Canada, debt, economy, mortgage, predictions

Chicken vs Egg: Retail Sales and Housing Bubbles

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153 Comments

Southseacompany pointed out this article in the Globe and Mail about the connection between retail sales and household debt.

Falling interest rates between the fall of 2013 and mid-2016 made it easy for Canadians to add debt. The five-year Government of Canada bond yield, on which mortgage rates are based, fell from a high of 2.2 per cent in September, 2013, to a low of 0.49 per cent in February, 2016. This trend made monthly mortgage payments lower and helped spur the housing boom.”

“The reverse process – rising interest rates – is now evident and mortgage debt is getting more difficult to service. The five-year bond yield has climbed to 1.1 per cent and major lenders are slowly raising mortgage rates.

Read the full article here.

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Van real estate buff

Mar 1, 2017 Daily Video Review Vancouver Real Estate Housing Bubble News
https://youtu.be/OVpUolQ6RI8

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trackback

[…] southseacompany pointed out this article in the financial post: […]

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hmm ok

Richmond Parents: School’s LGBT policy could convert heterosexual teens

http://www.richmond-news.com/news/parents-lgbt-policy-could-convert-heterosexual-teens-1.10625322

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Combat roach

Why Richmond parents? Is there something special and different about them?

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ostritch

Shoot me now. The trend is the same everywhere. We are going to be the third world.

http://www.cbc.ca/news/business/middle-class-retailers-dying-a-slow-death-don-pittis-1.2535685

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southseacompany

“”People in the top half of the income distribution are doing just fine. They’re spending enough to keep the economy moving,” Mark Zandi, chief economist at Moody’s Analytics, told the Journal reporters. “But the lower half is having a difficult time keeping their heads above water.””

Pretty well sums it up.

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ostritch

Just to be clear, it’s an older article I know but it came linked to this one about more retail stores closing. Not good for the No 1 industry employing Canadians.

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ostritch

http://www.cbc.ca/news/business/bcbg-max-azria-1.4004293

BCBG, Smart Set, Jacob, Danier Leather. Lots of jobs there. Some of the business will go online meaning less employees in countries where these goods are sold, more in the US where the online store sells are run.

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southseacompany

“The Surprising Cities Canadians Are Leaving”, Huffington Post

http://www.huffingtonpost.ca/2017/03/01/canadians-leaving-major-cities_n_15080726.html

“Canadians are leaving Canada’s three largest cities much faster than they are moving to them — an unexpected fact buried in StatsCan’s data on internal migration.”

“Toronto, Montreal and Vancouver all ranked among just five major Canadian cities that saw a loss of locals to other cities between 2011 and 2014, the latest year for which data is available.”

“That’s not to say these cities are losing population; they aren’t, thanks to immigration from abroad. But the data shows locals are leaving these cities primarily for less expensive nearby communities.”

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Fomo

Dated. Doubt many people moving to Edmonton and Calgary over past few years …

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ostritch

I think this is people expanding the outer burbs where they hope to find lower housing costs. It’s not good news. And it’s not surprising news. It’s like Oakland outside San Francisco and nine zones now of “commutable” London.

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southseacompany

“Canada’s banks are pushing back against taking on more mortgage risk”, Financial Post

http://business.financialpost.com/personal-finance/mortgages-real-estate/canadas-banks-are-pushing-back-against-taking-on-more-mortgage-risk

“Canada’s financial industry is urging the federal government to consider alternatives to proposals that could require them to take on a greater share of mortgage defaults through a deductible — calling it one of the biggest shakeups to hit housing finance in 50 years.”

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southseacompany

“Bank of Canada holds key interest rate steady at 0.5%”, CBC

http://www.cbc.ca/news/business/bank-of-canada-poloz-1.4004440

“The Bank of Canada has decided to keep its trend-setting interest rate steady at 0.5 per cent on Wednesday.”

“The central bank, led by governor Stephen Poloz, elected to neither raise nor lower its target for the overnight rate, citing “significant uncertainties” weighing on the outlook for Canada’s economy. “

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southseacompany

“Beware the odds of March: Talk of Fed rate hike sinks loony”, Globe & Mail

http://www.theglobeandmail.com/report-on-business/top-business-stories/beware-the-odds-of-march-loonie-whacked-on-signals-of-fed-hike/article34170418/

“The loonie is taking it on the chin as the U.S. dollar rallies amid mounting speculation of a March rate hike by the Federal Reserve.”

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southseacompany

“Leverage and Debt Driving Real Estate Growth”, Van City Condo Guide

http://vancitycondoguide.com/leverage-and-debt-driving-real-estate-growth/

“The debate rages on as to why real estate prices have grossly inflated and have completely diverged from basic economic fundamentals. Some blame foreign buyers and speculation while others dumb it down further to population growth and supply constraints. However, research from the brightest minds in finance and economics will tell you those are all symptoms of an underlying disease. The disease, is a prolonged credit cycle, combined with low interest rates, lax lending standards, and a hunger from banks to provide more and more leverage for homebuyers in need of a mortgage. As a result, household debt levels and real estate prices are at record highs.’

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Newcomer

Don’t trust “research from the brightest minds in finance and economics,” trust your gut. If you saw a foreigner driving an expensive car yesterday, you already know the truth.

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Anecdolt

I saw a local driving an expensive car yesterday.

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Shut It Down Already

Interesting. Do you think they would understand sarcasm when they saw it?

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ostritch

Maybe it’s a blend: foreigner joining locals to borrow from Canadian institutions at historically low rates speculating in a land where there is high population growth and limited supply.

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No Money Down

6849 Heather St
https://www.zolo.ca/vancouver-real-estate/6849-heather-street

Listed: $2.15M
Assessed: $3.28M
34% below assessment

An attempt to spark a bidding war?

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fomostyle

The UN special rapporteur for housing, Leilani Farha, will highlight the devastating human rights impact of society’s tendency to view houses as financial commodities rather than homes for people, in her report to the UN this week.

https://www.theguardian.com/housing-network/2017/feb/28/un-report-lays-bare-the-waste-of-treating-homes-as-commodities?CMP=Share_iOSApp_Other

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Combat roach

UN will ask for proofs and links otherwise dismiss it as a racist agenda.

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Shut It Down Already

Yeah, best stick with your “alternative facts”.

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ostritch

Beautifully stated. +2

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southseacompany

“Market odds of March rise in US interest rates hit 80%”, Financial Times

https://www.ft.com/content/37520c36-fddf-11e6-96f8-3700c5664d30

“Federal policymakers say they do not need to see Republican tax reforms before acting”

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southseacompany

“Fed officials jolt market with talk of pending interest rate hike”, Globe & Mail

http://www.theglobeandmail.com/globe-investor/fed-officials-jolt-market-with-talk-of-pending-interest-rate-hike/article34168679/

“A handful of Federal Reserve policymakers on Tuesday jolted markets into higher expectations for a March U.S. interest rate increase, with comments that suggested rate-setters are worried about waiting too long in the face of pending economic stimulus from Washington.”

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Best place on meth

Trump hit it out of the park tonight in his address to Congress, even the leftist, white-hating crybabies on CNN were incapable of their usual, useless chants of “he’s a racist, he’s a sexist he’s a homophobe, he’s anti-semitic, he hates Mexicans and muslims and immigrants and jazz!!!”. Useless cunts. No mention of the 45% tax on the theiving locusts, but he’s going to need a lot of money to pay for that military upgrade he’ll use to knock the chinamen back to the Stone Age (1967) so I suspect it’s coming soon. Speaking of usesless cunts, Mayor Qu and his gang of Maoists refused to attend an event featuring the sons of the President of the United States of America. You can bet if were Malia and Sasha they would have been there on their knees. Useless cunt Kerry… Read more »

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Newcomer

Drinking a little tonight?

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Just me

Colorful, but completely spot on about that idiot Kerry Jang. That guy feels Chinese first, Canadian a distant second.

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Combat roach

Politburo secret service infiltrator, testing waters and checking thresholds. Has a top-notch local support at the ground.

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patriotz

The pipsqueak next door, North Korea, is opening daring the US to go to war against them. There are only two ways to resolve the North Korea problem – open warfare which would be the most costly Asian conflict since Vietnam, or cooperation with China. And the Chinese know this.

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patriotz

Trump points to Canada as a model for U.S. immigration reform in Congress speech
Wow didn’t see that coming. I should point out that he was talking about legal immigration – the US takes in many more family class immigrants, proportionally, than Canada. He wants more economic immigrants.

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Abdul Lahazi

Well said: +1. I almost feel sorry for the lefties like Gregor Qu etc. they are bending over so far backwards for the special interest groups that they miss out on the really good opportunities that pass them by while they are looking at the ground.

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Shut It Down Already

Did you see that article about be racists who cried as they were sentenced to a decade in prison for their vile hatred? What a day to be alive!

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ostritch

Be happy, he’s our mayor right now. Otherwise they would have drafted him to run the provincial NDP. And he would have won.

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Just me

“Sydney Home Prices Surge at Fastest Annual Pace Since 2002”

https://www.bloomberg.com/news/articles/2017-03-01/sydney-home-prices-surge-at-fastest-annual-pace-since-2002

Values rose 18.4% in year to February, CoreLogic says
Lending curbs are failing to slow booming Australian market

“The strong growth conditions across Sydney have provided a substantial wealth boost for home owners,” said Tim Lawless, head of research at CoreLogic. “However, the flipside is that housing costs are becoming increasingly out of reach.”

Prices are now almost 8.5 times higher than household incomes in Sydney, according to CoreLogic.

Only 8.5? Wimps!

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Combat roach

Locust is steadily dismantling western civilization and hitting where it hurts the most, cities and homes. Outcome is the same as massive air strikes, carpet bombardment, all what is left are destroyed communities and wasteland.

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Newcomer

You might consider studying history. There is great stuff on Netflix, or even Youtube. As it stands, you come across as inconceivably spoilt and nieve to compare your slight inconvenience with actual death and destruction.

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Combat roach

I always admired those “intellectual titans” who were always first to jump and bite when it comes to figurative language, irony, sarcasm, etc. And what do you say? “You might consider studying history”, amazing. Even my 7 years old nephew isn’t that much literal-minded.

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ostritch

Wait a second. I thought they reported a decline? Was that apartments?

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southseacompany

“Possible Vancouver housing market corrections a concern, says Scotiabank CEO”, Vancouver Sun

http://vancouversun.com/news/local-news/possible-vancouver-housing-market-corrections-a-concern-for-scotiabank-ceo

“Trees don’t grow to the sky and markets will correct at some stage here,” Porter told analysts Tuesday after the bank reported net income of $1.49 billion during the first quarter of the year.”

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Oh NO

4223 Quebec… just sold after being reno-flipped…. what did it sell for??

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vangrl

$1,865,000

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specialfx3000

Looking at the building value, it dropped from previous year meaning the assessment does not account for the reno.

So I guess it sold for below peak assessment with reno thrown in.

Total Value $1,907,000
Assessed as of July 1st, 2016
Land $1,691,000
Buildings $216,000
Previous Year Value $1,560,000
Land $1,295,000
Buildings $265,000

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paulb

New
212
Price Change
37
Sold
141

TI:8180

http://www.clivestevepaul.com

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Best place on meth

And that concludes the worst February for listings since 1923.

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Foo Man

But… but… YVR said a tsunami of listings and he’s usually so good with predictions. Maybe tsunami means something really small and weak where he’s from.

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Just me

Rule number one: read what YVR writes, then do the opposite.

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YVR

Just me had made his 100th useless post in the past 24 hours. Do you have anything productive going on in your life.? You do have a life right? I would think working the Burger King drive through would keep you off the computer for a few hours per day. Did BK fire you?

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Just me

I don’t work in BK. And, unlike you, I don’t think that people who work in BK or similar jobs are stupid or bad.
You need serious help to deal with your issues.

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YVR

Good luck finding a new job. Just a hint. Get out more and spend a little less time posting the same drivel over and over again. At some point you have to stop blaming others for your failures and take your own action. A good start would be finishing high school and moving from mom’s basement.

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Best place on meth

Looks like YVR has officially replaced space as the idiot who makes a shitload of assumptions about everyones life.

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YVR

Meth boy somethings I don’t need to assume. We know you are a lunatic racist. By your own admission you make very little money and we know you will never be able to afford to buy anything In Vancouver no matter what happens to prices. Did I miss anything?

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Shut It Down Already

He’s saving the difference.

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Combat roach

Space is irreplaceable! Such rarity of a “human” waste is very hard to find.

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YVR

Thanks for the commentary Fool Man. My statements have been correct. I said prices are crashing and they are. I never said anything about a tsunami of listings in February. Crashes are about a lack of buyers not about an increase in sellers. That is exactly what we are seeing. Prices are going down. If all you got in life is RE then life is sucking real bad for you.

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Shut It Down Already

Prices aren’t crashing. Condos and townhouses are up month on month, year on year, or however else you want to dice it.

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Doomcouver

Maybe everyone in Vancouver is collectively going to experience the 5 stages of grief for our housing market: 1. Denial – Sellers are being confronted with having to list their house for a number less than what is in their head so they’re leaving it off the market, expecting prices to resume their infinite uptrend soon. 2. Anger – Next will come the outspoken rage from home owners that the foreign buyer’s tax has ruined their lives and it’s everyone else’s fault. 3. Bargaining – Eventually they will list, en masse, however prices will be far from what buyers will want to pay, causing a huge glut on listings. 4. Depression – Poor sob stories will show up in the news of speculators locked into their “investments” even with as many 6’s in their list price as possible. 5. Acceptance… Read more »

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realist

“when global interest rates were the lowest they’ve been for 5000 years of recorded human history.”

No less an authority than Andrew Haldane, chief economist of the Bank of England, has confirmed that this is indeed the case. Of all matters discussed on this blog, this is by far the most noteworthy and the most sinister – it is unprecedented in human history. Talk about six sigma black swans and “nuclear weapon finance” – may the Lord take mercy on us! An outcome that is not catastrophic is very hard to envision.

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Just me

“Canadian Banks Push Back Against Taking on More Mortgage Risk”

https://www.bloomberg.com/news/articles/2017-02-28/canada-banks-push-back-against-risk-sharing-mortgage-deductible

Surprise, surprise!

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Just me

“Possible Vancouver housing market corrections a concern, says Scotiabank CEO”

http://vancouversun.com/news/local-news/possible-vancouver-housing-market-corrections-a-concern-for-scotiabank-ceo

Porter highlighted the bank’s “very conservative mortgage book,” saying more than half of its portfolio of mortgage loans is insured.

That is part of the problem: banks have little skin in the game, they make profits no matter what happens.

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BubbleTea

BIV: Stiffer currency regulations in China could dampen Vancouver real estate sales, but some say they might also provide an excuse for China-based investors to bail out of Metro Vancouver’s slowing housing market.
https://www.biv.com/article/2017/2/china-crackdown-threatens-cut-foreign-investment/

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KickThemOut

@Oracle – these morons will only believe you when in 5 to 12 years time, their kids or grandkids, who has lived in a rented apartment (oh, sorry, I meant the main floor of a SFH) their whole live, suddenly find that they can’t get into any remotely useful program at a 3rd rate college like Kwantlen Univ / Nanaimo Univ, even with a 95% average. Then they will be crying about how unfair it is and why no one is doing anything about it. I’m sure Christy Clark, if she hasn’t become Prime Minister then, will throw these fools a bone right before election and make them feel everything is all right again. But if your kid’s aim is to be the foremost expert in post modern feminism or intersectionality of gender fluidity & race privilege, I’m pretty sure… Read more »

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Just me

“China crackdown threatens to cut foreign investment. Tougher currency control rules could also offer investors an excuse to exit Metro’s slowing housing market” http://www.vancourier.com/news/china-crackdown-threatens-to-cut-foreign-investment-1.10586007 Joe Zhou, JLL’s head of research in China, has predicted a “big drop” in overseas purchases this year amid concerns over stricter and longer review procedures by the authorities as part of efforts to ease pressure on a depreciating yuan. “We do expect a slowdown in outbound investment made by Chinese investors because of strict capital controls, which is not likely to be loosened any time soon,” Zhou said in email to Business in Vancouver. “The impact will be felt across all the major global cities where Chinese investors have been active over the past few years.” Vancouver might already be sharing the pain. “I have been hearing rumours of some key China-based players in Metro… Read more »

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bullwhip29

Most B.C. residents ‘likely’ to boycott Trump-branded property
http://bc.ctvnews.ca/most-b-c-residents-likely-to-boycott-trump-branded-property-poll-1.3304153

>>> but in typical hypocrite vancouverite style, current owners, their lawyers, future shadow flippers and a handful of wannabee protesters trying to appear PC for their facebook pgs would be all over a potential name change like dirty shirt.

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bullwhip29

Why Toronto’s condo rental market is described as ‘ridiculous’
http://www.cbc.ca/news/canada/toronto/why-toronto-s-condo-rental-market-is-described-as-ridiculous-1.4000329

>>> something tells me that many of us have seen this movie before…

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