Wait a minute.
In recent posts this pathetic blog challenged the doomer narrative with stats showing better days may be upon us. Housing prices creeping higher. Federal deficit fading. Full employment. Wages rising. No recession.
Lots of people who crave change – mostly political change – hate hearing real estate sales are rising again, inflation is stalling or that economic growth picked up in January after the briefest of dips. They argue the impact of higher interest rates has not really been felt yet, housing will soon crumble again and GDP will circle the drain. It’s a bull trap. A dead cat bounce. Cannot last.
So let’s look on the dark side.
The banks have been signaling some trouble coming, RBC (the biggest of the big) said a few days ago its mortgage originations collapsed 40% in the last few months. A third of its $365 billion mortgage portfolio is made up of people with variable-rate mortgages, many of whom hit their trigger rates. All their monthly goes for interest with no debt being retired, and many have extended amortizations to survive. Not good. If house equity falls more, they’re toast.
Meanwhile CIBC reveals $52 billion worth of its mortgage portfolio (totaling $263 billion) “relates to mortgages in which all of the fixed contractual payments are currently being applied to interest.” So half the bank’s variable-rate customers hit their trigger and have ceased to pay off debt with monthlies insufficient to service it. How has the bank responded? “For those whose payments can’t meet their contractual payment obligations,” it says, “that amount is being re-applied to their principal.”
All the banks are doing it. Amortization periods have been extended for fixed-payment, variable-rate mortgages in order to stay onside with the regulator. Below you can see the incredible result – over a quarter of CIBC’s entire portfolio now has an effective amortization of 35 years or more. A huge number of home loan clients are hanging on by their fingernails. Longer amortizations mean increased interest charges, less debt reduction and extra years of payments. Financial stress.
And what’s going on with mortgage rates?
Nothing good. That 5% five-year rate at most banks snuck up to almost 5.5% on the back of rising bond yields. Steamy inflation stats south of the border have baked in two (or more) rate increases by the Fed, the first of which will take place in three weeks. Mr. Market now thinks the US central bank won’t pause until the summer or autumn, with no pivot remotely possible for a year.
And our guys? Ten days ago most economists were saying the Bank of Canada would be on pause here until the end of 2023, leading to mortgage stability and renewed consumer confidence.
Well, pfft to that, apparently.
“The Pivot died and the party is OVER,” says crusty mortgage broker Ron Butler. “The small opening of barely affordable mortgage payments that spurred a tiny flurry of RE sales in Jan / Feb 2023 closed. As much as some people would say that there’s pent up demand to buy properties, and there likely IS demand but at 5.49% that is suddenly more expensive.”
So we’ll know more Wednesday morning. The Bank of Canada will not hike (or drop) its rate this week, but will make a statement. “I think the BoC has perhaps halted its hiking cycle prematurely,” says Scotiabank chief economist Derek Holt. “Recent developments have emphasized that a choice lies at hand in terms of further rate hikes in order to make sure that inflation will be brought durably lower, or a higher policy rate for longer which may rule out cuts for a long time, or higher inflation risk for longer. My preference would be for the BoC to return with further hikes.”
Why would the bank do that, pretty much guaranteeing the housing market’s emerging bull is gelded? With a dull knife?
Holt gives his reasons. Our rates cannot diverge too much from the Fed, lest the dollar tank. Inflation in Canada remains too hot. Unions are going all macho, threatening to explode wage settlements. (Like the CRA’s 35,000 workers scrabbling for a 30% increase.) The US economy is growing fast while China is recovering and the Euro war rages. All that’s inflationary. So is the labour market. “220,000 jobs created in two months. 150k of them in January alone and arriving after the BoC’s last decision. Figures like these have continued to tighten the job market. Canada’s job market is much tighter than the US.”
So, we’re told, there’s a choice. More rate hikes now (squishing real estate) or higher rates for longer (squeezing the economy – goodbye Nordstrom) or your grocery bill keeps bloating for years to come (social mayhem).
Or, I guess, everything could be fine.
Best advice: change those things you can control and make better. Don’t be paralyzed by what might occur. Nobody knows how this will turn out. But you’re not in southern Turkey. Or Ukraine. Or Syria. Or a Russian penal colony.
Grouse all you want. First, be grateful.
About the picture: “I’ve been reading your blog daily for several years after a hat tip from Mr. Money Mustache,” writes Brendan. “Pretty weird for an American in Georgia who’s only been to your great land once (to the Maritimes, not those places you refer to by area or airport codes). You write so well I even read the irrelevant articles on the Canadian tax code. I should get help. Anyway, here’s Louie, who’d be honored to grace your pages. He showed up at a neighbor’s house during a wild thunderstorm, we think after breaking free from a chain. That was based on the massive size of his neck muscles, which have since returned to normal size. He rarely leaves my side.”
150 comments ↓
Knock knock…
Is this the metaver$e ?
or the metaphysical ?
This will continue to be the new normal for the next year.
1st?
______________________
Weekend musing 1:
This brand-new research report (02 Mar 2023) by the Aussie think tank (ASPI) is confounding to the unspeakable extent. It claims that China is ahead of US in 37 out of 44 critical technologies.
The question is: How stolen and copied technologies (Chinese) can be more advanced than the original ones (American)?
I guess the inevitable correct conclusion is: this Aussie think tank must be a ChiCom paid shill spreading propaganda. Election interfering?
Anyway, read it for what’s worth:
China takes ‘stunning lead’ in key technological research, think tank says
https://www.japantimes.co.jp/news/2023/03/03/world/china-lead-tech/
Here is the original report:
China’s global lead extends to 37 out of 44 technologies…
The US comes second in the majority of the 44 technologies examined
https://www.aspi.org.au/report/critical-technology-tracker
Weekend musing 2:
What does not kill me (by arresting my CFO on your airport tarmac) will only make me stronger:
US-Sanctioned Huawei Makes a Show of Force at Mobile Conference
https://www.bnnbloomberg.ca/us-sanctioned-huawei-makes-a-show-of-force-at-mobile-conference-1.1891036
In uncertain times cash with no debt is the best defence position. We’re seeing a Bear Trap and it’s very obvious. Covid shut down and turned out the lights on the economy and we can’t expect to start it up whenever we want. We need to expect tough times with plenty of tears and record number of divorces when in-laws start demanding their money back.
I never post links.
https://mgamble.ca/this-is-not-my-conservative-party/
Good.
Keep raising rates.
Long overdue.
Time for people to realize debt is the enemy.
Its been 35 years since housing was neutered.
Hopefully the Liberals wear this fiscal reckoning like a Furry Suit at a taxidermist convention.
Louie looks like a faithful beast.
#36 Alois on 03.04.23 at 1:07 pm
^Ear to the ground brotha. Are we to be kicked off the land (again) via policy? Land sequestered and roped off for ‘Climate”? Wars are fought over LAND.
In 2020, which was in my opinion the start of global WW3, many anti-personel tactics were taken against us.
Land roped off with Yellow caution tape. Unsafe. HUMANS stay away. P.s. that’s us.
Fact: in 2020 we were banned from the land including Provincial and National parks, campgrounds, children’s playgrounds, gravesites, sport fields, boat launches, tennis courts. In some countries, beaches too.
————
Mainstream news link. No comment.
https://www.telegraph.co.uk/news/2023/03/04/project-fear-covid-variant-lockdown-matt-hancock-whatsapp/
‘Project Fear’ authors discussed when to ‘deploy’ new Covid variant
Matt Hancock’s plan to ‘frighten the pants off’ the public to ensure compliance with lockdown measures exposed in leaked WhatsApp messages
Matt Hancock wanted to “deploy” a new Covid variant to “frighten the pants off” the public and ensure they complied with lockdown, leaked messages seen by The Telegraph have revealed.
The Lockdown Files – more than 100,000 WhatsApp messages sent between ministers, officials and others – show how the Government used scare tactics to force compliance and push through lockdowns.
In another message Simon Case, the Cabinet Secretary, said that “the fear/ guilt factor” was “vital” in “ramping up the messaging” during the third national lockdown in Jan 2021.
So save the pain from no rate hike this week to exponentially enhance the pain in the rate hike next cycle.. well done Tiff!
Yogism #59: “When it comes to discussion about levels, I was taught to be straight up about it- that’s the level truth”.
Rate impacts are already affecting consumers. People in my circle are starting to be more cautious and budget tighter. I’ve had to loan a friend money for groceries while he’s awaiting some receivables. Even the T-Rev clan is delaying/downsizing major purchases, including reducing our farming capex this year. We were going to do two new agri-buildings this year on the hopes that finance rates had stabilized, now we’ve delayed one until at least 2024 and we’ve reduced the size of the other. We’ll build what we can with cash when we have it and avoid financing, it’s just too risky right now to take on debt. We’re also looking ahead to when land loans re-fi in a few years, and putting away money in some fixed income products that will allow us to pay down some of those loans at renewal if high-rates persist at that time. Inflation isn’t done with us, but we will be done with it before CBs stop hiking. The Western world is getting back to sub 3% come what may, but it will take more hikes. As stated here numerous times over the past couple months, we likely have 0.5-2% left to go. It will be shocking to people when it happens, but it really shouldn’t be a surprise. My hope is that the water comes off the boil with the lower end of that range, but it won’t surprise me if T-Mack and J-Pow are forced to go close to the higher end, either.
Happy Sunday!
Wishful thinking.
Today we have rates higher than in the last 15 years and still detached houses in GTA are sold like freshly baked bread. Whatever was on the market for 1.4M at the beginning of January, now is sold in a matter of days for 1.6M-1.8M.
And I’m asking myself a question: who are the commenters on this blog? By the last survey they are all millionaires and living a great life, but by the latest comments they are proud to be driving 10 years old Corollas and hope for a 50% RE crash.
If you think people can’t afford RE, well don’t judge by yourself. Forget the official stats. Somebody still buys RE at the current prices.
As I said. The 5 year fixed is 5.5% now and the houses gained almost 50% of what they lost from the peak. With this rate, we’ll get back to the peak by summer lol. But wait until the rates go down, then you’ll wish you bought in December 2022.
Ever been to Amsterdam? Beautiful city, and real, and, yes, not a Disneyland creation.
Great for touring around by foot, bike, tram, boat, bus, you name it.
Somehow, they figured it out, after some false starts. An American wanted to pave it over and put up a parking lot.
3-1/2 minutes of saving Amsterdam from the Urban Car Disease:
“How Highways Almost Destroyed Amsterdam – Plan Jokinen” A Not Just Bikes (Jason Slaughter, Canadian, from London ON, who is one of the growing numbers who figured it out, ditched the car, and pocketed the car payments):
https://youtu.be/vI5pbDFDZyI
An interesting 3:25 of your time, if you have the slightest interest in economics, real estate, money and the (only viable solution to the urban) road ahead.
#131 Gravy Train on 03.05.23 at 12:49 pm
#126 Dharma Bum on 03.05.23 at 11:45 am
You do know that “Dharma” is a Buddhist concept, right? And you do know that Buddha literally means “Awakened One,” right? Do you see the irony? :P
—
Well played.
Also:
We asked conservatives at CPAC what ‘woke’ means. Their replies were revealing
It is long overdue that actual money has an intrinsic premium over borrowed money. Crush housing, “fairy gold” should not be required for a middle class existence. Let newcomers and workers realistically afford shelter.
The “virtual Russian Penal Colony?
#122 Alois on 03.05.23 at 11:12 am
Miss your car payment?
Ford Motor Co. working on technology that would allow vehicles to repossess themselves
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One day a gate or turnstile will not open for you, leaving you wondering; outstanding fine?, portfolio ESG score too low?, wrong opinion expressed on-line, a glitch in the databases that tells them who you are?
You will not know why, the AI Bot you interface with will not be “reasonable” and you will have no recourse.
“The Trial” a novel written by Franz Kafka, it tells the story of Josef K., a man arrested and prosecuted by a remote, inaccessible authority, with the nature of his crime revealed neither to him nor to the reader.
People will circulate stories and rumor, you need high Credit scores, need proper social media profiles, need the right opinions, the right identity, anything and everything being AI observed and recorded, the entire history of you. A “Panopticon” the self reinforcing perfect Gulag.
Now for a real “Dark Side”
https://gwynnedyer.com/2023/making-lethal-molecules/
“the AI produced 40,000 deadly new virtual molecules within six hours. Some resembled VX and other existing nerve poisons, but “others occupied a region of molecular property space that was entirely separate”
Project Lazarus?
#123 Doug Rowat on 03.05.23 at 11:20 am
#120 Chris on 03.05.23 at 10:36 am
I see some good uses for the metaverse. Clothes shopping would be a great idea. You could scan your body and have the company determine the exact size you need an even show you how it will look on you.
—-
Biometric privacy laws are struggling to keep up with technology and its potential abuses. Don’t be too eager to have your body ‘scanned’.
—Doug
—————-
Agree.
As for clothes shopping.
Metaverse will make the boys look like Brad Pitt.
And the girls like the Kardashians.
And grateful I am.
I like to tell a story to the young’uns that think things are tough about being a teenager in the early ’80’s. They opened a new Chuck-E-Cheese close by and were going to have an in-person hiring day for 30 or so jobs. hundreds showed up and stood in line for a few hours.
Last night enjoyed a great Brazilian Steakhouse dinner. Hard to get a table, place was packed, and had to go a bit earlier than I wanted. All-in, with a bit of booze, about $200/head.
I also marveled at the size of the place and the amount of staff and operation it takes to manage, and the fact that this is as low tech as you can get. Other than on-line reservations and paying with a credit card, this place, and the food, wouldn’t have been any different 100 years ago.
Retired friend laments that his favourite Starbucks in Tsawwassen never has any seats at 10AM. Nobody works any more, they all hit the real estate lottery, sitting there discussing their next vacations now that Covid is over.
Wondering if this will all last?
re: Inflation in Canada remains too hot. Unions are going all macho, threatening to explode wage settlements. (Like the CRA’s 35,000 workers scrabbling for a 30% increase.) The US economy is growing fast while China is recovering and the Euro war rages. All that’s inflationary. So is the labour market. “220,000 jobs created in two months. 150k of them in January alone and arriving after the BoC’s last decision.
time to cut immigration targets
mass untargetted immigration is in itself inflationary and does little to address labor shortages
Canada is targeting 1.5 million immigrants over the next 3 years. It’s also hoping that half of them are economic migrants, bringing their skills. That should help with the near-record job vacancies, and slow wage-related inflation. However, it’s not as easy as it sounds—immigrants also introduce demand and dependents.
“Indeed, new immigrants can fill open positions, but they also increase demand for housing and consumer goods which in turn raises demand for labor,” writes Nathan Janzen, assistant chief economist at RBC, Canada’s largest bank.
First I guess, anyway I wish I could have stumbled onto your blog years ago. So might insightful info. Have not done too bad for myself but it could have been better had I had known of your nuggets of valuable info. This is one gen x that appreciates your blog.
re: The banks have been signaling some trouble coming
maybe time to make sure you do not have any unisured money in Canadian banks, knowing this country they will do anything to help the banks even without them failing and nuts to the consumer
witness the piddly 100K insurance we are offered vs USA 250K
There is zero need to worry about having CDIC insurance. If a major bank fails we’re doomed. And it’s not happening. – Garth
I follow the blogs of a few GTA-based relators, and they are saying that the recent surge in activities is just a blip that will fade quickly. Also, the average price increase in February could be due to the different mix of properties sold in February. Fewer high-end properties sold might have skewed the average price.
#103 Jon B on 03.04.23 at 11:39 pm
What the hell has happened to a society that deems being alone watching a screen as social interaction progress? I want my analog world back
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Well ,clearly you were lucky enough to have never worked in a “Customer Facing position” say retail sales or call centre agent . Makes the metaverse,even reddit with all the online bullying and trolling sound heavenly. At least you can unplug and come back under a different avatar.
“Be very very cautious investing in China…”
https://www.reuters.com/markets/billionaire-investor-mark-mobius-says-he-cannot-take-money-out-china-fox-2023-03-05/
Nothing like biting the hand that feeds them.
China locking down the foreign investors assets.
Good luck enticing foreign ownership after that…….
I don’t know anyone that has not frequented WalMart, Costco or Crappy Tire but I know no one that ever went to a Nordstrom. Don’t have a clue what they even sell.
I don’t get it.
I can’t go to the bank and ask for a 35 + year long interest only mortgage, but if I’m reckless, enter into a bidding war, buy a house at an insane amount with no conditions and leverage a piddly 5% down payment into a massive variable rate mortgage that I can no longer afford because interest rates have increased dramatically, then OK, here you go.
For all your warnings Garth, about buying real estate you cannot afford, it doesn’t seem to matter. No one is held accountable for poor financial decisions. 35+ year interest only mortgages, incredible.
Reminds me of the old saying, if you owe $100 to the bank that’s your problem, if you owe $100,000,000 that’s the banks problem.
The banks got a huge problem. Now I understand why there will be no day of reckoning.
I would have to side with Ron Butler, the small window pivot that a lot of sellers got excited over, will be short lived. Tiff does not have the marbles to increase rates again this coming week, as he knows he should, but perhaps he will need a second glass of wine to find the nerve in another six weeks or so to get it done proper, he would not listen to the general public, now he will eat crow in delaying the unpredicatable.
Have you checked with your local banks and mortgage lenders over the past couple week, “you got it, money is on the rise for mortgages”, as banks enjoy your savings and chequing accounts for all their free investing and pay you nothing in return, what a wonderful business, the banks don’t buy your money, they just take it and spend it wisely from your accounts, but only for themselves.
There is no valued reason why banks cannot pay 3 % plus in your saving accounts right now, pull it, only the dumb would leave it there.
Home prices had a little glory in February and I suspect on a reasonable scale over the next little while until the spring burst gets behind us, sure as God made little green apples, prices will dip back to January lows by late summer and fall.
Our economy needs to stabilize before sellers and buyers alike will feel confident again, and no one knows what stabilization looks like at this point. I tried to get an opinion from one of the local real estate guys yesterday, he was about as dumb as streetcar on what was happening, unbelievable.
Real Estate Math is not working in North America right now, you will be into 2024 before we see any housing stabilization, none of us understand true value anymore, so back to the classroom we go when this is all over.
Gambling is not in my blood, but my betting for coffee money that real estate prices will continue to fall back again, put it on record, what Chalkie predicted and send me back my prediction in the fall, if I am wrong.
Real Estate Math is not working in North America right now, you will be into 2024 before we see any housing stabilization, we do not understand true value anymore, so why would anyone pay for something that they have no idea what the real price is, so back to the classroom we go when this is all over.
Quote of the day: if it does not make sense, then it’s not
#125 Calgary on 03.05.23 at 11:35 am
https://www.realtor.ca/real-estate/25313457/682-pender-place-port-coquitlam
Bidding war?
///////////////////////////////////////
Hey Cal, so I had a quick look.
So, I guess the 3 main strategies are a) list below market value, b) list at current market value and wait for an appropriate offer, c) list high and either hold tight due to low inventory, or let the buyers bid you down to make it feel like they’re getting a deal.
These guys went for option A.
The asking is 999k, but it last changed hands in late 2022 for 1.3 million, so they probably need to get around 1.4 to walk away clean.
Current assessment 1.32
https://www.zealty.ca/mls-R2755874/682-PENDER-PLACE-Port-Coquitlam-BC/
A guy on here from Surrey highlighted a similar strategy a few months ago, it had a similar asking price, the assessment was slightly higher, somewhere around 1.45 and I think it eventually sold for around 1.25.
The difference in that case was they didn’t need to get a certain number to not lose money, it was an old purchase and it was all gravy.
I’ve been staying away from the Pink Snow ( losses on flips) and focusing on showing relatively affordable options, as that what people who contacted me on my blog wanted help with the most.
Having said that, I say a stat the other day with a couple of days left in the month of February, a guy had ran the stats for sales that month concerning properties bought in the last 5 years, like yours, and slightly less than 10% had lost money.
That was just one month, the market is a lot different than last year, most people o.k at the moment but 1 in 10 not so much, so hopefully they continue to do this so we can see if the debt load is breaking the bridge.
Coquitlam is where people go to quite quit…
M48BC
STATE OF FLUX
Optimistic & Pessimistic scenarios – today and 2 days ago.
You argued both. Nicely done Garth.
Balance.
A very good thing.
What do I think?
Most Likely scenario somewhere in between?
Then again, nobody really knows. Wait and see.
Agreed. I am controlling what I can in terms of investing, living life and that’s good enough for me.
“So let’s look on the dark side.”
*************
More objective than dark, I reckon….it’s the culmination of years of loose monetary policy that resulted in people engorging themselves with debt…followed by the unfortunate who felt that they had to overextend to keep up. The banks have most of this factored in, I’m sure.
Those who were calling for a weakened stress test are looking mighty foolish.
People love to talk a doomsday scenario. From the forties into the seventies, Canada had a huge middle class for many reasons, as working people got a piece of productivity increases in their wages and were able to make significant gains in real incomes.
In the eighties the two income family became the norm, as interest rates peaked and started to decline. The nineties began a decline in interest rates that lasted for decades and went farther than most baby boomers could have imagined. All of these major trends built and maintained a sizeable working and professional middle class, anchored by a high rate of home ownership.
At this point with expensive real estate, real wages still in decline, massive household debt and interest rates resetting to a new range, it’s really difficult to see a new secular macro trend that will drive the economy for real people. A lot more money is going to go into the cost of living and interest expenses, and I can’t see a scenario where the economy grows strongly.
There certainly could be higher commodity prices for the next decade, but it’s a challenging jurisdiction to get projects to production and the replacement of labor by capital and technology continues.
Look for massive immigration to prop up growth, continued large demand for housing, and a combination of NIMBY’s, ESG advocates and an increasingly broken democracy as major challenges for Canada.
So half of CIBC customers have hit their trigger wow
sounds like a soft landing to me.
‘Louie’ looks like a real character!
I had wondered how banks might deal with the fallout from rising rates that trigger higher payments. Have to say, would NOT want to be any of the over-indebted who are seeing $ being added to their debt owing.
Something I’m wondering about. I know that there are limits on ‘legal’ interest, which last I heard tops out at 60%. Are there any restrictions/legal limits for amortization periods? So even if the lenders wanted to they can’t for instance offer a 40 or even 50 year amortization period?
“All the banks are doing it. Amortization periods have been extended for fixed-payment, variable-rate mortgages in order to stay onside with the regulator” – GT +++
There used to be a poster named ‘Chaos’ on this blog who said some interesting things, including this : ‘ At the peak of a debt cycle, all efforts are directed towards increasing the debt, because there is no painless way down. The only solution to a debt fueled bubble is collapse’.
Smart, that Chaos guy. That was back in mid 2019 before Covid arrived and the housing market blew its brains out with escalating and unrealistic property valuations and peeps scurried off to Bunnypatch and other locales. Even before Covid arrived property valuations were way too high in GVA/GTA. The price drops achieved in 2022/2023 only trimmed off a little Covid fat.
If extending amortizations in order “that amount is being re-applied to their principal” isn’t fully understood by peeps with mortgages as ‘increasing the debt’, they need to sign up for a night class in mathmatics. This is a runaway train, and casting a doubtful eye at news headlines signaling that ‘ real estate sales are rising again’ (coincidentally right at the start of the annual rutting season) doesn’t make one a Doomer but perhaps cautionary. It isn’t just residential real estate. It’s commercial real estate. WFH, retail storefront, mom&pop shops, and restaurants. There’s a movie out now called ‘Everything Everywhere All at Once’. Seems fitting.
As ‘Chaos’ wrote: ‘The Minsky moment approaches. All efforts must be deployed to delay it as long as possible.’ That’s sure how it looks from the cheap seats.
What’s the problem? If the banks can allocate 35-yr amortizations, then our illustrious Photo-op Minister can also unveil multi-generational 70-ur amortizations to make housing “more” affordable. I guess I should stuff my pathetic FHSA with bank stocks. Jack-up those juicy divvies!
Tiff pauses now then is forced to follow the Fed moving forward. Takes BoC off the front burner. Political posturing is all it is at this point.
Jekyll and Hyde: one day, everything is good, inflation is getting closer to being under control, there are now bidding wars on some houses in prime neighbourhoods again, no further declines, and will be a good year for equity markets etc…… The second half of this post is, to the same the least, rather at odds with the rosier scenario. My sense says that it is the latter that more accurately reflects reality and what will transpire over the next year.
So half the bank’s variable-rate customers hit their trigger and have ceased to pay off debt with monthlies insufficient to service it.-GT
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Typo alert. Not half, only 20%.
https://www.theglobeandmail.com/business/article-mortgage-negative-amortizations-cibc/
There is a lot of wage increase in the pipeline that will help spur the second wave of inflation.
The financial conditions index shows “looseness” equivalent to a year ago, before rate hiking really started. Tightening peaked in August. We’ve seen assets rally hard since that peak. Namely equities and more recently homes.
There’s so much money sluicing around, so little regulation, and so much FOMO that the system is hypersensitive. This reminds me of something called the nuclear “Demon Core”. The principle is that, when contained, the mass would stay sub-critical and all would be well. But, with the slightest bit of tampering, supercriticality is reached and massive radiation doses delivered. Any easing and inflation spikes here in a very convex way like cracking open the “Demon Core”.
CB induced rates need to go up and stay up until way more pain is felt. With 2.7 years on my fixed mortgage, I’m not looking forward to any crushing rates. But it probably has to happen.
#7 TurnerNation on 03.05.23 at 2:46 pm
#36 Alois on 03.04.23 at 1:07 pm
^Ear to the ground brotha. Are we to be kicked off the land (again) via policy? Land sequestered and roped off for ‘Climate”? Wars are fought over LAND.
In 2020, which was in my opinion the start of global WW3, many anti-personel tactics were taken against us.
Land roped off with Yellow caution tape. Unsafe. HUMANS stay away. P.s. that’s us.
======================
Re Cabins and recreational property…
Thanks for insight by you and others
…….it supports my premise that Non SFH property will not have demand and thus price support….moreso once the property is inherited by future generations.
In our family..I have a majority interest in a waterfront cabin….its 300 miles away/6 hour drive…More hassle and cost..novelty is worn off..I plan to cash out.
We’ve owned it since 1974….but the new class of owners bring up all their loud and expensive toys and the peace and tranquility is looooong gone.
I reread it. Nevermind.
Unions are going all macho, threatening to explode wage settlements. (Like the CRA’s 35,000 workers scrabbling for a 30% increase.)
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Before anyone at the CRA gets a raise, what exactly is the CRA doing about collecting taxes from illegal activity? A few years ago we heard they would be cracking down on off shore income, house flipping, etc., to help reduce the income tax “GAP”. The last report stated there was approximately 23b in uncollected tax per year, but that report was in 2018, almost five years ago. Since then the CRA has hired thousands boosting their employees to 54 thousand. So, where’s the beef? Now we’re told they want a 30 percent pay increase as they refuse to come into the office. I guess performance and results are not something that enters into the equation when it comes to financial compensation. Every cent of uncollected tax has to come from some law abiding citizen who pays what they owe, and that alone should have folks demanding better results from the CRA. Are we just going to ignore the issue, perhaps just write it off much like the uncollected 27b in CERB payments? The CRA is failing us…..big time.
https://www.canada.ca/en/revenue-agency/corporate/about-canada-revenue-agency-cra/tax-canada-a-conceptual-study/tax-gap-brief-overview/overall-federal-tax-gap-report.html
https://nationalpost.com/news/politics/auditor-general-27-billion-suspicious-covid-payments
#23 Ed on 03.05.23 at 3:20 pm
I don’t know anyone that has not frequented WalMart, Costco or Crappy Tire but I know no one that ever went to a Nordstrom. Don’t have a clue what they even sell.
********
I frequented Nordstrom in Vancouver and the in-house coffee shop is second to none with great staff and baked goods…lots of space to sit and watch the city pace roll by through the big windows….I bought good brands there like Zergrand shoes which cost more but last a long time (still have the first pair I bought there) and look like the quality that they are. Great store and will be missed.
I never would have predicted that Greater Fools’s idiocy would be the ultimate cause of 50-year mortgages. It’s a coming … because no politician is ever going to sacrifice their career or party to kill this toxic RE cow.
“Meanwhile CIBC reveals $52 billion… “relates to mortgages in which all of the fixed contractual payments are currently being applied to interest.””
^If the average size of mortgage there is half a million this means roughly 104,000 homeowners [sic] “own nothing and will be happy”? I sarc but…
———
For the Muskers, Elon is a frontman for the globalists.
Everything old is new again. Tesla “The People’s Car” — unaffordable to most, may be remote controlled once your social credit score drops. There’s no escaping those Starlink satellites. Those keeping close eye will recognize a military operation when they see one. But he’s so goofy on Twitter and makes me laugh. I am lulled.
https://www.carscoops.com/2021/03/bolivian-president-accuses-elon-musk-and-tesla-of-being-involved-in-countrys-2019-coup/amp/
At a joint press conference with the President of Mexico Andres Manuel Lopez Obrador, the Bolivian President thanked Mexico for offering political asylum to Evo Morales and himself after the 2019 events, adding that the financial reason behind the overthrow of Morales was none other than Bolivia’s vast reserves of lithium, and Tesla, El Sol de Mexico reports.
——-
File this under Control over our Breeding/Feeding. Here in this tax slave farm. Our farmers:
https://www.canada.ca/en/health-canada/services/consumer-product-safety/pesticides-pest-management/public/consultations/proposed-special-review-decision/2023/atrazine.html
2023: Health Canada is currently consulting on its second special review of atrazine.
This consultation is on the proposed decision to:
– continue to allow most uses of atrazine, with new and additional risk management measures
“‘atrazine side effects on males””
Atrazine-exposed males suffered from depressed testosterone, decreased breeding gland size, demasculinized/feminized laryngeal development, suppressed mating behavior, reduced spermatogenesis, and decreased fertility.
..”Canadian officials last fall ordered Chinese companies to sell stakes in three Toronto-listed lithium companies, two of which are developing mines outside Canada.
https://www.reuters.com/world/americas/miners-grow-anxious-canada-tightens-foreign-investment-rules-2023-03-05/
Of course you could always pay over 400 per square for a lovely 1972 single wide trailer here in sleepy little Parksville.
https://www.realtor.ca/real-estate/25156499/963-riley-rd-parksville-french-creek
I’m not sure who would be in the market for a 51 year old trailer, banging on a half millski? Retirees? Starter? Forever Home?
Madness abounds.
How long can the overextended mortgagee hang on paying just interest (some not only that). The only sensible thing is to bail, admit defeat, retreat with grace, live to fight another day. I think more supply is coming to the market.
“better days may be upon us. Housing prices creeping higher.”
How does this constitute ‘better days’?
I thought the goal was lower prices?
Not for the 70% of people who own. – Garth
One dimension to all of this that lies somewhere between no big deal and Titanic-killing iceberg is the amount of mortgage fraud in this country. It’s gotten a little coverage, but some people, with the help of shady mortgage brokers, lied about their income so they could qualify for a bigger mortgage, this circumventing the protective effect of the stress test.
We know it’s happening. We just don’t know how big.
Compare to a one bed crappy condo in Canada for the same money!!
Canadian real estate investors are idiots and losers!!
https://countrylifedreams.com/circa-1856-horse-farm-for-sale-on-74-acres-new-york-509000/?fbclid=IwAR2oyN21W0q0CqnPmzkRblPo_le2SgTeOwh5OndXuIXAZIv2xsu8w6otunE
If the banks are avoiding forclosures by increasing principal amounts owed, it shows just how terrified they are of a big real estate correction. Also banks must by law, mark their loans to market which will increase loan loss provisions and shrink their capital reserves and reduce lending. What if the banks are using fanciful market values to cover up. Is there political interference here? This could lead to shareholder lawsuits against the banks.
Relax. These are regulated, permitted activities. Banks do not want to own anyone’s house. They want monthly payments, and this is a way to ensure those continue. – Garth
#23 Ed on 03.05.23 at 3:20 pm
I don’t know anyone that has not frequented WalMart, Costco or Crappy Tire but I know no one that ever went to a Nordstrom. Don’t have a clue what they even sell
The folks who manage our stuff puts up fairly current info posts on the client side of their website.
Their position, backed up by loads of links and etc. is that Nordstrom sacrificed the Canadian operations in order to save the US operations.
Nothing to do with Canada or Canadians, in fact apparently all the Canadian stores were profitable. Some not as much as others but just like the Target fiasco it is once again US mismanagement that is impacting Canada. Canadian jobs.
Why do they announce they will pause way in advance? Shouldn’t they make the desicion with the most up to date information ie this week?
Great post, exactly what I’ve been saying all along, no one knows how this will turn out. Its possible that it will be all good. Its also possible that it won’t be. Literally nothing any of us we can do about it either. IMO this was a financial disaster in the making, and the notion that its impossible for RE prices can’t or won’t tank 50% is illogical. I know my area, and in the last 10 years detached homes have risen from the mid 500s to 1.5mil. It literally makes no sense, incomes haven’t gone up anywhere near this. So 50% drop down to 750k makes complete sense, and they will still be expensive. Obviously every area is different,but just because it hasn’t happened yet doesn’t mean it can’t, I’m sure people in the late 80s said the same thing. I could easily see rates staying plus 5% for a few years,and RE prices will slow melt just like Mr. Turner has said in the past. Take his advice, don’t have all eggs in one basket Good luck to everyone,
There is zero need to worry about having CDIC insurance. If a major bank fails we’re doomed. And it’s not happening. – Garth
No, it’s overdue. Northern rock, banks in the US, Europe. It’s irrelevant it’s a shock to the system that brings change and might I say the Canadian swear word “competition”?
No systemically-important Canadian bank will fail. Period. – Garth
Just loaded up on BCE…almost a 6.5% yield…not bad Garth!
#5 Ustabe on 03.05.23 at 2:44 pm
I never post links.
https://mgamble.ca/this-is-not-my-conservative-party/
^^^^^^^^^^^^
Yup. Thanks for the link.
#11 Jacob on 03.05.23 at 2:54 pm
And I’m asking myself a question: who are the commenters on this blog? By the last survey they are all millionaires and living a great life, but by the latest comments they are proud to be driving 10 years old Corollas
++++++++++++++++++
This is why many “people with money” have the money. Bling is not necessary, financial security/independence is. Btw my car is 22 years old and still looks and drives like new.
Banks are doing what they can to kick the can down the road. Forced sales are the last thing they want so a little mathematical sleight of hand goes a long way in avoiding that. It’ll all be over in a few months.
And yet.
Shopify (-1,000 jobs), Nordstrom (-2,500 jobs), both on the consumer spending side of the economy. Not to mention, closer to home, SIL just got laid off by a start-up that ran out of cash, not the only one by a long shot. If that’s a trend instead of a cycle, we’re in for something.
Things do seem puckered-up out there.
Canada added 220,000 jobs in the last couple of months. These current layoffs are inconsequential. Unless it’s you. – Garth
#127 Sail Away on 03.05.23 at 11:58 am
Ok, let’s wade into renewables…
Renewables are feasible. Maybe not everywhere and not immediately, but definitely feasible. As long as there are no flash-booms.
=================================
COMMENT:
I really hoped that these alternate energy sources (ie Wind,… Solar)would be viable and displace conventional “alleged polluting” options.
Not gonna happen.
Nada…
Period.
Like a Grimm’s brothers Fairy Tale ….far too many pitfalls and landmines for dupes and suckers. Careful following the breadcrumb trail ….
I won’t overwhelm anyone with the overwhelming case……but one point is “Wind” and “Solar” can/will produce “some” electricity “aka …”power”… for say ” EV’s”…but where are some of the basic resources to create crucial components for the EV going to be derived from ?
People have every right to buy an EV..
…but please don’t insult the intelligence of others who have done their homework, especially “Cultural Marxism” …and choose to pursue options that take Junk Science to the mat it will never recover from.
Sad story in the Tor Star about Milton being the most mortgaged city in Canada (80 % have mortgage debt)….With increase in rates, inflation, etc causing many to turn to food banks..Also investors starting to offload properties due to rate increases.
If I cause a crash while using self-driving features, am I considered responsible?
Humans are still on the hook behind the wheel — for now, anyway — and it’s still up to drivers to watch the road
https://www.richmond-news.com/highlights/if-i-cause-a-crash-while-using-self-driving-features-am-i-considered-responsible-6650621
=========================
Well I concur…
Otherwise we will need Robo Lawyers…
(redundant?)
Well, I don’t know much about the job numbers except that they do seem to be back to the pre-covid trend. Nothing spectacular though.
And I don’t know much about interest rates either except that they are still negative in real terms, which somehow implies money is worth more in the future than it is now. I thought that only works in a deflationary environment? But what I do know is that inflation is baked into the cake. Monetary policy can’t fix it because the problem is fiscal in nature. We are already at the point where the debt has gone exponential, and it can’t be fixed. There is no political will. All monetary policy can do at this point is slow inflation, but it can’t stop it. And perversely, although anyone skilled in math could see it coming, now increases in interest rates accelerate the increase in debt rather than slowing it down. Our goose is cooked.
Then there is the biblical adder: The future is very uncertain, and no one knows when for them the end comes; but we know it comes. Therefore the rational thing to do is still to “Eat, drink, and be merry, for tomorrow we die.” Everyone will do their own calculation but I figure that is worth about 3.5%/year right there. You can’t take it with you. And the government does everything they can to make sure you can’t leave much of it to your kids either. Garth even wants them to go after your house.
They say that the purchasing power of the dollar has declined a whopping 97% since 1913. Well, those numbers aren’t really true, because you can buy a lot of things now that couldn’t be bought at any price in 1913. Your phone being a good example. What’s that worth? I don’t know but people place a high value on them. But there is no doubt that the dollar ain’t what it use to be. That trend is unstoppable. Somehow I think the phone should cost something less than a thousand dollars. They mass produce the things. They are made out of sand and oil and a bit of copper.
As always, buy all the things. Maybe even a house. You may lose money on it, at least for a while. But you are losing your time either way.
———————————
Hmm I thought maybe I might repower my boat since I’m still running an old 2-stroke. A new replacement, with less power, but yes it does smoke less, will cost more than the whole boat did originally. “Oh ya, boats, they are for the rich so we don’t care.” But the same thing happened with car engines and the transmission in my tractor, and now even milk and eggs. This is the real face of inflation. And it didn’t start with Trudeau. It is the face of socialism, no matter who the patsy we appoint to steer the sinking ship happens to be.
But since we can’t get off this boat, we may as well enjoy the music while the band is still playing.
The last month or so of blog posts with the certainty the Tiff landed the plane sure aged well.
I mean, nobody ever really knows, but rather than talk in probabilities, the discourse being spouted is just….wow
Who would’ve possibly guessed that Tif would have to (eventually follow the Fed)?
Almost every blog post these days is something along the lines of Garth vs the “doomers” in the comments section. I am starting to think Garth hates a lot of the views of his audience. It’s fascinating to watch. Interesting social experiment, to start a blog that preaches a housing crash for over a decade and then suddenly turn. I love it. It really threw everybody off. Now Garth has doubled down on that position and it’s on. Will this blog make it to the end of 2023?
I did not forecast a housing ‘crash’, but volatility and a correction – which we just got (30%). The problem is that people want extremes, and the world does not work that way. One of us (steerage section or host) will be correct. I have no doubt which one. – Garth
Unions are going all macho, threatening to explode wage settlements.
——
It’s been 15+ years of 0-1% wage bumps for me, damn right I want my union to get macho.
45 Prankster
“Of course you could always pay over 400 per square for a lovely 1972 single wide trailer here in sleepy little Parksville.”
———————————————————
It’s on a city sized building lot of over 7000 sq ft so most of the “value” is in the land. I’ve either seen this listing before or other ones in that ‘hood. It is different in that aspect. I note there are listings for smaller SFDs starting in the 600k+ range in the PQ area.
Real estate prices will not return to normal due to the PR capital gain exclusion and to the Canadian culture of house worship. It is quite clear the average Canadian firmly believes real estate ownership is the pathway to riches, more so than salaried employment, opening an RRSP, or starting a business.
It doesn’t help that in Ontario, the average detached bungalow now makes more annually on an after-tax basis than the average salaried worker.
Our smaller city downtowns are filled with former small businesses that are now divided up into slum-level rentals. In other words, the money to be made is in real estate, not in operating these businesses as going concerns. Meanwhile on the outskirts of these cities, farmland is being bought up by developers to put up single family detached monster homes. Again, real estate is where the money is, not in farming operations.
I feel sorry for the younger generations. Outside of inheritance, they have no chance of ever owning property.
#57 Yukon Elvis on 03.05.23 at 5:23 pm
#11 Jacob on 03.05.23 at 2:54 pm
And I’m asking myself a question: who are the commenters on this blog? By the last survey they are all millionaires and living a great life, but by the latest comments they are proud to be driving 10 years old Corollas
++++++++++++++++++
This is why many “people with money” have the money. Bling is not necessary, financial security/independence is. Btw my car is 22 years old and still looks and drives like new.
———-
No rich people commenting here.
They are busy making money.
Following Garth’s advice.
There goes the boc’s credibility. If they had any remaining….
Stuff changes. Policy-makers need to change with it. – Garth
#50 Norman Bigbird on 03.05.23 at 4:54 pm
If the banks are avoiding forclosures by increasing principal amounts owed, it shows just how terrified they are of a big real estate correction. Also banks must by law, mark their loans to market which will increase loan loss provisions and shrink their capital reserves and reduce lending. What if the banks are using fanciful market values to cover up. Is there political interference here? This could lead to shareholder lawsuits against the banks.
—————–
Marking to market?
That’s correct. But it takes a few years to show a trend downwards. Then the auditors step in.
It happened in the 80s. Quite painful for some Credit Unions.
And what is the market, right now?
Not enough sales right now.
During the CERB days of the pandemic, raccoons were getting fat due to more people working from home and eating their lunches there.
In addition, the majority of the lunches were Uber Eats and Door Dash which enriched the calories for raccoons.
I wonder if my fellow raccoons are still getting Uber Eats in their garbage cans lately.
Not me.
The CERB money is finished and Door Dash goodies are at an all time low.
Wonder were the electricity to power all the EVs will come from?
You should.
Especially with AI and Metaverse coming.
Apparently they use enormous amounts of electric power.
And don’t forget the Cryptos.
Maybe you’ll have to forget about your “cheap” digital trip Paris.
I’m reading about listing prices, which are obviously easy to verify, but who get’s to know the real sale prices?
They are not published, except on the MLS Systems (Ontario). So the people claiming houses are selling for xyz $$ are guessing, not knowing. All anecdotal. And your neighbour who sold for over asking, is he telling you the truth. I’ve been in RE since 1984 and don’t believe everything the RE Boards are telling you.
Work with an agent. Sold stats are freely available. Also on several specialty sites. – Garth
I did not forecast a housing ‘crash’, but volatility and a correction – which we just got (30%). The problem is that people want extremes, and the world does not work that way. One of us (steerage section or host) will be correct. I have no doubt which one. – Garth
Agree. The same disconnect can be found in the political makeup as well.
Like Garth, I remember when it was possible to elect a governing party from the Progressive Conservative side of things. A titch right of center. Don’t even try telling me that the various permutations of so-called conservatism that some provincial politicians wear is true conservatism either. Doug Ford is a Progressive Conservative? Ha. Flags of convenience worn to obtain and hold onto power, period.
As it stands it is going to be long time before the cons gain the leadership of this country if they embrace the extremes as they currently do. So, nothing gets done, no policy gets made…stalemate, driving folks further into the extreme end of things. That isn’t the solution tho…
Big tent, people. Welcoming, inclusive, discussing not yelling, sometimes even capitulating. Certainly not having drinks and dinner with foreign Nazis.
Red Torry, Blue Tory…whatever. Read the blog I posted earlier today, those are the folks you leave behind when you go extreme. Trouble is some of you don’t even acknowledge that you are extreme because you can’t see it. Or won’t.
“For those whose payments can’t meet their contractual payment obligations,” it says, “that amount is being re-applied to their principal.”
All the banks are doing it. Amortization periods have been extended for fixed-payment, variable-rate mortgages in order to stay onside with the regulator.
—————-
Isn’t this just wonderful for the banks – such generosity. What about the renters who can’t afford astronomical rent increases – whose got their backs?
Homeowner debt is being increased. It’s no bail-out. – Garth
Sure, nothing to panic and worry about.
Jumping form the top of a 100 stores building and we he have not hit the ground yet. While further accelerating fast.
Keep calm while Titanic is sinking. Enjoy the music. Lifeboats are already busy so what can you do?
Pretty sound advice.
————————-
I said that all this rush in the rate increases by BoC was just theatrics. Their communication is like that of a fifth grader. They hoped to create the optics that they are doing their job when miserably and pathetically failing in it.
The fiasco with the statements that rates will stay low for a long time just prior to raising it from 0.25 to 4.5 %.
Then the faked ‘rush’ to raise rates announcing that this was it/the top in rates/ just prior to the Fed saying that they will keep raising rates.
With BoC perfectly well knowing that they have to follow the Fed’s lead or else currency will tank and tsunami of inflation will drown us with the loonie possibly in the low 0.6 -ish range just as a start.
———————
The change or mortgages amortization duration is a practical default. Period. Pulling more demand from the future while already all the potential demand and much more on credit is pulled to the present.
What follows next? 40, 50 years mortgages? What will happen when these increased percentile of 35 years + mortgages can’t cover even the interest rate payments that will have to be added to the principal?
——————————–
As for how ‘the world works in a housing crash’ we can see if we choose to look at the Japan’s example. 70 % crash from the top. With zero rates and huge debt as a result. Debt that we already have and can’t afford more.
—————————
A lot of people comment here from pure schadenfreude.
Last time I checked majority of people with net worth 1-10 millions (not in houses but in liquid assets) drive their old cars. The poor drive audi-es on lease.
Inflation in necessities is fast accelerating and we witness 20 -25 % yearly food inflation on world scale, with basic services following up closely.
You can’t beat roaring inflation with strongly negative real rates and hot job market.
No amount of lying and massaging data with ‘preferred measures’ will change the reality or subdue inflation.
If rates do not climb toward double digits and become strongly positive, i.e. higher than real inflation, the feedback look will remain strongly positive and we could have inflation out of control.
Maybe it already it.
As I said, everyone attempting to prematurely declare a win against inflation will fall on his/her face.
Unfortunately our central bankers are in that category.
For them the cost of money is what the indebted to the eyeballs credit junkie cans pay, not what markets demand.
And we all will pay the price. We are already paying it, but much more to come.
> Homeowner debt is being increased. It’s no bail-out. – Garth
Me: Can I have a $900,000 mortgage?
Bank: No you idiot, but here’s a $750,000 mortgage
….8 months later
Bank: …..you now have the equivalent of the $900,000 mortgage that we declined you for 8 months ago….pretty please keep paying interest only?
#3 Proud Truck Driver
“The question is: How stolen and copied technologies (Chinese) can be more advanced than the original ones (American)?”
This is because the Chinese are focused on studying math, science and engineering while the US and Canada are focused on studying CRT, equity, diversity and inclusion!!
Federal outsourcing on pace to reach record $21.4-billion this year
In a PBO report, Yves Giroux notes that outsourcing costs — officially described as professional and special services — have increased by over a third since the 2017/18 fiscal year.
Simultaneously, the federal public service climbed to 335,957 employees in 2022, up 28% from 262,696 in 2017
etc etc.
Exactly. Instead, if it were to happen, the taxpayer will be completely screwed over, and will bail out, and bail in the failing bank. And in the same sentence, politicans will tell us how wonderful the Canadian banking system is.
You know..the same way our healthcare system is still so wonderful. Oh, wait…
====================================
No systemically-important Canadian bank will fail. Period. – Garth
Sounds like life long customers. What’s not to like?
A totally renewable sustainable global energy future is enivitable. The question is when. I think it will happen within twenty years( to 80%). Within 30-40 years, there will be enough excess energy avalible in off peak times to address water desalination at large scale to hydrate drought hit areas and perhaps atmospheric CO2 removal to reverse some of the climate change . This can be easily financed through reduced fossel fuel subsities. It is all about exponentially reducing cost curves. (Wrights Law)
Also enivitable will be fully autonomous self driving cars. The liability of any accidents will be the manufacturer of the autonomous software. It has to be, because few people will actually own the vehicles in ten years, but just be paying passengers (TaaS) (Transportation as a Service)
#73 Enquirer
I use housesigma.com
Create a free account and go ahead.
#47 Waystar Royco Shareholder on 03.05.23 at 4:46 pm
“better days may be upon us. Housing prices creeping higher.”
How does this constitute ‘better days’?
I thought the goal was lower prices?
Not for the 70% of people who own. – Garth
……….
Those 70% would still own homes if prices dropped….and maybe, just maybe, their kids could also afford a home!
Dreamer. – Garth
$45 Parksville Prankster “I’m not sure who would be in the market for a 51 year old trailer, banging on a half millski? Retirees? Starter? Forever Home?”
That’s nuts, and the cheapskate realtor can’t even be bothered to pay for decent photos.
Canada added 220,000 jobs in the last couple of months. These current layoffs are inconsequential. Unless it’s you. – Garth
Seems like a supporting argument for higher interest rates.
And the inverse relationship to real estate has been stated many times.
Interesting Chart on Mortgage Rate History for past 48 years. Seems the variable rate was the best way to go for 44 of those 48 years or 92% of the time.
I suspect we will see the banks soon offering the prime minus rates from their posted rates soon as they have done in prior years like they were doing at the peak in 2007.
The talk around the water cooler back then by the Gen Xers and Millies was how they were getting these awesome prime minus rates from the big banks and so loading up on real estate was the thing to do. Then the 2008 GFC hit and they took the BOC rate down to .25% in 2009. That soon ignited the house prices and why we are where we are today.
My son did well with his prime minus rate and was at one point paying a bit over 1% interest on his mortgage.
I doubt the banks want to own any of those houses where the owners can no longer pay the mortgage so after all this other stuff they are doing to keep the buyers in the houses, I expect we could see prime minus rates coming back big time.
So variable may not be such a bad thing or even 1 year fixed as we can see by the charts. So we may have seen the bottom for real estate for some time yet. After all, banks are in the business of lending money. Don’t expect them to raise the amount they are paying the savers on their high interest savings accounts. Free money for them. Yet, they will turn around and charge you 9 to 10 percent on your line of credit. I guess that’s why we invest in banks.
https://www.superbrokers.ca/tools/mortgage-rate-history
The joke of a country doesn’t even have a brain to lead it. And ain’t that the truth. Leave politics to the factotum banks.
If the banks stopped increasing the amortization periods maybe there would be more inventory.
What I can’t grasp is, how Tiff couldn’t know Poppa Fed wasn’t through with the necessary uppas. I knew that, and I’m not on payroll to have known that.
Maybe he thought he could sway the world with first dibs on pause policy? Ego play much Shorty?
Ponz, can you feed my head another milestone(r) lullaby?
Tiff should have started hiking earlier, he paused too soon, and should have kept his cards closer to his chest, ie, kept his yap shut.
#74 Ustabe on 03.05.23 at 7:06 pm
As it stands it is going to be long time before the cons gain the leadership of this country if they embrace the extremes as they currently do.
Maybe however, you can’t appeal to differing degrees of ‘woah that’s too much’ on a national level – that’s been not a winning strategy of the last decade. Fiscal conservatism is dead, right or left everyone want’s their free stuff or ‘freedom’ – neither are reasonable. Social conservatism is a spectrum from the cancelling the recent ‘woke’ apologetic, trans stuff all the way to Jordan Peterson level of regressing to the 1950s.
Thing is, in the last decade alone we’ve drifted so far left anything else is perceived as being a backwards dinosaur. So yes any moment in that direction will attract the usual flies and seem repulsive.
Top that off with our woefully outdated electoral system and here we are.
Gee
Animal “rights” activists in Montreal couldnt find any meat producers so……… they hung pigs?
https://montrealgazette.com/news/local-news/animal-rights-group-says-it-hung-frozen-pigs-from-montreal-viaducts-report
The irony of this is……
I was eating a delicious pork chop when this story crossed the newswire……….
Urrrrp!
@#65 Dave
“It’s been 15+ years of 0-1% wage bumps for me, damn right I want my union to get macho.”
++++
I run a union shop.
Most of my friends are in the union or mamagement.
I’ve been calling a Wage/price spiral up up up for months.
Inflation and interest rate hikes…just getting started….
This is the proverbial rock and a hard place.
Canada 4th quarter, no growth.
Tiffster’s hands already tied.
This is T2’s good ship Lollipop and the chickens are coming home to roost.
Next station stop is your 62 cent buck.
T2 and his cronies all have their guaranteed pensions. They already sold you down the river.
I laid it all out for you 5 years ago.
All you had to do was read my posts.
You can’t build an economy selling houses to one another. At some point management has to manage but the people have to hold management accountable. Unfortunately you need an intelligent populace to make it happen, we just don’t have that in this country. The intelligent ones moved south years ago to build all those internet companies.
Compare the returns of the S&P 500 to the TSX over the last 10 years, it’s enough to make you want to cry.
You were played for a fool.
#84 Lorne
Those 70% would still own homes if prices dropped….and maybe, just maybe, their kids could also afford a home!
Dreamer. – Garth
——————————-
Yup, in the new Canada, it is way too much to expect that your kids will have comparable opportunities to build wealth and purchase a home that you did. Two double income brain surgeons would be hardpressed to purchase an average home 2.5M home in Kitsilano without saving first for 20 years (and watching the goal posts shift in the interim) without family assistance. In 1996–1998 to teachers who had saved around 50-75K it was no big deal to purchase a basic house in dunbar for around 450–500K… How we have fallen…But be grateful, because we are not in Ukraine, or watching our livelihood devastated by flood or fire etc… But as soon as there are chances of a tax increase, or a survey by the Fraser institute on the radicalized mindset of young Canadians, then we should really discuss the hypothetical implications of this to those that have resources, and the idea that everyone needs to be “grateful” is put to the side…
Like I’ve been saying, Tiff has no choice. Why he even gets out of bed is the question. Consensus on US rates is now 6.5%. If Freeland – Trudeau ( yeah right I don’t even consider Tiff as being any part of this economic charade) keep robbing the treasury and avoiding reality the Loon will crater further and grocery bills ( mostly imported) will skyrocket at an even faster pace than present.
Inflation is already set to surge with the triple carbon tax coming down. Everything that’s carried in a truck or airplane will go up at the same rate. What’s that got to with mortgages? It’s the economy stupid. No one’s going to buy $C to ‘catch a falling knife’ and debt will plump by osmosis, because it’s a competition dummy. Canada is sitting with the ugly girls at the dance. Unlikely anyones first choice for investment. That means the cost of goods are going up, not down.
And if US rates hit 6.5% then Canada has to match that plus a risk premium. Hello Truinflation ( debt plus increased costs) for much longer than being bandied about in political circles, much much higher and longer. Tell me you get uncomfortable with income taxes at 100%. Maybe I’m missing something, can we really own nothing and be happy? I think many will find out the hard way.
#90 Wrk.dover on 03.05.23 at 9:07 pm
What I can’t grasp is, how Tiff couldn’t know Poppa Fed wasn’t through with the necessary uppas. I knew that, and I’m not on payroll to have known that.
Maybe he thought he could sway the world with first dibs on pause policy? Ego play much Shorty?
Ponz, can you feed my head another milestone(r) lullaby?
————————-
How about this one?
Comfortably Numb, Pink Floyd
Hello? (Hello? Hello? Hello?)
Is there anybody in there?
Just nod if you can hear me
Is there anyone home?
Come on now
I hear you’re feeling down
Well I can ease your pain
Get you on your feet again
Relax
I’ll need some information first
Just the basic facts
Can you show me where it hurts?
There is no pain you are receding
A distant ship smoke on the horizon
You are only coming through in waves
Your lips move but I can’t hear what you’re saying
When I was a child I had a fever
My hands felt just like two balloons
Now I’ve got that feeling once again
I can’t explain you would not understand
This is not how I am
I have become comfortably numb
I have become comfortably numb
#85 Elon Fanboy on 03.05.23 at 8:42 pm
$45 Parksville Prankster “I’m not sure who would be in the market for a 51 year old trailer, banging on a half millski? Retirees? Starter? Forever Home?”
That’s nuts, and the cheapskate realtor can’t even be bothered to pay for decent photos.
—————————————————————–
For years this has been something I could never figure out. You have a house trailer that age set up on a rental lot which you don’t own. You pay taxes as though you owned the lot and its valued as such. But if the trailer were to burn down, what do you have? Zilch. And the value of the trailer is also zilch. And people buy these things. Nutso.
In this particular case, they own the land which BC Ass. value at $309 grand and the trailer at $56.8 grand which is pretty crazy. And the owner is trying to get $111,200 over the assessment value of $363.8 grand. Another owner with severe dillusion disease.
#129 Faron on 03.05.23 at 12:23 pm
#124 Ponzius Pilatus on 03.05.23 at 11:33 am
#110 under the radar on 03.05.23 at 5:20 am
If the Metaverse is not gonna get us.
The Sugar will.
—
One of the greatest misdeeds done to the (American) consumer was convincing people what dietary (and adipose to a degree) fat was dangerous.
Seeing the words “cholesterol free” on a bag of candy is a serious mind fck.
*************
Pour some sugar on me
Ooh, in the name of love
Pour some sugar on me
C’mon, fire me up
Pour your sugar on me
I can’t get enough
#95 Reality is stark on 03.05.23 at 9:45 pm
Compare the returns of the S&P 500 to the TSX over the last 10 years, it’s enough to make you want to cry.
You’re right which is why I invest like an American, Canada is a pimple on their butt, at some points we are an annoying growth, others a cancer. Our leadership been consistently incompetent and does not give one fig about us. But hey we flip houses, are not at some war and are apparently perceived as less ugly than them.
So yay I guess?
#93 crowdedelevatorfartz on 03.05.23 at 9:30 pm
Gee
Animal “rights” activists in Montreal couldnt find any meat producers so……… they hung pigs?
https://montrealgazette.com/news/local-news/animal-rights-group-says-it-hung-frozen-pigs-from-montreal-viaducts-report
The irony of this is……
I was eating a delicious pork chop when this story crossed the newswire……….
Urrrrp!
—————
Oh man. As a proper opportunist, I would’ve been out with a trailer liberating those delicious pigs in a heartbeat.
Since housing is a significant component of CPI and the cost is rising due to the “feeling” that rates will not rise further YET the inflation rate is far off the 2% mark ( not even close in reality).
Thus if rates do not rise further to stop increasing the cost of housing then it is a poor decision.
No matter how you look at it, the BOC created a housing crisis and they think they can solve solve it without creating ANOTHER one. (They are scared of the monster they created.)
History has always shown this to be true.
Now Garth you’re telling us ” IT’S DIFFERENT THIS TIME”
The CB did not create a housing crisis. We did that. – Garth
One of us (steerage section or host) will be correct. I have no doubt which one. – Garth
As you wrote lately we had a correction recently and the bottom was at the beginning of January.
Then what was today’s blog post about? A “what if” speculation?
You want both sides or is that one too many? – Garth
Victoria ponders another ban on natural gas — this time on rezoned developments
The BC capital is debating a ban on gas ovens and heating for rezoned developments after several councillors proposed a motion to have them powered only by electricity.
https://www.rebelnews.com/victoria_british_columbia_ban_natural_gas_rezoned_development
=====================
I see no reason why we should pay any taxes that support these dregs of the public education system.
At least have the cajones to say/admit/confess
” COMMUNISM RULES ” !!!
#60 ts on 03.05.23 at 5:29 pm
Sad story in the Tor Star about Milton being the most mortgaged city in Canada (80 % have mortgage debt)….With increase in rates, inflation, etc causing many to turn to food banks..Also investors starting to offload properties due to rate increases.
—————————————————————-
Mortgage trap. Underwater and unable to sell as don’t have the money to pay the bank for the difference between mortgage and sale price. Prices down 24.3% in the year. If ma and pa funded the downpayment with a reverse mortgage on their home and the kiddies walk, bye bye retirement funds and home equity. Will be interesting to see how the banks stick handle this.
RE: #45 Parksville Prankster on 03.05.23 at 4:37 pm
Of course you could always pay over 400 per square for a lovely 1972 single wide trailer here in sleepy little Parksville.
https://www.realtor.ca/real-estate/25156499/963-riley-rd-parksville-french-creek
I’m not sure who would be in the market for a 51 year old trailer, banging on a half millski? Retirees? Starter? Forever Home?
=======================================
Well, considering that a similar sized empty lot in the area runs for around the same price, but this is a freehold property with a livable building on it…
Not saying the price is sane, but it’s not out of line with what other things are selling for in the area.
I’ve been listening to Peter Zeihan (he does the Youtube and newsletter thing) and compared to him, your bad news is almost Pollyanna-ish.
#77 Adam on 03.05.23 at 7:30 pm
Me: Can I have a $900,000 mortgage?
Bank: No you idiot, but here’s a $750,000 mortgage
….8 months later
Bank: …..you now have the equivalent of the $900,000 mortgage that we declined you for 8 months ago….pretty please keep paying interest only?
**************************
Yeah, so finish the thought, please:
You: can I have 900k mortgage?
Bank: Yes
8 months later
Bank: that’s now a 1.08m mortgage, can you keep making payments
You: no…
—————————–
So now do you understand why the banks said no?
It’s like those idiots who ask
“Why can’t I have a $1200/mo mortgage when I’m paying $1200/mo rent?
-Because interest rates & payments can change drastically.
It’s why we have the stress test and other calculations. Loans aren’t given out on a “best-case” scenario.
I would say that this stuff really needs to be taught in schools, but if regular readers here can’t even grasp the concept I guess it wouldn’t make a difference.
@KobeissiLetter
In 2022, the average 401k balance in the U.S. lost 23%.
What’s even more worrisome is that the average 401k balance is now just $103,900.
A record 48% of retired Americans will outlive their savings.
67% of retired Americans have unpaid credit card debt.
The U.S. Now Has:
1. Record $16.5 trillion in household debt
2. Record $11.9 trillion in mortgages
3. Record $1.6 trillion in auto loans
4. Record $986 billion in credit card debt
Total mortgage debt is now more than double the 2006 peak.
Meanwhile, 36% of Americans have more credit card debt than savings with balances rising at the fastest pace since 1999.
This is all while mortgage rates just hit 7.1% and credit card debt rates hit a record 24.9%.
We are “fighting” inflation with debt.
Meanwhile, interest rates are rising at their fastest pace in history.
The average payment on a new mortgage has risen by 61% in just 18 months.
The average American is spending a record 46% of their income on house payments.
Debt is being used to purchase basic necessities.
The worst part?
The US government now has $31 trillion in debt.
That’s expected to hit $50 trillion within the next 10 years.
Annual interest on this debt is set to cross a RECORD $500 billion this year.
This can’t end well.
#3 Proud Truck Driver on 03.05.23 at 2:43 pm
1st?
______________________
Weekend musing 1:
This brand-new research report (02 Mar 2023) by the Aussie think tank (ASPI) is confounding to the unspeakable extent. It claims that China is ahead of US in 37 out of 44 critical technologies.
The question is: How stolen and copied technologies (Chinese) can be more advanced than the original ones (American)?
I guess the inevitable correct conclusion is: this Aussie think tank must be a ChiCom paid shill spreading propaganda. Election interfering?
Anyway, read it for what’s worth:
China takes ‘stunning lead’ in key technological research, think tank says
https://www.japantimes.co.jp/news/2023/03/03/world/china-lead-tech/
====================================
Because our government requires public support in order to make significant moves. Democracies all over the world use propaganda just like the Chinese in order to get things done. The only difference is we do not do it in such an insidious way with malfeasance in our intent. if somebody wants to pass a bill or make a significant change to government they will need to drum up public support and the best way to drum up public support is to sell some fear. Garth has many times reiterated that selling fear is the most powerful way to change one’s mind. This is not lost on our governments and our media. so when our government sees a problem on the horizon and needs to fix it they will drum up some propaganda and sell it in the best way they know how. Ask any realtor how fear sells!
Virtually every statistic that comes out of China is manipulated. I remember back when they were all bragging that their kids had the highest scores in mathematics in the world. That was 100% BS! They only used the Shanghai schools for the elite that cost 20 to $50,000 a year for tuition and had full on western instructors! The USA included Arkansas scores. And if you saw some study that said it was a much broader study it was just simply a lie!
“Face” matters in China. In the West we don’t seem to care too much about our stature. At least not to the level where we will go to great lengths to lie and get caught and then face the same people you’ve lied to the next day with a straight face!
It astonishes me to see the level of naivete as to how much people will swallow without checking the source! I’ve spent several years in China and that qualifies me for nothing! But I can tell you I’ve never seen a country with more embedded lies than China.
I have a lot of friends in China who are Chinese and they are trustworthy people but the people who are monetized and politicized are extremely aggressive and will stop at nothing to get their way. I will bet that most of those patents are garbage patents and they probably have a Patent Churning department in the CCP. In fact I would really and truly bet money on that right now! Even though I don’t know!
Any businessman knows full well that for the last 40 years patent compliance is a joke in China. Only friends of the CCP that pay homage to the right people get immediate and effective patent protection as long as there is no one higher ranking that needs to use the same patent.
At street level it’s a great country with great people just like any other. At higher levels it’s filled with dangerous people with sensitive egos!
So Garth, there’s rumblings of OFSI changes coming this summer. Are they going to address these over 25y amortizations? The potential of a systematic problem seems real…
102 Sail Away
Your comment shows you have no idea of the suffering pigs go through nor have the empathy to imagine what it would be like to be in their shoes. Easy to laugh at their suffering knowing you will never have to endure what they do. You are a coward unless you volunteer to go through what they do – kept in a coffin like cage all your life unable to even turn around, having your body mutilated without anaesthetic, sent to slaughter to either be suffocated to death (gas chamber) or stunned (sometimes regaining consciousness) then your throat slit and sometimes boiled alive Otherwise you are like a spectator at a gladiator event comfortably cheering on violence knowing you are protected from experiencing it. FU.
#109 SoggyShorts: well said!
The CB did not create a housing crisis. We did that. – Garth
Sure, it was the market forces (dog forbid the untouchable and always correct holly cow – the CB) that kept interest rates at zero for close to 15 years incentivizing the credit boom and CB did not state that rates will stay low for a very long time.
CBs did not buy bonds and MBS at will, providing ‘liquidity’ and ‘diversifying holdings’, it was some other mystery buyer.
/sarcasm off
And no, it is not the drug dealers fault for the drug crisis, it is the addicts’ fault.
Thank your for your indulgence Ponz, if you haven’t listened to Roger Waters theme album ‘Amused to Death’, please do so. You will be very glad you did. I enjoyed his ‘Radio KAOS’ much more musically, but the other tells the story of what became of us, beginning in WWI, culminating as soon as tomorrow, if not later on today!
Spoiler alert, neither story albums have survivors.
Does anyone remember Modern Monetary Theory?
If you are a Canadian developer, builder or realtor with many millions on the line, you are hooped. Canadians & immigrants are dumping overpriced real estate, homes, condos, townhomes etc to pick up cheap snowbird homes across the southern USA sunbelt states to move to before selling out of Canada completely. No one in their right mind wants to shovel snow or crack ice as they get older. Game over Dumbos You blew it again. People will always do this & don’t give a damn about you or your problems
Did the CBC “out” its own employees?
https://nationalpost.com/news/cbc-employees-confidential-personal-information
Staff were asked to fill out confidential survey questionnaires at a diversity seminar….
Only to have those answers published in the online, employee accessible, company link.
Kinda like a Confessional booth with a video link to the staff lunchroom?
Gee now their own staff dont trust the CBC?
You want both sides or is that one too many? – Garth
But if you don’t believe the second side will happen, what’s the point?
Garth – that was my dad’s name btw. Your blog is always a treat to read despite how some posters continue to throw their digital mud on this board. Your advice is sound, mature, cautious and bold all at once. I’ve lived in several countries and my wife is Hungarian and grew up under Communism. We know what you mean when you advise all to be grateful. Most in this country haven’t a clue and the griping is beyond us. But that’s an open democracy for you – better to gripe than to remain silent under the jackboot alternative.
It kind of doesn’t matter whether 20% of debtors or 50% are in trouble. The US clearly demonstrated in 2007 that the threshold is 10% for a real estate debacle.
And we’re well past the American threshold, not just in relative to our population, but in also in terms of individual debtload. Our individual debtloads are massive compared to what Americans carried before the SHTF.
Pent up buyers demand will eventually be balanced out by pent up sellers demand. Once sales volumes reach normal levels we’ll see actual price discovery.
#14 Dogman01 on 03.05.23 at 2:58 pm
It is long overdue that actual money has an intrinsic premium over borrowed money. Crush housing, “fairy gold” should not be required for a middle class existence. Let newcomers and workers realistically afford shelter.
>>>
There is no plan to give priority to real money over borrowed money.
This millennium runs on borrowed money, but apparently not borrowed time.
As you can see, it won’t be repaid.
================
#64 Adam on 03.05.23 at 6:12 pm
Almost every blog post these days is something along the lines of Garth vs the “doomers” in the comments section. I am starting to think Garth hates a lot of the views of his audience. It’s fascinating to watch. Interesting social experiment, to start a blog that preaches a housing crash for over a decade and then suddenly turn. I love it. It really threw everybody off. Now Garth has doubled down on that position and it’s on. Will this blog make it to the end of 2023?
I did not forecast a housing ‘crash’, but volatility and a correction – which we just got (30%). The problem is that people want extremes, and the world does not work that way. One of us (steerage section or host) will be correct. I have no doubt which one. – Garth
>>>
Adam,
As a long time fan, I remember the early blog days, and even took some time to visit Garth at one of his early tours at the Dixon Rd. Westin Hotel!
I agree with your take that the tone of the blog has changed.
My theory here as to why is one that the blog started to outline few years back – you can’t go against CBs.
Some “conspiracy theorists” have noted early that real estate would NOT be allowed to crash in Canada. They were laughed at. But alas, here we are. Why even this blog outlines how no Canadian bank is willing to take the credit punch bowl away from the debt addicts. And they won’t. It would crash the bank stocks and the Canadian economy.
Took a while for all doubt on that to be eliminated. There is no free market. There will be no correction.
…oh…what’s that? Someone is going to hold up the drop from the little pandemic mental spike as proof that RE has “corrected”? …all while ignoring that it is higher than it was pre-pandemic, and just as unaffordable as it ever was? Completely detached from any fundamentals? Average income able to afford average home in any reasonable multiple?
Whatever dude!
Houses dropped 30%!
Can’t you see?
All is good now. Move on. Nothing else to see here.
Whether it strikes you or not, a price change of 30% is, of course, a market correction. For those waiting to buy who have the means, it was an entry point. Concurrent with pointing this out, the blog also said a greater unwinding has been delayed, not shelved. To be triggered that will take a consequential economic slide not currently on the horizon. There will be no real estate reset without a whole lot of pain. Of course, to make you happy, I can always lie. Would you prefer that? – Garth
Nothing to see here everything is fine; the best statement in this article is “if an entire city has a high concentration of risky mortgages, then a few random defaults could put sufficient downward pressure on prices to generate more defaults by otherwise prudent borrowers.” Brampton looks like it could be the epicenter of a collapse.
https://ca.finance.yahoo.com/news/private-mortgage-risk-flagged-regulators-120016222.html
#82 4 out of 3 people find math hard on 03.05.23 at 8:24 pm
A totally renewable sustainable global energy future is enivitable. The question is when. I think it will happen within twenty years( to 80%). Within 30-40 years, there will be enough excess energy avalible in off peak times to address water desalination at large scale to hydrate drought hit areas and perhaps atmospheric CO2 removal to reverse some of the climate change . This can be easily financed through reduced fossel fuel subsities. It is all about exponentially reducing cost curves. (Wrights Law)
+++++++++
Your application of Wrights Law is incorrect. Wrights Law outlines a flattening of the benefits curve, meaning that each additional $ spent generates less benefit than the $ before it. Unfortunately, you have provided an excellent example as to why Green Energy is doomed to failure. The benefits curve is too shallow to be of any real use.
The better way to look at Green Energy is through the lens of the “Pollock Breaching Analysis” which states that fossil or nuclear fueled systems must be added twice as fast as renewables are added to make up for the inefficencies of renewables. Until recently, our grids were large enough to paper over the problems of renewables, but those days are numbered.
In short, the more renewables we add to the grid, the worse and more unstable our grid becomes. It’s just math and engineering, not politics; it just is what it is.
https://wattsupwiththat.com/2023/01/29/why-installing-pollock-breaching-wind-or-solar-is-costly-and-wasteful/
I just arrived at Kicking Horse.
It’s been a while since I’ve been in BC, but, man, it really has turned shabby.
Golden was a sh*thole decades ago, but now it’s a real cesspool.
The accommodations at Kicking Horse haven’t been upgraded in decades, and the maintenance is non existent.
The best part is that the woke left leaning folks in this part of the country still believe in COVID.
Yup. That’s their excuse. Hahahahaha!
No housekeeping “Due To Covid”.
They reserve the right to review individuals’ vaccination status prior to gaining access to chairlifts “due to Covid”.
Geeeeeez. Get over it you weirdos.
Ahhhhh…but who cares anyway? It’s still Dog’s country.
Beautiful mountains. Beautiful trees. Beautiful British Columbia. Breathtaking scenery. Fresh air (when it’s not burning down).
The residents are a little nutty, but, hey, chalk it up to entertainment.
Ski ON!
#119
Why would you buy in the USA at this time, makes no sense as their market is tanking just like ours.
https://wolfstreet.com/2023/03/04/housing-bust-2-has-begun/
The Bubble economy is driven by fake fiat money….Big Disruptions are ahead….Support Anarchy
Go away. – Garth
#114 anna on 03.06.23 at 1:08 am
102 Sail Away
Your comment shows you have no idea of the suffering pigs go through nor have the empathy to imagine what it would be like to be in their shoes.
FU.
—————
That seems a little aggressive, Anna.
I do know pigs are delicious and don’t wear shoes, though.
Such a waste of chops and loins, bacon and hams, ribs, lard, cracklin’s, butts… very sad.
History tends to repeat itself, Garth. The 1970s was a period of rate adjustments, the Fed kept trying to increase and then drop rates only to see inflation roar higher with each instance. It took the Fed going “Macho” in the 1980s to bring finally stop growth. Maybe we won’t see interest in the teens, but history seems to indicate the only way to stop growth is to bring rates equal to or higher than inflation.
#116 Summertime on 03.06.23 at 2:48 am
The CB did not create a housing crisis. We did that. – Garth
Sure, it was the market forces (dog forbid the untouchable and always correct holly cow – the CB) that kept interest rates at zero for close to 15 years incentivizing the credit boom and CB did not state that rates will stay low for a very long time.
CBs did not buy bonds and MBS at will, providing ‘liquidity’ and ‘diversifying holdings’, it was some other mystery buyer.
/sarcasm off
And no, it is not the drug dealers fault for the drug crisis, it is the addicts’ fault.
++++++++++
Good point.
For those devoid of financial literacy, personal or familial responsibility, I agree. – Garth
#112 Sinophobia runs deep.
Move to the States.
No place here for people like you.
127 Dharma Bum on 03.06.23 at 10:16 am
I just arrived at Kicking Horse.
It’s been a while since I’ve been in BC, but, man, it really has turned shabby.
——————————-
Well, then leave.
Before the Horse kicks you in the Gonads.
Further to the porcine discussion, we shopped Costco Saturday and picked up a few large loins for around $30 each. Such bargain!
Also Gladiola bulbs. 600 that were planted in the boulevard yesterday. A quick bulb planting procedure, that some probably know, and works very well: start with wet ground after a day or more of rain, create a cross 2 shovel widths wide wide and one shovel length deep, plunge the shovel underneath the cross and lever it up- the turf opens like a hot cross bun and is perfect for 7-10 bulbs. Stomp it all down and move to the next. 600 bulbs took around 30 mins. A flower planting date.
#82 4 out of 3 people find math hard on 03.05.23 at 8:24 pm
A totally renewable sustainable global energy future is enivitable. The question is when. ….. CO2 removal to reverse some of the climate change …..(Wrights Law)
+++++++++++++++++++++++
The one correct application of Wright’s Law is in the logarithmic behavior of CO2 wrt to warming. This means that warming does not rise at the same rate as CO2 is added to the atmosphere. This misconception that each unit of CO2 will causes the same amount or more heating than the last unit is the root of all of the fear that the media pushes.
The way it actually works is that 80% of the CO2 warming effect has already taken place at a very low level, much closer to the minimum that plants need to survive. Every scientist knows this, even the UN’s IPCC computer modelers. Below that 80% threshold, plants die and we do too. To be clear, the 80% is far in our rear view mirror and we should be thankful that it is. And this also means that there’s not a heck of lot fuel left in the tank for additional CO2 warming power.
From here on, as more CO2 is added, it has less and less effect, with the warming curve becoming essentially flat at CO2 levels where we are today. This means that we can double the amount of CO2 in the atmosphere (extremely unlikely to impossible) and that the global mean temperature might rise a non-threatening 1-1.5C. As we all live with daily fluctations many, many, times larger than 1.5C and changes would occur over centuries or millenia I’m confident that our ability to adapt is infinitely greater than the actual threat.
Our biggest threat by far is politicians, activists and eco-grifters scaring everyone into blowing up the economy so that they can make a few $$ or grab power.
So, in short, is the climate warming due to human activity? Probably, but just a bit. But it’s not going to hurt us as nature has built in buffers, systems and limitations that make sure things don’t get out of hand.
Our biggest threat is how we react to the fear that is being foisted upon us. Doing nothing and ignoring the “experts” teeth-gnashing prophecies of doom is the best path for us all.
R.I.P. Gary Rossington!
Pretty much my sound track from ’75 into the 80’s.
The documentary ‘If I Leave Here Tomorrow’ portrays Lynyrd Skynyrd’s very interesting beginning to it’s end.
LOL, Twitter on web is down. Good job Elon.
Covid Variant Math: Envision a distributed renewable power grid system complete with power generation ( solar, wind, geothermal, hydro, perhaps thorium nuclear). Buffer this system with energy storage sufficient to provide stable power for peak demand cycles or unexpected power outs ( statistically determined). Distribute the system as flat as possible, Eg all new home construction has solar roofs , home batteries, and the collective community can operate as a virtual power utility. Ùse the energy to provide efficient transportation ( robo taxis), home air comfort ( heat pump), short distance air travel ( aircraft with high energy density batteries), long distance travel ( Intercontinental reusablely landing rockets using propellant fuel derived from electrolysis processes ( methane, oxygen). If the system is sufficiently buffered for ” power outs( sun not shining, wind not blowing), this means there will an abundance of energy to use on days the sun & wind is working. This “positive buffer” energy is avaliable for water desalination ( fill a reservoir, remove atmospheric CO2 etc) It can be done. I’m a crusty retired electro/ mechanical engineer, and envision this for my grand children’s future. Humanity HAS to get off carbon based fuels .
4 out of 3:
Imagine a world with thorium reactors that burn nuclear waste. And zero land devoted to green miners, polluters and grifters.
That I can get behind.
@#138 Faron on 03.06.23 at 12:32 pm
LOL, Twitter on web is down. Good job Elon.
++++++++++++++
great job, hopefully it stays down.
#135 Sail Away
So brave of you to go to a grocery store and buy pieces of the body of an exploited abused animal. That’s really impressive /s
E.W Niedermeyer:
@#112 Never
At street level it’s a great country with great people just like any other. At higher levels it’s filled with dangerous people with sensitive egos!”
+++
Sounds like Canada….
@#134 Ponzie’s problem.
“Before the Horse kicks you in the Gonads.”
+++
As opposed to being hoofed in the head like you?
140 Covid Math: Respectfully, in our multidimentional universe, you will be on your version of Earth, and I will be on mine. Namaste
#142 Anna on 03.06.23 at 2:25 pm
#135 Sail Away
So brave of you to go to a grocery store and buy pieces of the body of an exploited abused animal. That’s really impressive /s
^^^^^^^^^^^^^^^
I see you’ve encountered this blog’s resident sociopath, or at least the most repulsive one. Don’t bother looking for any empathy where none exists. You would have really been upset when he was going on and on about enjoying eating dogs. Best advice is to ignore him. He gets off on upsetting others.
jacob -> All is good. Investors are killing it! All the suckers here driving corolla’s are losers! lol ->just be frugal and suck up the negative cashflow and buy buy buy RE, there will be a happy ending provided investors can hold on. Check out this mortgage broker/specuvestor:
“We’re just being a lot more frugal and on top of our finances,” said Peter Esper, a mortgage broker in the Toronto area who was hit hard by interest-rate increases after relying on variable-rate mortgages to finance his own real estate investments. The payments on the home he shares with his wife and two kids went up by nearly $3,000 a month, while the difference between mortgage costs and what he was charging in rent on the four condos he owned as investment properties ballooned to a collective $4,000 a month in negative cash flow. He sold 3 of his condo properties and tells his friends he is a genius with all the money he made.
#142 Anna on 03.06.23 at 2:25 pm
#135 Sail Away
So brave of you to go to a grocery store and buy pieces of the body of an exploited abused animal. That’s really impressive /s
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You may be right, Anna. Let’s not argue about it.
“The Pivot died and the party is OVER,” says crusty mortgage broker Ron Butler. “The small opening of barely affordable mortgage payments that spurred a tiny flurry of RE sales in Jan / Feb 2023 closed. As much as some people would say that there’s pent up demand to buy properties, and there likely IS demand but at 5.49% that is suddenly more expensive.”
Bull trap or Dead cat bounce? Take your pick.
Warning: Summer heat ahead!
I love it when people come together and share opinions. Great blog, stick with it!