For the first time, yesterday, the S&P 500 crossed a key barrier. Then higher today. The Dow also hit a record. So did the Nasdaq. Even Bay Street is ripping a new one. Bond prices are also up. Balanced portfolios have been swelling. And investors are feeling just as smug as yesterday’s comments section was morose.
In fact, the contrast is epic. Rarely has this blog attracted such an angry, emotional, vitriolic and visceral clot of malformed opinion as yesterday. Vilifying everyone who owns a rental property – out of hate and jealousy – underscores a generational divide which will undoubtedly rock politics. And not necessarily for the better. There is a class of non-house-owning people ready to do whatever damage they can inflict on others since their expectations have not been met.
Alas, things are about to get worse for them.
Interest rates are coming down. It’s official now. There will be three cuts in 2024 in both Canada and the States. CBs will tap the accelerator starting (probably) in June in order to keep these nations out of recession, to promote job growth and an expanding GDP plus ease up on credit so the consumer-fed economies won’t starve.
Bond yields have dropped as a result. Stocks have romped higher. GIC rates are already edging lower. Mortgage rates will be trimmed. And the inverse relationship between loan costs and house prices will again be evident.
There are some things this blog told you that the angry folk have dismissed. To their detriment.
We told you rates would decline this year. They will. The drop will be at least three-quarters of a point in the US. Maybe 1% here, depending on the data.
We told you real estate sales levels would rise this spring. That’s happening. March stats will confirm this in the next fourteen days.
We told you the low point for house prices in major markets was January of 2023. Thus far, that’s true. And with lower mortgage rates on the horizon, there is scant reason to anticipate a market collapse. Especially now that the Fed and the Bank of Canada are making it clear avoiding recession is equal to – if not more important than – crushing inflation.
Recall that our CB (according to legislation now in the Senate) has two mandates. Price stability. And full employment. Currently an inflation rate of 2.8% is within the bank’s target range and has behaved better than expected. We can live with that, Tiff suggests. The unemployment rate of 5.7%, however, is too high. It does not meet the definition of full employment, and attention turns to supporting the economy.
Evidence of the pivot has arrived. The Fed now says it expects (and accepts) a slightly higher inflation rate target of 2.6%. It will be reducing its balance sheet by $95 billion a month. The latest dot-plot shows a series of rate cuts – no pause, no increases – over this year and next.
In Canada the CB’s latest summary of deliberations agrees rates will begin to fall this year if projections are met. Our guys are more opaque than the Fed, but the language has changed dramatically over the past few months. “There was some diversity of views among governing council members about when there would likely be enough evidence that these conditions were in place, and how to weight the risks to the outlook.” You will notice that gone is any reference to tighter monetary policy. The only debate is when it will loosen. And that moment is closer.
Meanwhile the Bank of England has paused its rates once again, with the widespread expectation of cuts. In Switzerland this week the CB chopped its rate by a quarter point. In America, the GDP is romping ahead more than 3%. Unemployment is once again south of 4%. Corporate earnings are improving. Stock markets are scaling new heights.
The futures market is giving 84% odds of the first rate cut coming in June. Hours before the Fed announcement this week, the chances were 60%. Policymakers are telling us they can live with elevated prices more than they wish to deal with an economic decline – which might force rates lower, faster.
These are facts. Not opinions. No emotion. No revenge.
An aggressive rate-tightening cycle brought a 15-20% housing price correction (except in Calgary of course). Mortgage delinquencies, power-of-sales and distressed, over-leveraged vendors are certainly more in evidence now. Shelter costs – mortgage interest and rent, mostly – have been a huge part of the inflation rates. As the cost of money falls, this will be reduced. The question is whether real estate values will revive as the cost of credit costs flags.
I think we know the answer. Sorry. Hate on.
About the picture: “My wife and I are renters by choice living in Toronto and long time fans of the blog (and you personally),” writes John. “Renting lets us invest in a balanced and diversified portfolio and leaves money for… well, everything that life might throw your way. This is Millie, the loudest purring cat on Earth. If she likes you, you will find her on your lap purring like a little engine. P.S. – Glad to see you moderating the comments section – a lot of bigots seem to be coming out of the wood work lately and I think we need to keep it factual.”
To be in touch or send a picture of your beast, email to ‘[email protected]’.
152 comments ↓
I said long ago when they started to raise rates that they would abandon the arbitrary 2% inflation rate and here we are. Can’t have low inflation like that with high energy prices.
I also stated that the stress test would be abandoned. Is it coming too? we will know in April.
Recall that our CB has two mandates. Price stability. And full employment.
———
That’s the mandate for the Federal Reserve.
The Bank of Canada mandate:
The Bank of Canada is the nation’s central bank. Its mandate, as defined in the Bank of Canada Act, is “to promote the economic and financial welfare of Canada.” The Bank’s vision is to be a leading central bank—dynamic, engaged and trusted—committed to a better Canada.
Not need to print. Just catching the snafu.
You have not read the new legislation. – Garth
Interesting opinion piece in G&M. Link below.
We should all use less energy by walking, biking and public transit, but EVs counter that trend as they are environmental and social hogs.
EV subsidies ending. Owners starting to have to pay for their toys.
Author seems to have a pet peeve though…
“The primary beneficiary of this generous support has not been the environment, but EV drivers, the demographics of which are predominantly middle-aged, white men earning more than $100,000 year. EV drivers are also much more likely to own their home and have a garage, an increasingly privileged position in Canadian society. Let us not begrudge anyone their EVs. But don’t ask the college student with a 2006 Civic to cover the costs of the wear and tear on the roads.”
hah! ??
Linkie: https://www.theglobeandmail.com/business/commentary/article-this-is-the-end-of-the-road-for-electric-vehicle-subsidies/
#2 Travelling on 03.21.24 at 11:52 am
Recall that our CB has two mandates. Price stability. And full employment.
———
That’s the mandate for the Federal Reserve.
The Bank of Canada mandate:
The Bank of Canada is the nation’s central bank. Its mandate, as defined in the Bank of Canada Act, is “to promote the economic and financial welfare of Canada.” The Bank’s vision is to be a leading central bank—dynamic, engaged and trusted—committed to a better Canada.
Not need to print. Just catching the snafu.
You have not read the new legislation. – Garth
———
Just referring to what’s on both the Fed and BoC websites. Is there a link to the new legislation online?
Could not agree more Garth, some people live on negativity, not a positive bone in their body, jealousy clinks like a leach in a Southern Swamp. I have seen from many up close, but always from the ones who sat home, complained about other, drinking beer after beer until glutted, smoked to the hilts until their stomach aches from coughing, but never hurt or feeling bad enough to stop tomorrow’s same cycle all over again, followed only by envious, bitterness all while grudging other of earned successes. This same high percentage crowd want what others have earned handed to them on a silver platter, eat your heart out haters, not happening on my watch, I despise laziness and lack of ambition.
I have been told over and over, you are so lucky, there is no luck to it my friends, it is called common sense to give one the drive to go and do what needs to be done, and encourage others to keep up the good work, for those that have it, I am so happy for you, it’s well-deserved, keep up your good work and keep building your portfolio, its healthy.
Quote of the day: always stay true to yourself and not let others distract you from your goals.
Garth clearly sees housing as an investment–not a right. And he wonders why the market is so absurdly high.
Owning real estate is not a right. – Garth
China’s Sinochem Group has purchased one of the first crude cargoes shipped through a new pipeline in Canada, which is designed to move oil from landlocked Alberta to the Pacific Coast for export.
Sinochem bought a 550,000-barrel cargo from Suncor Energy Inc., which will load from the Trans Mountain Expansion pipeline in May-June, said traders who asked not to be identified. The oil is a heavy crude quality, they added.
The Trans Mountain Expansion is the country’s biggest new pipeline in over a decade and will nearly triple the capacity of the system, allowing Canadian companies to sell more crude to Asia and the U.S. West Coast. The oil purchased by Sinochem is of similar quality to Iraqi Basrah crude and will likely be refined in coker units, traders said.
Sinochem and Suncor didn’t immediately respond for comment.
The pipeline was initially slated to start in 2017 but faced repeated delays, cost overruns, construction mishaps and regulatory hurdles. Canadian Prime Minister Justin Trudeau’s government bought Trans Mountain in 2018 from Kinder Morgan Inc. to save the project from cancellation.
https://www.bnnbloomberg.ca/china-s-sinochem-takes-first-oil-cargo-from-canadian-pipeline-1.2049105
Russia has lost 12% of its refining capacity in the past six weeks and has imposed an export ban on petrol for six months as Canadian crude finally reaches tide water for export. Good news for the Canadian oil patch.
Bank of Canada Mandate?
#2 Travelling on 03.21.24 at 11:52 am
Recall that our CB has two mandates. Price stability. And full employment.
———
That’s the mandate for the Federal Reserve.
The Bank of Canada mandate:
The Bank of Canada is the nation’s central bank. Its mandate, as defined in the Bank of Canada Act, is “to promote the economic and financial welfare of Canada.” The Bank’s vision is to be a leading central bank—dynamic, engaged and trusted—committed to a better Canada.
Not need to print. Just catching the snafu.
You have not read the new legislation. – Garth
********************************
I had the same thought as Traveling. I’m pretty sure BoC said it’s mandate is only price stability. (defined as the 2% target)
I thought they said they cannot serve two masters.
What new legislation and is it in force?
It is before the Senate. – Garth
Wait, waiiit, waydaminute… I had it on good, comment section certified, Dunning-Kruger soaked authority that index was at a top, SPY500 was a magic limit and index was overheated. Shucksadarnit.
Nice article Garth.
To contrast our situation with a country that’s is experience major inflation problem, Russia.
https://www.cbr.ru/eng/
Their interest rate is 16%. Despite the high rate, the inflation is published at 7.7 %
Imagine being a business owner, not only are your employees getting conscripted (Who didn’t show up at work today ?), you have to deal with a bank that will charge you close to 20% interest rates
#2 Travelling on 03.21.24 at 11:52 am
Recall that our CB has two mandates. Price stability. And full employment.
———
That’s the mandate for the Federal Reserve.
The Bank of Canada mandate:
The Bank of Canada is the nation’s central bank. Its mandate, as defined in the Bank of Canada Act, is “to promote the economic and financial welfare of Canada.” The Bank’s vision is to be a leading central bank—dynamic, engaged and trusted—committed to a better Canada.
You have not read the new legislation. – Garth
————————————————-
Is it this bill?
https://www.parl.ca/DocumentViewer/en/44-1/bill/S-275/first-reading
The government is inflation.
https://www.durhamregion.com/news/council/taxing-people-til-they-bleed-durham-region-oshawa-whitby-pickering-ajax-clarington-governments-say-enough/article_1819f799-4e69-5dfc-b011-9d576f8b0313.html
‘Double-digit increases in years to come’ just part of local need to fund growth, drive for new homes, coverage of provincial priorities by property taxpayers
It will kick off in 2024 with a 7.5 per cent increase to Regional property taxes which, blended with the average municipal property tax increase across Durham’s eight municipalities, will average about 5.7 per cent more. But that’s just the start.
Water and sewer rates jumped this year too — by 7.4 per cent, with a forecast of “double-digit increases in years to come.” They went up just 4.3 per cent in 2022 and only 1.8 per cent in 2021.
…That funding will need to be made up somewhere, in part on the backs of property taxpayers across Durham Region. She estimated that it will add at least 1.55 per cent in annual tax increases.
— —
Control over our Feeding is here to stay. What are our Rulers up to.
Is there nothing ‘Climate’ cannot do?
https://www.reuters.com/world/europe/giving-away-apples-polish-farmers-stage-more-food-protests-2024-03-20/
Polish farmers intensify protests against ‘executioner’ EU
WARSAW, March 20 (Reuters) – Polish farmec blocked roads with tractors and flares on Wednesday in escalating protests against EU environmental regulations and cheap food imports from neighbouring Ukraine which the bloc provisionally agreed to prolong.
Placards depicted a farmer swinging from a gallows next to wind farms and an EU-emblazoned executioner with the words: “Green Deal equals death of Polish agriculture”, referring to the bloc’s plan to tackle climate change.
Only things I can find for comment #2 and #4 are the following:
https://www.theglobeandmail.com/business/commentary/article-we-must-consider-serious-structural-changes-for-the-bank-of-canada/
https://www.parl.ca/DocumentViewer/en/44-1/bill/S-275/first-reading
The first is just an opinion piece however indicates the BoC mandate will not change until 2026 (that’s around 2 years from now).
The second is a bill introduced via the Senate. Nothing noted in there regarding a change in mandate for the BoC.
Based on the above, there is no change coming to the BoC mandate until at least sometime in 2026.
I don’t disagree that a dual mandate for the BoC would potentially be a good idea (ultimately, Canada is too often a copycat of the US). Anyways, it was an interesting subject and at this stage, I will move on from this until something concrete becomes available to show an actual change in the BoC mandate.
Happy to be a Boglehead. My B&D portfolio is roaring ahead with basically no effort and rock bottom fees.
People seem to be confusing “housing is a right” with “owning a house is a right”.
Owning is a choice, the result of planning and hard work.
“Housing is a right” is quoted by the 40% who feel entitled to others hard work.
DELETED (Ad hominem)
Jeesh, after a wonderful hiatus from your insightful, humorous and sometimes devious blog, the comments yesterday were truthfully hateful and jealous. Sucks to be them!
I’d be curious to know the demographics of the posters here. Really just age. Are they hateful and jealous because of the choices they’ve made (and now have to make themselves feel better by blaming and bashing someone else – start with Mom)? Or are they hateful and jealous b/c of the realization they will never attain today’s manufactured societal normality and are unwilling to change (start by ditching the lumberjack shirt and pulling your pants up)?
Anyway, [email protected] for a deeper look at your insecurities.
Og
Just to clarify, Garth:
You do believe that any landlord who lies and enacts a bad faith eviction, or who claims principal residence tax exemption on sale of a rental property that he never lived in for a reasonable period of time, should indeed be fully “vilified” and prosecuted.
Correct?
We’re just talking about the law here, after all. This is Canada, eh….
The fact is Canada sucks. The government is at fault. The only question is when will the young revolt?
Canada slips to 15th place in annual World Happiness Report
https://www.ctvnews.ca/canada/canada-slips-to-15th-place-in-annual-world-happiness-report-1.6815318
This one?
https://www.parl.ca/LegisInfo/en/bill/44-1/s-275
You must have been reading a different comment section than the one I read. I saw plenty of comments that respectfully and politely disagreed with you But disagreement is not vitriol or hate. What is this comment section if not a forum for the exchange of ideas?
I did see some quite hateful comments from people who agreed with you (see #67 for example), and plenty who were calling others socialists / communists / marxists, merely because they support the rights of renters.
It is before the Senate. – Garth
———————————-
So they are following a bill or mandate that’s not even enacted yet?
What’s in this new bill or mandate? Thou must artificially prop up Bay Street and insanely priced bungalows?
Garth flouted the jealousy/sour grapes card yesterday, and some embraced it without second thoughts. That’s sad, because it is the reason of so many of our society’s issues. Short attention span. Inability to think critically. Intellectual laziness.
I am not a renter (anymore). Purchased a place five years ago (in Vancouver) – and in two months time I’ll have to make up my mind between either paying off the remainder of the mortgage, or going forward with a mortgage and either buying another property, or investing the savings resulted from NOT paying the mortgage off. Or a combination of the above. But, bottom line, I have nothing to be jealous about.
But, even though my housing situation is resolved, the fact that so many others are struggling with this is directly affecting me (and those who don’t understand how this affects them too aren’t good analysts). Lack of housing exacerbates homelessness, drug abuse, mental health, infractionality, disease (which increases public healthcare costs), and generally societal breakdown (a much higher percentage of broken families with children jerked around between single parents, which leads to even more issues downstream, proven statistically). Also, if housing is so expensive for a very high percentage of the population (both renters and mortgaged owners), it’ll also affect me because I need to co-pay into others’ very high cost of living. Think waiters, hairdressers, trades, etc. etc. etc. – those people, though they earn what appears to be a good income – barely get by, with nothing to show for, year over year.
Garth, you are very strict with ad hominem attacks. Please read your own responses to many of your commentators of yesterday. Does that warrant the “honorable” designation?
Hey, I’m nobody’s punching bag. Including you. Cowardly, anonymous online guy. If you don’t like coming to this free, 7-day-a-week, original-content, no-AI blog, then don’t. – Garth
spring has sprung and I don’t read the comments any more. To depressing. No time for that. Thanx for the blog … always the truth mixed with wit and common sense. Top shelf …
There is a class of non-house-owning people ready to do whatever damage they can inflict on others since their expectations have not been met.
————————————————
Indeed and having spoken to some of these folks as that’s my job, there is a pattern that I think can somewhat be explained by the delay in family formation. Many young adults aren’t really thinking about their futures. Whereas in Garth’s day, getting married in your late teens or early 20s was common, nowadays, that’s not happening for another decade.
What this has caused is a bunch of young adults with no view on the future. Working low paying jobs and living paycheque to paycheque while spending their money on going out for beers with their buddies every night. Necessity is the mother of invention, and if you don’t need to worry about anybody except yourself, you don’t. Until you do.
What I’ve seen now is a number of folks in their 30s who are now married and wanting a family, and suddenly they want to get into the real estate market. Except they don’t want an entry level / fixer upper place. They want a single family detached immediately that they can raise their family in. And with minimal to no down payment (unless they can tap the bank of mom and dad) they can’t afford it. And so they’re frustrated.
However if you’re a young adult, if you do things properly, you can still own a family home. Focus on your career to maximize earning early. Save and invest. Take advantage of cheap or no rent living with mom and dad (young folks seem to be doing this regardless). And when you have enough for a down payment on a small entry level place in perhaps a shadier neighbourhood than you’d ultimately prefer, jump in. Then you’re in the market and can start moving up the real estate ladder.
#6 Dave on 03.21.24 at 12:25 pm
Garth clearly sees housing as an investment–not a right. And he wonders why the market is so absurdly high.
Owning real estate is not a right. – Garth
It may not be a right but if you are intelligent, hard-working, and diligent with your personal finances you should be able to afford a home. The social contract is broken and it’s a massive problem for this country.
I can understand the bank of Canada cutting because we are in worse shape then the states. But the economy in the states is much better, and full employment. doesn’t make sense for them to cut rates this year.
Thanks Garth, and oh man, the ripping market!
So satisfying to open the portfolio and see daily increases greater than an arbitrary measure sorta equal to annual compensation from ‘work’.
Off shortly for a vacation weekend date with the wife. Symphony, in-room hot tub, bike excursions, sightseeing, slap and tickle, wildlife viewing and excellent food awaits!
Life is tough :-)
Owning a house is not a right but shelter is, people so often get these two confused. With rates going lower we can certainly expect housing prices to climb.
BoC rates fall and inflation will once again skyrocket…making life even more unaffordable!!
Is now the time to transition B&D funds into real estate for great returns vs boring safe returns
“Maybe 1% here, DEPENDING on the data…….rates will
begin to fall this year IF PROJECTIONS are met……….
when there would LIKELY be enough evidence that these conditions were in place,……”
———————————————
That’s still a few very big maybes.
As I walked by The Atlanta Federal Reserve Building today, I saw a shiny coin on the ground, that I assumed fell from an employees pocket.
It was a heavy coin, had something engraved on each side, so I flipped it and read both sides.
Heads, Biden says you can keep your job.
Tails, Trump is gonna fire your ass…
M49GA
The march toward UBI continues. CERB was the test rollout guys.
Guess what, we will require even MORE government employees to administer this UBI program.
The perfect Socialist Dictatorship would have half its population on UBI, the other half working for the government.
Free money is not enough for some. They want even more. Funny how this works.
https://www.cbc.ca/news/canada/thunder-bay/ontario-basic-income-pilot-class-action-1.7149814
Stripped of dignity, $22 left after rent — stories emerge as Ontario sued for halting basic income pilot
A judge has certified class action against the province for ending the 3-year OBI early
https://www.cbc.ca/news/canada/prince-edward-island/federal-government-willing-to-explore-proposed-guaranteed-basic-income-pilot-on-p-e-i-1.7150253
Federal government ‘willing to explore’ proposed guaranteed basic income pilot on P.E.I.
A cross-country coalition has already identified P.E.I. as the right place to pilot
When the rates start going down, both stock prices and real estate will double this year. There is a lot of cash and pent up demand waiting on the sidelines.
Neither will double. (Why does everyone here talk in extremes?) – Garth
Canada needs a really good infrastructure project like they did in the olden days.
How about the construction of a brand new city, new infrastructure, housing/shelter, industry, financial models, everything, that’ll be designed to hold a population of 2 million or more.
A brand new start to everything.
Are you willing to pay more in taxes and take less in services to finance it? – Garth
…as gas at the pump hits almost $2 (inflationary)
…as 12% of Russian oil is halted (inflationary)
…as $85 Canadian oil is suddenly viable and economy retools to more expensive carbon-taxed oil/gas (inflationary)
But internet is down lol
I own a house so I don’t personally hate this but it’s pretty clear our policy makers have failed and deserve a lot of scorn. US citizens treat their stock market like we treat our housing market – because of the financial incentives involved – and they reap enormous benefits while we reap enormous opportunity costs. Hoping the young start actually voting in their own self interest in Canada.
Thank you, Garth. Seems like you and your colleagues called it all perfectly.
For all the haters and constant complainers out there, it might be worthwhile to watch the movie “Cabrini” for some perspective on how good we all have it here in Canada today:
https://m.imdb.com/title/tt14351082/
@ #192 RyYYZ on 03.21.24 at 9:01 am
“#144 T-Rev on 03.20.24 at 7:06 pm
Today’s comments section is just deplorable. Everyone acts like the world owes them. There are single family houses all over this country for under $200,000.
===================================
Where can you buy a single family home in this country today for less than $200k? I mean, I suppose it might be possible if you want to/can live in a place like Bouctouche, NB, 45 minutes from downtown Moncton, which is a minor city. Great if you don’t mind and are able to live in such a place. Many can’t.
Many can’t. But many can, with remote work a reality as never before. If you want to live in or near a ‘major’ city then borrow your buns off. Or, start on a lower rung of the property ladder. Your choice. – Garth”
You can buy a SFH for $300k IN Edmonton, Saskatoon, or Regina. In fact, you can buy for under $200k in those cities, but $300k will get you a post-war bung from the 50s.
$300k post-war in Edmonton: https://www.realtor.ca/real-estate/26620021/12028-55-st-nw-edmonton-newton
$200k pre-war in Edmonton: https://www.realtor.ca/real-estate/26223076/11312-84-st-nw-edmonton-parkdaleedmo?view=imagelist
$130k within 35 minutes of Edmonton City Limits https://www.realtor.ca/real-estate/26572969/5112-53-av-tofield-tofield.
For under $400 k, you can get a 3 bed fixer-upper in a bougie burb with amazing schools and minutes to the city if you’re willing to put some sweat equity. Been saying on this blog for a long time (decade? longer?) that young folks need to flee the HCoL cities unless they’ve got family money.
Edmonton is the fifth biggest city in this country. If you’re willing to go smaller, like Saskatoon, Regina, or Winnepeg, you may find prices even lower in some cases.
You have not read the new legislation. – Garth
The last shred of independence the BofCanada had on monetary policy goes down the drain, as they now have only 3 votes out of 9 in the permanent committee. Freeland reins supreme. What a sinister farce…
NN
“Owning real estate is not a right. – Garth”
Correct, but affordable housing is a right. Landlords speculating on investment housing and driving up prices then milking renters for ever increasing wealth is greed, pure and simple. Renters deserve stable rents. Tied to inflation sure, but not to a speculative housing bubble.
Shelter is a right. Affordable housing is not. – Garth
#147 Flop… on 03.20.24 . Rented land. Not freehold.
…..
Re cellphone roaming… switched to public mobile . 60/mo for usa/canada full coverage. No roaming. Works well.
Agree on what you wrote today Garth.
BoC could cut rates faster but it does not affect me. I feel bad for the kids wanting to buy their first home but cannot because of escalating Shelter costs.
A good year so far in US Mr. Market for me. Dividends are fat and clawing back the stock price losses of the past year. 31.5% dividend yield after-tax, -1.8% stock price appreciation for a total return of 29.7% YTD Feb. March dividend announcements out and another stellar month.
In fact, going to plow in a lot more cash in Mr. Market within a few weeks. Have been holding back. On April 1st, hopefully not a Greater Fool that day.
I am very pleased with 2024 thus far.
Keep on truckin’ Garth.
Further to earlier posts by Shawn and myself, a brief explanation of quantitative tightening and “rolling bonds off the balance sheet”
BOC target still aways to go.
https://ca.finance.yahoo.com/news/bank-canada-says-quantitative-tightening-133730081.html
“An aggressive rate-tightening cycle brought a 15-20% housing price correction (except in Calgary of course).”
Calgary is experiencing a population boom, largely attributed to the fact that houses still cost less than half of what they do in the GTA and BC’s Lower Mainland.
I anticipate that prices will continue to rise until they reach a point where it no longer seems reasonable for individuals to relocate here solely for the sake of a more affordable housing option. In other words, the cost associated with uprooting one’s life and moving will outweigh the savings gained from purchasing a house in Calgary.
“Don’t fight the fed!” Jerome Powell’s recent presentation is like putting the markets on steroids.
You cannot even spell CERBia without C and B.
This is why this is the solution to all future problems for our nation.
All Hail CERBia!
Markets are giving gifts. Our portfolio is up 22.3% over 12 months excluding contributions. Rates will come down, markets will go up and the big orange clown will get elected and at least that will probably (hopefully) bode well for the economy in North America.
“Thou shalt not covet thy neighbours goods”
It’s amazing how hard it is for some to keep this one.
This is not a problem to blame on anyone else! The issue is you, and if you have this problem, you need to spend some time in church!
Focus on, and be happy with, what you have!
The new bill is probably this one here:
https://www.parl.ca/DocumentViewer/en/44-1/bill/S-275/first-reading
Seems like the BoC will be diluting it’s “agnostic” political stance in favor of the Ministry of Finance. AKA printing presses will be kept hot to print(type) on demand to likewise dilute the value of Canadian currency. Chrystia doesn’t like that she can’t control/influence the central bank. The Governor has become an obstacle to her agenda.
Which brings to mind: what exactly is wrong with the current structure and mandate of BoC?…. there was nary a sound while the free money was flowing, why the need to interfere now in this time frame? Why add a committee to something that hasn’t required one thus far!? The BoC is being injected with political agenda, thus diluting it’s institutional legitimacy. The steps in the direction of politicized finance? What could go wrong?
Or am I reading this wrong? Maybe MMT is being institutionalized? And not just fantasized about…
Might as well change names from Bank Of Canada to Communist Canadian Central Bank, or the CCCB. Free dividends, free benefits of social and corporate kind, freely printed(typed) money, right to profits, right to youthful eternity…… and don’t forget the right to a free house AND A RENTAL PROPERTY!!!
Sounds pretty good eh!
Maybe we need to coin some new acronyms:
DOMO Denial Of Missing Out
ROMO Rage On Missing Out
DOMO Depression On Missing Out
etc…
Would anyone trade places with an 18-year-old right now? The answer a generation ago used to be a resounding yes, I doubt that is the case anymore.
Do I get to keep my stuff? – Garth
Shelter is a right. Affordable housing is not. – Garth
What does that practically mean ? I guess you have a right to camp on city land ? Or does the government have to build you something with heat and water ? Who goes to jail if this doesn’t happen ?
I’m not being facetious, but seems like we have all these rights without any good mechanism to implement. Seems a bit pointless.
Exactly!
——–
#52 Brett in Calgary on 03.21.24 at 3:23 pm
Would anyone trade places with an 18-year-old right now? The answer a generation ago used to be a resounding yes, I doubt that is the case anymore.
Do I get to keep my stuff? – Garth
The nerve of young people these days wanting to have the same things I had when I was their age. How dare they.
Like commuting to work? Phones with cords? Mortgages at 14%? – Garth
I think people start to realize that unaffordable home ownership is not the biggest problem we have.
How about rent affordability? How about personal vehicle affordability? Both are getting worse and worse under the current government. And you don’t need a degree in economics to understand that this is not right. It shouldn’t be like this.
warning:
One of Mexico’s most violent criminal groups, Jalisco New Generation, runs call centers that offer to buy retirees’ vacation properties. Then, it empties its victims’ bank accounts.
https://www.nytimes.com/2024/03/21/world/americas/mexico-timeshare-fraud-cartel.html
This is an interesting twist on selling condos. It must be hard trying to sell an new overpriced Net-zero ecco-friendly condo. If you buy one in London, Ontario, they are throwing in a $64,000 Tesla.
https://driveteslacanada.ca/news/eve-park-offering-a-free-tesla-model-3-with-condo-purchases-ontario/
So the ‘low point’ for housing prices in Canada was January 2023. This, combined with what is expected to occur via rate cuts etc. will presumably see RE prices marching inexorably upward. Which is not going to assist any of the house hungry, landlord bashing crowd to find ‘affordable’ accommodation any time soon.
What I found interesting in some of yesterday’s comments were those saying that government supplied housing isn’t something that should be done. Because it is ‘too expensive’. So why then the vitriol towards anyone who is a landlord? If government isn’t building housing, that leaves the private sector to fill the need/demand. Which in our capitalist society means turning a profit. Which doesn’t exactly encourage price reductions. After all, those who are investing the funds to build presumably have to make a living. What is this expectation that said folks should provide shelter at their expense to others? I do wonder if any of the folks making such declarations have ever acted on their convictions by acting as landlords themselves, either by taking the step to ‘invest’ to ‘make gobs of money’ or by sharing the space they occupy with someone who couldn’t otherwise afford a place to live? Bet most have not & if given the ‘opportunity’ would find all sorts of reasons why they couldn’t take on that responsibility they so freely expect others to engage in.
Life is good.
#2 Travelling on 03.21.24 at 11:52 am
Recall that our CB has two mandates. Price stability. And full employment.
———
That’s the mandate for the Federal Reserve.
The Bank of Canada mandate:
The Bank of Canada is the nation’s central bank. Its mandate, as defined in the Bank of Canada Act, is “to promote the economic and financial welfare of Canada.” The Bank’s vision is to be a leading central bank—dynamic, engaged and trusted—committed to a better Canada.
Not need to print. Just catching the snafu.
You have not read the new legislation. – Garth
****
@Travelling – in 2015, Prime Minister Justin Trudeau said, “The budget will balance itself.”
#17 ogdoad
Anyway, [email protected] for a deeper look at your insecurities.
—
Hilarious, mate. Always enjoy your comments.
Shelter is a right. Affordable housing is not. – Garth
And this can be squared to a functional result how?
The odds of rate cuts in futures markets are opinions, which fluctuate wildly according to emotions since the beginning of the year.
There does not appear to be any mention of the upcoming Federal budget and how it fits into the Bank of Canada forthcoming decisions.
It doesn’t. – Garth
#53 alexinvestor on 03.21.24 at 3:29 pm
Shelter is a right. Affordable housing is not. – Garth
What does that practically mean ? I guess you have a right to camp on city land ? Or does the government have to build you something with heat and water ? Who goes to jail if this doesn’t happen ?
I’m not being facetious, but seems like we have all these rights without any good mechanism to implement. Seems a bit pointless.
*******
The purpose of SJW’s when claiming that “housing is a human right”, is not to ensure that everyone has a government-subsidized roof over their heads.
No, it’s to ensure a gullible segment of the population is continually enraged that they don’t have a government-subsidized roof their heads.
Because the government will never provide enough subsidized housing to make the aggrieved happy.
Calling something a human right doesn’t make it one, but it does provide a means to distract and control the dimwitted who believe it does.
Like commuting to work? Phones with cords? Mortgages at 14%? – Garth
Keep going!
Ability to buy a house with high school education.
Good unionized jobs that could have you on your way to a house/car/family at 20 years of age
Detached Toronto homes for $125,000
Good selection of rock on vinyl at SAM for $3.99ea.
Canadian team in Stanley Cup Final.
Buying houses at 20 with Grade 12? Where do you get this stuff? – Garth
#55 Get off my lawn on 03.21.24 at 3:37 pm
The nerve of young people these days wanting to have the same things I had when I was their age. How dare they.
Like commuting to work? Phones with cords? Mortgages at 14%? – Garth
Mortgages at 14% when houses were a whopping 2x household income, as compared to 8.5x today. This argument is bunk
Isn’t revisionist history fun? – Garth
…there is uncertainty and instability
as jobs are not as stable as they once were and the rate of change sometimes is too rapid drains the energy from work
The 2000-2002 Dot Com collapse was largely the result of prior years of M&A, overvaluations and resulting layoffs. Around 1M jobs lost, $2T market loss, careers destroyed, companies like MCIWorldcom, Global Crossing and other companies went bankrupt and destroyed hundreds of thousands of employee retirement savings.
https://en.wikipedia.org/wiki/List_of_economic_crises
Tiberius Used Quantitative Easing To Solve The Financial Crisis Of 33 AD
Bryan Taylor, Global Financial Data
Oct 26, 2013, 7:10 AM EDT
https://www.businessinsider.com/qe-in-the-financial-crisis-of-33-ad-2013-10?r=US&IR=T&IR=T
44-1/bill/S-275/first-reading
So; when the system gets difficult for the system it’s self, the system changes the playing field!
Seems like what the former president south of here has in mind also doing.
But he has to win another election first, while up here the employed and or pensioned for life Senate can simply devalue the CAD for the rest of us at will?
Like commuting to work? Phones with cords? Mortgages at 14%? – Garth
I am already commutting to work, so all good.
When I was using phones with cords I was happier and less distracted, so I’ll take that too.
And I would be super happy to have 14% mortgages. It would finally bring down this momma of a real estate bubble.
#67 Lloyd on 03.21.24 at 4:20 pm
#55 Get off my lawn on 03.21.24 at 3:37 pm
The nerve of young people these days wanting to have the same things I had when I was their age. How dare they.
Like commuting to work? Phones with cords? Mortgages at 14%? – Garth
Mortgages at 14% when houses were a whopping 2x household income, as compared to 8.5x today. This argument is bunk
Isn’t revisionist history fun? – Garth
****
What revisionist history? Homes in Canada used to cost ~ 2X income, today it is closer to 10 in most cities. Millennials have every right to be angry. We have a Minister of Housing in this country ffs. What the hell have politicians done to this country? Life was waaay cheaper in the 90s, anyone telling you otherwise is guilty of revisionist history!
Your numbers are wrong, but you don’t care. Just rage on – wasting your time and emotion. – Garth
I graduated high school in 1972. Worked as a truck driver until fall 1973 and used my wage savings to enter college.
In college for 3 years, drove pizza delivery cars and worked full time summer jobs. Just made it thru with $40 to my name at graduation in 1976. Had to stay in student housing for 3 months to save for first and last.
First job was $700/month salary. After payroll taxes, rent was $200/m. Had no furniture but an apartment only.
It took another 5 years to save a down payment for my first very modest house with a 9 3/4% mortgage. I was 27 by then and in debt. It took decades to pay off.
Us boomers had it so easy. (sic)
#19 Neolithic Man on 03.21.24 at 12:59 pm
The fact is Canada sucks. The government is at fault. The only question is when will the young revolt?
Canada slips to 15th place in annual World Happiness Report
https://www.ctvnews.ca/canada/canada-slips-to-15th-place-in-annual-world-happiness-report-1.6815318
———————
Has anyone really a clue how these surveys are conducted?
For what it’s worth, Finland and the other Scandinavian countries are perennial “winners” in that contest.
Could it be their cradle to grave welfare state?
Just asking?
#41 Samsara on 03.21.24 at 2:10 pm
“Owning real estate is not a right. – Garth”
Correct, but affordable housing is a right. Landlords speculating on investment housing and driving up prices then milking renters for ever increasing wealth is greed, pure and simple. Renters deserve stable rents. Tied to inflation sure, but not to a speculative housing bubble.
Shelter is a right. Affordable housing is not. – Garth
_____________________________________
I don’t think a roof over one’s head – owned or rented – is a right. You have a right to purchase or rent a home if you are earning enough money to afford it. If you do not earn enough money to own or rent your own property, then you have the right to live in your parents basement – if they’ll have you, OR you have the right to seek out opportunities elsewhere.
If you’re educated, are working hard and spinning your wheels getting nowhere, then perhaps it’s time to rethink your path forward. Instead of complaining and lobbying gov’t to ‘do something’, maybe consider this place isn’t for you. And I don’t say that with cruel intentions. This country is not going to get cheaper, it’s going to get more expensive. Stop looking to gov’t to solve your problems, whenever they stick their noses into something, they usually make it worse.
Canada is not the only country in the world, in fact it’s one of the coldest, most expensive, most boring, uneventful places on the planet. I was born and raised here but I know and say this having lived outside the country for nearly half my working life. Instead of spinning your wheels here, maybe have a look at opportunities in other countries, some of them are tax free and warm all year round.
I still think the youth are eventually going to launch a revolution over housing…
But in the meantime, I’m enjoying the stockmarket gains…
make hay while the sun shines.
Steve-O
Getting some news from Twitter about Ottawa issuing mortgage backed securities to essentially boost house building. I didn’t quite understand it, but the central bank issues bonds in which Ottawa buys half to the tune of $30 billion and relends, and I think I got that wrong.
I’m kind of hoping you could put this in plain English Garth so we can understand it.
Also, in your opinion, is this a good thing or bad thing?
Usually something like that gets sold to private investors doesn’t it? But then, who in their right mind would buy a mortgage backed security from this country considering home prices where they are?
@#61 Gen Z Realist on 03.21.24 at 3:57 pm
#2 Travelling on 03.21.24 at 11:52 am
Recall that our CB has two mandates. Price stability. And full employment.
———
That’s the mandate for the Federal Reserve.
The Bank of Canada mandate:
The Bank of Canada is the nation’s central bank. Its mandate, as defined in the Bank of Canada Act, is “to promote the economic and financial welfare of Canada.” The Bank’s vision is to be a leading central bank—dynamic, engaged and trusted—committed to a better Canada.
Not need to print. Just catching the snafu.
You have not read the new legislation. – Garth
****
@Travelling – in 2015, Prime Minister Justin Trudeau said, “The budget will balance itself.”
–
folks just don’t care about context anymore it seems.
sigh.
It’s official now.
mmhmm… sure.
We told you rates would decline this year.
mmmhmm… yes, it was supposed to have already happened, but hasn’t.
Oh come on! No one knows until it is announced.
Stop with the proclamations.
I’m still happy the market is stomping ahead!
“chances” are now “facts”.
hogwash. those chances change quick – in both directions.
@67 Loyd;
“Mortgages at 14% when houses were a whopping 2x household income, as compared to 8.5x today. This argument is bunk”
You sound like me, back in 1982. Numbers different, but you’ve got my tone and meaning down pat. Just ask my Mom.
My first little house early ’80s was 5x average family income, at a time when mortgages averaged around 13%. Shortly afterwards they went to something like 22%.
After a while of banging our heads against the wall, it’s the reason why we left Canada, to places with better income/expense ratio. Finally came back for family reasons, but smarter than before.
Smarter? Like, keeping track of expenses, so we KNOW where money goes. Do you know, down to the penny, where your monthly take-home gets spent on? If not, why not?
DELETED (Ad hominem)
no worries Paulsen et al is fund raising for him ?
ABACUS –
https://www.reuters.com/article/idUSTRE63F5CZ/
beside Manafort
Roger Stone, who was also indicted by Mueller and convicted of multiple crimes;
Bannon, who had pleaded not guilty to charges he defrauded donors in a “We Build the Wall” online fundraising campaign; and
Michael Qanon Flynn, Trump’s former national security adviser charged with lying to the FBI.
Stone in 2020 was sentenced to three years in prison and two years of supervised release. Trump pardoned Bannon before he went to trial, but his three co-defendants last year received prison sentences ranging from three to five years. Flynn pleaded guilty but was never sentenced and faced a maximum of five years in prison.Instead, they’re now key players in the effort to reelect Trump
…. all of his own making
On Thursday, Trump’s fraud judge set rules for an “enhanced” court-imposed monitoring of Trump Org.
Trump must give 5 days notice if he’s moving $5M or more in cash or assets out of the business.
Effective immediately, “the Trump Organization shall provide copies of monthly bank statements for all bank or brokerage accounts of the Trust within five business days of the end of each month,” Engoron ordered.
The “Trust” is a reference to the Donald J. Trust Revocable Trust, which holds all of Trump Org’s assets and for which Trump is the sole beneficiary.
The judge also ordered on Thursday that Trump foot the bill for the additional staff needed for this extra monitoring. Trump has already been paying for the team Jones brought in to watch his books 16 months ago.
Finally, the judge took action to prevent Trump from using the monitorship as a legal shield, as his lawyers attempted to do during the civil trial.
https://www.businessinsider.com/how-nys-judge-engoron-is-tightening-the-leash-on-trump-2024-3
Is this the part where they said they were willing inflation to run hot, since we are past the transitory phase?
It’s 2.8%. How is that possibly ‘hot’? – Garth
#39 T-Rev on 03.21.24 at 2:05 pm
You can buy a SFH for $300k IN Edmonton, Saskatoon, or Regina. In fact, you can buy for under $200k in those cities, but $300k will get you a post-war bung from the 50s.
——————
If you’re down to live on the fringes of civilization, 50K will get you a dated, unloved, vacant, Victory house on a serviced lot. Or, a candidate for a “Heroic Restoration” could be scooped up for as little as 25-30K. You’ll need tools and skills to win at this game though. Reality is, a simple 7-800 SF single/1.5 story bung ain’t a daunting renovation by any stretch. Consider the potential winning.
Lots of options if you are open minded and cut from the right cloth. Red Lake Ontario has a 106K median household income, 38 y/o median age, and a decent house is 150-200K. Not to mention actually being surrounded by the landscape and wildlife our Immigrants fall in love with when flipping through the propaganda – before taking the plunge and landing in the GTA.
If employment income is all you’re packing, start getting real about post-Trudeau Canada. That ain’t enough anymore. Forget about the job laden big Metros. You’ll pay what they’re asking, and they’re asking a lot. Thinking outside the box is how to win if you’re just starting out armed with only a paycheque. If you’ve got the resolve, and can tolerate being among the living without sushi delivery, you likely got what it takes to thrive in post-Trudeau Canada.
We told you rates would decline this year. They will. The drop will be at least three-quarters of a point in the US. Maybe 1% here, depending on the data.’
Trust…the …data?..sure..cell phone plans have a greater influence on inflation than energy costs..
#72 necessary on 03.21.24 at 4:48 pm
First job was $700/month salary. After payroll taxes, rent was $200/m. Had no furniture but an apartment only.
You were paying 28% of your AFTER TAX income for your housing. That’s from the salary of the first job you got.
Now, see this: https://rentpanda.ca/rent-report-october-2022
Not surprisingly, Vancouver leads the pack of unaffordable cities with 123% of an average individual’s income being spent on rent. Toronto (118%), Victoria (87%), and Kitchener/Waterloo/Cambridge (87%) are close behind in terms of unaffordability for individuals based on an individual’s average income.
That means you can’t rent alone. Either you and your second half have to work to cover for all your expenses, or rent with a roommate.
So what you were saying there about being (sic)?
#35 Ballingsford on 03.21.24 at 1:51 pm
Canada needs a really good infrastructure project like they did in the olden days.
How about the construction of a brand new city, new infrastructure, housing/shelter, industry, financial models, everything, that’ll be designed to hold a population of 2 million or more.
A brand new start to everything.
Are you willing to pay more in taxes and take less in services to finance it? – Garth
——————-
They’ve done this in China. Spoiler alert, it works out REALLY badly. It turns out central planning misses key details that the free market doesn’t.
#73 Ponzius Pilatus
Yup.
They are welfare states.
They claim to be happy, yet, they cut loose and go nuts here in Italy and Spain (the latter for Nordics on a budget that drink too much beer). Eat like horses, drink like fish and just go nuts basically. At least they don’t etch our monuments like the drunk dung for brains English do.
And they ply our beaches nude scaring our Nonne.
During Spring Fashion Week in Milan, you’d think you were in Stockholm for all the +6 ft blonde, blue eyed Norse that invade, then to do their shopping and go home (where they are very happy). Supposedly.
#75 fomosapien on 03.21.24 at 5:14 pm
@#61 Gen Z Realist on 03.21.24 at 3:57 pm
@Travelling – in 2015, Prime Minister Justin Trudeau said, “The budget will balance itself.”
–
folks just don’t care about context anymore it seems.
sigh
——-
The context of that quote was that we’d “grow the economy from the heart out”, and the revenues thereof would keep the budget in the black.
What actually happened though, was the economy had no chance in hell of keeping pace with the rate our drooling federal politicians were spending at, and now our federal debt is 100%+ higher than it was when Harper got the boot (and counting).
Just for laughs, Harper had the deficit to sub 1 billion in 2015 when he handed the reins to Trudeau. That’s right, less than 1 single billion. Today, our normal run of the mill deficits seem to run between tens, and hundreds of billions annually. So much for the budget balancing itself.
I think the proper context is the Trudeau Libs are a slack-jawed dunce-cap sporting troop of monkeys.
#41 Samsara on 03.21.24 at 2:10 pm
:):):)
My Sig had a horse named Samsara. Great name!
Og
#72 necessary on 03.21.24 at 4:48 pm
Also you said:
It took another 5 years to save a down payment for my first very modest house with a 9 3/4% mortgage. I was 27 by then and in debt. It took decades to pay off.
So you had to privilege to be able to save for a downpayment for 5 years!
Believe me, that is what most people want!
I am sure you know that these days if you don’t make a lot of money you won’t save fast enough even for a downpayment, right?
The young generation wants to have the same possibilities you had:
1. Pay a max of 30% of an individual’s after tax income for rent
2. … while being able to save, and not get locked out of the market because the RE prices grow faster than you can save for a crappy 5% downpayment.
Get it now?
#78 Another Deckchair on 03.21.24 at 5:20 pm
Smarter? Like, keeping track of expenses, so we KNOW where money goes. Do you know, down to the penny, where your monthly take-home gets spent on? If not, why not?
I do actually, I’m an accountant and have a spreadsheet that tracks every expense. But besides, this issue is way bigger than teaching people how to budget.
You’ve also probably made some assumptions that aren’t accurate. I’m early 30s and own a detached home in Toronto and do ok, but I got lucky. The fact remains that at no other point in time has housing been more unaffordable in this country, and it’s having widespread negative implications. Work ethic from colleagues in their 20s is way down since there’s no real reward for getting that raise/promotion, GDP per capita is negative (despite increasing in the US), birth rate falling well below replacement level, etc. Not sure where this is headed but it’s likely to get worse before it gets better
#66 Garthisms on 03.21.24 at 4:13 pm
Like commuting to work? Phones with cords? Mortgages at 14%? – Garth
Keep going!
Ability to buy a house with high school education.
Good unionized jobs that could have you on your way to a house/car/family at 20 years of age
Detached Toronto homes for $125,000
Good selection of rock on vinyl at SAM for $3.99ea.
Canadian team in Stanley Cup Final.
Buying houses at 20 with Grade 12? Where do you get this stuff? – Garth
>>>>
Are you kidding Garth?
My BIL finished high school and was working at GM Oshawa in 1985 at 18. At 20 he put down a deposit for his Oakville detached 3bdrm 2 car on a 40″ lot build to move out of his parents house. He also bought a Mustang.
Granted, young lad was doing overtime at every opportunity to get the downpayment money and the commute sucked, but he was accelerating his life big time and at 20 was well on his way.
#67 ‘Old Boot’ – in point of fact the masses don’t actually want government supplied housing. At least not the kind of government housing that springs to mind. What they want is the 3 bed, 2 bath with all the mod cons house, single family, in a good to excellent location with excellent resale value. Not gulag grey building blocks cheek by jowl with the freeway surrounded by graffiti & grit. Now I’m willing to believe there is plenty of public housing that isn’t the aforementioned gulag grey building with graffiti, but let’s be honest. That IS the image that springs to mind!
#84 IHCTD9 on 03.21.24 at 5:28 pm
#39 T-Rev on 03.21.24 at 2:05 pm
You can buy a SFH for $300k IN Edmonton, Saskatoon, or Regina. In fact, you can buy for under $200k in those cities, but $300k will get you a post-war bung from the 50s.
——————
If employment income is all you’re packing, start getting real about post-Trudeau Canada. That ain’t enough anymore. Forget about the job laden big Metros. You’ll pay what they’re asking, and they’re asking a lot. Thinking outside the box is how to win if you’re just starting out armed with only a paycheque. If you’ve got the resolve, and can tolerate being among the living without sushi delivery, you likely got what it takes to thrive in post-Trudeau Canada.
——————
Just curious, who wants to live in post-Trudeau Canada? Will this country be any different than China? Why would anyone want to live here? Seriously – no jobs, no economy and no homes. What is the point of Canada?
Everyone should read George Grant’s 1965 classic, “Lament for a Nation”, it predicted all this and more!!
#87 Josh in Calgary on 03.21.24 at 5:46 pm
#35 Ballingsford on 03.21.24 at 1:51 pm
Canada needs a really good infrastructure project like they did in the olden days.
How about the construction of a brand new city, new infrastructure, housing/shelter, industry, financial models, everything, that’ll be designed to hold a population of 2 million or more.
A brand new start to everything.
Are you willing to pay more in taxes and take less in services to finance it? – Garth
——————-
They’ve done this in China. Spoiler alert, it works out REALLY badly. It turns out central planning misses key details that the free market doesn’t
*******
Where does one find a free market that actually works on fundamentals?
#86 “Not surprisingly, Vancouver leads the pack of unaffordable cities with 123% of an average individual’s income being spent on rent. Toronto (118%), Victoria (87%), and Kitchener/Waterloo/Cambridge (87%) are close behind in terms of unaffordability for individuals based on an individual’s average income.”
You made your point, so only a fool would live in those cities and live on the hamster wheel for life.
This blog is full of “poor me” TO and VAN people who won’t do something about their situation and just complain.
It’s a big country.
Garth, curious why you say that mortgage rates will fall when the BoC cuts rates this summer (or 2024 for that matter).
Are those rate cuts not already priced into the 5 year GoC bond? If you’re referring to the variable rate, it still doesn’t improve affordability, until serious cuts are made.
Hard to see how the housing market makes any meaningful gains over the next few years, unless the BoC can cut rates further than they are forecasted to, at the same time avoding recession (good luck with that!).
#62 Les on 03.21.24 at 4:05 pm
:):):)
Happy to oblige!
Og
We went to a garage sale this weekend for “three homes”. I spoke with the owner and he said he was just tired of renting home out for the last 20 years.
After a bit of prodding, he basically told me “the government, city and beverybody is against me and this business now, so I’m selling.”. This is in winterpeg.
A friend of mine who has 7 properties doesn’t really feel any stress to sell, but clearly times are changing.
DELETED
In my area , suburban Vancouver South of Richmond, there were still $50, 000.00 or less starter homes in 1975 – 76 time frame. I wasn’t even quite 20 and considered buying one. Bought a Lotus instead with the down payment money and rented with a couple of friends. If I had of bought there is a good chance I would have lost it when interest rates went through the roof in 1981.
They haven’t cut rates and they’re not going to cut them this year.
See you in June. – Garth
It’s actually the right to “adequate” housing, which this document covers well:
https://www.ohchr.org/sites/default/files/Documents/Publications/FS21_rev_1_Housing_en.pdf
And remember, this does not give you the right to someone else’s legally tenured property.
If you’re a compliant landlord, you have nothing to worry about. We are going after slumlords,” Santos said, adding that the enforcement will be complaint-based.
In a January council meeting, Mayor Patrick Brown said the city has up to 100,000 people living in substandard houses, an estimated 30,000 illegal rental units, including complaints about dozens of students crammed in one basement.
https://www.cbc.ca/news/canada/toronto/residential-rental-licensing-pilot-brampton-city-hall-protest-landlords-property-owners-illegal-lodging-1.7151141
#96 DON on 03.21.24 at 6:09 pm
#87 Josh in Calgary on 03.21.24 at 5:46 pm
#35 Ballingsford on 03.21.24 at 1:51 pm
Canada needs a really good infrastructure project like they did in the olden days.
How about the construction of a brand new city, new infrastructure, housing/shelter, industry, financial models, everything, that’ll be designed to hold a population of 2 million or more.
A brand new start to everything.
Are you willing to pay more in taxes and take less in services to finance it? – Garth
——————-
They’ve done this in China. Spoiler alert, it works out REALLY badly. It turns out central planning misses key details that the free market doesn’t
*******
Where does one find a free market that actually works on fundamentals?
————————
Good question.
Asked PP.
#55 Get off my lawn on 03.21.24 at 3:37 pm
The nerve of young people these days wanting to have the same things I had when I was their age. How dare they.
Like commuting to work? Phones with cords? Mortgages at 14%? – Garth
Mortgages at 14% when houses were a whopping 2x household income, as compared to 8.5x today. This argument is bunk
Isn’t revisionist history fun? – Garth
Boomer here with two hardworking, educated children in their 30s. One owns a house and the other rents. I would have expected that their standard of living would have been higher than mine at that age or at least the same. They both have very good family incomes but my family income at the same age allowed husband and I to pay off first house in 6 years. It was a detached 2200 sq ft purchased in 1985 for $107,000 with a mortgage interest rate of 11 1/4%. Family income was $70,000. What’s wrong with parents wanting their kids to have at least as much as we did? It’s not jealousy.
OK enough with the felines already. I am going to catch cat scratch fever.
Stock markets up!
Garth is right. Quit the gloom and doom folks…
Things could always be worse.
For one, you’re not dead.
Turn up the Bachman-Turner Overdrive… and let it ride!
https://www.youtube.com/watch?v=vKSUQ9ANoOE
@#73 Ponzies pals
“For what it’s worth, Finland and the other Scandinavian countries are perennial “winners” in that contest.
Could it be their cradle to grave welfare state?”
+++
Taxes taxes taxes, pay for that welfare state.
https://www.numbeo.com/cost-of-living/country_result.jsp?country=Sweden
Hmm, on second thought…. do they have elevators in Sweden?
@#93 Retrophonic
“My BIL finished high school and was working at GM Oshawa in 1985 at 18. At 20 he put down a deposit for his Oakville detached 3bdrm 2 car on a 40″ lot build to move out of his parents house. He also bought a Mustang.”
+++
He worked at GM and bought a Ford?
#93 Retro Phonic on 03.21.24 at 6:04 pm
Your BIL was the leading edge of the GenXer’s who for the most part have done very well including my sons who both owned their own homes in early 20s. Homes could still be had for 2.5 to 3 times a single income in most parts of the country. Very different times.
Well, it’s good to know Trumps son-in-law has Gazans best interests at heart….
https://www.scmp.com/news/world/middle-east/article/3256043/donald-trumps-son-law-jared-kushner-praises-very-valuable-potential-gazas-waterfront-property
“perhaps they could all move to the desert……”
#70 Jacob
And I would be super happy to have 14% mortgages. It would finally bring down this momma of a real estate bubble.
—————————————————————-
It would only take 8% to do it at current prices and it ain’t gonna happen.
The big issue is affordability for young people in the big metros. In 1982 my immigrant father made $24000 a year working in construction in Vancouver. At the time a house in East Van could be purchased for $60000, that was 2.5x times our household income. The Boomers bought real estate at 3-4x household income and are today selling the same real estate to generation Y and Z for 20x household income. On top of that they are not allowing high density housing to be built. This selfishness has destroyed the economic prospects of newer generations. The government does not tax capital gains in real estate, unlike the US. So, here we are, branch plant economy, exporting raw materials and real estate are the most important sectors. The most expensive cities on the planet, in the second largest country in the world. No high-tech industry, no advanced manufacturing, no Nasdaq, the real wealth creators south of the border. Eventually all smart graduates will leave to work for higher salaries in the US. Very distorted economy due to poor economic development policies and greed. People have no ambition to create real wealth, just buy a house and rent out the basement. Where are the Nvidias and Teslas of Canada?
#95 Millennial Rage on 03.21.24 at 6:05 pm
Just curious, who wants to live in post-Trudeau Canada? Will this country be any different than China? Why would anyone want to live here? Seriously – no jobs, no economy and no homes. What is the point of Canada?
—————-
If you take a reasonable, critical look at Canada, you’ll see pretty quickly that 90% of the problems which have taken hold under Trudeau’s bungled tenure, affect maybe 5-10% of the land area of Canada. Basically most of Ontario south of North Bay, and most of the Southern half of BC. Outside these two areas, just avoid any Metro, and 99% of the go-nowhere trouble zones are eliminated.
Now all you gotta do is figure out how you’re going to make a living. You’ll find two likely options, go back in time (get hands dirty), or go forward in time (remote work). Both will allow financial, shelter, and retirement security. In some cases, a better living for the average working stiff than there has ever been.
I’ve lived 41 years in rural southern O’, all of them were great except the last 4. I’m exiting as I’ve identified better options for a better future, and since I’ve been presented with the opportunity. Anyone can do it, just do your research, operate that calculator, and hold the excuses.
Exiting Canada is an option too, but realistically – it ain’t easy. Crusty old dudes of my demographic should not even bother wasting time trying to gain a second citizenship, it ain’t happening unless you can do so via ancestry. I can, but it would gain me access to any EU country, and the Dutch Caribbean – none of where I would want to live. I’d choose Russia (with a different government), or any Scandinavian country, but none of those are ever going to be a real option.
The point is, Canada is a two-faced country. Urban/populous (problems), and everything else. There is no question opportunity awaits for those willing to find it, and nail it down.
#19 Neolithic Man on 03.21.24 at 12:59 pm
The fact is Canada sucks. The government is at fault. The only question is when will the young revolt?
Canada slips to 15th place in annual World Happiness Report
https://www.ctvnews.ca/canada/canada-slips-to-15th-place-in-annual-world-happiness-report-1.6815318
*********
It’s worth noting – we were number 1 the year before Trudeau – and have fallen virtually every year since…
M60BC
He worked at GM and bought a Ford?……….
I can believe that more than I can believe he bought a house in Oakville,
In 1985 they had 3br, 2 car on 40′ lots in Oshawa.
110 crowdedelevatorfartz on 03.21.24 at 8:06 pm
@#73 Ponzies pals
“For what it’s worth, Finland and the other Scandinavian countries are perennial “winners” in that contest.
Could it be their cradle to grave welfare state?”
+++
Taxes taxes taxes, pay for that welfare state.
https://www.numbeo.com/cost-of-living/country_result.jsp?country=Sweden
——————
The question was :
Why are they so happy?
Seems like they are happy with their ROT (Return on Taxes)
Talking about happiness.
Seems that the assumption here is that people who don’t own a house, are destined for a long life of un-happiness .
And their children will become bank robbers.
#93 Retro Phonic on 03.21.24 at 6:04 pm
working at GM Oshawa in 1985 at 18. At 20 he put down a deposit for his Oakville detached
_______________________________________
The logistics. How Canadian! Minimum one hour on QEW/427/401. Or QEW/Gardiner/Don Valley/401, each way, each day.
Paint solvent fumes at the plant?
Greetings Blog Dogs!
Lower interest rates and (most likely) higher home prices seems to be a logical prediction in the short term. Thank you Garth!
I’m a renter, but I do not have an envy or malice towards those that currently own real estate (even those that are just mortgaged/indebted to the hilt).
My frustration and I suspect many others would agree -comes from witnessing the current trajectory of our country and the inability to change course because of housing! An economy based on selling each other houses is not a true thriving economy or country! When will it end? When the average SFH is 2 million? 10 million? Canadian real estate is an obvious bubble and it continues to unfold right before our eyes like a slow moving car crash!
Twenty years of lazy government policies laid the groundwork for this mess and greed continues to drive it forward! As a result, our ability to have a productive, vibrant and robust economy has been hobbled (and good luck changing course)!
Higher house prices just further inflates the housing bubble which in turn only benefits those Canadians who own real estate (and validates the choices of those with mortgages). However, when this bubble finally bursts (and it will), I suspect all Canadians – homeowners and renters, will suffer financial consequences due to our over reliance on real estate. And that hardly seems fair!
“Kicking the can along” and not dealing with all levels of debt (private & public) and the housing bubble is not a viable solution and represents a moral hazard with significant consequences and collateral damages eventually…… “just not now” – as per Garth
Scooter
To all who is not happy about current housing.
I’m pretty sure you are looking for the incorrect solution.
We live in the capitalism, not socialism
All problems are solved by the market rules.
Supply and demand
It’s so obvious to me that our supply in Canada can’t catch up with demand
To solve this problem, we need to build way more houses, so supply should be always above demand, then the market rules will kick in and the prices for the houses will start going down.
The election is coming, so pick your candidate who does promise to build more than demand is.
And make sure it’s not a BS. The candidate has to have a clear idea how to achieve this.
Supply chain of building materials and all related things (I would say we need to provide huge tax breaks for new factories which will produce all the building materials to make sure it’s always over supply), way less paper work for building permits, some tax breaks for new builders to make sure we have plenty of competition. Basically, you have to stimulate this part of the economy starting from the very 1st step to build the house to the very last one.
Then vote for this candidate to make sure a majority in the parliament. I’m not a conspiracy theorist, but it’s very clear to me the current government does not want the prices for the housing to drop for some reason (maybe lobbing from some businesses or something else, who knows)
USA did it once in 1960s what is described above and it worked. So, in theory it’s doable.
Interest rate is not a solution. Supply and demand is.
#111 crowdedelevatorfartz on 03.21.24 at 8:08 pm
@#93 Retrophonic
“My BIL finished high school and was working at GM Oshawa in 1985 at 18. At 20 he put down a deposit for his Oakville detached 3bdrm 2 car on a 40″ lot build to move out of his parents house. He also bought a Mustang.”
+++
He worked at GM and bought a Ford?
————
That was the era of the Ford fox body. They ate the 3rd Gen F-bodies (Camaro, Firebird, Trans-Am) for dinner. I was a Ford guy back then too, until GM came out with the LS motors in the 90’s, which they are still (unbelievably) still making and stuffing into pickups.
Buying a Mustang in the 80’s was the right decision. :)
There is a class of non-house-owning people ready to do whatever damage they can inflict on others since their expectations have not been met.
Alas, things are about to get worse for them.
they expect that government can do anything but it cannot.
Goodness gracious.
What was the local Montreal Press thinking?
https://www.timesofisrael.com/montreal-daily-faces-backlash-over-netanyahu-vampire-cartoon/
@#124 IHCTD9
I have a friend that works as head mechanic at a Ford dealership in BC.
He bought, and drives…. a diesel Jetta…
A simple case: you bought a house for yourself, and lived there for several years. After that, you’ve got a 1 year work contract in another city or another country. You wish to go there for money and/or new experience, and intend to return.
In the old days, you would rent your house out for 1 year. You get the money, the tenant gets a place to live. 1 year later, you move back into your house. Everyone is happy, a win-win.
These days, you will have to either keep the house empty and pay the extra tax, or sell. Renting it out comes with too much legal risk.
DELETED
123 ifriend on 03.21.24 at 10:11 pm
To all who is not happy about current housing.
I’m pretty sure you are looking for the incorrect solution.
We live in the capitalism, not socialism
All problems are solved by the market rules.
———————-
Haha.
We got a live one here, folks.
Still stuck in Reaganomics.
What you are proposing is State controlled intervention.
Like in China.
Where they wanted to put a house in every pot.
And ended up with ghost towns.
Is that what?
The Right to Shelter simply means you have the right to buy or rent a home, etc., regardless of skin colour…
Not to freebees.
There were lots of houses for sale in Canada for under $100K in 2015, then Trudeau was elected.
The average new car cost $27,000 in 2015. Now it’s $66,000. Damn Trudeau. – Garth
It’s been a long time since I last visited this blog. Garth has become sanguine and bullish on housing prices. On the surface, it’s hard to disagree with your synopsis Garth. But I believe there are leading indicators foreshadowing a more serious recession than many envision. And with debt at all levels soaring, the demand for roll over and new credit will be astronomical. Might buyers demand lower prices/ higher yields? Remember, the CBs only control the shortest end of the yield curve.
I am forecasting higher sales, and explained why. I have not projected hugher prices. Real estate has become more market-centric than usual. Having said that, I see no meaningful declines in the next year. – Garth
“We told you….we told you……we told you…we.
“The question is whether real estate values will revive as the cost of credit costs flags.”-Garth.
Oh, you have a question all of a sudden at the end?…
I thought you had an answer to that as well.
#3 Another Deckchair on 03.21.24 at 12:01 pm
———-
You write about EV subsidies and the average EV owner earning 100k+. FYI – people in that income bracket don’t get any rebates for buying an EV. Here in BC they will most likely be hit with paying the higher luxury car tax as EV cost a lot more.
As for EV not being environmentally beneficial, those arguments have been refuted so many times. Are EVs as environmentally friendly as some claim, of course not. But over their lifespan they are better than the equivalent ICE car.
#97 necessary on 03.21.24 at 6:11 pm
#86 “Not surprisingly, Vancouver leads the pack of unaffordable cities with 123% of an average individual’s income being spent on rent. Toronto (118%), Victoria (87%), and Kitchener/Waterloo/Cambridge (87%) are close behind in terms of unaffordability for individuals based on an individual’s average income.”
You made your point, so only a fool would live in those cities and live on the hamster wheel for life.
This blog is full of “poor me” TO and VAN people who won’t do something about their situation and just complain.
It’s a big country.
——————————————
I’m a big fan of moving, though for anyone young and without inherited wealth, the more logical move is to leave Canada rather than finding a hovel within.
But for the young working and middle class that chooses to remain (for whatever strange reason), your suggestion that they should be content to be shut out of two metro areas comprising nearly 1/4 of the country’s population probably won’t go over well. And it’s not a good long term strategy to turn the GTA/GVR into massive nursing homes as the young are forced out.
#74 TheDood on 03.21.24 at 4:50 pm
Instead of complaining and lobbying gov’t to ‘do something’, maybe consider this place isn’t for you. And I don’t say that with cruel intentions. This country is not going to get cheaper, it’s going to get more expensive. Stop looking to gov’t to solve your problems, whenever they stick their noses into something, they usually make it worse.
—————————————-
1) Is it wrong for the young working and middle class paying 30-50% income tax to expect the government to at least consider and represent their interests? Does that qualify as ‘asking the govt to solve their problems’?
2) Do you give the same advice to old people complaining about rising property tax? Stop complaining and sell or move, right? World’s a big place. Nobody is forcing them to retire in Canada.
On the whole I do agree with you that the young should emigrate. Wish more would take the plunge. The administrative hurdles are daunting, but the result rewarding.
#125 45north on 03.21.24 at 10:15 pm
There is a class of non-house-owning people ready to do whatever damage they can inflict on others since their expectations have not been met.
Alas, things are about to get worse for them.
they expect that government can do anything but it cannot.
—-
Are you on meds, missed or overdosed?
https://i0.wp.com/www.bitsandpieces.us/wp-content/uploads/2024/03/429671400_10228546327895978_2668587011130415965_n.jpg?resize=600%2C749&ssl=1
@#119 Ponzies Pals
:Seems like they are happy with their ROT (Return on Taxes)”
+++
Seems like their happy with their welfare state.
¨…dynamic, engaged and trusted—committed to a better Canada.¨
Dynamic – weasel word #1. What does that even mean in this context?
Engaged – weasel word #2. Engaged to what?
Trusted – that´s a result, not by any means a fait accompli.
Committed to a better Canada – sounds like this one was lifted directly from Liberal Question Period yuck speak.
None of this speaks to actual substance, especially when bouncing ¨dynamically¨ in the same sentence.
No disrespect, however overpaid ¨communications specialists¨ truly pump out the most soporific, meaningless drivel.
Verbal junk designed to lull people into thinking that economic stability is practically in hand.
Sorry.
That has not been the case since rates began permanently declining around the early 90s (current rise is simply a blip). The fabric of life for the broad middle class resembling nothing like it was for its forebears, has degraded to the point where it affects not only physical, but emotional health as well. The burden of debt mightily obscures the future.
It is categorically not dynamic, engaging nor trustworthy when most working-age souls have far less to look forward to than they did less than a decade ago.
I don´t care what CBs do with interest rates so long as it fixes the damage wrought on Canada´s finances.
#96 DON on 03.21.24 at 6:09 pm
#87 Josh in Calgary on 03.21.24 at 5:46 pm
#35 Ballingsford on 03.21.24 at 1:51 pm
Canada needs a really good infrastructure project like they did in the olden days.
How about the construction of a brand new city, new infrastructure, housing/shelter, industry, financial models, everything, that’ll be designed to hold a population of 2 million or more.
A brand new start to everything.
Are you willing to pay more in taxes and take less in services to finance it? – Garth
——————-
They’ve done this in China. Spoiler alert, it works out REALLY badly. It turns out central planning misses key details that the free market doesn’t
*******
Where does one find a free market that actually works on fundamentals?
*****
The nordic countries, Sweden, Norway, and Finland.
Lotsa fields torn up around Durham. Let’s see if any houses grow this spring.
Canada is no longer the nation that it once was. The one that I cherished and wore green fatigue on its behalf.
All this talk about “rights”.
Hah!
There are no rights.
Rights are a construct. (Like everything else humans invent.)
Human rights.
Property rights.
Civil rights.
Religious rights.
Cultural rights.
Medical rights.
Speech rights.
Privacy rights.
Mobility rights.
Economic rights.
Protesting rights.
There are no rights. Just privileges. As bestowed upon us by the PTB at any given time.
Any and all of these so called “rights” can be stripped from us by the stroke of a pen by the next whacked out sociopathic narcissistic dictator that gets into power.
We like to live under the comfort of the illusion that we have rights. We’re just lucky for the time being.
These “rights” are slowly disappearing.
For instance, I used to have the right to get a bag from the grocery store to put my stuff into so I could carry it out of the store.
No more.
POOF!
That “right” is GONE.
Ya follow?
Soon I might have to use preferred pronouns or some other ridiculous speech infringement edict to address a snowflake.
Rights, my eye.
Why do politicians with four year mandates have fourty year goals?
Soon I might have to use preferred pronouns or some other ridiculous speech infringement edict to address a snowflake.
Rights, my eye.
—-
Actually, you’ll have the right to walk away and not talk to them.
#127 crowdedelevatorfartz on 03.21.24 at 11:05 pm
@#124 IHCTD9
I have a friend that works as head mechanic at a Ford dealership in BC.
He bought, and drives…. a diesel Jetta…
————————
In the 80s most mechanics drove used VOLVOs.
Most reliable car around.
These “rights” are slowly disappearing.
For instance, I used to have the right to get a bag from the grocery store to put my stuff into so I could carry it out of the store.
*******
You used to have a right to get free bags and now you have the right to pay for them. You now have the right to pack your own groceries. Just buy grocery stocks.
#140 crowdedelevatorfartz on 03.22.24 at 7:34 am
@#119 Ponzies Pals
:Seems like they are happy with their ROT (Return on Taxes)”
+++
Seems like their happy with their welfare state.
—————————————
Nordic income tax rates are not appreciably higher than Canadian rates. The difference is that their citizens actually get stuff in return – long paid vacations, far better healthcare than Canada, rock solid worker protections, cheap post secondary and re-training programs, etc. Usually good housing options at all price points too (not luxurious at the lower end, but functional and stable).
Canadians get almost nothing comparable unless you’re at the very bottom of the income scale. Middle class gets very little for the taxes they pay.
Despite coming rate cuts people are angry because housing in general has never been more unaffordable. Here in the West Kootenays building costs are over $400/Square foot. A 2000 sq ft 3 bed house costs roughly a million to build. For the younger people saving for a home for many is impossible with high rents. Inflation in everything else from food to mechanics charging $150/hr. it’s impossible to get ahead. In short we are becoming a have not society with many that will be working well past retirement.
I just think some people out there don’t have basic education in math / finance – ie., they don’t understand basic concepts like compound interest……. and so they can’t invest, do not have a basic understanding of how western economies work….. and then blame others as a result as they fall behind.
I briefly visited a canadian “bear” housing discord….. it was a sad situation — people sharing really bad investment advice (like reassuring themselves that they could time markets, staying in cash waiting for a recession which they though meant major deflation, and if not staying in cash, buying junior miner penny stocks using “technical analysis). There was also a ton of paranoia / buying into racist narratives – some were actually idolizing Putin & buying into his propaganda on Tucker Carlson. Of course they blamed immigrants for somehow causing inflation etc.
Maybe this was just the wrong crowd & the majority of Canadians are not that gullible……. but it made me worry about what we are learning at school. Maybe we need better math / economics education in high school itself.