“We renewed our mortgage in 2021 for the next 5 years,” says Patti, “with the amortization of 10 years and we chose variable rate.” Ouch.
“Today, as you know almost half of our monthly payment goes toward the principal and the other half goes toward interest. Should we switch to fix rate or should we stay with variable till 2026?”
How to borrow is as important as knowing how to invest. The allure of variable-rate mortgages a year or two ago was irresistible when money cost less than 2%. But today the cost has tripled. Every time the effective rate rises (with each Bank of Canada increase) more monthly goes to interest and less to debt repayment. Lots of people have found 100% of their payment is eaten by interest – that ‘trigger point’ at which uncomfortable choices must be made.
Should Patti switch from a 6.5% VRM to a 5% fixed and lock in for five years? Or float with the prime rate until renewal?
Well, switching to a longer amortization would immediately drop the monthly payment but, of course, delay paying back the principal amount or reduce the interest overhead. Converting to a fixed rate would slightly chop the payments but lock P in for years.
Maybe the best option: do nothing. The Bank of Canada macho-man tightening cycle is on pause at the moment, and may well remain there – even if the US Fed isn’t quite finished goosing things in America. Without more BoC hikes there’ll be no more prime rate increases, which means VRM rates have topped out.
Meanwhile the CB has said it expects inflation to be back down to 3% within six or seven months, and hit the 2% target next year. Mr. Market believes that will bring a rate cut of half a point. Relief. It’s also realistic to think the banks will be nipping mortgage rates as much as possible over the next year because new loan originations have been circling the drain (and OSFI is about to bring down da hammer). As this happens, VRM costs will fall and the debt repaid quicker.
We are not returning to 2%. Nor are we headed for 7%. The worst is over. The Mills and Zs still hate you.
Now, where is this market going?
Stehen Glaysher is, of course, a real estate shill. That’s his ob. He’s a big-time rockstar agent in godless Toronto. But facts are facts and he points out that so far in February (yeah, one week) 50% of all sales have been for above-asking. So is this a harbinger of the rutting season, which officially kicks off in about ten days?
“There is a real debate right now amongst peers in the industry that we are about to see a pricing spike despite all the recent interest rate hikes,” Glaysher says. “The logic being that there is a pent up demand to acquire real estate due to buyers sitting on the fence over the fall, coupled with the decreases in pricing and the massive increases in rental prices and competition we have seen in the rental market over the same time
“There is a legitimate reason to believe that the recent increase in listings selling above asking price is a precursor to this becoming a reality and I tend to agree! Couple this with an increase in new listings and this could be the “calm before the storm”.
As stated, he’s a pumper. But something is happening. For example, months of inventory in the GTA have gone from 4.3 in mid-January to just 2.3 now. Supply is shrinking as sales volumes increase, which helps explain Glaysher’s claim of rising prices. The big questions are whether a gusher of new listings will erupt over the coming month, and if the CB will actually stay on pause.
If listings swell and rates rekindle, the 23% decline in detached prices could well deepen, perhaps surpassing the all-time correction record of 27%. But if sellers are slow to return, the rate pause holds and Spring hormones flow, the opposite occurs. “Why wait for multiple offer bidding wars?” Glaysher asks potential buyers. “Let’s find the perfect “motivated seller” at the perfect time!”
Many on this blog have been perplexed about how real estate values can rise when houses are more unaffordable than ever. Even when mortgages were 19%. After all, we’ve been bombarded lately with stories of failed buyers, rising foreclosures, mortgage delinquencies and a coming tsunami of forced sales. Doom is endemic. The houseless kiddos are apoplectic. How could we possibly have a robust Spring market when 80% believe a recession looms and the damn stress test if over 7%?
Well, the recession was cancelled. The CB has throttled back. We are now at the end, not the beginning, of a historic tightening cycle. The labour market is robust. The central bankers say inflation will be down by half in six months. Winter will end. Sales volumes can remain sharply lower than in previous years, and yet prices can still rise – especially if fear keeps oodles of sellers on the sidelines.
At this moment it would take a deep, dark, troubled, job-sucking recession to bring a 50% real estate correction. It’s not coming.
About the picture: “This is my pet. I love dogs,” writes Brent, “but have this little guy instead. Maybe you could use him when times are slow ( markets etc..) you’ll get what I mean. His name is Apollo. Ten years old and should live till 60. He doesn’t do much so I don’t know what else to tell you about him. Haha. Thank you for all your advice. I never miss a day reading your blog.”
142 comments ↓
What if the war escalated in Ukraine.
Oil jumps to over $100
Will rates stay the same?
Garth, with respect, this doesn’t make any economic sense. If rates hold, the vast majority of properties are unattainable to anyone who doesn’t already have a sizeable amount of equity in a prior property.
I honestly can’t believe the last few blog posts. It’s like the 10+ years of economic reasoning I’ve heard you writing about in the context of Canadian housing no longer applies and we’re going to see people scooping up properties that devour 60% of household income to carry.
There are plenty enough people able to purchase to rekindle prices. Remember that 68% of Canadians already own. These are just facts, not opinions. – Garth
The undeniable fact is that the pool of buyers is very limited (only 10% of the population can afford buying a home) but the pool of sellers is not. So the upward price pressure can continue only so long as the number of listings is scarce. As soon as more sellers come out to cash in on the perceived gains, the scale will tip.
Love the dreamy yakety yak Canadian realtors and banksters are praying for in their fantasy world. Not going to happen. Us money guys deamnd to get paid now, we have susidized Canadian homemoaners for 20 years. Now it is catch up time – My spidy sense sees 12% interest rates coming very fast to teach all the hoarders and overindebted a lesson they will never forget. You break it you bought it. Be careful what you wish for.
This reminds me of a reoccurring story. Every time I list my downtown condo for rent on Kijiji the same realtor calls me telling me why I should sell because it’s too hard to be a landlord. The market’s hot for selling he tells me every time it’s a great time to sell. Sell now before it’s too late!
I explained to him that this is my business and I have multiple properties and I can make money on it. So then he tells me, and I quote, “it’s a great time to buy! You should buy some more properties now for your portfolio”
#110 VicPaul on 02.07.23 at 8:45 pm
#22 the Jaguar on 02.07.23 at 3:54 pm
What do people want to talk to me about the most? – GT ++
I would submit that one of the burning questions most have for you is why you continue to allow someone who regularly posts the following sort of statements remains with no admonition from you. It’s not isolated or even occasional, but daily mental unravelling. You have ‘toasted’ others for far less. :
‘We are trying Garth’s patience.’
‘By continuing to post your nonsense you are allowing a kind of hate speech. Anti-trans ‘violence will hereafter, in some small part, be on you.’
Disingenuous lying that dolts like The Jaguar amd Sail Away thrive on.’
‘I’m asking for Garth to grow a spine and reban you for hate speech.’ (WOW! -grow a spine?) …
*********
I agree…this ideologue’s fantasy-infused, caustic vitriol is a daily verbal assault – putrid.
But Jaguar, I think this is exactly how the rise of woke culture/marxist feelings have permeated our society…through this sense that, if you just scream down people and play victim, most will acquiesce and let you have your way – and look where it’s gotten us.
The group that claims no victimhood, are the victims of today.
Gratefully, it’s begun to eat itself…as these malignancies usually do.
Can’t blame faron though – he is so dug in…hot-housed in the lab of marxist wokeism (universities of the last twenty+ years). He bought into the catastrophication (did I just coin that one?) of climate and sees himself a young Michael Mann.
Yeesh!
M59BC
*************
We are enduring the entirely predictable results of delayed adulthood due to spending too much time marinating in the woke broth of academia.
Just as an acidic marinade dissolves the tough connective tissues in a cut of meat, corrosive woke academia dissolves the necessary concepts of “self” and “other”. This process is hastened in some who failed to fully integrate these concepts at the appropriate stage of toddler development.
The empathy weaponization movement is another facet of this phenomenon. Projecting empathy onto strangers with whom one has no meaningful connection is just projecting the all important self onto a convenient other, with the added incentive of receiving social approval amongst the perceived educated elite.
Ergo, to be based is basic. Fully buffered against the tantrums of developmentally delayed, woke toddlers.
Again, I disagree with garth:
“Should Patti switch from a 6.5% VRM to a 5% fixed and lock in for five years? Or float with the prime rate until renewal?”
The context that the answer needs is – are you in danger of losing the house if rates stay above 5% – 6% for the next 3 years? It is possible that they are that close to the edge.
If this is ultimately just play money (i.e if wrong, you don’t get to go to mexico) then roll the dice, stay variable.
If you’re at risk of losing the house if rates stay as high as they are go fixed.
Nobody ‘at risk of losing the house’ chooses a 10-year amortization. Sheesh. – Garth
If inflation hits 2% next year I’ll eat my hat. We’ll need more hikes to hit the 2% inflation target. The pause is only because the BOC wants to wait and see how their rate hikes are going to effect Canadians pickled in mortgage debt. They don’t want to over correct. But more rate hikes are coming.
#89 Bdwy Yesterday
TRAVEL TIP: Don’t BS us Europeans.
“Should be back to 18-20C is a couple days.” (Andalusia)
—————
As if.
Looks like you brought your Left Coast Noah’s Ark weather with you:
https://www.bbc.com/weather/2514256
18-20 C maybe next month when I will be there, Madrid & south (my personal Reconquista Tour ending in Malaga), hops to Bordeaux, Lisbon & Porto as well.
Bitterly cold in Italia even here in Napoli thanks to Gelo di NìKola (Italian code for Siberian cold & winds):
https://www.adnkronos.com/meteo-italia-gelo-si-intensifica-al-sud-tonnellate-di-neve-in-collina_1uWmM2NPz5WY9xumJ29Cb6?refresh_ce
https://www.bbc.com/weather/3172394
I guess another thing for those on Variable Rate Mortgages, those are not necessarily OPEN. They can only lock in at their current bank? Ouch again. In that case they will not get the best rate.
Best rates are more like 4.5% for 5 years?
Never go with ‘best rate.’ Always choose the best lender with the most flexible loan features. – Garth
How can anyone believe anything the BOC says. One minute its pause, next minute its we are prepared to raise our policy rate further. Even before Tiff was saying rates would stay low for a long, long time. Now 8 or nine hikes later he’s impossible to trust. I still don’t know how 3% inflation is even possible with wage inflation and gas prices about to rise. Maybe end of 2024, but for next few years thousands will be renewing mortgages and many won’t be able too. In my area just south of Vancouver, deals are falling thru and thats 100% due to financing. Down she goes!!!
Shakedown coming…
PS There’s the Turtle….where’s the Hare?
No Dog?
CAAARRSSSS!
The auto market is very interesting right now and worth a post.
This is Day 1 of my protest to get a blog post about today’s car market.
Maybe Mr. Soroha will join me to fight this gravest of tragedies.
DELETED
Off topic from your 1st World Trauma topic today Garth:
“The median income of families in the top quintile is seven times that of families in the bottom quintile.”
https://www150.statcan.gc.ca/n1/daily-quotidien/230208/dq230208a-eng.htm?HPA=1
20% of Cdns. A day in the life.
Sad. A very sad epitaph indeed.
Reason to give thanks there oh well healed acolytes of Garth.
Classic cycle – CB tightening, hit terminal rate, markets rally, housing holds up and everyone thinks there is no recession.
12-18 months later it hits… just give it some time.
“Long and variable lags” …
As Samuel Goldwyn once said,
“the harder I work, the luckier I get”
Think about that the next time you dismiss others efforts to attain happiness, financial independence or whatever floats your boat.
#3 Jens on 02.08.23 at 2:35 pm
The undeniable fact is that the pool of buyers is very limited (only 10% of the population can afford buying a home) but the pool of sellers is not. So the upward price pressure can continue only so long as the number of listings is scarce. As soon as more sellers come out to cash in on the perceived gains, the scale will tip.
——-
Agreed. New home buyers are the cohort that cannot enter this market without considerable strife, and they are the minority. More than likely these few sales are speculators gambling on an interest rate pivot by the BOC. These folks are already in the market and can suck equity out of their owned properties and double down on new ones.
based on my anecdotal evidence.
All this “above asking” are for properties in the 700-999 range on the eastern part of the gta. Hot right now because that is what is “affordable”
Most places above 1M range seem to be sitting for ages/relisted.
If real estate prices increases between now and April 12, look for another rate increase.
No correlation whatsoever. – Garth
Guess I’m renting forever. Why would I pay 100% of my monthly income, and some of my spouse’s pay, to own a crummy home and bury my family in debt … When I can rent a nice little place for south of $3000 and max our TFSA’s, and then enjoy the nice DB pension I have coming in six years? Honestly, Canada has lost it’s mind when it comes to real estate. I may own a home again, but it probably won’t be in this nutty country.
Or Putin drops a nuke on the market
First time for a Tortoise here I think.
Does the Jobs number say the full story? Jobs market being robust might not translate to good news for housing if the jobs being added are not in the high pay category. With many layoffs and hiring freeze that we are hearing about, it is to be seen if the irrational exuberance will be back with a vengeance.
it might be some pent up demand from first time buyers trying to prop the market which might fizzle out as other investors have burnt their hands in the last year.
Question for you Garth.
In the past 2 days alone, I’ve seen:
A third of Toronto’s Condos are owned by investors
https://www.thestar.com/business/2023/02/07/across-ontario-the-investor-is-taking-over-the-condo-market.html
More than 86 per cent of London’s apartment condos are owned by investors
https://www.cbc.ca/news/canada/london/london-ontario-investment-property-1.6739784
Do you think this is a big nothingburger, or something worth paying attention to, if (or when) it scales to other cities?
Without those investors there would be a rental catastrophe. Thank them. – Garth
With the rise in interest rates, has the affordability of real estate actually improved? It seems it hasn’t, despite the price drops we’re seeing. So how are we any better off than 1 or 2 years ago? How can the market continue to support such prices?
Because smart people know it’s way better to buy with a lower price and less debt at a higher rate than at a higher price with more debt at a lower rate. – Garth
Let’s see what happens when all these very juiciest mortgage renewals come. Why is very little being said about these stats?
Bill does makes sense,
https://www.bloomberg.com/news/videos/2023-02-08/bill-dudley-says-us-soft-landing-is-still-unlikely-video
As equity permabulls fight the FED, my money this time around is on the FED. Canada likely follows suit.
Front end of this year will be the best part for sellers. Starting later half the buyers will see Mr.Market’s hubris come undone!
If you got firepower, hold the line.
One another note, did anyone notice the change in tune from bond traders:
https://www.bloomberg.com/news/articles/2023-02-06/bond-traders-quickly-come-around-to-fed-s-view-on-peak-for-rates
The best three-part strategy: 1. Invest when you have money. 2. Stay invested. 3. Spend more time with your dog. – Garth
Canadians – its like we have nothing else in this country to do but screw around with the housing market
Mexican standoff between the buyers and the sellers continues….
Some folks believe that recent tiny drop from 20 times average income prices to 15 times average income prices represents the opportunity? Again all power to them. It takes a special person to believe something like that…
How to square off the information where on one hand people are having difficulties maintaining the payments on the current mortgages and on the other hand there is a group of buyers who happily seize the moment and buy under the current monetary regime?
I know that this is Canada and it is different here then USA but really different buy how much ? And different how? Better or worse? If people would pay attention to our country’s balance sheet they would be scared out of their mind and maybe do things differently….
https://www.mckinsey.com/capabilities/strategy-and-corporate-finance/our-insights/global-balance-sheet-2022-enter-volatility
At least in USA FED is not afraid to call it as he sees it….
“We’re on an unsustainable fiscal path.” Jerome Powell
https://twitter.com/DiMartinoBooth/status/1623021566668771418
I was hoping for a deeper correction. I have only months remaining on my mortgage and was hoping that cottages would be getting more affordable.
RE: #11 Joe Mama on 02.08.23 at 2:40 pm
How can anyone believe anything the BOC says. One minute its pause, next minute its we are prepared to raise our policy rate further.
=======================================
If I was pickled in mortgage debt, (Thank EJ I’m not) then I really wouldn’t know what to do. The BOC, pundits, etc have been so wrong in the last few years that it’s hard to take their words seriously now.
If it came down to it, I would lean more to listening to what the US FED says and assume the BOC will follow their path no matter what Tiff is saying.
Dog walking is fun for sure!
Good day.
6: I agree. The “Woke Mind Virus”will be more damaging to our society than Covid could ever have been. (Re the virus, the question I still have, was the release of the Covid virus from the Wuhan lab accidental or deliberate ?)
#27 You know Val on 02.08.23 at 3:30 pm
Let’s see what happens when all these very juiciest mortgage renewals come. Why is very little being said about these stats?
—————————————
People will adjust their spending to make their mortgage payments. There will be a slight uptick in foreclosures, but certainly not a tsunami like people are thinking. Canadians make their mortgage payment like it’s a religion.
About inflation falling to 2% or less.
There is evidence that it already has…
Headline numbers are year-over-year. Actual current inflation today is far lower than the year-over-year numbers. See the data:
If January prices are the same as they were in December, that’s zero percent inflation my friends.
Inflation was negative in December. Fact.
“On a monthly basis, the CPI fell 0.6% in December following a 0.1% gain in November.”
https://www150.statcan.gc.ca/n1/daily-quotidien/230117/dq230117a-eng.htm
Shhh. Quiet, Shawn. They wanna moan. – Garth
Why does everyone think that a market has to either go up or down? There’s a third scenario… sideways. After this Spring party, we could easily trend sideways for years in a narrow +/- 5% channel.
As for the bankers… I would never fight the FED, but they usually get it wrong. Transitory inflation turned into a record 40 year one. They are blowing smoke if they think we are back to 2% in a year. From 4% down to 2 will be the toughest and longest part.
#3 the only problem like Garth is saying where is the jobless unemployment is low until that rises over 5 percent then we have a crash soon a year or two realestate will crash inflation is here for a while longer
Fixed rate mortgages will all renew at higher rates, even if the BoC pauses or does a minor rate cut. 1.9% fixed for 5 years will never happen again, which means there will be a slow rolling car crash of people who took fixed mortgages at the very edge of their affordability as those renewals come up. The effect of interest rate increases has only just started. I don’t see how it could be the case that this is the bottom of the market.
On twitter “ron mortgage guy” just predicted that GTA real estate prices will continue a slow grind downwards, “maybe another 10%”
My favorite living economist Mohamed El-Erian thinks inflation will get sticky at around 4%. He is not the only one who predicts this. Mohamed was right about the FED needing to tighten earlier so he may be right about this.
Higher interest rates don’t impact the service sector as much as the goods sector. Competition for employees in the service sector will keep costs rising.
#8 Adam on 02.08.23 at 2:39 pm
… The pause is only because the BOC wants to wait and see how their rate hikes are going to effect Canadians pickled in mortgage debt.
**********
I don’t think so. Why should they “to wait and see how their rate hikes are going to effect Canadians pickled in mortgage debt.”
This is already known!
The reason for the waiting is that they want the bankruptcies of insolvent debtors to go smoothly – wave after wave. BOC increase rate and waiting … again (after 3-4 month) increase the rate… waiting …. and so on until will be REAL decreasing in inflation.
In between, they don’t forget to make reassuring
statements – inflation will drop to 1% in 2024, the labor market is fantastic, the Trudeau government will fall soon – it’s not their fault, etc.
The end of those waves is not yet visible. Everyone is happy – the bankruptcies reports is stable. There is no popular revolt of debtors. Everybody laughing and singing (like in India movie).
You were more credible when telling us how great Putin is. – Garth
#6 Old Boot on 02.08.23 at 2:39 pm
:):):)
We are enduring the entirely predictable results of delayed adulthood due to spending too much time marinating in the woke broth of academia…………
………Ergo, to be based is basic. Fully buffered against the tantrums of developmentally delayed, woke toddlers.
:):):):)
Yah, that too….but I just call it lack of sex.
Og
1981 Housing Crash across Canada
Broke homemoaners were dropping out of the market like swatted flies
https://open.spotify.com/track/57JVGBtBLCfHw2muk5416J?si=71c991ffdc354854
Never go with ‘best rate’. Always choose the best lender with the most flexible loan features. – Garth
So, true. Our first house (1989, yeesh!) we chose the green bank. They had provisions for doubling your payments PLUS annual 20% principal repayments. We were newlyweds, new employees, new careers and were looking at double digit wage increases annually due to employment anniversaries and wage increases. Road the interest rates down from 12% to 7%. Had that sucker paid off in 7 years during the dirty 90’s GTA real estate money suck! Moved once to our forever home and have been mortgage free since.
Even in the US this bubble is bigger than 2006, in Canada it’s in the stratosphere!
But this time there are more problems: we now have a car debt bubble on top of massive consumer and corporate debt and also record public debt. Population aging makes productivity gain almost impossible. And of course we now have this little problem called inflation…
The only way this is not crashing at this moment is a good dose of denial, inertia and because more debt is being spent, just look at the US ridiculous inflation reduction act. Massive amounts of money being spent from reserves even before it is borrowed (because of the debt ceiling fight) which explains in good part the lower interest rates.
I don’t care what the market does in the short term, it is irrelevant because fundamentals are horrible and red flags are everywhere. Just act and prepare consequently.
“he points out that so far in February (yeah, one week) 50% of all sales have been for above-asking.”
Imaginary example:
2022 Nov Sold – $900k, asking $800k, assess $700k
2023 Feb Sold – $780k, asking $600k, assess $850k
Sold over asking!!! Prices must be going up! (120k loss)
Are they selling above assessed values? Above 2020 prices?
If someone asks $1 and sells for $600k, it’s over asking – right?
This is one narrative that the seller (aka agent) can control to try and create some positive spin.
Outside of BC, nobody cares about assessed values. Nor should you. – Garth
@Sail Away
#168 Old Boot on 02.08.23 at 2:20 pm
#110 VicPaul on 02.07.23 at 8:45 pm
#22 the Jaguar on 02.07.23 at 3:54 pm
—
Amazed that you are all still in a yowling tizzy about your getting whooped past days. I exchanged my halo for a trucker’s cap and went for a two hour run yesterday. You mewled pathetically.
Sad.
#41 PeterfromCalgary
I didn’t hear El-Erian say it but that was what I just posted. Coming down from 9% to 6% is much easier than from 4% or even harder from 3% to 2%. Tiff would make a good salesman though.
#6 Old Boot on 02.08.23 at 2:39 pm
Oh, god, missed this one. You are seriously so arse hurt that you continue to whine a full 24hrs after your evisceration? I know it must hurt, but Gaia help you. Move on. Get a life.
In German there is a saying that goes like this:
“IF the word IF would not be there.
LIFE would not be so hard to bear”
So Tiff will happily fiddle from the roof while Poppa P moves higher?
Save homeowners to destroy purchasing power.
I just love turtles. Apollo is absolutely adorable. He’s got the cutest face. Just want to cuddle him. Seriously, he is the cutest.
#48 Victoria’s Cross to bear
“Move on. Get a life”
——————————————————————-
Oh the irony..
#47 is in response to #1
46 comments ↓
#1 dave on 02.08.23 at 2:19 pm
What if the war escalated in Ukraine.
Oil jumps to over $100
Will rates stay the same?
Tiff Macklem;
2020: “Our message to Canadians is that interest rates are very low and they’re going to be there for a long time”
2021: “Don’t ‘overreact’ to temporary inflation”
2023: Inflation will be back down to 3% within six or seven months and 2% next year.
‘Nuff said.
Interest rates stayed at ridiculous levels for two more years and are still historically cheap. Such drama. – Garth
The way I see it, bubbles inflate. In the short term, Garth is probably correct that we’ll see even higher prices, even more unaffordable housing.
But the fundamental problem of housing affordability must be addressed eventually. The higher it goes, the further it has to fall.
Average family incomes must be able to purchase average family housing. The implications of this remaining untrue for long periods of time are not restricted to just the housing market. As it stands, average family incomes cannot even afford to rent average family housing.
Let’s wait and see how this all shakes out (I’m not buying)
J-Pow: I agree! I think the real Garth was kidnapped and replaced by Michael St. Jean.
Garth, What happened to a dead cat bounce? Could this be it? Also, you mentioned several months ago about how economists say it takes a year to see the consequences of higher rates. I’d almost say wait until the beginning of 2024 to see the real results of all this macho man tightening.
It seems too soon to tell right now.
Having said all this, I look forward to leaving the GTA and it’s madness behind me forever one day!
Outside of BC, nobody cares about assessed values. Nor should you. – Garth
==============
But here in BC we do care about it and is the guideline for everything RE related. To the point that if one sells for below assement it is looked at as “losing money” even if say sold for a cool 500K over purchase.
You can ridicule the mindset but you cannot fight it. Assesment price is everything here in Lotus Land…and we will not get over it :-)
DELETED
Meanwhile the CB has said it expects inflation to be back down to 3% within six or seven months, and hit the 2% target next year. Mr. Market believes that will bring a rate cut of half a point. – GT +++
Mr. Market could be right, but intuition tells me ‘major disturbances in the economic system arising from other sources’ could play a significant role between now and September, and it could have a lot to do with the situation in eastern Europe and Ukraine.
A wise man once said “Things that can’t go on forever don’t”. When that moment arrives I find it hard to believe it will be a return to ‘business as usual’.
Barely out of the Covid Pandemic and then the usual suspects engineer a global geopolitical armageddon. If you think that situation is improving maybe replay the whackadoodle SOTU address from yesterday evening.
Hard to believe the POTUS advisors weren’t tuned up on what ‘Loss of Face’ means in Chinese culture. Don’t go ‘a callin’ Joe B’, the house lights will be turned off in Beijing. +++
“Monetary policy can contribute to offsetting major disturbances in the economic system arising from other sources. I believe that the potentiality of monetary policy in offsetting other forces making for instability is far more limited than is commonly believed.”- Milton Friedman.
Without those investors there would be a rental catastrophe. Thank them. – Garth
Garth, would you please elaborate on this statement of yours? What do you think happened if first-time buyers (i.e., folks who never owned property) had a first pick for new properties? Do you think it’s OK to have serial flippers, who end up making more money year over year compared to productive members of society without giving anything in exchange? The ‘investors’ (speculators, really) don’t even put much on the table to play (they often pay very little for condos-on-plan), thus aren’t risking much, and if the flipping game doesn’t work out – they simply put it on the rental market, and sell it later.
I am curious to hear your argument, as there are many countries around the world where there is no such housing crisis – even though many have a growing population, and especially through quick urbanization. Is Canada different? If so, why?
Are you implying that the specuvestors increase the available housing supply?
Thanks.
Investors are not flippers. You are confused. – Garth
#36 Shawn on 02.08.23 at 3:58 pm
Inflation was negative in December. Fact.
=======================================
So what of it? Here’s a list of other months with “deflation”:
Dec 2022 -0.6%
Aug 2022 -0.3%
Dec 2021 -0.1%
Dec 2020 -0.2%
Sep 2020 -0.1%
Aug 2020 -0.1%
The monthly decline in December is mostly driven by gasoline prices falling.
In fact, there seems to be a bit of a pattern in the month to month inflation data. The yearend months always seem to be lower if you look at the monthly inflation stats over the last decade. Fact.
#36 Shawn on 02.08.23 at 3:58 pm
… Quiet, Shawn. They wanna moan. – Garth
_____
Most of the regulars here could win Lotto 649 and would find something to complain about it.
When my son was younger he would sometimes say it would be nice to win the lottery. I told him he did. He was born in Canada.
25 Rook
“More than 86 per cent of London’s apartment condos are owned by investors
https://www.cbc.ca/news/canada/london/london-ontario-investment-property-1.6739784
Without those investors there would be a rental catastrophe. Thank them. – Garth”
——————————————————–
Thank you for these links Rook, as it helps fill in some gaps from blogger “Yukon Elvis” from a few days back.
From the article:
“I don’t think the answer is to block that investment because those investors are fulfilling a real need for rental housing,” he said, adding that governments need to create incentives to make it more profitable for large institutional landlords, such as REITs, to start building new apartment buildings rather than buy up buildings that already exist.
“I think how we solve it is to build more purpose-built rentals and student residences,” he said.
#34 4 out of 3 people find math hard on 02.08.23 at 3:52 pm
6: I agree. The “Woke Mind Virus”will be more damaging to our society than Covid could ever have been. (Re the virus, the question I still have, was the release of the Covid virus from the Wuhan lab accidental or deliberate ?)
+++++++++++++++++++++++++++++
Smart people doing dumb things is far more common than people doing pure evil, so my bet is on an accidental release.
Besides, why would the ChiComs release it in their own back yard? That doesn’t make sense. They could pick a place in Lower Elbonia to do the dirty deed. No collateral damage at home and no risk of political fallout. Or at least that’s how Tom Clancy would write it.
But bear in mind that the “Woke Mind Virus” was originally spawned in California as it needs land fertile for nuts and fruits.
Garth….You were more credible when telling us how great Putin is. – Garth
***************
Dear Garth,
I never said anything like that. If I’m wrong, please point me to the post where I did it.
I did not choose Putin, I am a citizen of Canada. I don’t care what happens on the other side of the globe.
Only Canada, and a little bit of our neighbor USA!
True, once, about a year ago, you gave information from the Canadian press that did not correspond to reality. In response, I gave a link to this information from an official source. It seems to be the Kremlin’s website. In response, you banned me. So if this was the official web site of the State Department, it would be OK. Why can’t the Kremlin’s website be trusted? We don’t have freedom of speech anymore? We can’t compare different points of view in order to form our own?
About other in my todays post – it was just my opinion. How I can trust government when they telling us about so sharply decreasing inflation with present rate? It is contradict economical theory.
What a complete disaster our CRA is, but who can blame them? How can you collect 15 billion handed out by Trudeau and gang without even so much as requesting a SIN? I’ve spent quite a bit of time trying to find out what exactly they’ve accomplished of far as collections, confiscations, etc. with little success. It appears they measure their results on hiring practices, public opinion, complaints, anything except what we pay them to do. When it comes to reporting actual numbers, transparency doesn’t appear to be their strong suit. I blame Trudeau.
https://nationalpost.com/news/politics/cra-covid-wage-subsidy-15b-pbo
From the well known realtor in Vancouver…
The default cycle has begun. Several large land bankers in Vancouver have filed for bankruptcy, unable to roll their loans now that the music has stopped.
https://twitter.com/SteveSaretsky/status/1622701320351399936?cxt=HHwWgIDSgZyQ_4QtAAAA
Also from the well known Mortgage Broker…..
Lunch today with a top Canadian lender manager with purview to a lot of market activity
Says home owners on the B lending side are being forced into 10%+ rates, and every day more and more owners are handing over their keys
A sad and troubling time in Canadian RE
https://twitter.com/altruafinancial/status/1623115416791818241?cxt=HHwWgoCx9ea3u4YtAAAA
@#44 1981 All Over Again on 02.08.23 at 4:17 pm
1981 Housing Crash across Canada
Broke homemoaners were dropping out of the market like swatted flies
https://open.spotify.com/track/57JVGBtBLCfHw2muk5416J?si=71c991ffdc354854
++++++++++++++++
except the interest rate was 22% back then
BoC trying to be prudent and not over correct hence the pause. People who are interpreting this as a slam-dunk that the tightening cycle is over are being over optimistic. It may be, but T-Mack never said this. He said if inflation proves sticky, we’re going up again. And if JPOW goes much further, T-Mack has to follow. T-Mack’s tea leaves have inflation with a 3 or 4 handle by year end, but he’s the first to say that’s the current projection and reality may differ. This is all “wait and recalibrate”. Anyone betting the farm on 2-3% inflation by end of 2024 at current rates is taking a gamble, even T-Mack has said so indirectly. Don’t know what all the fuss is about. The man himself has stated we’re in wait and see mode.
What a mess our housing market is in. It should actually be called the land market, because houses aren’t actually the problem. It’s cost of land, zoning, availability, etc. The pile of sticks that sits on top of it has cost $200/sq ft to build give or take for decades for basic finishings. We have an unreal surplus of land in this country, we need to all get our heads out of the sand and find a way to unlock it for building.
‘Meanwhile, the CB has said it expects inflation to be back down to 3% within six or seven months, and hit the 2% target next year.” ….and if you be those wise words.. you can sit in on Chrystia’s budget round table..
I hope these FOMO obsessed folks start pumping tons of money into real estate this spring. Then watch the “Tiffster” raise rates again! We never learn.
I’m thinking home sales will fall flat this spring market.
I also think there is more room for home prices to fall slowly over the next few years.
Why! You ask?
The mortgage approval rating is a big deal because consumer debt is a Monster number $2.32 trillion in Canada and it’s growing fast! With an average debt load of approximately $21,183—excluding mortgages and you know this debt is mostly credit card debt and Audi leases.
Prices can rise amongst low sales volumes when inventory is scant. – Garth
DELETED
I track same store sales as part of my business function. Double digit growth from Jan in both Canada and the US, up nearly 10% on the merchants we track. Large sample across multiple industries.
Inflation is not tamed. Powell knows this.
When Tiff gets this wrong again, and we have a second wave of tightening because we backed off too early, no more excuses, he owns it now.
More rate hikes in fall and we call pretend no one saw whatever event they plan to blame, coming . Total amateur hour. Stan Brooks bless.
Prices can rise amongst low sales volumes when inventory is scant. – Garth
Possibly, but this is meaningless and above all unsustainable because the low volume ensure far less capital enters the economy to feed consumption and economic growth. Less growth means less possible demand at current prices…
Yet eventually volume will have to increase enough to sustain requirements for the population and there is absolutely no way this is possible at current prices. It’s just mathematically impossible to sustain this, it wasn’t even sustainable before the rate hikes!
#156 Tiffing Around on 02.08.23 at 10:03 am
The best inflation hedge is of course investment real estate, preferably leveraged if you are still a working stiff and can get a mortgage.
The numbers don’t work very well right now, but they are getting close for an all cash investor like me.
Energy producers are second best, I don’t like buying individual stocks so I just buy XLE.
Stocks in general are not great inflation hedges but not terrible. Commodities are just a bad idea, period.
Gold? It keeps pace with inflation but not much else, I prefer assets that have earnings.
I am sitting on my hands waiting for RE prices to come down just a little more, starting to lose hope that will happen.
For all the heavily debt laden. You signed the papers. Enjoy the ride to the bottom.
https://open.spotify.com/track/3fkPMWQ6cBNBLuFcPyMS8s?si=02029350794247b7
One month ago: “ Right on cue the nation’s worried realtors have released data on December and the miserable period called 2022. If you’re in the house-flogging or financing business, there’s no good news here. If you’re a seller, it’s clear Peak House is gone, gone, gone. If you’re a buyer, every month we inch closer to sanity. But it’s still miles off.”
We all knew the pause/pivot was coming a month ago, so what gives?
Jpow certainly has a credibility problem that mr. market is calling bluff however, the US has a lot more leeway than say Canada. They don’t have this stupid mortgage dance like we do, sure higher lending slows the RE & Car market but is not this dangerous headache like we have.
The Fed is not in a position to bailout our banks like 2008 again and make no mistake BoC really REALLY does not want an implosion hence, trying and hoping it all works out.
That or Tiff is taking a page out of the Poloz playbook of sinking loonie being good for exports. Everyday inflation would still take off here but hey, we saved the banks.
Only the inexperienced among us in BC put any value in the BC assessment property values.
At one time, years ago, they were closer to actual market value, but due to unknown reasons (probably poor quality and under staffed) they are all over the place, some high and some low with variations from actual of up to 25% being common.
Do not use these numbers to determine market value, especially in years like this one when they are particularly inaccurate.
Another example of a degraded service provider.
71 T-Rev
Good comment re BoC.
Flop Drops.
Paging John Sidhu to the blog.
#15 John Sidhu on 01.24.23 at 2:37 pm
“In Surrey BC a listing yesterday for 1 million. Assessment is 1.46 million. What do you make of this? Is this a case of list low to attract multiple offers? Is that a thing again already?”
$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$
Love heart alert.
Well John, I’ve got a result for your question.
After I wrote you back I clicked on the loveheart icon and today it came up on the sales map as sold.
The details…
Asking 1 million
Assessment 1.46
Just sold for 1.29, or 88% of assessment value.
https://www.zealty.ca/mls-R2747819/7864-163A-STREET-Surrey-BC/
So, did the strategy work?
Yeah, I guess, it got the job done in 8 days.
The probably could have gotten the same sales price if they listed at 1.25, or whatever but it got your attention.
Blocks of banger land, early 900’s, but this was never that scenario.
I always thought that Surrey Council should have a big boards up like they do at the factories at the city boundaries.
6 days since the last shooting, or whatever the number is.
Vancouver could have one that says 16 minutes since last drug overdose…
M48BC
Interest rates stayed at ridiculous levels for two more years and are still historically cheap. Such drama. – Garth
———————-
Right, which is why is is so ridiculous to pause when inflation is still 3x target and employment is historically low. When Tiff wakes up in 6 months and has to add 3/4’s hopefully can we agree he is just throwing darts.
It would be funny if it was not true…..
How bubbly is ‘s real estate?
The average person’s investment thesis is that immigrants will share tiny spaces, and pool their money to rent—thus driving rents and prices higher.
is hoping for indentured servants 2.0.
https://twitter.com/StephenPunwasi/status/1623344354424225793?cxt=HHwWgoC8md3Fo4ctAAAA
This guy should be stand up comedian….he is on the roll
The head of the Bank of Canada mentioned he paused rates because of household debt, and not even he sees how disastrous the situation is.
We need to keep debt cheap because people keep taking out cheap debt.
Bruh effectively lost control of speculators today.
https://twitter.com/StephenPunwasi/status/1623159037620625409?cxt=HHwWgoC9te-iz4YtAAAA
#71 T-Rev
….We have an unreal surplus of land in this country, we need to all get our heads out of the sand and find a way to unlock it for building.
****************
Yes it is. But the whole land is 100 km and further
on North. You can’t unlock existing green areas around cities or give away agricultural land for construction. It is a crime!
We need to move North! But for this it is necessary to start not with unblocking, but with the creation of infrastructure, primarily roads to the North and the creation of economic clusters in the North. This is what the Soviet Union did – it mastered Siberia and the Far East. This is not the case in Canada. The old Canadians, I worked with, told me that all the highways were built in the 50s and 60s of the last century. Since then, nothing! A shame!
@#88 Vlad the Impaler
” This is what the Soviet Union did – it mastered Siberia and the Far East.”
+++
Yes.
With millions of political prisoners …building….more gulags.
We’ll take a pass.
This country is a socialist backwater/colony, with an economy based on natural resource extraction, real estate and uncontrolled immigration. Look at the great USA, they are investing 5x more in R&D per capita and have a much healthier economy. The US is the superpower and Canada the great mine of the world. T2 has no clue how to run a country. See report link, please read to understand what is terribly wrong in BC.
https://bcbc.com/reports-and-research/stuck-in-the-slow-lane-a-closer-look-at-capital-investment-trends-in-canada-and-british-columbia
Finding it odd that after more than a decade of Garth saying that home prices are in a massive bubble, he is now declaring the fall over when house prices merely dropped to where they were a couple of years ago and with interest rate impacts just starting (such as triggers on VRM and homeowners renewing at much higher rates over the next several years).
Would you rather I lie? – Garth
Home insurance question.
Our house insurance premium jumped from $2600 to $5600 last week. Seems our house went from $800K to $1.7M.
I want to insure our house for less than the replacement value. If our $$1.7M house burns down, I would rebuild something smaller for $800K.
Insurance agent says they have to insure the property for the full replacement value (At $450 per square foot).
I want to insure our house for less than the replacement value.
Is this possible?
PS- Garth, in addition to your real estate costs like property tax, opportunity cost, maintenance. You might want to include home insurance. $200/month mattered. $400-500 per month is significant.
Flop Drops
Swings and roundabouts.
Hey Broadway, did I report on this one back in the day?
I gave up counting after the fir 20,000 or so posts.
This run of the mill Eastside house is as good as any to showcase the ebb and flow of the frenetic market the last
Sold in 2016 for 1.6, then someone sold it during the last correction for 1.49 and lost some money.
Things got hot again and the second guys offloaded it for 1.7 and most likely made a small profit.
Then player 3 picks up the joystick and tries to get 1.82, then 1.74, now 1.59, looking at Pink Snow with a hundred thousand loss plus expenses, could always get out of it with a draw, I guess I’ll click the loveheart again.
Player 4 probably doesn’t know the history and their cousin the realtor will advise them to come in strong 300k over asking.
Player 5?
Could be one of the current owners who decide to buy the house back after getting divorced because they haven’t felt the same way about life since they moved out.
Great game, this real estate shell game…
M48BC
https://www.zealty.ca/mls-R2748141/2273-GRAVELEY-STREET-Vancouver-BC/
Markets rally on the way down, brisk RE spring sales are possible. Biden SOTU was as anti globalist as any Trump ever gave, rebuilding the industrial base in NA, cheap Chinese labour going away and without Western techs in Russia the Americans are detecting massive industrial explosions from space. I’m guessing CPI will be more volatile than we’re accustomed to.
Retiree here, following up on his first walk with a battery chainsaw.
Went down the overgrown/choked off lane beyond the backyard trout brook, trimming both sides, putting the saw down and stashing the off cuts into the understory along the way.
No smoke, no fumes, no rope tugging.
The chain is 1/2 normal width, so it doesn’t snag the wee branches and pull them at you.
Nobody out there with idiot phones!
All in all, I kept thinking of Garth exclaiming how he enjoyed floor sweeping at Belfontaine. Same head.
The walk back home through my accomplishment at dusk was stellar. Cardio done, check.
#84 Flops
I always thought that Surrey Council should have a big boards up like they do at the factories at the city boundaries.
6 days since the last shooting, or whatever the number is.
Vancouver could have one that says 16 minutes since last drug overdose…
—————————
What’s your problem?
Trinkets and baubles
The Trudeau Feds are giving BC $600 million more PER YEAR for healthcare.
Our sycophantic NDP Health Minister Adrian Dix is “looking on the positive side”.
“We’re getting more money from the feds for healthcare”.
What does $600 million dollars buy in BC Healthcare?
One week of provincial treatment……. province wide.
@#96 Petulant Ponzie’s political problem
“What’s your problem?”
++++
He speaks the truth….unlike pc pandering politicians.
#95 Wrk.dover on 02.08.23 at 9:12 pm
Retiree here, following up on his first walk with a battery chainsaw.
Went down the overgrown/choked off lane beyond the backyard trout brook, trimming both sides, putting the saw down and stashing the off cuts into the understory along the way.
No smoke, no fumes, no rope tugging.
The chain is 1/2 normal width, so it doesn’t snag the wee branches and pull them at you.
Nobody out there with idiot phones!
All in all, I kept thinking of Garth exclaiming how he enjoyed floor sweeping at Belfontaine. Same head.
The walk back home through my accomplishment at dusk was stellar. Cardio done, check.
—————
Yep, battery power is pretty nice. Tools, bikes, vacuum cleaners, trimmers, cars…
Trout stream on the property. Fantastic.
#96 Ponzius Pilatus on 02.08.23 at 9:17 pm
#84 Flops
I always thought that Surrey Council should have a big boards up like they do at the factories at the city boundaries.
6 days since the last shooting, or whatever the number is.
Vancouver could have one that says 16 minutes since last drug overdose…
—————————
What’s your problem?
//////////////////////////
Arthritis…
M48BC
Flop Drops.
Guess I’ll finish the trilogy.
You wanna know why the assessment matters so much in B.C?
It matters because people want it to matter.
Original ask 1.59
Assessment 1.44
Just sold for 1.02
https://www.zealty.ca/mls-R2749699/1688-156-STREET-Surrey-BC/
Yeah, so these new buyer’s are destined to live the life of the damned, because they decided to only pay 70% of the Recommended Retail Price.
It happens, people also pay 30 % over too, but at the end of the day you’ve got to respect a crown corporation that sends a vehicle around your neighbourhood, with a guy in the back snapping pictures of your house telling everyone what they should pay for it should you ever list it…
M48BC
I agree with many of the comments here today…complete 180
You said in late 2019/early 2020, when mortgage rates were under 3%, house prices were way overvalued coast to coast and had only one way to go. Down.
Now, even after a ~ 23% plop, prices are still higher than 2019/2020, BUT rates are now more than double….and prices will rise??
Doesn’t make sense
When did the market make sense? – Garth
Continuing here with reviewing portfolio holdings and overall investing philosophy while re-reading the market bibles. Good news is that the plan is working. As follows:
Specifically on the equities side, we have a total of 32 holdings, with average CAGR by period of: 20yr-22%, 10yr-23%, 5yr-19%, plus average dividend of 3.4%. Although we’ve only been investing for ten years, so that full 20 year return wasn’t achieved by us. The companies were initially chosen by sorting specifically for proven long term performance, then broken down by sector and geography.
It’s a simple plan. Sort for only good companies with solid long term performance, diversify across sectors, wait for opportune entry points, then buy… and do nothing more. Well, count money and blog, I guess. It actually is that simple.
#85 Mattl on 02.08.23 at 7:59 pm
Interest rates stayed at ridiculous levels for two more years and are still historically cheap. Such drama. – Garth
———————-
Right, which is why is so ridiculous to pause when inflation is still 3x target and employment is historically low. When Tiff wakes up in 6 months and has to add 3/4’s hopefully can we agree he is just throwing darts.
**************************
I think you might be mistaken about inflation. Those numbers are year-over-year. Once there is a spike there’s no going back (prices won’t get significantly cheaper), so the goal is for prices to remain the same (+2%).
For example:
We can have the exact same prices in March as we have in February, but because prices will be compared to last March they will be shown as +5%
– it’s not a measurement of whether prices are still going up, which is what really matters.
This is why they say the rate increases will take time to show their effect.
Basically, even after a one-time 10% spike, the numbers would look bad for the next 12 months no matter what you do, because the comparison is year over year, not current.
When my son was younger he would sometimes say it would be nice to win the lottery. I told him he did. He was born in Canada._
100% agree….. But… that was then.
Yet still 99% of Canadians, Americans, Borrell’s Garden and down under do not know how good they’ve got it.
It is a jungle out there_ (Borrell)
They can only do that by plundering, raping and pillaging the jungle. I can provide a litany of proof.
A big Vancouver developer files for bankruptcy:
https://canadatoday.news/ca/many-new-homes-at-risk-as-major-vancouver-developer-files-for-bankruptcy-263751/
EconomicWoes @ManyBeenRinsed
Realtor telling me 50-60% of the realtors at his brokerage of about 60 own 2-3 pre-cons. Confirms my thesis since last year further that they all bag holding.
They selling you their bags. They gotta be bullish. They have no choice. Next 90 days are critical for them.
https://twitter.com/SteveSaretsky/status/1623519042849107968
More on the way?
https://twitter.com/mortimer_1/status/1594542557941608448
Why sell so cheap; less than land valuation?
#90 Snowbird on 02.08.23 at 8:36 pm
This country is a socialist backwater/colony, with an economy based on natural resource extraction, real estate and uncontrolled immigration. Look at the great USA, they are investing 5x more in R&D per capita and have a much healthier economy. The US is the superpower and Canada the great mine of the world. T2 has no clue how to run a country. See report link, please read to understand what is terribly wrong in BC.
———————————————————–
You can’t just blame T2, especially on the left coast where the business leaders have gone crazy woke and are doing their best to tear the place down.
Try reading a business magazine or attending a Board of Trade function.
Energy policy is more insane than anywhere, including California, where at least an open market in Power Generation is leading a flood of investment. They are years behind in what could have been a huge LNG opportunity.
When you’re a Coal Mine company trying to get to “net-zero”, in order for the corporate mandarins to keep their social calendar, you deserve to go broke.
The bigger issue is land use and ownership. The whole place has been frozen for a long time as no one can figure out how to spend the first ten minutes of every speech going on and on about how we’re all squatters on the natives land, and yet need land and mineral rights in order to invest for the future, or even build a few houses.
They now print this nonsense on official letterhead.
The City of Coquitlam includes it on their official paperwork that the City sits on the traditional lands of the Coquitlam people. They were slaves! They didn’t own anything. Part of the great Coastal Salish slave trade.
The craziness now includes all almost all top leaders of any sort on the west coast. It’s a lot bigger than T2, and it paralyzes investment and a future. The poverty this creates leads to a downward spiral as the best in society move south for greener pastures.
with all the respect, the last few posts are surprises to me, such a big shift on the outlook of Canadian RE. there might be a short rebound, but the key reason behind the crazy RE boom – super low rates and super fast price surge no long hold. yes, RE price in average may already down to the similar level as last RE correction, but it had gone up much more than last RE boom as well.
we will see.
I like Andy Borowitz because he, unlike the Babylon Bee, is funny. And he reports truthfully.
Dick Cheney Offers to Shoot Down Future Balloons
…”Many on this blog have been perplexed about how real estate values can rise when houses are more unaffordable than ever.”
Anecdotally, spoke to a few recent immigrants. First priority to buy a house. Even if it uses all their savings. Some are buying with siblings or extended families living together (basement living) and will put every cent of savings toward it. Not the most diversified investment strategy. But you can live in a house and the family is taken care of.
Tiff really showed us “his cards” today. No ifs or buts just have to be careful due to the economy might have “a not yet recession” as housing is a serious component of GDP. Code for much care required to unwrap this “Easter Egg.”
Disagree. Rates will rise along with US Fed, Tiff has no choice. The “pause” is all politicking. Trudeaus numbers are swirling around the bowl. The pause we see is the desperate attempt to stop a complete flush. Justin is back to spending, that can only produce one result. Mind, there is a choice. Justin can keep spending, keep his boot on Tiffs neck , strangle our resource industries, boost immigration and sink the currency. Why should he care? As long as his buds at McKinsey and Eurasia Group ( where Gerry Butts went) think he can staunch the bleeding and create a few more GTA seats out of the new population ?
Looks like the starving lawyer who is unable to put food on his table is the reason why BoC stopped rate hikes, nothing more to see here, housing runs the BoC.
https://www.bnnbloomberg.ca/interest-rates-bank-of-canada-chief-flags-debt-load-in-explaining-early-pause-1.1880502
Agree with you.
The only chance of an economic downturn happening is if PP gets in charge. But then, there’s room for the BoC to lower rates again – so nothing will change.
HOWEVER – where I disagree, is what happens if the US Feds keep raising their rates. I’m pretty sure that’ll force us to follow (even if its a few months behind).
And if their rates stay high, will limit our ability to lower ours if PP does what I expect him to do.
The only way out of this doomsday scenario (For me) is if PP doesnt get in.. But as everyone is super upset with being asked to wear a mask last year, and upset they cant afford the mortgage they overborrowed on, It seems inevitable …
109 Calgary
“Why sell so cheap; less than land valuation?”
—————————————————
Market may have slipped since last assessed, but also
expense and liability of demo, disposal of hazardous
materials, potential fuel leaks (old autos and buried oil tanks), possible geotech and adjacent support issues
with collapsing retaining walls, ponds and pools and all the studies, reports, permits and remediation required.
The listing no longer shows on MLS, so cannot review any particulars if there were any given.
A highschool student was suspended and then arrested because he refused to acknowledge any other pronouns other than male & female. It was a “Catholic School”!
This is the Justin Trudeau “woke mind virus” in it full insanity . Rather than asking the transgender offended student to “suck it up”, it is politically correct to banish the student who actually had Catholic views.
The “Woke Mind Virus” is more dangerous than Covid ever was.
https://torontosun.com/opinion/columnists/lilley-catholic-high-school-student-suspended-then-arrested-for-saying-there-are-only-two-genders
92 – If you have a mortgage then the lender requires guaranteed replacement value. If free and clear, you can insure for an agreed value or not at all.
Dolce.
Seville over/near 20c next few days. 19 today.
Icy Italia not for us!
#99 Sail Away on 02.08.23 at 9:40 pm
Trout stream on the property. Fantastic.
_____________________________
Or, you could have Billy Bishop and the Gardiner Expressway within earshot, but you can’t have both!
#43 ogdoad
Thanks, ogdoad. I sprayed coffee all over my monitor from this comment. Too funny.
68% own, but how many have meaningful equity? And how many are in distress due to rising interest rates? What is the tipping point for distressed sellers to crash the market? Obviously this can happen–the United States circa 2008 was a vivid illustration.
I know you were in government, but I think you place too much faith in the BoC and the Government to get things right. The days of responsible government are not with us. The electorate wants its cake and to eat it too, and eventually the music stops.
———————–
There are plenty enough people able to purchase to rekindle prices. Remember that 68% of Canadians already own. These are just facts, not opinions. – Garth
Insolvencies up 37% and growing. The amount going under is about to explode. Few can afford $1000 to $2000 a month increase in mortgage payment for long on average wages. This will nullify the horny buyers pumping the dead cat bounce.
95% of sales on the Saanich Peninsula are under ask with over ask or at the ask a rarity. Usually on a place that’s cut it price by 15% or relisted at a lower price. This is far from over Garth.
https://www.bnnbloomberg.ca/canadian-business-insolvencies-up-37-2-in-2022-consumer-insolvencies-up-11-2-1.1880549
Almost back to 2019 Normal guys, what our Rulers want! Hang in there.
— Just another day of global WW3, kicked off March 2020. A war for oil? Why, I never.
https://www.dailymail.co.uk/news/article-11727691/U-S-carried-Nord-Stream-bomb-attack-secret-plan-led-Joe-Biden-report-claims.html
Did Biden give the order to destroy Putin’s Nord Stream pipeline after Ukraine invasion? Bombshell report claims Navy divers carried out mission to kill Russia’s gas stranglehold on Europe in audacious mission overseen by president
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Welp, another Internet Consp. Theory came true. QR codes…I have here predicted, all future lockdowns will be electronic in nature.
Seen on Twitter — a link to the tender.
“The federal government put out a tender notice for a new pan-Canadian digital health credential technology”
https://t.co/ZaiIBVwsbV
Title – Sujet DIGITAL HEALTH TECH PLATFORM
Solicitation No. – N° de l’invitation
HT218-224061/A
“From the G20 Declaration:
In the section Collective and Concrete Actions by Working Groups and Workstreams Contributing to the Implementation of the 2030 Agenda for Sustainable Development, specifically under SDS Global Health, the following passage can be found:
“Acknowledge the importance of shared technical standards to facilitate seamless international travel, interoperability, and recognizing digital and non-digital solutions aligned with countries’ relevant legal provisions including those used for COVID-19 proof of vaccination or verification of tests as well as the IHR (2005) which provides an overarching legal framework for addressing public health emergencies that have the potential to cross borders”
“Endeavour to move towards interoperability of systems including mechanisms that validate proof of vaccination””
Finally, rennovating a hospital in Ontariowe! A good use of tax dollars. (A mental hospital?)
.Ontario legislator eyes full shutdown for major renovations; likely to cost over $1B. At 130 years old, Ontario’s legislature is showing its age. (cp24.com)
——- Moving at the Speed of Science here folks. Nothing else matters but Corvid. We must halt all work on treatments (but never cures, wink wink) for all other afflictions as it all must be Corvid.
https://www.msn.com/en-us/money/other/merck-covid-drug-linked-to-new-virus-mutations-study-says/ar-AA170cuh
(Bloomberg) — Merck & Co.’s Covid-19 pill is giving rise to new mutations of the virus in some patients, according to a study that underscores the risk of trying to intentionally alter the pathogen’s genetic code.
https://www.nature.com/articles/d41586-023-00347-z
COVID drug drives viral mutations — and now some want to halt its usePublic Health
.White-tailed deer harbouring COVID-19 variants thought to be nearly extinct in humans (ctvnews.ca)
The price of a house, 20 years from now, will be higher than it is today.
Either, inflation will stabilize and abate, reducing interest rates, thereby increasing house prices. (House prices are highly correlated to interest rates-as we all know.)
Or, inflation will rise steadily over time, reducing purchasing power, devaluing the currency, thereby making everything, including houses, more expensive.
In the future, a house will cost more than it does today.
I know the future, because that’s where I’ve been.
#155 Love_The_Cottage on 02.08.23 at 9:59 am
#85 Drew on 02.07.23 at 6:24 pm
People always spend more when retired. What are you going to do? Knit? – Garth
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This is the first time I’ve heard someone say you spend more money in retirement. Studies I’ve seen and observations show less expenses.
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Maybe in those studies, people spend less in retirement because they can’t spend more due to lack of funds.
Garth advocates for a more fat FIRE (well actually he scorns the RE part, but he has a job he actually likes so YMMV)
Any idea as to what will happen to Canada when the U.S. defaults on its DEBT ?
You will not be alive to find out. – Garth
Inventory may go up as WFH comes to an end. This might put a downward pressure on prices. Maybe the straw that will break and make homes affordable again.
Big tech firms are calling people back onsite. Govt is also trying to end WFH. By summer, WFH/Hybrid may be a dream again.
Listings are rising. So is the number of buyers, according to weekly stats. Mortgage rates have stabilized. – Garth
#119 4 out of 3 people find math hard on 02.09.23 at 1:40 am
Are you saying a teen who repeatedly trespasses for months and deliberately interrupts the education of 10s if not 100s of children in doing so should not be arrested? Or are you making the intellectually dishonest leap that he was arrested for his views?
https://ottawa.ctvnews.ca/employees-vendor-speak-out-about-abrupt-highbridge-construction-closure-1.6265842
Another one bites the dust. Who’s next?
#104 SoggyShorts on 02.08.23 at 10:39 pm
Wait. Isn’t monthly CPI based on month-to-month change that’s annualized? Pretty sure it’s not annual same-month deltas. Do you have a link?
I thought Jan CPI in pct was 1200x(jan – dec) / dec
You are saying it’s 100x (jan23 – jan22) / jan22
Shawn seems to share your view, but I’m pretty sure it’s incorrect.
Let’s see if these equity speed wobbles amplify into mOpEx.
Well, lookie here: TSLA +6% today for a double since the new year. And while the Sail Away portfolio reaped all of that, it gives greater pleasure to see our son did the same. For me, it’s another happy Elon day; for our son, it’s a compelling reason to continue learning.
This was a classic Munger moment, and I paraphrase: ‘when a company you understand well is selling for an excessively good value, trust yourself and go in hard’ or something like that. Shoot, score!
Went for my early morning walk in the drizzle.
Noticed a SOLD sign on a listing that just went up two days ago.
Nicely maintained TownHome complex. 55+
The first SOLD sign in my hood in ages.
Mind you, almost no listings.
136 Sail Away on 02.09.23 at 10:46 am
Well, lookie here: TSLA +6% today for a double since the new year. And while the Sail Away portfolio reaped all of that, it gives greater pleasure to see our son did the same. For me, it’s another happy Elon day; for our son, it’s a compelling reason to continue learning.
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Are you home-schooling?
I hope not.
134 Faron: He was kick out of school because he recognized only two pronouns ,just as the Catholic taught in what was once a real Catholic School.
This is a”Brave New World” unfolding .
I don’t know you GT but some of my posts disappear and their required work – don’t like it but that is your choice, and I am not going away. Could be my mistake but I will never know – as usual. People do lie about their power- lessness and influences but my former cat could beat. So put your vote to work on elections – it’s just about you and there are lots of us with votes. Put your brain into action which people do for different motivations.
Who to replace T2? Pepe has not won my vote although it is a given in AB. I do despise the easy way out. People should be proud of what they do and don’t bring me up with Public Servants and they deliver (on average).
I got a kick of Trevor from the RCMP on our raids on Tax Evaders. He was walking around the house poking ceiling tiles with his extendible club. So, I asked Trevor what the hell was he doing? HE was looking for things to fall out of the ceiling.
So, I asked, have you ever used that thing in combat? Yeah, I was sent to a bar room fight in North Alberta by myself. I walked in the door, extended my club – who is first? He was promoted to sergeant to train new volunteers at Regina. I am sure he was tough. Armies depend on their sergeants to get things done. You want someone with spine, look no further. Things have to be get done.
I refuse to deal with half to meet halfway. Well actually, I refuse to give a free pass although many they got it though I sit in the trenches during W1. You have known that a 10th or more were involved died. So many dies and there were the class of their death, but many I did do.
Have no fear…
History has proven over and over that home values have risen consistently over time. Even if you bought high you will still be OK if you stay in your home.
Headline CPI is year over year
#134 Faron on 02.09.23 at 10:39 am
#104 SoggyShorts on 02.08.23 at 10:39 pm
Wait. Isn’t monthly CPI based on month-to-month change that’s annualized? Pretty sure it’s not annual same-month deltas. Do you have a link?
I thought Jan CPI in pct was 1200x(jan – dec) / dec
You are saying it’s 100x (jan23 – jan22) / jan22
Shawn seems to share your view, but I’m pretty sure it’s incorrect.
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Faron, you know it’s best to assume I am correct.
It’s NEVER a good idea to annualise a one month change so no does that unless it suits their narrative.
Headline CPI is comparing to one year ago as SoggyShorts said.
Like Soggy alludes, if there was permanent 10% increase in CPI and then no further increase it would be 13 months before CPI would fall back to 0%. Year over year is a lagging indicator.
But month over month such as December compared to November is too volatile to trust. But if you averaged about 3 of the last month over month figures…
https://www150.statcan.gc.ca/n1/daily-quotidien/230117/dq230117a-eng.htm