Author Topic: Garth Turner - Real Estate in Canada  (Read 502497 times)

alpha

  • Full Member
  • ***
  • Posts: 158
Re: Garth Turner - Real Estate in Canada
« Reply #1790 on: November 01, 2018, 10:42:41 AM »
Canadian government is increasing the national immigration rate even more, to almost 1% of the population by 2021.

The housing situation in Toronto is already ridiculous with very low vacancy rates and the government has increased the cost of new housing development with the ever growing list of regulations and approval processes.


https://www.cbc.ca/news/politics/canada-immigration-increase-350000-1.4886546


rb

  • Hero Member
  • *****
  • Posts: 2922
Re: Garth Turner - Real Estate in Canada
« Reply #1791 on: November 01, 2018, 10:46:30 AM »
The target for immigration in Canada has long been 1% of population. Some years it's a bit more, some years a bit less. But this is nothing new.

Viking

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 1500
Re: Garth Turner - Real Estate in Canada
« Reply #1792 on: November 01, 2018, 11:17:02 AM »
With the current rate at 1.75% and a neutral rate of between 2.5 and 3.5% it looks like the BOC may increase rates 3 times in 2019 starting in January. Given the amount of debt held in Canada one has to wonder when higher rates will start to slow economic activity, particularly in the housing market. It looks like higher rates hit the economy with a multi-year lag as it takes years for mortgage rates to reset at the higher rates (given most mortgages are 5 year fixed). Perhaps we are another 12-18 months from more fully understanding the impact of higher rates on the economy here in Canada (not just slower housing sales but also reduced consumer and business spending as more money is shifted to servicing debts).

Bank of Canada will keep raising interest rates, Stephen Poloz says
- https://business.financialpost.com/news/economy/bank-of-canada-will-keep-raising-interest-rates-stephen-poloz-says

Rate hikes to cost Canadian households $2,500 each year but it isn't uncharted territory
https://business.financialpost.com/news/economy/rate-hikes-to-cost-canadian-households-2500-each-year-but-it-isnt-unchartered-territory-report#comments-area
« Last Edit: November 01, 2018, 11:22:43 AM by Viking »

Liberty

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 11384
  • twitter.com/libertyRPF
    • twitter.com/libertyRPF
"Most haystacks don't even have a needle." |  I'm on Twitter  | This podcast episode is a must-listen

rb

  • Hero Member
  • *****
  • Posts: 2922
Re: Garth Turner - Real Estate in Canada
« Reply #1794 on: November 07, 2018, 07:07:28 PM »
Seems like reasonable policy and good risk management of the financial system. But it's gonna hit some people.... hard! These are those people who were taking unreasonable risks.

rukawa

  • Hero Member
  • *****
  • Posts: 919
Re: Garth Turner - Real Estate in Canada
« Reply #1795 on: November 23, 2018, 08:37:39 AM »
Whenever I read Americans complaining about debt or house prices I just find it funny. I know financially responsible Canadians, :o with double the debt of these people and a lower household income:
https://www.wealthsimple.com/en-us/magazine/money-diary-couple-debt-us

I said financially responsible and I mean it. I don't even know what these words mean anymore in the GTA or if its possible for them to have a meaning. These days 1m in debt is considered pretty much normal.

rb

  • Hero Member
  • *****
  • Posts: 2922
Re: Garth Turner - Real Estate in Canada
« Reply #1796 on: November 23, 2018, 10:42:31 AM »
Yea, it's ridiculous and a problem that we've let things get this far in Canada. Thankfully, the powers that be finally decided to put a stop to it. Better late than never.

But the people in that article, the problem is not their debt. Their problem is that they're stupid. They make 160k a year and think that their 360k house is their problem? Ridiculous.

It's not that they have made a mistake once when they were naive and didn't know better. They're in debt up to their eyeballs and they have 3 kids in private school, 2 pets, and they must have sushi and whatever other ridiculous fancy food. Stupidity! If I go ahead and write those 2 a cheque that clears all of their debt, I GUARANTEE you that in 2 years those 2 are in the same situation they're in now.

merkhet

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 2995
Re: Garth Turner - Real Estate in Canada
« Reply #1797 on: November 23, 2018, 02:43:03 PM »
Yea, it's ridiculous and a problem that we've let things get this far in Canada. Thankfully, the powers that be finally decided to put a stop to it. Better late than never.

But the people in that article, the problem is not their debt. Their problem is that they're stupid. They make 160k a year and think that their 360k house is their problem? Ridiculous.

It's not that they have made a mistake once when they were naive and didn't know better. They're in debt up to their eyeballs and they have 3 kids in private school, 2 pets, and they must have sushi and whatever other ridiculous fancy food. Stupidity! If I go ahead and write those 2 a cheque that clears all of their debt, I GUARANTEE you that in 2 years those 2 are in the same situation they're in now.

Someone already DID! The article indicates their parents paid off their credit card debt a few years ago, and, yet, here they are again... ridiculous!

scorpioncapital

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 1726
    • scorpion capital
Re: Garth Turner - Real Estate in Canada
« Reply #1798 on: November 23, 2018, 03:29:07 PM »
160k a year? you're already talking about the 1%. Canada is not a wealthy place, not more than other spots anyway.


Cigarbutt

  • Hero Member
  • *****
  • Posts: 1743
Re: Garth Turner - Real Estate in Canada
« Reply #1799 on: November 24, 2018, 05:01:43 AM »
Yea, it's ridiculous and a problem that we've let things get this far in Canada. Thankfully, the powers that be finally decided to put a stop to it. Better late than never.

But the people in that article, the problem is not their debt. Their problem is that they're stupid. They make 160k a year and think that their 360k house is their problem? Ridiculous.

It's not that they have made a mistake once when they were naive and didn't know better. They're in debt up to their eyeballs and they have 3 kids in private school, 2 pets, and they must have sushi and whatever other ridiculous fancy food. Stupidity! If I go ahead and write those 2 a cheque that clears all of their debt, I GUARANTEE you that in 2 years those 2 are in the same situation they're in now.
Who is we?
Isn't that the crux of the issue, the crass conformance?

-Optional part:

http://www.rbcgam.com/investment-insights/research-publications/_assets-custom/pdf/rbcgam-economic-compass-canadas-debt-threat-201107.pdf

-This is a report from 2011 which I had kept to see if/when the real estate in Canada would reach two standard deviation levels.
-The report contains comments about the role of the powers that be, in terms of the challenges related to prevention and the risks related to cheerleading and the conforming marginal buyers lining up as long as the music plays.
-Especially fascinating are exhibit 10 and exhibit 14. See the two following links for more contemporary updates.
-The question is not if but when and, at times, there are unusual "market forces" at work.
-An argument could be made that the author was wrong on many levels but he had that to say, in 2011:

"There is a popular misconception that the Bank of Canada cannot afford to raise interest rates because this would prove too damaging for mortgage holders. The opposite is in fact true. The reality is that the Bank of Canada cannot afford to delay raising interest rates, for precisely the same reason. The longer the Bank delays, the more marginal borrowers will enter the market and be walloped when rates rise, and the further home prices will go above their equilibrium levels, only to tumble later."

http://creastats.crea.ca/natl/index.html
See MLS composite benchmark price
https://tradingeconomics.com/canada/bank-lending-rate
See 10 year or max option

And as the housing tide has lifted us to unusual heights, we just learned this week that the federal government has no plan to balance the fiscal budget for the foreseeable future. On this last point, I agree formidably that the budget will not balance for a VERY long time even if we wanted to.

Famous last words.
« Last Edit: November 24, 2018, 05:04:33 AM by Cigarbutt »