By Friday, some answers.
Is the housing correction over, or just getting started? Will those who eschewed a 23% price decline, waiting for a half-off sale, look like visionaries or fools? Is 2023 going to hand us that soft landing with more jobs, income and confidence – or are we headed for a smoky hole in the turf?
Some stuff is clear. The US Fed will be hiking its rate this month, maybe even by a half-point (25% odds). Our guys will stay on pause next week. And neither central bank will be cutting the cost of money this year. Inflation may or may not drop from 6% to 3% by Christmas, but it’s not going back up. In fact, 5% mortgages may be with us for years. Can the economy absorb that (as it did in the past), or has everything changed after the pandemic housing, puppy & Peloton orgy?
Yesterday this misunderstood (but cocky) blog updated you on real estate sales and prices. Realtor stats due in a few days will provide further evidence. We told you prices in the GTA, for example, have increased 11% in the last couple of months. Sales are ticking higher. The over-ask sales ratio has gone from 12% to 44%. There’s lots of anecdotal evidence of bidding wars and packed open houses, but so far sales volumes remain vastly below previous years. So are just the crazies buying? Or the rich who don’t need financing?
The steerage response was almost universal: what’s happening now is a “dead cat bounce”. Or a “bull trap.” And both of those always end badly.
Points to consider:
First, prices (and sales) can swell even when average people cannot afford the average house. There are always folks who have wealth and capital to deploy. Move-up buyers are cashing in on Covid’s big premium, using windfall equity. Others are porting cheap mortgages to new properties. So sales volumes can stay low, yet sale prices augment especially as low inventory leads to a feeding frenzy when a desirable pile comes up in a demand hood.
Second, it’s not foreign buyers behind the current pop. They have been whipped, beaten, taxed and banned into submission by politicians looking for a straw man to pummel. Non-residents never were the driving force in our market. Now they’re ghosted.
Nor are houses been Hoovered up by corporations, as has happened in some secondary US markets, rife with cheap props. Given our stupid real estate values and web of restrictions in favour of renters and against landlords, there’s no corporate justification for scooping up single-family homes to lease out. It’s a myth.
Fourth, governments are doing another number on real estate, creating more demand and ensuring there’ll never be an actual crash in Canada. The FHSA launches in a few weeks, offering irresistible delights to newbie couples saving up a downpayment. The coming Chrystia budget (also in April) is rumoured to contain more buyer incentives. Greater numbers of newcomers are desperately needed (more nurses, surgeons, drywall dudes and framers) but in certain markets this will pressure rents.
Fifth, the main political response to stupid house prices is to build more of them. This will fail. Starts have actually dropped along with resale volumes. Builders don’t build on spec anymore. Besides, throwing up new subdivisions which march across former cow pastures or allowing densification in city neighbourhoods won’t make existing homes cost less. Why would that happen? Building costs are not falling. Trades expect more money, not less. Land is precious and takes heaps of money to service. Property taxes are on the cusp of a generational eruption. How can anyone think that creating more units over the next ten years will alter valuations one little bit? Give it up.
Finally, a 50% peak-to-trough drop in real estate values (twice the current experience) would only result from one of two things: much, much higher interest rates (7% mortgages, at least). Or a meaningful economic decline – that hard landing with the jobless rate bloating and the GDP contracting, leading to a sharp crash in consumer and buyer confidence.
In that scenario houses would be cheaper but the pool of people who could buy would also shrink along with employment and credit. Be careful what you wish for. In no realistic scenario are we headed for the day when a detached house in Toronto or Vancouver averages $700,000.
In short, there is reality. And there’s hopium. In the dreams of the houseless we’re headed for a day when the economy’s okay, jobs are safe, wages rising, WFH is forever and a nice house is affordable again, even in the big cities. But on the street, it’s impossible. Yes, real estate can drop more. But not in isolation.
Saying such things is not to make a prediction. It’s not calling a bottom. It sure isn’t being bullish on real estate. Homes are insanely priced and society is cleaving as a result. Not good. Buy at your peril. But the opposite, too.
About the picture: “This is Kona,” writes Jim in Vancouver, “who came to is just before the pandemic started n January 2020. She spends her days hoping to be chased by other dogs in the local off-leash dog parks near our home. This use to be my favorite chair but Kona has decided it suits her just fine and prefers not to share it.”
134 comments ↓
Life in the crowded, fetid UN Smart Cities.
DO Not buy property until you learn the location of these sites.
.Toronto will soon be getting more supervised consumption sites for people who use unregulated drugs. The exact locations for the new sites are still being determined (cp24.com)
—Trust the social science:
https://www.cbc.ca/news/canada/toronto/street-health-cabbagetown-crime-1.5232876
Cabbagetown residents blame supervised injection site for crime spike; Break-and-enters have increased by 75% over 2018, according to Toronto police
Posted: Aug 01, 2019
………… you might be wise researching the school district before buying of property.
Life under the Red Regime in Kanada.
https://nationalpost.com/opinion/paul-w-bennett-canadas-schools-have-descended-into-a-violent-hell-and-we-let-it-happen
Paul W. Bennett: Canada’s schools have descended into a violent hell and we let it happen
—-
—- We were to be so healthy :-(
https://www.nzherald.co.nz/nz/new-zealand-records-biggest-increase-in-registered-deaths-in-100-years/BQERSTKIANCKRNNA7IL42RD52U/
New Zealand has recorded the largest increase in the number of registered deaths since the 1918 influenza pandemic, new data from Stats NZ shows.
Can’t wait to escape from the freezer
I work remotely for a FAANG company. After surviving 2 rounds of layoffs, my colleagues and I have to start working in Toronto office 3 days a week starting May 1.
I think it’s one way to get some of us to voluntarily leave in place of a 3rd round of layoffs….
C’est la vie, I’m one of those scrambling to get a place within 30 minutes of work. I do look forward to it since Toronto living in the summer, while opened back up is pretty great IMO
New York CNN —
TD Bank will pay $1.2 billion to settle a lawsuit alleging its involvement in an infamous $7 billion Ponzi scheme orchestrated by disgraced financier Allen Stanford more than a decade ago.
…but denied any wrongdoing, the bank said in a statement Monday
https://www.theglobeandmail.com/business/article-td-to-settle-stanford-ponzi-scheme-lawsuit/
=========
readers may enjoy
wealth defense industry
https://www.tvo.org/video/documentaries/the-power-of-money
saw my neighbor the other day (remember those)? He was walking with his brand new, super cute golden retriever pup…in his PJ’s…That was definitely a first.
Oxy, reciprocation… loyal friendship…what every good human needs (as long as they don’t TALK…yet). Run as many parallels to ‘picking up their crap’ as you need…
My neighbor’s snarl has diminished slightly….must be working!
Og
The good thing with high housing costs (both buying and renting) is that it keeps inflation at bay (to a certain degree). If housing was cheap, we’d have even higher prices for everything. At least, this way most of the money stays in Canada, because it’s spent on housing.
Posthaste: Canada among countries most at risk of housing crash spiralling into a bigger crisis, say these economists
https://financialpost.com/executive/executive-summary/canada-housing-crash-bank-crisis-risk
#73 VladTor on 02.26.23 at 7:02 pm
All these companies will die, but they will not allow companies from other countries to enter the market.
Remember how long the Target lasted in Canada – 1 year!!!!
===============
Lots of interesting posts over the weekend so instead of rehashing the great posts let’s clear some confusion.
Dude , the Target failure in Canada has nothing to do with protectionism.
It is well documented out there in the interwebs in case you haven’t actualy been here when they failed and tried to shop at one.
It was first and foremost a supply chain failure ,driven by corporate arrogance and poor decision making.
They came into Canada with a brand new WMS , ERP and POS (that was not tested in Canada before and did not calculate taxes properly).
Target simply did not have enough product to sell in their stores and were unable to replenish in any reasonable amount of time and quantity the little stock they did have.
Moving a box from a warehouse to a store is not as simple as people think ,moving the correct one at the right time in the desired quantity even less so.
Ofcourse ,all compounded by a lot of poor store locations they bought from Zellers.
Baffling to me as Zellers’s inventory was really a subsection of Target.
Either way ,yes there is protectionism here in Telecom and Banking .
Retail (including grocery stores) it is not. Chains like Loblaws,Sobeys and Save-on-foods have something called vertical integration and the advantage of the first mover.
Costco and Walmart have strong supply chains well integrated into the Canadian marketplace so they are able to play to some degree, not that you would be saving much overall shopping there. If one is reasonably well off it is a matter of product selection and shopping around for the best deals.
We are simply too small of a market for any big US chain to come into Canada and build a succesfull discount grocery retail business with a decent ROI.
The only one that might have a chance is Amazon as they can absorb the intital massive losses and have an existing distribution network plus some existing skin in the grocery game at the high end. If it were that simple or profitable they woud have already built on their existing “Whole paycheque” stores and supply chain to expand.
” In no realistic scenario are we headed for the day when a detached house in Toronto or Vancouver averages $700,000.”
There is one scenario for TOronto. If the big banks all move their head offices out of hell hole Toronto. Might not be a bad idea considering how horrid the commute is and how unsafe the TTC is. Everyday read about assaults / stabbings / people being pushed onto the tracks.
So what you’re saying Garth in point #5 is supply and demand applies everywhere but housing? Building more houses won’t bring the price down at all? I guess it doesn’t really matter seeing that the feds want 500k/year of immigration and already housing is short.
On top of this, boomers are the largest cohort thus the CPP is underfunded. CPP was created with the idea that there would always be more young people working than the people collecting…hence we need immigrants.
And what about healthcare? Is the 500k/year gnna include a stipulation to bring in medical staff, trades and educated people?
So what I see is immigration ramping up with nowhere to live and more strain on the health system…but lots of new tax payers so CPP will be fully funded….the current Liberal government is definitely in over their heads. I just love watching our fearless leader Justin giving speeches he’s so well spoken, never stumbles and gives everyone that warm feeling.
“Buy at your peril. But the opposite, too.”
Everything is so perilous these days
Yogism #55: “It’s rich to consider rich selling to rich”.
look back
https://www.cnbc.com/2012/03/07/The-Rise-and-Fall-of-a-Multibillion-Dollar-Ponzi-Scheme.html
The current mood of many….
if it weren’t for bad luck,I’d have no luck at all,blues dispair and agony on me.
“Move-up buyers are cashing in on Covid’s big premium, using windfall equity. Others are porting cheap mortgages to new properties. So sales volumes can stay low, yet sale prices augment especially as low inventory leads to a feeding frenzy when a desirable pile comes up in a demand hood.” – GT +++
That’s a Bingo. Those who got in early and built equity in more modest homes or locations are pouncing on higher value locations/properties, and I wouldn’t be surprised if many of these are coming available due to the ‘flight’ of Boomers and some others from the big cities. Time to cash out, move to Mono, and cut the grass on board a ride-on lawnmower while listening to Van Morrison. ****
“Besides, throwing up new subdivisions which march across former cow pastures or allowing densification in city neighbourhoods won’t make existing homes cost less.”- GT +++
Quite the opposite IMHO. The City of Calgary is on a ‘hell bent’ mission to increase density and ‘renovate’ older inner city neighbourhoods. Despite the baffelgab of ‘affordable housing’ it’s a fraction of what really gets built, which is generally higher priced semi detached or townhouse developments where the bulider/developer focus is on increasing square footage to get more bang for their buck. The City’s latest move doesn’t seem to have hit most people’s radar yet, which is charging for parking permits, not just inner city but extensively throughout the city. It’s a move towards ‘user pay’ to allow for “increased opportunity for surplus revenue, which is directly invested in community improvements”. Maybe so, but in these inflationary times some peeps are only going to hear “Ka-ching’.
https://maps.calgary.ca/CalgaryParking/
https://www.calgaryparking.com/web/guest/parkingpermits
What does this possible interest rate activity split with the U.S. mean for the already crummy value of our CDN dollar?
Article slamming Elon Musk for his deadly Tesla software and the crappy half-baked ethics that stand behind it and happen to have been shared with Sam Bankman-Fried. Journalist goes on ride-alongs with a couple of people who are in love with their Tesla, but also got in accidents while autopilot and FSD was engaged.
Elon Musk’s Appetite for Destruction
You can listen as a podcast here
FHSA is irrelevant for now. SFH in GTA is 1m++ The 16K of annual room for a couple is barely a scratch on the down payment. I get that buying is more expensive than renting if one were to start right now, but even renting is too expensive relative to incomes.
There is no good solution without going through a lot of economic pain.
The only real hope for young Canadians is to leave Canada.
You were born too late sorry.
Hell at this point you would be better off in Mexico working remotely for a US company. This is something I am considering because retiring here is hopeless if you did not buy a house 30 years ago. Back when this was a legitimate country.
https://travel.state.gov/content/travel/en/us-visas/employment/visas-canadian-mexican-nafta-professional-workers.html
you cover dead bulls and cat traps? Sorry Felix …
“Is 2023 going to hand us that soft landing with more jobs, income and confidence – or are we headed for a smoky hole in the turf?”
=================
Economics prediction is like weather prediction. You can not go far and chief economics are only masters at riding waves once the situation is ascertained.
the best bet is to learn patterns from history and to use one’s gut an intuition that has been built during long period of time.
Let butterflies fly around. They will be burned by the flames of greed. Reduce the noise and listen to your inner authentic voice. You inner voice never deceives. We only do not know how to listen.
Remember:
we will have low rates for a loooong time
inflation is only transitory
…
…
…
Why does it have to stop know?
Garth, that was a very good explanation of the sordid mess RE finds itself in Canada.
Since some of you here have now mastered the Supply/Demand curve – NEW thing to learn …
ELASTICITY.
Something Garth was trying to explain but those “rigid” did not grasp the “elastic” (sorry Garth, I could not resist the former).
All I will say.
———————–
General TRAVEL TIP
If you are coming to Europa this Summer or sooner, I am telling there is a CRUSH of “I Turisti” already like I have not seen in 8 years. My guess is they all want to cut loose after near 2 years of Covid stagnation/captivity. You know what to do Canada.
Reminder:
In Italia, August is “Ferragosto” when all of Italia is on vacation. You know what that means Canada if you come here then.
Almost, all of Italia save me. Too hard to find my fave hotels, fave flights and transportation. Making up for it now instead.
“Fourth, governments are doing another number on real estate, creating more demand and ensuring there’ll never be an actual crash in Canada. The FHSA launches in a few weeks, offering irresistible delights to newbie couples saving up a down payment. The coming Chrystia budget (also in April) is rumoured to contain more buyer incentives. Greater numbers of newcomers are desperately needed (more nurses, surgeons, drywall dudes and framers) but in certain markets this will pressure rents.”
I’m almost certain you don’t need any other reason than this. If government will do everything they can to keep real estate growing, why not join in? ‘Never bet against The Fed’ right? Never bet against the Federal Government on housing?
#10 Paddy on 02.27.23 at 3:15 pm
So what you’re saying Garth in point #5 is supply and demand applies everywhere but housing? Building more houses won’t bring the price down at all? I guess it doesn’t really matter seeing that the feds want 500k/year of immigration and already housing is short.
=========
We have a base cost issue to begin with.
Building more housing at the current “Total cost to build” will not make them cheaper.
The only way to make housing cheaper is to have a significant government controlled and regulated industry where the builders would get the land for free (on a 50 years lease say , or 99 if you want to go the Chinese model) and be forced to build at a certain cost/sqft ,similar to today’s cost and indexed to real inflation. Combined with a list of pre-approved building plans that don’t require reviews and approvals for every single house.
So the point is that if you are unable to produce a product at a cost that will allow you to make a profit it will not make the product cheaper, it will make it go away. Basic capitalism.
Cost of housing in Canada is driven by land ,just look at any assesment or talk to any builder.
This is also the point that the ” Tenants Rights” activists miss, if a landlord can’t make a profit with minimal risk (or like in the current environment where there is a significant risk due to tenants rights) then the landlord simply stops renting out and gets out of the business.
Cheap housing can realistically only be social housing at this point ,a co-op maybe or fully state owned.
Unlike the US we do not have the vast areqs of livable spaces to build ,nor do most Canadians want to live in the cheaper places ,else we would all move to Nova Scotia ,or Manitoba ; not to Montreal as they speak French over there ,that is why that market doesn’t really matter to most Canadians :-)
I agree, the days of 700k detached homes in Vancouver and Toronto are long gone. The burbs are another story, average people bought million dollar box homes last year for 1.5ish mil. These homes have already dropped 20% or more and are sitting on market with no takers. 45 mins outside of Vancouver core I could easily see a 50% drop especially if rates stay in the 5% range for years. Just looking at realtor.ca average home for sale in Tsawwassen. Listed for 1.45 mil, sold last year for 1.65mil. Already a 200k drop and theres nothing special about it, and there’s comparable places in same area for 100k less. This is just the beginning, still lots of people with sub 2% mortgages, when they come up for renewal and have to pay 5% plus, an average mortgage around here will be 500 to 1k a month more, many will have no choice but to sell. Prices arent even close to bottom. Tiff saying pause might of been the most idiotic thing he said, those sitting on fence probable jumped over after that statement, he said pause, they heard drop.
Work-from-home could have ‘catastrophic’ effect on Victoria economy
https://www.timescolonist.com/local-news/work-from-home-could-have-catastrophic-effect-on-victoria-economy-business-groups-6613114#413445
The steerage response was almost universal: what’s happening now is a “dead cat bounce”. Or a “bull trap.” And both of those always end badly.
________________
The reality is that the only ones that responded to your post were those that have a horse in the race….i.e. thinking about buying a home, want others who bought recently to suffer even more (for their stupidity). The rest of us really couldn’t care less since we aren’t selling any time soon.
Garth,
On highly specialized real estate websites, I have repeatedly read the opinions of experts that the effect of a rate increase will be obvious about a year after the increase.
Therefore, it is now too early to say that real estate has hit the bottom so much that now prices will only rise. All that we see on the one hand is what I agree with you – very rich people buy. They don’t need a mortgage. If they find house which they like (wife like) – they buying.
On the other hand, those who are simply zombifyed by their realtor and the mass media (mantras – we have reached the bottom, prices will rise, rates will fall, etc., etc.) buy – their brains no longer work.
The best strategy now is to wait and drink whiskey!
No stress!
#24 ElGatoNeroYVR on 02.27.23 at 3:57 pm
We have a base cost issue to begin with.
Building more housing at the current “Total cost to build” will not make them cheaper.
Exactly. RE is still supply and demand however, it has very high input costs (paperwork, regs, land, demo & removal, marketing), trades and materials are not getting any cheaper. Naturally only sane builders actually go through with projects they have customers for – I notice zero large proposed projects in 2023 – seems they know their market and looks to be frozen and not worth it.
Cranes in the sky today are projects in the pipeline from years back.
Around here, seems we’ve burnt through all the ‘easy’ plots – surface parking lots a relic of the urban decay of the 1960s-1990s. Unless we keep sprawling out or level existing structures I don’t see how any of that can suddenly become affordable.
For sure high prices & rents are a terrible productivity killer but somehow decades later nothing changes.
If I had to guess, the RE frankenumber will proclaim price recovery; only the few sellers that MUST sell would and those with the funds to close, CBs: ‘mission accomplished’, less RE trades at the standoff but still does. Existing borrowers hang on for dear life until the next crisis trip to 0.25% (WWIII, cyber attack, alien invasion, etc).
Garth and all,
There will always be a demand for real estate. One argument is that the population is growing – maybe not as quickly in Canada as in other countries but war, famine, search for a better quality of life and climate refugee-ism, to name a few, will always factor into population growth. Not only this, but our deep seeded urge that nesting isn’t complete until we have our own land to raise our offspring should also be quantified.
5% mortgage rates or 1M homes will not deter those who’s life goal is to raise a family and own a home. Funny, actually, how many different cultures share this exact purpose.
For those of you waiting for a crash or a 50% decline you may be delusional in this line of thinking.
There’s only two types of people on this blog. Those who have real estate and those who want real estate.
I just wandered in to use the washroom, but didn’t the sign above the door used to read, The Greater Fool and The Troubled Future of Real Estate? Sounds more like, the name of the next book might have to be, No One Knows The Future, so just Diversify, and The Future Of Real Estate and Other Investments Will Be Just Peachy.
I wonder if the washrooms are still operating over at Hilliard McBeth’s Real Estate Bubble and Book Factory?
Just sit back and chuckle….
People can’t afford to live where the jobs are in the GTA. So logically the jobs (businesses and organizations) have to move where people can afford to live.
#8 ElGatoNeroYVR
Dude , the Target failure in Canada has nothing to do with protectionism.
It is well documented out there in the interwebs in case you haven’t actualy been here when they failed and tried to shop at one.
**********
I’ve been here and visited Target here in Etobicoke.
Thank you for explanation.
Second, Target is huge marketing net in USA. Do you believe that Target couldn’t fix marketing problems here and closed business instead improving everything. Personally me – not!
They may not to have profit here 2-3 years until competitors lost part of market.
#26 Victorious on 02.27.23 at 4:14 pm
Let’s be serious, please. Sending people to work from an office for roles that can be done from home for the majority of the working hours/days/months a year is plainly stupid. It’s like we’d have kept horses for public transportation a century ago for artificially keeping the manure removers in business.
It’s called EVOLUTION. Businesses downtown worked really well before the Internet and e-shopping. Online stores have given them the preview of what it means to have real, lateral-thinking competition.
When it comes to working from home vs. working from the office – it’s office workers who are the smart ones, and who realized that it’s totally worth to take a 10-20% pay cut but to live a nice, commute-free life.
Arguments such as ‘some can’t work from home’ are extremely weak. Those who cannot deliver when they are working at home because they lack discipline shouldn’t be in the workforce to begin with. It would be idiotic to force those who work very well from home to go through a commute just to babysit those who cannot because they are undisciplined.
Do you want a solution to this problem: do what other countries have done already. Get in line with the world, Canada. Consider commuting (for jobs that can be done remotely) as working hours, and allow employees to offset commuting costs the same way self-employed people can already do.
There. It ain’t hard.
As for forcing people to come downtown to buy a crappy coffee and a stale sandwich – no comment. Only fools would want to live that way.
As for the downtown businesses – good luck with your lobbying efforts. Even in the few cities that have managed to force some of the workforce to return to downtown offices, workers are so pissed that they are refusing to buy anything (or to work while at the office).
Bye, bye, downtown. You’ll be an oasis of quietude. Time for the rent-seekers (offices, stores, and parkings downtown) to find another gig.
Good balanced post Garth. I did wisecrack about the dead cat yesterday. I think the worst of the decline is behind us, but I would not count out another 5 to 10% down as listings come back. I think we are not out of the inflation yet. Unions are waiting for spring so they can strike. Labour inflation is getting into the bones of the economy. The pause in interest rates may not last long.
When we were house hunting in 2006, it was a slow market and this one place had been up for 8-9 months. Big property completely overgrown with ivy and daphne, rotted fences, lots of big branches broken and ignored in the yard, dated 1959 house with terribly-built addition, a big garbage pile in the back. The owners were old, had moved to a condo and had been renting it out for a couple of years. The main house was well-built and the location was perfect.
So… great location, tons of work, skeptical wife, motivated sellers, frugal me, two young kids.
Now, 17 years later, it’s perfect. Everything we’ve done will last for a long, long time and it’s just the way we want it. It gives great pleasure to caress the laminated, steam-bent fir railings, walk through the apple, hazelnut, pear and plum trees, enjoy the thousands of boulevard flowers, cook in the super-functional kitchen while watching porpoises in the bay… Bit by bit, piece by piece, then one day it just became done.
Some houses can be like kids- a whole lot of really hard, unrewarding work… that without you really noticing it’s happening, switches to an asset that simplifies your life while bringing great joy and contentment.
The classic battle between capital and labour continues…
If someone in power actually wanted to close the wealth gap, they would side with labour and get inflation down to near zero (called Sound Money!). That and open up the energy and industrial economies, and bury their virtue signaling impulses.
To get a true sense of the angry white liberals mood these days, go to the CBC website and read comments about the Alberta Govt. $28B cash gusher from the oil & gas sector, despite their best efforts to kill it.
Plenty of work to be had and money to be made producing the things that the world wants and needs. The BoC policy has nothing to do with it, as long as markets are kept free.
#24 ElGatoNeroYVR on 02.27.23 at 3:57 pm
Cheap housing can realistically only be social housing at this point, a co-op maybe or fully state owned.
————-
Great post.
Many believe state owned housing could never be profitable, but I’d argue it could be if we would put the correct rules in place and strictly enforce them, and provide incentives such as bigger units for those who prove to be good tenants. Also this silly idea of housing non contributing members of society in some of the most expensive cities in North America such as Toronto (presently 60k units) should be stopped, and those people relocated to less expensive areas. Turn those existing apartments into market rate rentals.
=============
#9 Victor Llearna on 02.27.23 at 3:15 pm
There is one scenario for TOronto. If the big banks all move their head offices out of hell hole Toronto
————
At least 50 percent of their employees.
Hello Garth Hope you’re great as ever and everyone that’s neat to your heart . There is something l would l your opinion on now here it is so what happens when inventory doubles or even triple what would that do to the market ty
17 Faron: I don’t understand your hate on for Elon Musk. On Weds , Elon Musk will be presenting Tesla’s path for a $25,000 electric vehicle . At this price , this vehicle will cover about 80% of the total vehicle market ( including ICE), thus accelerating the transistions to renewable energy. Elon will also be presenting the global path to a non carbon renewable energy future for humanity. ( what volumes of what materials, and the work/ timing needed achieve this). I would have thought you being a climate scientist, you would embrace these initiatives . Instead you prefere to envoke reactions by peddling petty arguments. To each their own.
Affordable housing is not exactly easy to find. Did a bit of a search. Used Vancouver, Toronto & Calgary as the 3 cities; used Remax as the RE search for all 3. Used $250K as the maximum price. Results: no house whatsoever in either Vancouver or Toronto for that price; the Remax Vancouver search did provide a single condo unit located in Vernon BC for $229K. Vernon is not too far from Kelowna, not quite 440 kilometers from Vancouver. The Toronto Remax search gave me a single condo for $379K, located on Dixon Road. Everything else was a fractional purchase – you too can own a square centimeter of this building for only $7K! – though there was a parking stall on offer for only $49,900. Whee. Calgary actually provided an honest to goodness 2 bedroom, 2 bath house for $199,900. I strongly suspect from photos that it is actually a glorified trailer unit on a foundation, but none the less, it was a house located in a major urban centre.
https://www.youtube.com/live/laasGd3LPsc?feature=share
You may be interested in this link.
“Canada Guarentee” suprime mortgage company owned by the teachers pension plan.
Well, what’s the lesson in all of this over the last years, say 2006 to today. Housing bubble, housing crash, financial crisis, zero or negative real rates, covid, puppies, inflation, rising rates, and another housing bubble and crash?
How about: “Anything can happen, and usually does.”
All I know for sure is that the people who have money are still spending it like it’s going out of style. Maybe it is. Anyway, at least two of the ski resorts here have gone to a sort of “rush pricing” like airlines use. Want to ski on the weekend or when the kids are off school? That’s going to cost more. A regular Saturday is now $149 at Lake Louise (but you can ski Monday for $119). Bring a family of 4 out for the day and you are talking some serious money. Add lunch and gas and equipment and whew, it’s breath taking. And the snow probably still sucks, they haven’t had a great year. But the parking lot must be full, or they wouldn’t be charging $149 a head.
So what about garden tractors? I bring that up because mine just broke. The recommended repair is a cool $5,500. I just about crapped my pants. Why wouldn’t I buy a new one? Well, because those are up to $15,000 now. Like cars, motorcycles and boats, it seems if tractors are working, you can now still sell them for most of what you paid 10 years ago. Deflation, or depreciation I guess is a better term, is no longer a thing! Well it still is, but with rampant inflation going on you can’t see it in the numbers. You have to measure the depreciation off the price of a new one, because the old one goes up in price with the inflation. It’s crazy out there.
So if everything is going up in price, why wouldn’t houses? Well, the short answer is they would. Remember, inflation doesn’t go down just because you are broke. It doesn’t go down until the last marginal buyer can finance no more. We aren’t there yet.
So good luck out there, and remember, “Buy all the things”. They simply won’t ever be cheaper, and thus there will never be a better time to buy. Interest rates are still negative, so there is no reason to hold on to the money.
#38 Sail Away on 02.27.23 at 5:31 pm
Now, 17 years later, it’s perfect. Everything we’ve done will last for a long, long time and it’s just the way we want it. It gives great pleasure to caress the laminated, steam-bent fir railings, walk through the apple, hazelnut, pear and plum trees, enjoy the thousands of boulevard flowers, cook in the super-functional kitchen while watching porpoises in the bay… Bit by bit, piece by piece, then one day it just became done.
_________________________________
Cookie cutter people want cookie cutter houses in all same house no view endless sprawl, where they can depend on the avaliablity of lines to stand in, when not stopped in heavy traffic, whilst they struggle to “live” cheque to cheque while running up debt anyhow.
Like the people this person mentions;
#24 ElGatoNeroYVR on 02.27.23 at 3:57 pm
nor do most Canadians want to live in the cheaper places ,else we would all move to Nova Scotia ,or Manitoba ; not to Montreal as they speak French over there ,that is why that market doesn’t really matter to most Canadians
Go Leafs!
Fifth, the main political response to stupid house prices is to build more of them. This will fail. Starts have actually dropped along with resale volumes. Builders don’t build on spec anymore. Besides, throwing up new subdivisions which march across former cow pastures or allowing densification in city neighbourhoods won’t make existing homes cost less. Why would that happen? Building costs are not falling. Trades expect more money, not less. Land is precious and takes heaps of money to service. Property taxes are on the cusp of a generational eruption. How can anyone think that creating more units over the next ten years will alter valuations one little bit? Give it up.
Doug Ford passed Bill 23 “More homes built faster”. Despite the Bill, more homes are not going to be built faster. As I said before, if you were a builder, you’d have to be crazy to build on spec. Now maybe you could find a buyer with deep pockets but you would want to have your own lawyer write up the agreement. It would specify pre-payment, payment for specified progress as well as consequences for non-payment. The buyer would not be your ordinary Joe.
Some people seem confused over the mixed messages coming from this blog, please allow me to clear a few things up.
The best argument for buying real estate at the moment, is the stupid prices people want you to pay for rent.
The best argument for renting real estate at the moment, is the stupid prices people want you to pay for buying…
M48BC
The “drywall dudes” will be out of work by the end of this year along with the rest of the building trades. This will reduce the probability of a soft landing. (The current cost per square foot to build a new condo in Toronto is $1,427 which is eye-watering and totally unaffordable) Quantitative tightening may cause over-leveraged business to become insolvent. The rock star bankers of the last 20 years are actually a bunch of PhD’s with big ego’s pulling the levers of our economy as if they knew what they were doing. The next 10 years will show us that they are really a bunch of clowns. You’ve been having a free ride but now you must pay. Those who avoided over-paying for assets will be rewarded as high interest rates persist.
Was watching Nat Geo channel..and the vets shows.
Dude had a pet Wolverine.
I’m in….!!!!
A job plop would be a good thing if it was from our bloated public service/consultants(5.5 million strong at 3 levels from coast to coast to coast). I don’t really know how many private sector jobs can be lost,as there really arent that many of them anymore. Loblaws.Metro likely won’t be laying off anybody. I guess if we get everyone working in/for government we can get the unemployment rate down to 0%.
Why do Canadians believe going into debt up to their eyeballs to own a house is such a good idea? Delusion reigns here in Canadastan.
As others have pointed out, until the cost to build a home drops appreciably, RE can only fall so far. When you consider a city lot , even in B and C markets, is going to run you 300k+ and that builder cost is 200+ per square, you aren’t going to see too many 5 or 600k homes. You simply can’t build a decent home, on a decent lot, in a decent city for much under 800k.
When you consider that, homes like the below are a decent option for a starter home, and it is hard to argue they are overpriced:
https://www.realtor.ca/real-estate/25311157/3710-glenford-road-west-kelowna-glenrosa
https://www.realtor.ca/real-estate/25307051/3333-mciver-road-west-kelowna-glenrosa
https://www.cbc.ca/news/business/inflation-cpi-price-growth-peter-armstrong-1.6590541 ‘Inflation is cooling but prices aren’t going to fall. Here’s why’
If prices don’t fall, how will wage demand ease? isn’t the $$$ chase a cause of inflation?..
One thing we forget about markets is culture. Maybe prices are rebounding for this simple reason: Canadians don’t mind getting gouged.
I also read that Canadians are way less mobile than Americans so they don’t “shop around” when it comes to real estate.
@#49 Norman K
“Quantitative tightening may cause over-leveraged business to become insolvent.”
+++
I went to talk with my accountant today.
Year end taxes for the biz.
They are seeing a steady rise in personal bankruptcies….
Wage and price spiral baby….hold on to your hats.
#45 nonplused
Sounds about right to me
#129 Ponzius Pilatus on 02.27.23 at 1:36 pm
#120 Adolf
I also mentioned many in Public Sector double dip.
After retiring they return as subs…or contract workers.etc etc. Here in BC..the Transit police are often police that are retired from RCMP..VPD…etc. on full pension..then obtain an even higher salary as Transit Cop
——————-
Same in the Private Sector.
As soon as they take off with their Golden Parachutes.
They become overpaid consultants, often for Governments.
Or hit the speaker circuit.
Take off your blinders.
============================
Dear Mr.PP/Kneejerk…..
Yeah..I’m WELL aware of that …
…..like the Gov’t regulators of “X” end up in the Private Sector of firms they previously regulated….called the “revolving door”(..ie retired military work for defence contractors.)
The resolution to double- dipping starts with one facet….start with Public Sector employees who as a condition of employment sign contracts that they cannot be employed outside the civil service (ie in private sector if even potential conflict of interest exists. ) Make this condition say 2+years…as this may weed out many opportunists.
It is obvious that Public Sector employees will gather a wealth of “insider” info WE TAXPAYERS FUND….that the private sector would be unduly benefit from such inside info……and of course this compounds the taxpayers best- and -better interests as neutrality is seriously compromised in the Gov’t – Private Sector interaction.
Ie this “revolving door” involving just a few connected parties could cost Taxpayers $$$ MILLIONS …..as opposed to Free Market and NON- insiders on outside looking in.
In other words..
….if a Public Servant is not happy with a good salary, ….job security ….and gold plated pension but with reasonable conditions post retirement…. Buzz Off and Bye- Bye. They don’t serve the citizen…they are opportunistic self -serving double -dipping pigs at the public $$$ trough.
…NEXT !!!
Stay in $$$$ until prices crash in the USA and Canada
https://unusualwhales.com/news/us-home-sales-were-down-by-36-9-in-january-reaching-their-12th-consistent-monthly-decline
STOP THIS ANTI-FELINE RACISM!!!
“Inflation may or may not drop from 6% to 3% by Christmas, but it’s not going back up.” But isn’t inflation on inflation actually inflation going up? Isn’t it compound inflation?
#21 Faron on 02.26.23 at 1:49 pm
#9 AnonyMusk on 02.26.23 at 12:52 pm
So, you are telling us…
——————————————————–
What I am telling you (and you alone) is that most people with above average intelligence learn to avoid sounding pompous and pretentious flinging jargon and big words around, especially when they don’t really understand the topic they are pontificating -ooops let me change that-blathering on about.
Your comments about Buffett’s t-bill holdings proved once again your knowledge of financial markets is shallow at best, and that’s being generous.
Nothing wrong with that unless you pretend to be an expert, which is cringeworthy.
Being able to explain complex subjects in simple terms so that people who do not have graduate degrees in the subject can understand is not a sign of incompetence as you seem to believe, but of knowledge and a desire to educate.
@#19 Neo on 02.27.23 at 3:38 pm
The only real hope for young Canadians is to leave Canada.
You were born too late sorry.
Hell at this point you would be better off in Mexico working remotely for a US company. This is something I am considering because retiring here is hopeless if you did not buy a house 30 years ago. Back when this was a legitimate country.
https://travel.state.gov/content/travel/en/us-visas/employment/visas-canadian-mexican-nafta-professional-workers.html
+++++++++++++++++++
more than a few smart 20 somethings working from Quito but getting a san francisco paycheck. there really is no reason for a lot of industries to go back to the office.
GF blogger/s mentioned Lake Country proposed tax hike
Came across this….still reviewing it.(SEE LINK BELOW)
Appears Lake Country TPTB are engaging in dialogue (to their credit), but regardless the question to be asked is why such large double digit tax increases are even being tabled?
In previous posts, I predicted that Local Gov’t like Surrey BC tabling increase of approx. 18% was a basic pre-mediated scam that would set the benchmark for OTHER Local Gov’ts…..in BC and elsewhere…(.ie is it a coincidence Local Gov’ts have screwed up “independently” ….and YET arrived at the same tax hike? )
This is NOT the time to r*pe taxpayers in these uncertain times. IMHO the evidence suggest this is a premeditated/co-ordinated attack…..which will impact Owner and Renters.
(See Below)
===============================
Lake Country:
February 23rd, 2023 Update
Council gives second and third reading to the 2023 budget
On February 23rd Council reviewed and discussed for nearly two hours the five-year financial plan that includes the 2023 budget. After several discussions leading up to Thursday’s Special Council meeting it was determined that the 17.05% increase is unavoidable and cannot be reduced for 2023.
Since the first reading of the budget on January 31st Council hosted a hybrid town hall which consisted of community members participating through Facebook Live, Council streaming and in person. Council also received and considered over 100 comments and questions(External link)Continue reading
https://letstalk.lakecountry.bc.ca/2023-draft-budget-five-year-financial-plan
#123 Faron on 02.27.23 at 1:20 pm
#115 the Jaguar on 02.27.23 at 10:49 am
@#108 Dharma Bum on 02.27.23 at 9:36 am
Don’t let the impossibility of a completely egalitarian society (there will always be greedy jerks) distract you from the rapidly accelerating inequality in wealth that’s leaving double-digit percentages of Canadians and Americans (NTM the global poor) sucking dust while the 1% snorfle up everything in sight.
———————————————————–
Interesting how as government and social programs got bigger and bigger the result was not the promised equalizing of wealth but the exact opposite.
Those of us who oppose big government for this (and many other) reason(s) are not in the least surprised that the elites have managed to profit from government largesse while feeding crumbs to the poor fools who vote for them.
We are only surprised that the poor fools keep voting for more of the same.
Knowing that both the size of government will continue to increase and we of the middle class will be expected to somehow pay for all the excess through taxes and inflation many of us are planning to protect ourselves.
And someday maybe the big spending-tax everything that moves-preferably twice-people will learn that capital can be moved very easily (and legally) and one doesn’t even have to leave the country, although there are lots of beautiful places to live with much lower costs of living than Canada and much better healthcare.
I’m leaning towards Uruguay at the moment. Once you have been to Jose Ignacio you really wonder why you put up with snow. And high taxes.
And yes, I am fully aware of the political situation in Uruguay. It does have a tendency to lean left, but also has a decent history of democracy and protecting civil liberties.
Besides, having lived in several socialist leaning countries I learned that as long as you are a non-citizen and leave your wealth elsewhere, there are some advantages that unfortunately the citizens themselves do not have. Such as having hard currency, no obligation to hand over your hard earned money to a corrupt government and the freedom to leave whenever you want.
It’s also a bit of a tax haven but I plan to leave my wealth elsewhere.
Not quite paradise but not bad.
#56 crowdedelevatorfartz on 02.27.23 at 7:21 pm
@#49 Norman K
“Quantitative tightening may cause over-leveraged business to become insolvent.”
+++
I went to talk with my accountant today.
Year end taxes for the biz.
They are seeing a steady rise in personal bankruptcies….
Wage and price spiral baby….hold on to your hats.
********
The lack of new builds is not good for Vancouver Island where there are a lot of contractors per capita. The Beast needs to be fed a lot to keep sustaining it. Like playing pickup sticks at this point.
It seems to me that the entire discussion always revolves around the people who are even in the ball park of being able to afford a house.
Isn’t there a huge problem right now with very educated people not earning enough to sustain a healthy housing market? How many people on earth will never ever even be in this conversation?
Maybe the line should be cast a little further, don’t you think?
Disagree! WEF has major plans in the works to bring in digital currency.
#63 Hmm on 02.27.23 at 8:27 pm
there really is no reason for a lot of industries to go back to the office.
Probably going to get deleted stating the now blindingly obvious: ‘actions have consequences’.
It’s no secret that places that ‘followed the science’ and were effectively forced to find an alternative solution for two years are in a real pickle now.
‘That subject’ might be passé in passing now but it was dead serious at the time, businesses can adapt given no other option.
Days on market is not a reliable indicator due to multiple terminations and re-listings of the same property (to restart the clock). This also invalidates new listing to sales ratios. Sales above asking has flaws as well. If a property fails to sell at the initial asking price, the listing may be terminated and re-listed at a much lower price. When the eventual sale price surpasses the reduced asking price, then voila, sold over asking. I trust year over year monthly sales volumes and avg sale prices, specific to location and property type. That’s it.
#56 fartz
Sounds about right to me
If you build enough homes for you local population and they are utilized for living in, it does not matter who owns them – they will be offered at a reasonable price for rent and/or ownership purchase.
If food is scarce, you think it will be offered at a reduced price without people fighting over it?
Same thing with housing.
Housing is easily manipulated and save on paying any taxes. Beats playing by the stock market rules.
Perhaps if Kim Jong Un and his family skipped a few dinners….the rest of North Korea would have enough to eat.
https://www.reuters.com/world/asia-pacific/north-koreas-kim-calls-agriculture-reform-amid-food-shortage-woes-2023-02-27/
The worst famine since the famine of 1990 where the CIA estimated 2 million people ….starved to death.
North Korean soldiers in Ukraine fighting for food?
Chinese officials in Russia for deep seated talks…..
Stay tuned.
DELETED (WEF conspiracy nut)
#49 Norman
Sounds about right to me
#42 4 out of 3 people find math hard on 02.27.23 at 5:55 pm
1) He sells fraudulent software that is killing people.
2) His cars are dangerous garbage
3) There are tens, if not hundreds, of thousands of people actually doing far more than Elon for the planet. Far, far more. The idiot owns an atmosphere- and bird-sanctuary- killing rocket company.
4) He’s fraudulently taking money for a product that does not and will not ever exist (from tesla).
That’s why.
#70 ExRealtor on 02.27.23 at 9:44 pm
Days on market is not a reliable indicator due to multiple terminations and re-listings of the same property (to restart the clock). This also invalidates new listing to sales ratios. Sales above asking has flaws as well. If a property fails to sell at the initial asking price, the listing may be terminated and re-listed at a much lower price. When the eventual sale price surpasses the reduced asking price, then voila, sold over asking. I trust year over year monthly sales volumes and avg sale prices, specific to location and property type. That’s it.
………
Good points!
Bad points. Y/y stats tell you zip about market momentum. – Garth
Those who will or are looked at as visionaries or fools are those who can imagine a 95% discount on home prices due to the lack of decent incomes earned by those who need and are required to have residence in Canada.
Employers are only willing to pay incomes today that are out of date by 50 or 60 years. Therefore that is where home prices have to go to meet demand and financial capabilities of potential buyers. The real life monopoly game is drawing to a close as no one can afford to play the game without earning as much as the prime minister of Canada at a minimum. Time to box it up and put it away.
https://www.cnn.com/2023/02/27/investing/premarket-stocks-trading/index.html
Why the Fed is increasingly flying blind on the economy
By Nicole Goodkind, CNN
Published 7:52 AM EST, Mon February 27, 2023
Author highlights a possible issue with the data being received on the surveys.
“With the growth of spam and a decline in the number of telephone landlines there has been a structural decline in response rates and there is no easy solution to this problem, which is getting gradually worse and worse.”
Inflation can definitely go higher as we retire, deglobalize and lose American security overwatch simultaneously.
Food prices have continued rising, if a semiconductor is 4 weeks late the car it goes in can still be assembled. If the Russian fertilizer or Chinese tractor part is 4 weeks late the farmer misses the growing season.
Global aging will skyrocket health inflation and industry loses productivity, do you think we’re the only ones looking for immigrants? Here’s the DW, German’s CBC.
https://youtu.be/8jhu4YO3__M
Inflation. Rationing takes place during wartime. Global WW3 kicked off March 2020 so…
Just another day in the Former First World Countries.
Cue the bugz?
https://www.theguardian.com/food/2023/feb/26/tomato-free-pizza-on-the-menu-as-chefs-choke-on-the-price-of-fruit-and-veg
Tomato-free pizza on UK menus as chefs choke on the price of fruit and veg
Italian restaurants are forced to replace classic dishes with ‘white’ versions as cost of their staple ingredient soars
The price of tomatoes has increased as much as fourfold in the past year, from £5 a case to £20 a case, according to the Federazione Italian Cuochi UK (FIC UK), a chefs’ association.
—
— Tings not looking so good Lads. From the blogs at Substack.com
–“There were at least 30,967 excess deaths in Canada in 2022, compared to the pre-pandemic average from 2016-2019.
The Government of Canada has not yet published mortality figures for November & December 2022.”
Chart: https://tinyurl.com/45pdxhx3
— Singapore.
“It recorded a 10.4% death over the previous year, the largest increase in 62 years since it started record keeping . The number is staggering because the number of deaths in 2021 is already the highest in 61 years (10.1%). Comparing the number of deaths over the pre-pandemic year 2019 is a staggering 25% increase. On top of that, it also recorded the highest number of perinatal deaths in 20 years. The perinatal mortality rate per thousand Live births and Stillbirths was 4.6, a 58.6% increase over 2021”
Chart: https://tinyurl.com/ycynat2n
@#76 Faron
1) His software has driven drunks safely home.
2) The TESLA cars are everywhere.
3) His “Rocket Company” is about to launch the biggest heavy lifting beast ( which is reusable) in the history of mankind…March 2023 will be historic.
4) The SEC has investigated Musk over and over and over….no fraud….just stupid statements.
Anything Musk focuses on seems to focus on …inevitably…happens….
Unlike the simpering apologists and appeasers in our govt.
Try harder.
#65 AnonyMusk on 02.27.23 at 8:46 pm
It’s this ∆ that makes me feel pretty comfortable disregarding your very triggered this V
#62 AnonyMusk on 02.27.23 at 8:14 pm
Buddy, I do pontificate and I never claimed to be an expert in finance. But you have also been blatheringly, redonkulously incorrect while also claiming expertise. So…
I’ll add that testing out one’s knowledge in discussion is one way of learning. You can help by telling me where I’m wrong in pointing out that T-bills, with their fixed redemption value, somehow magically benefit from rising rates while you hold them. Maybe after that, you can describe to me why ZIRP/NIRP didn’t lead to runaway inflation for 12+ years.
Thanks.
#70 ExRealtor on 02.27.23 at 9:44 pm
Days on market is not a reliable indicator due to multiple terminations and re-listings of the same property (to restart the clock). This also invalidates new listing to sales ratios. Sales above asking has flaws as well. If a property fails to sell at the initial asking price, the listing may be terminated and re-listed at a much lower price. When the eventual sale price surpasses the reduced asking price, then voila, sold over asking. I trust year over year monthly sales volumes and avg sale prices, specific to location and property type. That’s it.
………
Good points!
Bad points. Y/y stats tell you zip about market momentum. – Garth
….
Yet realtors use Y/y stats all the time…if it makes the market look like it is fine or going up. Otherwise, they totally avoid this stat!
All spot on as usual, Great Bearded One, except I really disagree with tour stance that building more hoses won’t help prices. Maybe what you’re really saying is that building more houses in the current atmosphere of insane land prices and development costs brought on by zoning, fees, and restrictive land policies wont help prices, and in that you are correct. However, with some fundamental changes to how we treat development, zoning, permitting, etc, you’re darn right it would bring house prices down. Drastically. The cost to put in roads and deep services, and to build the actual structure, do not differ significantly from one populated area of the country to another. So if you can bring a SFH lot to market in Edmonton for $200k, and sell it with a 2000sq ft two-story on it for $550k, and that same house in the Toronto burbs is $1M, the difference is almost entirely land and development costs. Heck, look at lane way homes: if we allowed them everywhere (with reasonable restrictions of course), instead of nimby-ing them out of existence you could bring a new 1000sq ft, 2-3 bed, simple laneway garden home on an existing lot for $200k-$250k building cost in any of Canada’s dozen largest cities.
Will this happen? Probs not, cause we lack the ability to think big picture and creatively. But there is an absolutely insane amount of available land in this country. It’s dear, only because we’ve allowed it to become that way through poor policy. No, you’ll never get a SFH lot in Toronto proper for under a million, but get out into some burbs and get the right development framework in place, and the cost should come down significantly. There’s a lot of smart people out there, including a few that our host reads and follows, who agree with this position. We must build, build plenty, and build simple (ie economical). Get those strawberry homes popping up in rows. Heck, get pre-fabbing them and teach people to build their own. I’ve built three houses by hand, and prior to the first I hadn’t built so much as a doghouse. It can be done.
#138 Linda on 02.27.23 at 4:00 pm
#61 ‘Alois’ – sadly, I have to agree that government intervention is not likely to improve housing affordability. First, they rely on private enterprise to take point on the solution, ignoring that a business exists to make a profit & that private enterprise is not going to invest time/money in low income housing when they can get a much better ROI on building luxury housing. Of course, the government can provide funding that permits private enterprise to make as much profit – funding paid for by taxpayers – but that also ignores the fact that there are only so many builders & skilled trades available
etc etc.
==============================
Great points..Thanks!
Post WW2…..Canada had the CMHC, basically a program to create SFH housing…strata wouldn’t appear till 1970’s. Was this shift due to popular demand, or a long term herding pan?
)
(Have some good anecdotes I’ll submit soon.)
Another point I came across is the GOLD standard…which we all know was de- linked from fiat currency..but reason was there was not enough gold to support the compounding interest…hence de- linked and the result was REAL things increased in price, and this inflation cycle has never abated, nor will it ever.
There are solutions to housing issue…
…..but IMHO gov’t tends to fail the general public by design and keep them controlled in FEAR MODE…
………..and at this late juncture NO Gov’t..neither Local..nor Provincial…. nor Federal wants to touch this housing topic with a well planned and comprehensive fix…via sheer incompetence? …and/or all levels of Gov’t in self -survival mode and/ or perhaps well- planned hidden agendas unfolding according to plan.
Hence:
They..the TPTB… will submit an endless litany of “kick the can down the road” agendas on major and important issues such as housing……as sheeple continue to place blind faith in TPTB…
What would happen if our democracy elected leaders invited Russia to join NATO?
Buller?
Garth?
Anyone?
#82 crowdedelevatorfartz on 02.27.23 at 11:43 pm
@#76 Faron
1) His software has driven drunks safely home.
What, once? Totally illegal and the shite software has killed more than it’s saved. Overall, the tech is as or more dangerous than a human and hasn’t improved meaningfully in years despite claims. Data would be way worse if AP/FSD didn’t disengage an instant before a crash.
2) The TESLA cars are everywhere.
They have the lowest quality of almost any car on the road. They also just lost their top tier safety rating.
3) His “Rocket Company” is about to launch the biggest heavy lifting beast ( which is reusable) in the history of mankind…March 2023 will be historic.
Who cares? Cool rockets are no better for atmospheric destruction than uncool rockets. “He lands rockets bro” is an oft mocked rejoinder from Elon stans. Good job.
4) The SEC has investigated Musk over and over and over….no fraud….just stupid statements.
Musk settled the 420 investigation. People settle when they know they will be found guilty and are offered an out.
Musk promised robotaxis and that his cars would earn customers money through them years ago. That’s fraud. False advertising FSD is also fraud.
Do better, indeed. I’m continually surprised that you, of all people, would simp for a billionaire. Tres strange.
Rook # 23,
“I’m almost certain you don’t need any other reason than this. If government will do everything they can to keep real estate growing, why not join in? ‘Never bet against The Fed’ right? Never bet against the Federal Government on housing?”
———————————————–
Ahhh…yes, somebody gets it.
I realized this about 5 years after selling my primary res in 2008. I was expecting a US style market crash, that was until the Can Gov took drastic measures and by spring 2009 housing in Canada had stabilized.
I bought another home in the winter of 2013 when I realized that all I had to do was align my financial interests with those of the politicos pulling the levers and they of course, have yet to let me down.
I was very public about this line of reasoning on the GF blog back in in 2014, but received a lot of groupthink pushback, oh well, each to his own.
Fast forward 9 years and my res has tripled in value and I no longer care what interest rates are doing or whether the RE / stock markets are going up or down in value. I now focus my energies on my business instead obsessing over RE.
Good observation Rook.
#45 NONPLUSED
“Buy all the things”….We were holding off on a new car, but changed our mind and will pull the trigger before the prices creep higher….
The inflationary mindset has kicked in for us….tired of waiting for anything to get cheaper….
#42
Just buy the dip and double your money, I bought at $120 and cashed out at $200, lots of people making lots of money and one does not need to be highly educated to make life changing cash.
The guy is a money printer!
You seem so bullish on Canada, but the reality is it ranks 20th among developed nations in gross domestic product per capita and productivity, according to the Organization for Economic Co-operation and Development data, lagging behind many countries of Europe, the U.S. and the United Kingdom. Who needs productivity when you can fluff up GDP by over 1% by increasing your population by over 1% per year through immigration? And who needs to be productive when you can sit in your shack and let the dirt you own make you rich tax free? Oh Canada!
76 Faron: WOW! Just WOW ! Thank you for your contribution to keeping Leap Calls in Tesla illogically affordable. I am impresseded in your level of conviction in your ignorance about Tesla. Invest on!
With rising US interest rates, and WITH Canadian inflation “UNDER CONTROL”, will the BOC let the Canadian Peso to drop t0 US$0.67 ?
#65 AnonyMusk on 02.27.23 at 8:46 pm
#123 Faron on 02.27.23 at 1:20 pm
elites have managed to profit from government largesse
—
Sure, in a few cases. Especially the wasteful US military.
But this is another case, like that of your ignoring the inflationless low rate era, of you ignoring historical facts that argue strongly against you. Wealth inequality has been exploding in lock step with the lowering of tax rates, opening of loopholes and the deregulation of industry after industry. Citizens United put the icing on the cake by injecting corporate say into the US political system.
Attempts to grow social programs is a symptom, not a cause. If you think otherwise, by all means show me the studies showing that inequality is a byproduct of bigger government. I will be surprised if you can find any.
What’s fascinating is that small government returns us to the era of the robber barons and horrific work conditions. You are playing into the hands of the wealthy conservative class that wants unrestricted capitalism despite the obvious outcome of a giant underclass and a small uber rich class and little bridge in between.
Just received my annual utility bill in Surrey. It went up 9% from last year. Ouch.
Condo units may be going up, but these ones have definitely come down.
https://www.iheartradio.ca/610cktb/news/1.19303513?fbclid=IwAR0fTdNRfa-ySxf-H8vYqqcnPeaqR2fZ6fNU1Sc_7TsLbVrLPQ52fCd3rX4
#61 David on 02.27.23 at 8:07 pm
“Inflation may or may not drop from 6% to 3% by Christmas, but it’s not going back up.” But isn’t inflation on inflation actually inflation going up? Isn’t it compound inflation?
Yup, this is where Garth’s analysis continues to fall short. Going from up 6% to up 3% is still inflation INCREASING over the last period.
For inflation to be going down we need a (-) in front of the number.
That’s deflation. Not happening. – Garth
The problem with lying about inflation is that you get eventually exposed.
Hot job market means one thing only – inflation. Period.
You can’t have much hotter than normally job market, combined with suppressed inflation.
So the truth in my mind is that inflation is much higher than the massaged CPI and as a result the real interest rates continue to be strongly negative and
continue to strongly provide positive feedback look in order to fuel inflation further.
https://ca.finance.yahoo.com/news/why-inflation-us-problem-bank-of-canada-163757745.html
We can lie as much as we want but the cost of food in the stores and the medications and basic services will most likely continue to rise very fast
and expose the CPI irrelevance
@#88 Faron
“I’m continually surprised that you, of all people, would simp for a billionaire.”
+++
We plummers continue to astound and amaze.
As for Musk.
He’s a self made billionaire who is still inventing, producing and entertaining, unlike the other billionaire tech geeks raking in more billions from….advertising clicks.
Musk dragged the other car producers kicking and screaming into the electric car industry.
If Telsa wasnt taking massive sales revenue from them They’d still be pumping out ICE cars and electric car production would be kicked down the road for another 10 years.
He’s revolutionized the space industry with safe, affordable launches….while Nasa dithers with another massively overbudget and delayed white elephant.
Your spittle flecked invective and utter loathing for all things Elon is noted.
Amusing and easy to trigger….but noted.
Jeff Bezos billionaire ex wife is number two on my billionaire heroes list for….. giving it all away.
#45 Nonplused on 02.27.23 at 6:01 pm
So what about garden tractors? I bring that up because mine just broke. The recommended repair is a cool $5,500. I just about crapped my pants. Why wouldn’t I buy a new one? Well, because those are up to $15,000 now. Like cars, motorcycles and boats, it seems if tractors are working, you can now still sell them for most of what you paid 10 years ago.
___________________________________
This brings home my point made Sunday morning about the need for 14 year old’s to invest in wrenches, rather than cash growth assets.
It would be an easy fix!
The 12HP MTD I brought home from the Rochester Home Depot for $800 in 1990 on a return trip to the center of the universe, when these mowers were $1800 locally, had had more welds, replaced belts, and hub bearings than I could count when I reluctantly sold it for $350 last spring, after having mowing an acre for 30 seasons, with 60 oil changes along the way.
(Short story, long sentence…)
“In no realistic scenario are we headed for the day when a detached house in Toronto or Vancouver averages $700,000.” – Garth
——————————————————————————————————-
That’s a signal.
The market signals buyers, sellers, investors, speculators, etc., with hints of how to behave.
The GTA housing market is clearly sending a signal to young, average income earners.
The signal is: GET OUT!
MOVE.
Pack up your stuff, hopes, dreams, delusions, aspirations, and any intentions of ever being able to realistically afford a house in this hellscape sorry excuse for a city, and MOVE to a city or town or village that you can afford a house in and make a life there.
The GTA will eat you up and spit you out. It’s a financial death trap with mortgage amounts so absurdly and ridiculously high that the debt load will destroy you, your finances, your family, and your spirit.
Listen to the market. Heed the signal. Time to move on.
https://www.youtube.com/watch?v=pDPq1QbGAAk
Garth
7% mortgage rates are almost here now, TD fixed and variable rates at 6% plus as of now and another 100 basis points coming up we are over 7%, easily doable by EOY.
That means most starter homes are coming with a payment of 6k/mth, add in strata, taxes, sky high insurance and your at at 7k/mth for the Canadian starter kit.
I guess one could see another 20% bump up in real estate which now takes the starter home to 8k/mth which is now the new normal and sustainable housing price.
Look at Japan, 844 people per square kilometer and Canada has 4 people per square kilometer, Japans average house price $337,000, Canadas average house price $612,204.
I guess density is different here in Canada, ours is financial.
Hey Garth:
Interesting times we are living in. I have a question for you or your faithful followers.
Digital Dollars. Will the supreme leaders of canada be successful in launching these things?
What do you think?
My thoughts…I think the public, when they catch onto this Digital Dollar thing, will not like it. As eventually, they will ban “real” physical paper money. And, lots of people use real money in transactions, like when you pay the teenager next door to baby sit your kids, and when you hire that handy guy “Joe” to install your ceramic tiles…And the hair stylist that does your hair in the basement of their home…all take cash…and likely don’t declare it.
And the big one…what about “itchy and scratchy” the guys you get your weed from….that whole industry works on cash.
Alot of people will not like it when physical cash goes bye bye thanks to Castro and Freeland.
My old man when he was alive, had this guy named Scrappy, who was his drinking buddy from the bar. There was always “something” for sale, with this guy. He fell at his job roofing, and after, would “sell” shit…all cash. Nobody asked where the stuff came from….but people would buy from Scrappy as he had a deal, and the price was too good to turn down. The stuff my old man came home with…incredible…then mom put a stop to it…won’t let my dad bring anything home from Scrappy. I wish my old man was still around…
LA Times
Hyundai was poised to become Tesla’s top contender. Then the U.S. government blindsided it.
When the Hyundai Ioniq 5 and the Kia EV6, compact electric SUVs with base prices around $48,000, debuted a year ago, U.S. sales totaled 37,000 vehicles in the first three quarters of 2022. The Ioniq 5 and the EV6, built on the same basic platform, together overtook the Ford Mustang Mach-E as second-place contender, according to Edmunds. The Korean brands were poised to take the mantle as Tesla’s top challenger, and because of their lower price, perhaps move the needle forward on mass adoption of EVs.
Then the Inflation Reduction Act, the Biden administration’s $369-billion climate bill, put on the brakes. Under the act, only electric vehicles assembled in the U.S. would qualify for a $7,500 customer tax reblate, bad news not just for Hyundai and Kia but also for all electric car makers in Japan and Europe. That part of the IRA kicked in immediately when President Biden signed the bill in August
Re: EV’s…
Anyone purchasing one of these is falling into a trap…
….they haven’t done their homework.
BOC 50bp hike on the card to stop CAD slide.
I don’t know which way we are headed , on the construction side I do know some large homebuilders and at the ground level there houses are not moving even with some nice discounts…..
Truthfully I think that until we have at least 2-3 months of historical sales and inventory volumes we won’t know were the market is headed….dangerous to call a bottom until then I agree we are closer to one now . Interest rates are also key if they settle in the mod 5 range then we still have some falling prices to go right now everyone is hoping for a rate cut or return to lower rates
I think we will start to see a rise in volumes over next few months and should have a clearer picture by July or August
#89 Blacksheep on 02.28.23 at 1:20 am
Rook # 23,
“I’m almost certain you don’t need any other reason than this. If government will do everything they can to keep real estate growing, why not join in? ‘Never bet against The Fed’ right? Never bet against the Federal Government on housing?”
———————————————–
Ahhh…yes, somebody gets it.
===============================
Agree as well…
….it’s like trying to fight the inevitable tide..
Bank rate hikes will be like putting a band-aid on a severed limb.
All the variables for affordability show no sign of going down….moreso increasing.
#90 Earlybird on 02.28.23 at 2:04 am
#45 NONPLUSED
“Buy all the things”….We were holding off on a new car, but changed our mind and will pull the trigger before the prices creep higher….
The inflationary mindset has kicked in for us….tired of waiting for anything to get cheaper….
—————————-
FOMO (Fear of missing out) is not only applicable to RE
Inflationary times are times to re-assess your needs.
Most of us have already a garage full of useless toys.
Unless you’re F who does not have a garage.
He’s a condo Renta.
#104 Alois on 02.28.23 at 10:32 am
Re: EV’s…
Anyone purchasing one of these is falling into a trap…
….they haven’t done their homework.
——–
Well, our last 8 years of driving a Tesla has been fantastic.
As mentioned here a few times, though: we don’t pay much attention to the macro, because that’s someone else’s job. We just concentrate on the items that we directly control, or that directly affect us.
By that standard, the Tesla has been, and is, otherworldly. Best car ever by a long shot. No problem in today’s snow, no problem with VI cold, no problem with range, no problem with range loss over time. Almost zero maintenance.
#104 miketheengineer on 02.28.23 at 10:12 am
Digital Dollars. Will the supreme leaders of canada be successful in launching these things?
______________________________________
I’ve been using my digital Master Card for so many years now, I can’t even remember the color of money. I’ve barely handled any of the plastic stuff, and when I see a coin, I’m surprised that they still exist!
#45 Nonplused on 02.27.23 at 6:01 pm
So what about garden tractors? I bring that up because mine just broke. The recommended repair is a cool $5,500. I just about crapped my pants. Why wouldn’t I buy a new one? Well, because those are up to $15,000 now. Like cars, motorcycles and boats, it seems if tractors are working, you can now still sell them for most of what you paid 10 years ago.
____
Man, what did you do? Blow the trans and engine simultaneously?
15K for a mower means it’s a pretty good one, it’s probably worth fixing. Unlike those big box store jobs. Good quality brands, and well looked after used equipment sells at a high price some day. Well used big box store units go to the dump for $0.10 / lb.
My mower has expensive parts on it too. I’m crossing my fingers and hoping that the Engine and Hydros will outlast me.
Eric Nutall of ninepoint comes on BNN full of conviction that if you buy one of his picks, the oil co. will be out of debt in a couple of quarters, then pay double digit dividends until the end of time, while the resale price of your holding multiplys.
I was going to bring this up, pointing out what Algonquin Power did, which will broadside him, but now Baytex just proved my point for me.
They blew the wad purchasing something the shareholders never asked them to do, and Baytex is on the way down in value as I type.
I didn’t invest in Ranger, but bought a 1/2 my normal bite of BTE, and now I own Ranger, in my homemade energy ETF which is outperforming my ZEO ETF.
Reminds me of my Cameco buying Westinghouse too.
I love having 12% of my worth in one year 5% and 4% cashable GIC’s! I know what I have there….
@#102 Dharma Bum on 02.28.23 at 9:24 am
“Listen to the market. Heed the signal. Time to move on.” +++
There’s a Revolution about to occur for which the Manifesto has yet to be revealed. ( I’m still writing it, and it’s keeping me up at nights, Dharma Bum..).
A sneak preview looks a little like this:
Idealistic egalitarian theories are blown apart as the full weight and price of illusions about equality of outcome and disappearing tribal affiliations become painfully evident. As Billie Holiday and Arthur Herzog wrote, ” Them that’s got shall have, them’s that’s not shall lose, so the Bible said and it still is news..”.
Flight to safety and comfort from the mega cities for those with prescience of mind and resources will happen slowly at first and then all at once. It won’t just be peeps, but large business enterprises similar to the exodus out of California to Texas & Florida. Even now bags are being packed in New York City. It’s a brave new digital world out there with the accelerant the Pandemic. It turned the world upside down, but revealed monsters roaming the halls of trusted institutions with no real plan or way to put genies like Freeland back in the bottle. Like a flashback to Havana, Cuba at midnight January 1st, 1959, it’s time to abandon the Casino and rebuild the shining city on another hill.
Unfortunately everyone can’t be saved. Similar to cattle being led to slaughter the deranged are focused on electric cars instead of the limitations of the electrical grid and what powers it, all the time clawing those precious minerals out of the ground with their bare hands. Climate mitigation instead of adaptation. Those with foresight, resolve, and especially ‘grit’ have downsized, transformed, and boarded the freedom train that just left the station. We left the keys to Palookaville for you on the kitchen table.
Save the housing market from crashing, or crash the dollar and increase inflation, hmmm.
A builder years ago told me ” You make your profit the day you buy the lot “.
The translation is the aim is to buy the lot in a RE rising market…so by time the home is completed and ready ” For Sale ” the lot value has increased substantially and the lot is the main profit generator.
Just a plug here for exercise…
Walking down the deck stairs this morning, both feet shot out on the ice and I came down full weight directly on the edge of a stair, on… my lat muscles, which are highly developed from 40+ years of regular pullups. No problem, no pain, no issue. Natural body armour.
Also sprained my thumb, though, and that hurts.
These slippery conditions are exactly the reason SAR calls trail crampons ‘essential gear’ when winter hiking Mt. Benson. Stay safe out there.
#111 Sail Away on 02.28.23 at 11:07 am
Well, our last 8 years of driving a Tesla has been fantastic.
As mentioned here a few times, though: we don’t pay much attention to the macro, because that’s someone else’s job. We just concentrate on the items that we directly control, or that directly affect us.
==========================
Glad it works for you…
The problem in the BIG picture is that each EV bought simply a vote for tyranny aka COMMUNISM. Those of us that prefer “choice” like ICE will have the Big Brother commissars demonizing us as they did with Covid issue.
There is a lot of information available that EV’s follow “the looonnngggg tailpipe premise”…..that EV’s environmental impact is BAD…given the pollution etc that occurs is “Out of sight- Out of mind” in far off jurisdictions.
I have no problem with EV as a choice…but not a draconian mandate by Big Brother, who increasingly earns our mistrust and distrust.
#93 4 out of 3 people find math hard on 02.28.23 at 3:16 am
#100 crowdedelevatorfartz on 02.28.23 at 8:05 am
It’s okay. I know it hurts your adolescent brains to hear bad things said about your father-figure idol. But, he’s a scµmbag through and through. The bad outweighs any good by a long shot but you seem to think that an iota of good excuses a gigaton of horror which isn’t a great ethical model IMO.
But, hey, feel free to keep rooting for a guy who enjoys antisemitic memes, cheers on racist jerks and sells deadly products that kill by the dozens, simps for putin, simps for Xi and all the rest. I wouldn’t, but… nevermind.
#110 Ponzius Pilatus
Lol…yes, totally aware of the FOMO and thanks for bringing that up…I thought of that too…
Been driving my little 4 Banger since 2005….bought with 40000km, taped it back together….fixed the things
I could myself…..walked and avoided driving it….meticulously maintain and lady driven….only 120000 km on it and keeping it!
The one we looked at 6 months ago is now 5G higher….buying it cash.
Buy once…..Cry once….
Renter…no garage….I hate useless crap…
#36 ‘Greater’ – actually the ‘some folks can’t work from home’ argument is completely valid. Examples of folks who can’t work from home: anyone working in a hospital, doctor’s office, senior’s care facility etc; firefighters – they actually have to go to where the fire is to be effective, no? – police ditto, they have to go to where the crime occurred; grocery store workers, any fast food delivery worker, any airline worker working out of an airport, any bus driver, any cab driver, any long haul trucker, any train operator – goodness, what a lot of folks who can’t ‘work from home’. Technically a farmer ‘works from home’ but in order to produce the food we rely on, home might be a considerable distance away from where said farmer is working. And that food needs to be delivered to the consumer by someone.
Now, if one is only considering office workers then many can easily work from home, though their employers may not wish to have to provide the secure network services they would need to protect their proprietary data. Presumably the network issues for providing at home connections might be more expensive & much more vulnerable to hacking. Also, what about Worker’s Comp? Would allowing said workers to work from home mean the employer would be liable if said employees injured themselves at home? If yes, what would the insurance rates be for coverage? Bet not as cheap as what they would be if all said employees were working out of an office. Just saying.
People that think
…Musk…
….Zuckerberg…
…….Gates….
….GOOGLE founders…
..APPLE founders
etc. etc.
are wunderkind geniuses???
….. really do NOT get it.
creepy thought
gpt chat + voice + picture = a synthetic copy of you doing a zoom to shareholders or raising capital?
Have you seen the software that turns a picture into a life-like? Or AI creating real images of people who Never existed just from text?
from vice: hacking a bank account with AI-generated voice”
#118 Sail Away on 02.28.23 at 12:50 pm
Ouch, that sucks. Sorry you injured yourself.
Political change is coming
https://building.ca/canadian-economy-slowed-by-more-than-expected-in-q4-contracted-in-december/
#123 Alois on 02.28.23 at 2:24 pm
People that think
…Musk…
….Zuckerberg…
…….Gates….
….GOOGLE founders…
..APPLE founders
etc. etc.
are wunderkind geniuses???
….. really do NOT get it.
—
Agree.
They may in fact be very smart, but no one should be fooled into thinking a CEO whose job is to put profit first, is out to do anything but make money. Musk pushes that to the margins of legality and over the line of fraud and has killed in doing so.
The people actually improving other’s lives work way closer to the problems at hand. Garth giving free, actionable financial advice for example. Best case scenario are the uber rich who fund humanitarian efforts (Gates is among them). Or those who simply pay taxes.
#119 Alois on 02.28.23 at 12:52 pm
#111 Sail Away on 02.28.23 at 11:07 am
The problem in the BIG picture is that each EV bought simply a vote for tyranny aka COMMUNISM
—
Sorry Al, that’s insane.
#119 Alois on 02.28.23 at 12:52 pm
Glad it works for you…
The problem in the BIG picture is that each EV bought simply a vote for tyranny aka COMMUNISM. Those of us that prefer “choice” like ICE will have the Big Brother commissars demonizing us as they did with Covid issue.
There is a lot of information available that EV’s follow “the looonnngggg tailpipe premise”…..that EV’s environmental impact is BAD…given the pollution etc that occurs is “Out of sight- Out of mind” in far off jurisdictions.
———
I guess
My First Sgt. would say that’s nunya
Nunya damn business
:-)
@#76 Faron
As a Tesla owner of four years, I wondered if your claim about them being unsafe so I looked for myself and found almost all rating websites saying the same thing; one of the safest on the road.
https://www.iihs.org/ratings/top-safety-picks/2022/all/tesla#award-winners
https://www.hotcars.com/safest-cars-in-the-world/#tesla-model-3
“Despite coming with an entry-level price tag, the Model 3 is a fantastic achievement in terms of engineering and design; both the NHTSA and IIHS gave it top honors for 2021.”
https://www.caranddriver.com/features/g20955601/safest-cars/
The Tesla Model 3 earned Good ratings in all six IIHS crash tests, including Superior ratings for vehicle-to-vehicle and vehicle-to-pedestrian crash avoidance, and an Advanced rating for vehicle-to-pedestrian avoidance. That said, IIHS found the LATCH anchors a bit of annoyance and gave the Model 3 an Acceptable rating in that category.
So, Faron…can you cite any “reliable” source to support your opinion?
#125 Faron on 02.28.23 at 2:45 pm
#118 Sail Away on 02.28.23 at 12:50 pm
Ouch, that sucks. Sorry you injured yourself.
——–
Thanks! Merely a flesh wound.
Congratulations and well done, you two. A New Ager might say, “Your energy fields are now at a much higher frequency!” :)
Interesting to watch what is happening down south, of course there is no migration of people to shore up the markets and this is why they are coming down, they should let in more people to stop this, as we are doing.
https://wolfstreet.com/2023/02/28/the-most-splendid-housing-bubbles-in-america-february-update-biggest-price-drops-now-in-phoenix-portland-las-vegas-san-francisco-seattle-denver-san-diego/
In addition to rising labour and material costs, the increased cost of land, etc., there is also a creeping elegance in the quality of new builds.
Many people today would refuse to live in small post-war suburban boxes. Now people expect granite counter tops, smart homes, sophisticated HVAC, safety and alarms, etc.
Today’s homes are nothing like the homes built in the forties.