Uh-oh Canada: Record debt threatens stability

Canadian debt is now almost triple the size of the national economy. How did we get here? A decade long housing boom!

While Canada boasts the lowest government debt load among Group-of-Seven countries, household debt is the highest of its peers, the Basel, Switzerland-based BIS said last month in its quarterly report. In September, Statistics Canada reported household liabilities rose to 100.5 percent of GDP, exceeding the size of its economy for the first time.

Canada was the only developed country showing early signs of stress in its domestic banking system amid “unusually high” credit growth relative to GDP, the BIS said.

“This debt overhang represents one thing and one thing only: a pervasive constraint on Canada’s economic growth potential,” David Rosenberg, chief economist and strategist at Gluskin Sheff & Associates Inc. said by phone from Toronto. “When you get to levels on total debt that makes even the Italians blush, you know you’re in a straitjacket.”

Read the full article over at Bloomberg.

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Kim
Guest
Kim

So I went to Costco today. Hadn’t gone in a while but I noticed that things are so expensive. A jug of 3l olive oil for instance, costs 18 bucks. This used to cost 20 bucks for two jugs just 3-4 years ago. This has gone up like 80%. Looks like Poloz hasn’t just inflated our housing prices. Keep this up and that jug of olive oil will soon cost 50 bucks. But hey, our houses are worth millions, right?

Keep this up and we’ll be like Zimbabwe, printing trillion dollar notes.

Combat roach
Guest
Combat roach

Well… you can’t have cheap olive oil and Costco parkade loaded with Mercedeses, Beemers, Maseratis and even Rolls Royces at the same time. Standards and lifestyle have to grow equally and consistently.

Wizard Sleeves
Guest
Wizard Sleeves

There’s actually deflation in the NA grocery industry right now. In fact, the US is seeing the biggest deflationary period since the sixties.

Dave
Member

I think Canada has room for inflation because we lost so much of our purchasing power last year. I expected to see more food inflation by this point in time, so maybe I was wrong. But, it’s hard to see not having inflation when we lose 25% the dollar.

Hyper-mega-Bull
Member
Hyper-mega-Bull

and film and tech industry are booming. so yeah.

UBC in Crisis Mode
Guest

A fascinating read of this story, many properties involved, and many famous realtors mentioned, e.g. Julia Lau:
http://news.nationalpost.com/news/canada/meet-the-mysterious-tycoon-at-the-centre-of-half-a-billion-in-b-c-property-deals

franko
Member
franko

Hard to believe that Ottawa is reluctant to turn such assholes over to China out of fear that they might be mistreated…especially when Canada stands to gain half of the proceeds from the recovered loot under the new agreement.

Best place on meth
Guest
Best place on meth

I woudn’t hesitate to turn Julia Lau over to a pack of mangy, rabid wild dogs.

Which come to think of it is pretty much the same thing as turning her over to the chinese.

HAMster
Guest
HAMster

Everything that’s wrong with RE right there.

UBC in Crisis Mode
Guest

Tonight is our rental housing town hall!
We’re looking forward to seeing you at David Eby’s Rental Housing Town Hall tonight. If you haven’t already, please RSVP and let us know you’ll be there to share your stories about trying to rent in the city, and learn about solutions that can help fix this crisis.
Only a few seats are left! Please RSVP at http://rentalhousingtownhall.eventbrite.ca to reserve your space. We will also be live streaming the town hall on video through David’s twitter page at this link: @Dave_Eby at 7pm.

Free child minding is available at tonight’s town hall.

Madashell
Guest
Madashell

According to Ross Kay, Vancouver has dropped 19% ($214,000) drop!
http://www.howestreet.com/2016/10/22/this-week-in-money-75/
And according to Canada’s National Bank is predicting home prices in Vancouver will fall as much as 20 percent! That’s 40% drop in about a year!

Oh NO
Guest
Oh NO

19% min 25% max drop already 20 %more is just as easy

Boombust
Guest
Boombust

It’s going to be a 55-60% drop.

FYI
Guest
FYI

In Fantasyland?

Detached in valley are down 5% at best.

Still up 25% since last year in Surrey.

45% in Abby.

Oh oh
Guest
Oh oh

Which means 50% is entirely plausible

Combat roach
Guest
Combat roach

Possibly even more. Those crpholes will go down the most over time.

Boombust
Guest
Boombust

Nonsense.

dyugle
Guest
dyugle

Abby is the inland empire here and it won’t go down like Stockton in Cali, would it?

Dave
Member

When Vanderzalm sold his themepark in the early 90’s, it only marked the beginning of BC selling Fantasyland to Asian money.

Boombust
Guest
Boombust

Listen to his Howestreet.com Sept. 17 (This Week in Money) podcast. Quite an interesting view on the “irreversible collapse” that is now underway.

FYI
Guest
FYI

This guy is another Garth.

Sell and invest with me…

But be fooled again.

Boombust
Guest
Boombust

Ross Kay is a very savvy prognosticator.

Ulsterman
Member

I posted this at the end of the Friday thread. A house i’ve been keeping an eye on is now reduced $201,000 or 13%. I believe it’s been on the market 2-3 month, but maybe someone can be more precise:

“I just had a pleasant WTF! moment. R2117325 is in my area and was originally listed at 1,499,000. Then i posted here that i was pleased to see it reduced to 1,425, 000. Now to my joy i see it at 1,298,000. That’s a not-insignificant 13% decline. Still a stupid price of course. It’s directly across from Burnaby North Secondary so the traffic is grim in the mornings and at 3pm, and there’s a bus stop right across from the house.”

Disgruntled condo owner
Member
Disgruntled condo owner

“Still a stupid price of course.”
EXACTLY RIGHT. Loooong way to go before anyone should be opening the champagne. So far I see nothing worth celebrating, given where we were so recently and how inane prices became. What is required is a “crash” of epic proportions far beyond where we are now, and hard to imagine our two-faced governments really let that happen.

Boombust
Guest
Boombust

The government has no real choice in the matter. In fact, they have merely helped speed the collapse along with the new mortgage rules.

Remember too, it was “the government” that got us into this mess in the first place. So, a brutal price collapse is not unreasonable to expect. And, who would have IMAGINED housing prices getting so high in just a few short years ago?

IF we all knew what was coming, we’d ALL be filthy rich.

Boombust
Guest
Boombust

BTW, the feds don’t give a damn about Vancouver. It’s all about Toronto (as usual). They are trying to head off a “blow off top” as happened in Vancouver last Spring with those new October 17 mortgage rules.

What happens in Vancouver is merely “collateral damage”.

Disgruntled condo owner
Member
Disgruntled condo owner

Obviously I hope you are right. But both provincial and federal governments in their rhetoric seem loathe to allow any substantial decline in existing homeowners equity, so the politicians say. They want a soft landing from 30000 feet, which is impossible. We just won’t land if it must be “soft”. Perpetually low interest rates and increasing immigration are a given, and I would not put a reversal or at least reduction of the foreign buyers tax past the liberals some time post election when homeowners start screaming. I guess I might be a little cynical after 15 years of ridiculous increases totally unchecked until a couple months ago. We will see, lets hope I’m wrong and we get the true correction aka crash that is needed.

patriotz
Member

As Boombust said, the Feds are committed to putting a cap on prices in Toronto and will take any measures necessary to do it. If Vancouver crashes and burns in the meantime, they don’t care. It’s not that important to the national economy, nowhere near as important to them electorally, and Christy has already made the first move and will wear a bust.

Madashell
Guest
Madashell

Headline is so funny!
Moody’s Says Canadian Housing OK As It’s Sued Over U.S. Bubble

Combat roach
Guest
Combat roach

Slow and ineffective, a drop in the bucket…

OTTAWA — As fears over the treatment of prisoners continue to dominate debate about a possible extradition treaty with China, data show Canada has already been removing dozens of Chinese nationals annually.

The previous Conservative government sent back more than 330, according to Canada Border Services Agency data. So far this year, Canada has returned 24 people to China.

http://news.nationalpost.com/news/canada/canada-extradites-dozens-of-people-to-china-every-year-despite-fears-over-torture-and-the-death-penalty

Best place on meth
Guest
Best place on meth

Dozens? Just dozens?

It should be thousands.

Every week.

Until they’re all gone.

Hyper-mega-Bull
Member
Hyper-mega-Bull

you know what’s crazy? people think prices have gone down. they think they’ve gone down a lot.

have we reached peak bearlogic or could people become even more delusional and irrational? only time will tell.

Boombust
Guest
Boombust

They are down 20%.

Hyper-mega-Bull
Member
Hyper-mega-Bull

yes, we all know that people believe that so you don’t need to come forward and show yourself as an example.

Boombust
Guest
Boombust

Merely providing a counter-argument to a flipper-gone wrong. Like you!

FYI
Guest
FYI

They are not. Detached home sales in the valley are down 5% at best from peak.

FYI
Guest
FYI

Meant prices.

Ulsterman
Member

I’m a skeptical bear, who regularly tries to tame the young, excitable bear cubs on this blog, but even i have some hope that THIS really could be a correction of significance in the making. North Burnaby detached has seized up. The one house i’ve been keeping an eye on has been reduced 13% without a sale, so Boombust’s 20% isn’t extreme at all.

I’m not delusional. I realise that I’ll never end up in a winning situation. Even a 50% collapse would still leave detached N Burnaby houses at an expensive $700k for a 1950s bungalow. That’s where they were in 2008 and i thought they were too expensive then. But you shouldn’t try and deny that this market has had a very abrupt about face.

Boombust
Guest
Boombust

Not to worry. After a RE bust (especially of the magnitude we will see in Metro Vancouver), prices will revert to the mean. There is absolutely nothing on the horizon that will stop this current collapse.

So, after the dust has settled (wait about 1.5-2 years or so) that Burnaby house will be within your reach.

squeak
Member
squeak

I am in no hurry to buy anything, waiting another few years is a piece of pie. Not budging in to unrealistic prices, I like my money way too much to dump it into some dump.
Also, there a many other places that are much more livable and pleasant than congested, smelly, highstrung, uncanadian Vancouver.

Meanwhile, really enjoying the freedom (not owning and not owing),
it is beautiful.

Hyper-mega-Bull
Member
Hyper-mega-Bull

Revert to the mean? You sound like a dumber millennial version of patriotz.

Boombust
Guest
Boombust

And you’re an idiot.

ostritch
Member
ostritch

LOL

Sellnoworbepricedin4evah
Guest
Sellnoworbepricedin4evah

3 levels of government slowing this down. Don’t fight the fed 😉

Confucius
Guest
Confucius

We believe in the fact that prices are down 20 percent. You are delusional and irrational if you don’t belive it. Look at sale prices, not list.

Funky monkey
Guest
Funky monkey

The house next to this house (now torn down bought by the city of Vancouver) sold last year or two years ago (someone correct me) for 950k what will this one sell for?http://www.rew.ca/properties/R2114271/1011-e-45th-avenue-vancouver?property_search=426965940

No Money Down
Member
No Money Down

Steve Saretsky on October Demand if you haven’t seen it
http://vancitycondoguide.com/buyer-demand-continues-slow-october/

To paraphrase in MOI (inverse of monthly sales/list %):

Detached: Solid Buyers’ market and continued weakening. REBGV detached market now has 11.6 months of inventory (MOI). East Side detached at 15 MOI.

Condo: Overall the condo market is still a Sellers’ market at 3.3 MOI. However, it’s been on a slippery slope down. For example, Vancouver West was once at 1.2 MOI in March.

paulb
Member

New
210
Price Change
82
Sold
112
TI:9975

http://www.paulboenisch.com

Combat roach
Guest
Combat roach
Oh NO
Guest
Oh NO

Good for low income or fixed income people… well I have a fixed income of lots, so will I qualify and just airbnb it to make cash?

Disgruntled condo owner
Member
Disgruntled condo owner

Time to buy a house? My FitBit reads 8888 steps.

Sellnoworbepricedin4evah
Guest
Sellnoworbepricedin4evah
Best place on meth
Guest
Best place on meth

Suspended death sentence – excellent!

See, we CAN send them all back now.

Whistler or Bust?
Guest
Whistler or Bust?

I was at a notary in White Rock today to have a document notarized and I got to discussing the RE market as his assistant photocopied my ID. He said that he had two Chinese students buying a house for $4 mil cash two days ago and he told them that under the Fintrac rules he was required to report the transaction. They abruptly left to find another lawyer.

Could not make this shit up.

Combat roach
Guest
Combat roach

Expect now a bunch of fake lawyers of Chinese origin to start providing the legal services across the Lower Mainland.

patriotz
Member

“He said that he had two Chinese students buying a house for $4 mil cash two days ago”

You mean literally a briefcase full of money?

Whistler or Bust?
Guest
Whistler or Bust?

He didn’t say. He just said cash.

No Money Down
Member
No Money Down

HAM Neighbourhood #1: Point Grey

2 (yes two) Detached Sales Aug 25 – Oct 20
Sales down 89% compared to same period in 2015
Listings: 56
MOI = 56

https://www.zolo.ca/vancouver-real-estate/point-grey/trends

Lurker
Guest
Lurker

Poor locals, they’re too stupid to see what’s happening until the end. They’re still buying into Mt. Pleasant, Grandview etc without realize the bottom is falling out of the top end.

Slava
Guest
Slava

It is just like the Hillary Millennial Voters, until they realize the damage, it will be too late.
But, but the celebrities, the MSM, say it’s cool to vote Hillary, so it must be…

No Money Down
Member
No Money Down

FOMO Neighbourhood #1: Grandview
13 Detached Sales Aug 25 – Oct 20
Sales up 44% compared to same period in 2015
Listings: 43
MOI = 7

No Money Down
Member
No Money Down
vangrl
Member
vangrl

sales up 44%?

No Money Down
Member
No Money Down

Zolo aggregates MLS neighbourhood data over 2 months. So you’re not seeing the most recent activity.

I think the data do show the 2-speed market:

1. Westside detached in HAM-friendly neighbourhoods – dead.
2. Condos/townhouses and Detached in Millenial-friendly neighbourhoods-robust but weakening.

It will be interesting to see the effects of mortgage rule changes going forward.

Softy
Guest
Softy

What does FOMO mean?

Boombust
Guest
Boombust

Fear Of Missing Out.

CanNeverThinkOfAGoodName
Member
CanNeverThinkOfAGoodName

What happened/is happening at the town hall? Sorry I missed it.

Hyper-mega-Bear
Guest
Hyper-mega-Bear

The market is crashing hard. Ironically, the parents that bought houses for each of their kids are going to have to sell a kid to survive this bust.

Ultimate danger for bears coming.
Guest
Ultimate danger for bears coming.

After much analysis of comments here, it seems the bears on this blog are doomed for the simple fact that they can’t pinpoint the root cause of this bubble. Its has been pointed out by the likes of Chilled, Oracle, AlR and a few others but they are met with angry retorts.

With the changes afoot in the marketplace, prices may drop 20%. However, that still leaves homes out of reach of locals without a substantial down payment. MEANWHILE, rents will continue to go up by about 15-20% a year for desirable rentals.

Not acknowledging the root cause will promptly price you out of the lower mainland rental market.

Combat roach
Guest
Combat roach

What’s your point, it’s been said like 900 times. What that has to do with the crashing market? Who cares, one thing at the time.

Newcomer
Member
Newcomer

Yes, Oracle, we know. Tell you what, come back next year when the rents are 15-20% higher than they are now and crow about it.

southseacompany
Member
southseacompany

“Fed’s Task Next Week: Signal December Rate Rise”, Wall Street Journal

http://www.wsj.com/articles/feds-task-next-week-signal-december-rate-rise-1477351253

“Federal Reserve officials, wary of raising short-term interest rates amid the uncertainty surrounding the U.S. presidential election, are likely to stand pat at their November policy meeting and remain focused on lifting them in December.”

“Traders in futures markets already place a 74% probability on a Fed rate increase by then, according to CME Group.”

JayTor
Guest
JayTor
Just me
Guest
Just me

While unpalatable, I can understand their motives. There are some serious problems with open border policies. I wishTrudeau and McCallum paid more attention: millionaires benefit from open migration much more than average joes. The same is quite true in Vancouver snd Canada.
Telling people that they are racists justmakes things worse. Worries about immigration are not about race. They are about jobs and the cist if leaving. The businness of importing people to support economic growth has to be called a sham.

http://www.bloomberg.com/news/articles/2016-10-24/britons-happy-to-sacrifice-trade-for-fewer-foreigners-poll-says

Best place on meth
Guest
Best place on meth

“Migration levels have frequently been touted as one of the key reasons behind the June 23 referendum result and the government has pledged to get numbers below 100,000. ”

And our drunken immigration minister wants to increase immigration to 400,000 – in a country half the size of Britain.

What a traitor.

Bag it and tag it
Member
Bag it and tag it
Then again last week there was that panel that released their list of recommendations to help stimulate the Canadian economy, and one recommendation was to increase immigration to 450K over a 5 year period with their concern being not enough skilled workers to fill the vacancies left by retired boomers and not enough workers to pay cover the costs associated with an aging population. I think this is all a big scam orchestrated by special interests (Real Estate Cartel, Corporations, etc) to ensure there is continued demand for their products, cheap labour, etc.. I think the boomer voting block also wants to ensure there will be people to buy their overpriced homes and ensure they have a comfortable retirement (ie. lots of healthcare funding and no pressure on their bloated pensions). The powers realize there is no appetite for this… Read more »
HAMster
Guest
HAMster

There is no reason for “skilled people” to immigrate to Canada, the land of high taxes and over-priced housing. The only immigrants we will attract are the low-hanging fruit who want our free social services.

Just me
Guest
Just me

Yet another expert confirming that it not lack of supply but disproportionate demand growth that is driving price growth.

http://www.cbc.ca/news/canada/british-columbia/vancouver-sydney-unaffordable-1.3819898

The BC liberals are really out to lunch on this problem. They are trying to scam us all into believing that itmis all about reducing red tape.
Clark, DeJong and the others have got to go.

Combat roach
Guest
Combat roach

Right, list of their achievements is too long…

“Firing of Vancouver trustees part of broader effort by Premier Christy Clark to silence dissent”

http://www.straight.com/news/813781/firing-vancouver-trustees-part-broader-effort-premier-christy-clark-silence-dissent

HAMster
Guest
HAMster

Christy is taking lessons from Harper.

No Money Down
Member
No Money Down

“Research shows that with big housing booms, demand for housing actually grows. It’s a complex situation. It’s not something that can be fixed with basic school economics. With a boom in demand, more people want to enter the market for FEAR OF MISSING OUT.”

And speculator greed.

HAMster
Guest
HAMster

Australian housing expert says Vancouver, Sydney, facing similar issues.
http://www.cbc.ca/news/canada/british-columbia/vancouver-sydney-unaffordable-1.3819898?cmp=rss

It’s because of the locust Chinese. Why don’t they just admit it?

Combat roach
Guest
Combat roach

Right, locust decided to launder and stash on the west side and picked the closest cities. Wonder why fucks didn’t go to Rusia, that would be closer to the motherland but perhaps Russians would not so politely tolerate their shit.

patriotz
Member

The Russians will politely tolerate anything as long as the right “incentive” is paid. Right now the Chinese are pillaging Siberia’s resources and may outnumber the Russians before long.

http://abcnews.go.com/International/story?id=82969&page=1

Combat roach
Guest
Combat roach

Either locations locust’s objective remains the same because they operate on all levels, take advantage of everything possible.

“Alexander Shaikin, in charge of controlling the Russian-Chinese border, said on June 29 that 1.5 million people from China have illegally entered the Russian Far East over the past 18 months.”

Best place on meth
Guest
Best place on meth

Why don’t they shoot the illegals on sight?

Russians don’t give a shit about political correctness or the “rights” of illegal aliens.

patriotz
Member

Oz and Canada have inflated prices for the same reason – government policies that encourage people to park their wealth in RE. For example, Oz has asset-test qualifications for social benefits. Sound good? Problem is principal residence is exempt, no limit on market value.

Hyper-mega-Bull
Member
Hyper-mega-Bull

Remember when bears made snarky comments about how landlords were subsidizing their rent and how they pretended that owning sucked and renting was amazing?

Combat roach
Guest
Combat roach

They still do, thanks for the reminder.

funky monkey
Guest
funky monkey

Still happening almost every rental on craigslist are being subsidized by landlord. Many north shore houses (whole house) for rent 3K. A few months ago I was looking in west van 3500 was a price where many houses were priced from. Wages are tied to rent!
I think I heard it here, we talk about high rents in Vancouver we don’t talk about the lack of good paying jobs here.

southseacompany
Member
southseacompany

National Bank Special Report:
“Report: Imminent Pullback for Vancouver and Toronto Home Prices, October 21,2016”

Full Report:

https://www.nbc.ca/content/dam/bnc/en/rates-and-analysis/economic-analysis/special-report-21oct2016.pdf

Hyper-mega-Bull
Member
Hyper-mega-Bull

>The index has not so far shown a decline of prices.

contradicts all the chicken little’s on here.

patriotz
Member

“The (Teranet) index has not so far shown a decline of prices.”

The Teranet index is based on closings (not sales) and uses a 3 month moving average. Given the sales bump in October to beat the new Federal rules I wouldn’t expect to see anything significant from them until next January.

Dave
Member

Member when Gordon Campbell froze assessment values in 2009 because of confusing values? What’s the over/under on history repeating?

Whistler or Bust?
Guest
Whistler or Bust?

I predict you change your handle by 2017.

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