First, the crumble in Vancouver. Then the blog terrorists. Please ensure you have the correct gear (protective eyewear, gloves, sidearm etc.) before proceeding. Thank you. And ignore the financial markets today. Everybody’s in a funk.

The forecast: Tumult, then cannibalization

The meme coming out of the real estate cartel lately in Toronto, Vancouver, Montreal and (even) Calgary is that the storm’s abating. Buyers are coming back. Cheap mortgages are doing the trick. Sales are ticking higher. FOMO’s creeping in.

For example, read this breathless report from Van’s realtors:

Home buyer demand picked up across Metro Vancouver last month, making July, a traditionally quieter month in real estate, the second highest selling month so far this year.The Real Estate Board of Greater Vancouver  reports that residential home sales in the region totalled 2,557 in July 2019, a 23.5% increase from the 2,070 sales recorded in July 2018, and a 23.1% increase from the 2,077 homes sold in June 2019.

Wow. Big jump. Better buy now, kids, before the temporary dip in house prices is history. And how about that Hong Kong situation? Surely when the Chinese army marches, there’ll be an invasion of YVR. Yellow helicopters will blot the sun. Buy!

Well, Dane Eitel has another view.  His company, Eitel Insights, is a Van-based global leader in applying the principles of technical analytics to residential real estate. The results have been uncanny. Wicked accurate. You might be interested in the report he provided me yesterday.

On Detached house sales and prices:
“The Detached market is still plummeting especially when you take a 1 or 2 year outlook. Eitel Insights sees a tumultuous time still upcoming for sellers, and we anticipate the market to continue lower with a test of $1.400 million in our future. If that price point does not hold we expect the market to sink lower until we see prices of $1.225 million across Greater Vancouver on an average sale price.”

On the condo market:
“With the average sale price of Greater Vancouver coming in at $656,000 the market is down 13% from the peak. We anticipate this price point decreasing over the upcoming years leading to a test of $525,000 a total drop of 30% from the peak. The market will be inundated with active listings, even now the realtors are continually getting emails about assignments sales because developers do not allow their buyers to publicly advertise the listing on the open market. Once the property is completed the market will sharply rise in active listings and with each new month see higher and higher inventory. Eventually leading to the cannibalization of the condo market with new properties selling with warranties and kickbacks the resale market will be forced to lower their prices to see any offers. Thus forcing newer properties to lower their prices and the vicious cycle will repeat until the market bottom likely in 2022.”

On the stress test and why sales have bumped:
“The rationale for why the market is seeing a temporary lift is due to the Stress Test Mitigation. What we mean by that is the sale prices have fallen off 18% from the peak. Meaning those that have been forced to the sidelines due to the 20% increase of mortgage qualification, can now begin to purchase. This, as we say, will be a temporary effect. Once the demand due to stress test mitigation is introduced to the market the sales will pick up and we anticipate a tighter range of average sales price. However once that buildup of demand dissipates, we will see the market continue lower.”

The conclusion, kids: it’s a trap.

Things that go bump in the night (and all day)

Have you noticed some delays in trying to access your favourite, addictive and pathetic blog lately? Maybe your request to join has just timed out. Perhaps you’ve received some of those annoying ‘connectivity lost…we’re looking  into it.. be patient” messages from some elusive, cloud-based webmaster.

Well, there’s a reason. We are under attack. Here’s a screen shot of the automated firewall filtering of visitors or bots for part of an hour. Note the activity from China.

Says the webmaster (I actually have one, named William Stratas): “This is constant stream of identified crap that never reaches the server (or receives a challenge prompt) thanks to the network filtering.”

So, howcum this is happening? Why target a blog like this where there’s nothing of value to steal, above or below deck? “It happens due to general untargeted (or targeted) IP address scanning over the network,” Stratas explains. “Searching for open ports or particular apps. Poking around for vulnerable servers and sites and stuff. Whether an unemployed slob with a PC living in a basement, or a malicious state actor with a huge technical apparatus. Millions and millions of probes and pings every hour. Hell, every second, worldwide.

“Unless web site operators have competent knowledge of the available tools, their sites almost inevitably will fall. The good news is effective duct-taping of this infrastructure does not require big-budget tools. It’s quite satisfying for me that so many Canadians derive knowledge and inspiration from your writings, and can join the daily conversation, with minimal to nil inconvenience, no intrusion upon their privacy, and no barrier to participation.”

See how lucky you are to be here? Now behave better.


Have you noticed the middle’s missing these days?

In politics, libs and cons might as well be commies and Nazis. The globalists are battling the nationalists. Society’s divided between the 1% and the 99%. The Mills have declared war on the Boomers. The #MeToo movement turned men into the enemy of women. And when it comes to financial stuff, the extremism continues. Rates aren’t dropping – they’re going to zero or below. Stocks aren’t just correcting – the market will be destroyed. Toronto bungalows will be $5 million each before long. And money’s finished – to be replaced by cryptos or hunks of gold.

See what I mean? The missing middle. But thinking in extremes sure gets people into trouble.

For example, they mistake routine declines for the End of Days. It goads them into selling at the worst moment, crystallizing a loss when none was needed. It makes people buy stuff that’s already soared in value, whether it’s Bitcoin at $15,000 a pop or particleboard McMansions in 2017. Seeing the world in absolutes makes us sell low, buy high and be ruled by the emotions of fear and greed – of which fear is by far the strongest twin. This blog serves a daily dose. I beseech you, for the love of God,  never to read the comment section.

Well, here’s Jan, with a small example of what extreme thinking can do to you.

Recently caved and bought a house just closed at the end of July 5 yr fixed 30 year am at 2.8%. Wanted to borrow cheap money instead of going clear title, plus I wanted variable but listened to the broker.  My penalty to get out of this brand new mortgage is $2,100. My question to you is should I pay it off and go variable?

Her mortgage is two weeks old and locked up nicely for five years at less than 3% when the inflation rate is over 2%. How can that possibly be a bad deal, worth spending two grand to get out of?

Simple. Rates are going to zero, right, Jan? If people in Denmark can pay nothing for a bank loan, it’s surely coming here, too. Even though the Fed has cut just once after nine increases and our central bankers have done nothing, the money-for-free trope is out there. So Jan wants to go variable. Questionable idea. Rates may not have bottomed quite yet, but they’re not staying in the ditch. In three years she may feel like a genius.

And then there’s Rick. “You’re a moron, Garth,” he generously says. “I just backed the truck up and put everything I’ve got into gold. Your stocks and bonds are dog crap in comparison, and they’re going down for a long, long time.”

True enough, rocks have outpaced equities in the last few months. Recently bullion in reduced Canadian dollars hit a high, even though it sits $400-per-ouce under levels of nine years ago when measured in US$. With interest rates falling and Trump at the controls, gold’s been a temporary safe haven asset. But Rick’s thinking in extremes. Too bad. Always a mistake.


First, gold is a temporary play. The decade-long track record is one of volatility. Up a mere 2.5% annually over the past five years. The only people doing well are the ones who bought at depressed levels and lock in sales. That’s a tiny fraction of those who own gold (or silver). The typical metalhead buys and never sells – a bad strategy for an asset that pays you nothing, yet can come with real costs.

Second, this surge will end. It’s a time to sell bullion, not buy it. Hedge funds are stuffed with bullion so when prices start to drop this speculation will fuel the descent. Then there’s Trump. Going into re-election, the guy is unlikely to let the China trade war fester, negatively affecting the US economy. As that risk dissipates, so will the price of bullion – just as the Fed throttles back. Hey, look at Tuesday’s action – Trump relented a little on new anti-Sino tariffs and gold choked $30 an ounce.

If you want some bullion exposure, buy an ETF holding the biggest companies trading on the Canadian stock market. That’s enough. And if you own a mess of rocks, unload. That was the advice here in 2011. It was brilliant.

The message is simple. Extremism is costly, almost always emotional in nature and the refuge of people who think Instagram is meaningful. There has probably not been a better time to be alive. No world wars. No pandemics killing millions. No depression. No hyperinflation. No 20% mortgage rates. And Adele still isn’t touring.