No Eureka Moment To Imperil The Gushers Of Money
The first of two weekend topics on the realization of a housing bubble. Macleans, “In mid-March, Elijah Joseph attended the Toronto Real Estate Wealth Expo, a jungle of real estate gurus and their 15,000 disciples who paid up to $500 per ticket, only to be told to invest in what is actually one of the worst buyer’s markets in Canada. A line-up of personalities preached that, despite record-high Toronto house prices, now is actually an ideal time to buy. The presenters all had personal stakes in the market, but attendees ignored the conflict of interest, and the event, disguised as a conference and concert, became a full-day sermon on buying real estate as the greatest good.”
“‘Fear will kill you. Fear will drown you,’ said Daryl King, who is selling properties upwards of $8.8 million throughout the Greater Toronto Area and Ontario. ‘Just jump in!’ chanted Inez Kurdrik, a downtown realtor. On the same panel, Brad Lamb, nicknamed ‘the condo king,’ who has built eight high-rises in Toronto, declared, ‘Toronto has become one of the last safe havens in the world.’”
“If real estate were a religion, Joseph would be a believer. He is 24-years-old, and he has devoted his future to erecting properties trimmed with 24-carat gold. ‘I’m looking to build a great big empire,’ he says. ‘There is no doubt. I have a plan. I have a course of action, and right now, I’m kind of looking for a mentor.’”
The Business News Network. “Toronto’s mayor is putting the real estate industry on notice after the city’s real estate board registered another month of scorching price growth. ‘I would hope we would have our provincial government partners look at the real estate industry and just ensure that their practices are not encouraging an even more frenzied marketplace that makes it harder for people to acquire homes at any kind of cost that is reasonable at all,’ John Tory told reporters.”
“The latest Toronto Real Estate Board data showed the average selling price in March surged 33.2 per cent year-over-year to reach $916,567. That marked an acceleration in price growth after the 27.7 per cent year-over-year rise in February that sparked a renewed wave of concerns about housing affordability across the Greater Toronto Area. TREB told BNN the price growth in March was the fastest since 1989.”
“The price growth in March came amid a double-digit rise in home sales. 12,077 properties traded hands in the month, nearly 18 per cent more than in March 2016. ‘Demand is nearly insatiable,’ BMO Capital Markets Chief Economist Doug Porter told BNN via email. ‘Policymakers simply have to take steps to cool demand, with some haste. … We are now approaching the rarified air Vancouver was in a year ago.’”
From CTV News Toronto. “Soaring house prices in Toronto have local and provincial governments scrambling to come up with solutions, but Ontario’s finance minister cautioned Wednesday that there’s no ’silver bullet.’ Sousa also suggested that it was hard to predict the market’s reaction to any government intervention. ‘To what extent any one measure will have a positive impact or negative impact is questionable and we’re still trying to ensure we put nobody in harm’s way.’”
“Both Sousa and the Toronto Real Estate Board have said one of the underlying causes of the soaring prices is that demand for housing continues to exceed supply. The number of properties listed on the market in March was up by 15.2 per cent from the same time last year, but the number of sales rose by 17.7 per cent.”
“Ontario Premier Kathleen Wynne has said that the government is looking at how it can help speed up construction. ‘There are people coming to us saying, ‘I want to build, I’ve got land, but the process is so cumbersome that I can’t build fast enough,’ she said. ‘So it’s not just whether you can build or not, but the availability of supply, so how long it takes to get from purchase of land to actually building.’”
“Ontario Housing Minister Chris Ballard said the government has to be aware of what consequences could arise from any measures. ‘For many Ontarians their house is the biggest asset that they have, they’re looking at their house as something that will get them through their retirement years,’ he said. ‘So, we have to be cautious — at the same time recognizing that for so many Ontarians they feel shut out of the housing market.’”
From Inside Toronto. “There’s a house beside a highway on-ramp in my North York neighbourhood that could be advertised as being ’steps to tow trucks.’ People with Texas plates bought it a year ago, renovated the front, and sold it the other week for $1.7 million, about twice what they paid.”
“There are almost no ‘bad’ houses left in this city. Almost any residence can be sold, and fought over. Two-bedroom condos are selling for what was, a few years ago, the price of a house. And no government we have wants to do anything about it. Why would they? Tax money keeps flowing in. Selling and fixing homes is the biggest thing Toronto has. We know it’s nuts. It’s entrenching the divide between Toronto’s haves and have-nots. It’s jacking rents as owners of condos and houses pay off their investments.”
“Mayor John Tory met the city’s building and real estate and rental industries last week to show, he said, ‘a deep concern’ for those finding it difficult to live here. He emerged, repeating there would be no ‘eureka’ moment, no magic solution, no risky measures to imperil the gushers of money.”
“People say major bidding wars engineered by agents drive prices up. The real estate people acknowledged the rules on that are ‘fairly weak.’ Talk to their regulator. My brother is renting a North York house from a man in China who bought it a year ago. Another brother was just outbid on a house by another out-of-country investor in Bloor West Village. Half the city is rich on paper, and half is either trapped in ancient rent-controlled apartments or paying whatever rents the market will bear.”
From News 1130. “With the average price of a home in Metro Vancouver now topping more than $900,000, BC’s New Democrats are promising to take action to make housing more affordable. That includes stronger safeguards against the illegal dumping of cash in this province. Housing Critic David Eby says, if elected May 9th, the NDP will set up a task force to investigate money laundering and tax evasion. ‘buying luxury properties through numbered corporations and offshore trusts.’”
“He says he doesn’t understand why the Christy Clark government hasn’t already taken action. ‘We have had so many red flags in our real estate market about the source of funds, who is actually buying property and where the money is coming from…. Between the tax avoidance, allegations of tax evasion and links to criminal conduct –both locally and internationally– I do not understand why this provincial government still refuses to delve into these issues.’”
From Common Ground. “The provincial government has jurisdiction over election rules for both the province and municipalities. Here in BC, the wild west of campaign fundraising, provincial and municipal campaign finance rules are currently among the least accountable in Canada. This has been a huge problem for decades and will not change until the province takes action. The British Columbia provincial election on May 9 brings an opportunity to raise the issue of big money in politics and campaign finance reform.”
“Large donations and cash for access to candidates (often from vested interests) are standard practice with multi-million dollar campaigns. We are becoming the equivalent of a banana republic as globalized capital increasingly influences our governance.”
“The Vancouver Sun reported that, from 2005 to the first few weeks of 2017, of the corporate donations to the BC Liberals, the largest group among the top donors are property developers, with 21 of the top 50. Condo marketer Bob Rennie was the BC Liberal’s head fundraiser up to January 2017, leaving the party well funded for the May 9th election. Rennie has also been a prominent supporter and fundraiser for Vancouver’s ruling party, Vision Vancouver and Mayor Gregor Robertson.”
“Property developers seem to have significant influence on both civic and provincial policies. Land use policies favour dense transit-oriented large scale market development of investment luxury pre-sold condos that are often left empty. These tower developments are serviced by expensive, publically subsidized infrastructure. The real estate market has become disconnected from the local economy.”
“Recently, former Montreal mayor Michael Applebaum was sentenced to one year in jail on corruption-related charges. The Globe and Mail reported that, during the trial, former aide Hugo Tremblay testified he led developers and businessmen to believe their projects would be delayed or not approved unless they made a supplemental cash contribution that was then split with Applebaum.”
“In this election, it is critical to put pressure on all parties and candidates to seriously commit to campaign finance reform to stop the current practices that breed systemic corruption. Only the provincial government can change these rules for both BC and the municipal governments. For the sake of democracy, the people of BC deserve better. A change of government would be refreshing.”
The next part of this will be on Australia.
‘Ontario Premier Kathleen Wynne has said that the government is looking at how it can help speed up construction. ‘There are people coming to us saying, ‘I want to build, I’ve got land, but the process is so cumbersome that I can’t build fast enough,’ she said. ‘So it’s not just whether you can build or not, but the availability of supply, so how long it takes to get from purchase of land to actually building.’
‘Ontario Housing Minister Chris Ballard said the government has to be aware of what consequences could arise from any measures. ‘For many Ontarians their house is the biggest asset that they have, they’re looking at their house as something that will get them through their retirement years,’ he said. ‘So, we have to be cautious — at the same time recognizing that for so many Ontarians they feel shut out of the housing market.’
There was a subscription editorial in the Globe and Mail that asked, “would it have solved the housing bubble in Las Vegas to have built more houses?” This supply issue looks pretty stupid when you have auditoriums full of people worshiping greed and easy riches.
I suspect one factor of a bubble ignition is a consumption-demand factor starts pushing prices up, then speculators pile in.
I was wondering about the population of Ontario: http://www.statcan.gc.ca/tables-tableaux/sum-som/l01/cst01/demo02a-eng.htm - according to StatCan (the Canadian government agency tasked with gathering statistics), 550,000 people have moved into Ontario in 4 years. Canada appears to have gained 2 million in population over the same period - I assume due to the natural resources boom and the immigration boom.
But then, as evidenced by housing bubbles in places like Mongolia, which has a nomadic population and one of the world’s lowest population densities, there are monetary factors (like governments buying mortgages, something the IMF bailout of Mongolia prohibits) as well as economic booms (Mongolia is natural resource rich, drawing large amounts of Chinese money) that fan bubbles.
Canada seems to have all of these factors: consumption-demand growth from population increase, an economic boom in natural resources, and government and central bank policies designed to further stoke the market.
The question becomes, how long can it last, and what will government do when speculators start trying to take profits and exit the market?
The question becomes, how long can it last, and what will government do when speculators start trying to take profits and exit the market?
I realized something: Interest rates yielded a lot more purchasing power for savers in years past than they do today:
• The purchasing power of each dollar is less than it was in 1950.
• The interest rates are lower than in 1950
So, a 5% interest rate in 1950 and a 5% interest rate today, both yield me a nickel from a dollar. A nickel in 1950 could buy me a sandwich. Today, I can’t think of anything that I can buy for a nickel.
This drop in real purchasing power from savings due to inflation + low interest rates could be a factor which pushes people into riskier investments.
‘A majority of Americans (59%) don’t have enough available cash to pay for even a $1,000 emergency room bill or even a $500 car repair, according to Bankrate.’
‘There was some good news, however. Around 22% of consumers in March said they feel more comfortable with their savings today compared with a year ago. About 19% said they feel less comfortable, and 55% said they feel about the same. For every previous month in the last six years that Bankrate has conducted the survey, those numbers were reversed, with more people saying they felt less secure than one year ago.’
‘Because Bankrate included retirement savings as part of this question, the optimism could be because “the stock market has been on quite a tear,” said Greg McBride, Bankrate’s chief financial analyst. “That account balance looks a lot better, and that could be contributing to that comfort people have with what they’ve accumulated.”
people dont save money any more. Their homes are their savings accounts.
“A nickel in 1950 could buy me a sandwich. Today, I can’t think of anything that I can buy for a nickel.”
But at the same time, in 1950 people put away a lot fewer dollars and therefore earned far fewer nickels. I’m sure there’s some disparity, but it’s probably not as bad as it seems at first.
Hey Donk.
1955 personal savings rate - 10%
2015 personal savings rate - 5.6%
The question becomes, how long can it last, and what will government do when speculators start trying to take profits and exit the market?
So: what will government do?
Neel Kashkari, Minneapolis Fed bank president said bailouts will happen again unless banks are forced to have larger capital buffers:
https://medium.com/@neelkashkari/jamie-dimons-shareholder-advocacy-letter-c2d867f3cc1e
What exactly are they doing with bailouts? The mantra in the MSM is “Bailouts are regrettable but they prevented another Great Depression.”
Well, bailouts involve transferring national wealth to the bagholders - Wall Street - while extracting it from the taxpayer.
It could be a slow growing black swan is that these policies do make the taxpayer feel ill, flu-like, and while the taxpayer cannot trace the malaise to the policy, it leads to the rise of populist, anti-establishment political thought, a loss of control over the taxpayer’s mind by the PTB (advertising, loss of faith in government).
So while the PTB can give the taxpayer the flu from one cataclysmic wealth transfer, can they do it twice?
Ben I have a former classmate who lives and works in Australia, Sydney, at a university, who purchased what she calls her house “in the mountains” (don’t know if she owns or rents in the city). It’s a good 70 miles west of metro Sydney in the Blue Mountains. I looked it up, as she posted pictures and general location on the busybody Facebook, in the local MLS or whatever they call it. It is approximately 1000 ft^2 and the sale price was ~AUD$400,000, which at the time (last summer) was ~USD$300,000. It’s a cute house on a nice lot, but it is so small and far away from the jobs.
I went hiking there last year. Beautiful, but jobs have to be a factor in affordability. Lots of people just getting by from the conversations I had. Sydney is an absolute madhouse, a RE frenzy + an immigrant invasion, plus the traffic is painful. Still like the quality of life there though more than anywhere in coastal california, where I lived for many years.
But she has pride of ownership!
‘Interest rates might be too blunt a tool to cool the hot housing markets, but leading economists say the Bank of Canada is “certainly not powerless” when it comes to runaway real estate prices.’
‘The central bank will weigh in on the health of the economy Wednesday when it delivers a rate decision and its accompanying monetary policy report, which provides a deeper analysis of international and domestic economic conditions. A move in the key rate is not expected, but Governor Stephen Poloz will undoubtedly face tough questions about low rates and soaring home prices during the ensuing news conference.’
‘Unrelenting gains in the Greater Toronto Area have frustrated house hunters pointing fingers of blame, with some targeting the central bank for keeping rates so low.’
‘But don’t expect the bank to change its tune. “The Bank of Canada will likely stick to its view that house prices are best dealt with through macro-prudential policies particular to that market, with the interest rate setting used to steer the economy overall,” Avery Shenfeld, CIBC Capital Markets’ chief economist, told BNN in an email.’
‘If Poloz raises rates to cool Toronto he runs the risk of derailing the country’s other housing markets and the overall economy.’
‘Still, the bank’s influential powers don’t start and end with the overnight rate. “The BoC should cease and desist with talk of possible further rate cuts, which simply fuel the sense that rates are never going higher, and instead start warning that rates will someday rise,” Doug Porter, chief economist at BMO Capital Markets, told BNN via email.’
Porter used to go crazy when some one said there was a housing bubble in Canada.
“the risk of derailing the country’s other housing markets…”
The markets left the rails a long time ago. That’s the problem.
This lame excuse is used in Australia too. Here’s an idea: if you must lower rates to keep the sad dog of an economy moving, why not separate mortgage interest rates from it? You could have a wall between the overnight rate and shack loans. Note that credit cards aren’t 4%.
When policy makers studiously ignore the obvious, it means they’re in on the scam.
“Here’s an idea:”
That’s a very good idea and good example with the credit card rates.
Toronto Population Statistics
2006 = 2,503,000
2016 = 2,732,000
Ten year growth = 229,000 or 0.9% per year
That is considered solid growth, but not overwhelming. Why can’t they build enough housing to satisfy demand? Because non-resident investors are buying up the product and leaving it vacant.
Initiate a transaction fee for foreign investor sales and a tax on vacant properties (based on utility usage?)
Are those figures only for the city of Toronto? If I’m not mistaken, the greater Toronto metro area is a lot bigger than 2.7 million, probably more like 4 million.
It would be interesting to see what the population growth for the GTA (greater Toronto area) has been over the same period.
I was mistaken. The GTA population is nearly 6 million and the population increased by 6.2% over the past 5 years.
From a Toronto Sun article published 2/8/17 about newly released Census data:
“Statistics Canada released the first batch of numbers from the 2016 census on Wednesday and the population of what the government agency refers to as the census metropolitan area of Toronto increased by 6.2 per cent since the last census in 2011.”
“When the 2016 census was taken last May 10, the population of the census metropolitan area of Toronto was 5,928,040, compared with 5,583,064 from the 2011 census. The population of the actual city of Toronto was 2,731,571, up from from 2,615,060 in 2011.”
www dot torontosun dot com/2017/02/08/toronto-area-population-outpaces-national-growth-census
Ha! Pick ANY long term democrat controlled city in America. People are fleeing…
Philadelphia has lost half of its population in the last 50 years…yet housing prices are insane.
NYS has lost 1 million people in the last 10 years. Housing prices are insane across the state.
It’s not about supply or demand or having enough housing stock.
Supply and demand are what the hucksters talk about.
Ben Jones: Supply and demand are what the hucksters talk about.
It IS demand - but they don’t specify the TYPE of demand: consumption or speculative demand.
Now, demand can come in three flavors for a physical asset:
1) Consumption (buy it to use it)
2) Hybrid consumption-speculative (wouldn’t buy it unless it were going up in price)
3) Speculative (buying it in order to sell for a profit)
The reason this disaggregation is important is because each of these individuals will react differently in the face of a price increase slowdown or reversal. And thus drive the market differently.
Take this headline:
Report: Four counties in Colorado, including Weld, top the list of …
Greeley Tribune-8 hours ago
He said until there is higher inventory of single-family homes, there won’t be a leveling out of the housing market to make homes more affordable for those …
Let’s say Greeley announces no more houses can be built. Using this logic, house prices would climb to Toronto’s, more maybe.
Or this headline:
Northwest sees new listings soar by 50%
HousingWire-Apr 7, 2017
… as the housing market saw an increase of 50% from February in new listings. …
Where’s the crater?
“That is considered solid growth, but not overwhelming. Why can’t they build enough housing to satisfy demand? Because non-resident investors are buying up the product and leaving it vacant.
Initiate a transaction fee for foreign investor sales and a tax on vacant properties (based on utility usage?)”
Why? They are bringing money into Canada to buy inflated property. They are collecting property taxes from people that do not need services. When it blows up, the “investors” will take the major bullet. Yes, I understand that the locals do not like the higher prices but they will like a recession even less. That is why there is no political will nationally to enact what you have suggested in Canada. No politician wants to start the recession and kill the golden goose of the economy.
‘We’ve been putting in a lot of time studying Toronto real estate prices, and we started to get curious how rents relate to them. Going back to 1992, what we found was real estate prices and rents have an inverse relationship. That is, under normal market conditions.’
‘Toronto real estate prices, and rentals share an inverse relationship for the most part. The greater the rise in home prices, the lower the rise in rents. The most obvious example on the chart is 1997, when home prices rose 6.64%, and rentals moved only 0.2%. In 1998, the trend has a sharp reversal, with rents jumping a massive 7.3%, and real estate just 2.6%. So under normal market mechanics, it’s a clear trend.’
‘Note I said normal market mechanics, because there’s a pretty odd break in 2008. That was the year interest rates were aggressively slashed, and fueled cheap borrowing. 2013, the year they tried raising rates resulted in a slight dip. That trend reversed when they cut rates again shortly after. Interest rates then proceeded to drop to the lowest levels in history, pouring gas on scorching hot home prices to jumpstart the economy.’
If you want to realize why no politician in Canada wants to burst the bubble in Canada just remember what happened here. When the bubble burst here politicians were desperate for the tax revenue that was lost due to lower property taxes and sales taxes. They did not want to have to cut government spending a layoff workers. Thus, Obama’s “stimulus” package which was sold as an infrastructure bill but really was about sending money to the cities to keep people on the government’s payroll. Thus we got a higher national debt with virtually no infrastructure spending. Ironically, when those funds ran out, we did see some cutback in government. Hence, the worse recovery in modern times. The politicians in Canada know the history and want to avoid it during their terms in office. As Keynes said in the long run we are all dead. Questionable long term economics but great political advice.
‘There’s a house beside a highway on-ramp in my North York neighbourhood that could be advertised as being ’steps to tow trucks.’ People with Texas plates bought it a year ago, renovated the front, and sold it the other week for $1.7 million, about twice what they paid.’
This reminds me of Jingle. I used to ask him, just when is it a bubble? What’s too far? Do you think this is “recovery” and it’s going to sail right to the point of perfect equilibrium? Or does it take on a life of it’s own: a herd mentality?
I was talking last night with someone in Tucson who has poo-pooed the idea of a bubble. Immediately “I was at work today and everybody was using bubble talk. ‘You know it’s only going to go up!’”
And this is how it goes. Millions of water cooler discussions, the seed is planted. It grows. It is self reinforcing. The old saying applies: people lose their minds in herds and gain them back one by one.
Ben Jones:: I used to ask him, just when is it a bubble?
Probably when the ratio of Consumption Demand (desire to actually consume the item) relative to Speculative Demand (purchase of the object in order to sell for more money later in order to realize a profit) exceeds a certain ratio.
Like tulip bulbs. People start off wanting them simply to have them, speculators notice prices going up, then speculative demand grows. I’ll bet consumers get priced out at some point. So:
Consumption_Demand/Speculative_Demand > TippingPoint
is when the bubble bursts.
Would the tulip bubble have been resolved with an increase in the supply of tulips?
Hard to say. Depends on the amount of introduced supply. Depends on why people perceive the item has value for the next buyer.
But the tulip bubble doesn’t compare exactly to the housing bubble. The largest economic entities on earth (central banks) are typically ready to step in and buy mortgages if it feels the market is not sufficiently “perky.” No such buyer for tulips.
Remember, the tulip mania example is like catnip to financial moralizers.
Mugged by the Debt Moralizers - The New York Times
http://www.nytimes.com/2010/11/01/opinion/01krugman.html
Nov 1, 2010 - But the moralizers will have none of it. They denounce deficit spending, declaring that you can’t solve debt problems with more debt.
Krugman strikes again.
Seven years later and many trillions more in debt. For some reason this came to mind about Krugman:
And now, the end is near;
And so I face the final curtain.
My friend, I’ll say it clear,
I’ll state my case, of which I’m certain.
I’ve lived a life that’s full.
I’ve traveled each and every highway;
And more, much more than this,
I did it my way.
Regrets, I’ve had a few;
But then again, too few to mention.
I did what I had to do
And saw it through without exemption.
I planned each charted course;
Each careful step along the byway,
And more, much more than this,
I did it my way.
Yes, there were times, I’m sure you knew
When I bit off more than I could chew.
But through it all, when there was doubt,
I ate it up and spit it out.
I faced it all and I stood tall;
And did it my way.
I’ve loved, I’ve laughed and cried.
I’ve had my fill; my share of losing.
And now, as tears subside,
I find it all so amusing.
To think I did all that;
And may I say - not in a shy way,
“Oh no, oh no not me,
I did it my way”.
For what is a man, what has he got?
If not himself, then he has naught.
To say the things he truly feels;
And not the words of one who kneels.
The record shows I took the blows -
And did it my way!
Yes, it was my way.
Never read that Krugman before.
-> “And if you point out that their arguments don’t add up, they fly into a rage. ”
Wow, okay…
Typo: Should be:
Speculative_Demand/Consumption_Demand > TippingPoint
At one value, it’s a bubble. And a yet higher value, the bubble probably bursts.
…just when is it a bubble?
It’s a bubble when it’s a mania, when what is believed is simply not true.
Those who believe that prices are sky high because there is a shortage are living the mania. The proof that there is no shortage was shown a decade ago. When prices came down, there were millions upon millions of places for sale. Shortage of land? Practically the whole country is undeveloped. Building costs? Even when builders tell them construction costs are a tiny fraction of house prices they are not believed. That is mania, a bubble.
My answer to the question of when the housing market is in a bubble has many parts, but the biggest indicator is when the sales prices begin to exceed reproduction costs. A factor of 10% is not so bad, but when you get to 50% it is bubblicious and in 2006, we saw prices go over 100% of reproduction costs. That is very bubblicious!
I believe financing had the biggest roll in facilitating this run up. The 80/20 subprime, 100% financing with teaser start rates allowed all sorts of idiots to become MacMansion owners! Real buyers got caught in the updraft and unwittingly over paid for their purchases.
The more time I spend on this blog and the more experience I get in the real estate market, the more I believe we will always keep repeating this cycle, just to varying degrees each time.
It is clear to me we are nearing another peak in housing prices, but nothing is going to crater until the next recession takes its toll on the market. The last recession was driven primarily by the housing downturn. I don’t think that will be the case in the U.S. this time. It will be a more general, broader downturn. However, the housing market will suffer (to a smaller degree than in 2007)……my conclusion is it always does!
In other words you don’t know when it’s a bubble.
That’s why I read this Blog! It provides clyes. I also know when we are experiencing a bottom, when it’s a good time to buy!
Canada is bk until oil hits $65+++
The loopy pm doesn’t help
Friend hear trying to :/ on a 2012 purchase that zillow says is up 25%
$65?
We are not far from that right now.
‘Ontario Housing Minister Chris Ballard said the government has to be aware of what consequences could arise from any measures. ‘For many Ontarians their house is the biggest asset that they have, they’re looking at their house as something that will get them through their retirement years,’ he said.’
It is obvious what has been done and why. It’s made clear over and over how it will end. I know many don’t recall, but there was a time when there were no house flipping TV shows. And there sure weren’t 15,000 people paying $500 to be reassured that buying houses was the path to fortune. Housing is an expense. You pay for it like a car. The car maker needs a profit, the lender. But nobody expects to make money on their car, much less fund a retirement.
We remember when a nice house was a sign of wealth, not a source of wealth.
Hey Blue,
A nice house is becoming the last source of wealth. Heck, even with a good college education people have trouble. My kids are in CompSci at college. It looks like the H1B giveaway will make those hard-won degrees worth nothing. All that’s left is the debt and waisted effort. H1Bs are supposed to be used for those with one-off skills that can’t be found anywhere. Instead, H1B is being used to import coders and IT people who aren’t as good as ours are. Not by a long shot.
Regards,
Roidy
Getting a little tired of hearing IT grads whining about HB1 visas.
What hath technology wrought?!
That IT jobs are becoming much less lucrative is no surprise. Not only did IT decimate millions of jobs in other fields, IT now is eating itself.
I mean, really. Is this what IT folks believe? That IT would somehow be able to exempt itself from the deleterious effects of its own invention?
Geez.
For all their self-purported brilliance, IT people can be woefully asleep at the switch.
You, too, are expendable.
‘We have had so many red flags in our real estate market about the source of funds, who is actually buying property and where the money is coming from…. Between the tax avoidance, allegations of tax evasion and links to criminal conduct –both locally and internationally– I do not understand why this provincial government still refuses to delve into these issues.’
‘Large donations and cash for access to candidates (often from vested interests) are standard practice with multi-million dollar campaigns. We are becoming the equivalent of a banana republic as globalized capital increasingly influences our governance.’
‘The Vancouver Sun reported that, from 2005 to the first few weeks of 2017, of the corporate donations to the BC Liberals, the largest group among the top donors are property developers, with 21 of the top 50. Condo marketer Bob Rennie was the BC Liberal’s head fundraiser up to January 2017, leaving the party well funded for the May 9th election. Rennie has also been a prominent supporter and fundraiser for Vancouver’s ruling party, Vision Vancouver and Mayor Gregor Robertson’
The same Bob Rennie that took the time to mock this blog in a recorded speech a few years ago.
I wonder which co u n try has more gov housing agencies :
US ,CANADA OR GINA
a home is a right!
As are ever rising home prices at a 5%+ annual rate of appreciation…
Toronto
Elijah Joseph currently lives with roommates in an apartment in East York for $800 per month. He works going door-to-door selling solar panels on commission. He was formerly a college basketball player and lived in Windsor with his mother, a personal support worker, but he says, “I left my family to find wealth.”
Exiting the Expo, Joseph planned to convert others to join the real estate market. He is nicknamed “The Rev,” he says, because he talks to his friends with reverend-like pedagogy. “When I ingest this, I literally spew it all out to everyone I speak with,” he says. “Maybe I’ll get into motivational speaking of my own.”
http://www.peekyou.com/elijah_joseph/296479019
A reader sent this in:
May 14, 2015
‘Here’s a sample cover letter to help secure your client’s dream home’
‘According to a recent Redfin report, the number one way buyers are standing out against the competition is through cover letters, with 43% of winning offers using them in March, up 35% from last year.’
‘And it might be exactly what real estate agents need to provide to their homebuyers, in order to help stand out in places like San Francisco. By the way, San Francisco’s bidding wars are nearly at 100%, rising from 88% last year to 94%, with 32% of homes selling over the asking price.’
‘Sergio Silva, a real estate agent with Keller Williams Realty in Carmel, California, sent over a list of three things he does to get his client’s offers accepted above the competition.’
‘In his third point, he went in depth on what a letter should look like.’
‘Letter to the seller:
A letter to the seller does help, but it has to be done a certain way. The point of the letter to the seller is to make your clients come alive. You want your buyers to be more than just a number on a paper. When touring a property, find certain things that your buyer and the seller have common, such as water skiing, camping, local sports teams etc. When writing the letter to the seller, include that in there. People do business with other people that are just like them, so it’s important to build that rapport with the seller. Another important thing to do is to talk about just how amazing their home is. Never ever bad mouth or try to negotiate in a letter to the seller. The main point in the letter to the seller is to make your buyers come alive, tell the seller how beautiful their home is and how you are putting your best foot forward to buy the home.’
From the comments:
‘Well I agree completely, please send me that cover letter with your offer because I will use it on you to inflict the infamous “death by 1000 slices”.
‘Atlanta is hardly a market with the appeal of SF but there are highly desirable areas in certain school districts and every spring, things pop. I’ve sold buckets of these homes over the years and getting a letter tells me one thing - that hook has been swallowed and my seller is going to control this deal. From price to terms to inspection to appraisal or any other issues, my seller will call the shots.’
‘I’ve had buyers ask about these all of the time and I always suggest avoiding them. The best thing for a seller to see is a very strong offer - and leave it at that. Once a buyer starts getting too emotional they are apt to step on it - and shame on the buyer agent that allows or encourages that. Our job as buyers agents is to be that safety harness.’
A reply:
‘The only think you see are just $$$$ floating in your mind. You must sleep in blankets covered in $100 dollar bills at night. The only interest you have is how much commission you will get by selling the house way over asking price.’
begging to buy an overpriced shack seems smart.
Pathetic, isn’t it?
I think it’s high time for grocery stores to sell products only to those willing to submit personal letters to them.
Or, perhaps utility companies ought to ask developers to submit formal, hand-written, personal letters before they agree to provide power to a worksite. And, a week later, quadruple the rates.
Don’t forget to mention that you will…
TAKE CARE OF THE SQUIRRELS!!!!
Ain’t no such thing as a buyer’s agent. They’re both working for, and paid by, the seller.
If the buyer’s agent can get the buyer to start writing love letters, he knows he’s very close to closing the deal at he maximum price possible, which translates into maximum profit for himself.
Imagine if car sales worked this way - both agents work for the manufacturer (NAR or GM), and both make maximum profit the higher the sales price of the car. One pretends to represent the buyer though.
It doesn’t seem like these types of transactions are true arms-length deals.
Next up:
A demand that housing is a right and that the government needs to nationalize housing.
Destroy the average individual’s ability to participate. Check.
Introduce national housing programs that provide “access”, under the auspice that it’s “for the people”. Check.
Now, not only is it extremely difficult for one individual - one salary - to participate in the housing market, it is commonplace to enslave two individuals - two salaries.
The government-sponsored, government-induced corruption, that exists in housing today….unfathomable.
And nobody gives a shit.
Housing is an industry full of scammers. At all levels. Government, developers, realtors, speculators, landlords.
A disgusting subset of the population.
It stopped being anything resembling a free market a long time ago.
I saw a show last night where a guy in so cal is building tiny houses out of porta potties and calling it affordable housing. The larger ones that are for the disabled where you could lay down in it.
Prices were gonna be around 21000.00. Seems a little high to me.
Why not just buy a 10 X 12 shed at Home Depot for $3500?
Rent space in a defunct mall parking lot and run utility lines from the mall to the parking lot? Shower at the local Y?
Or purchase one of those hump-shaped trailers that attach to the back of a vehicle? Retails at about $2500.
Stay at a BLM with showers? You can do that for $30 / night. Better still, at Lassen, you get plenty of hot water in the camp showers. Sits on a volcano.
This is a real thing in the Bay Area. People are going into debt serfdom and getting on their knees for the “privilege”.
Hey Canadah
Nat gas futures for December 2021 are $3
= ouch
Allen, TX Housing Prices Crater 13% YoY
http://www.movoto.com/allen-tx/market-trends/
Funny. From the Canadian article Ben posted:
“The most aggressive salesman was realtor Tim Payne, a presenter who was expected to spill secrets on flipping houses but spent nearly two hours advertising his $995 three-day course, charging an extra $6,000 for access to contacts. “I wanna kick your legs out and choke you until you’re wealthy,” he said. As the father of six boys, he boasted to the crowd, “I feed them money. They just crap out money.””
A bit off-topic, but I thought this was interesting. A different approach to financing college tuition. Future-income share agreements. In a way, it’s kind of like those sports coaches that teach kids tennis or golf in exchange for a future cut on earnings:
http://www.businessinsider.com/income-share-agreements-help-students-pay-for-college-loan-alternative-2017-3
“ISAs are different. It’s not even a form of debt. Instead, investors such as private investment firms or a college endowment pay for students’ tuition. Then, when the students enter the workforce, they surrender a percentage of their post-college salaries for a period of time, generally no more than 10 years. ”
“If graduates get good jobs with nice salaries, those investors can make out quite nicely. They could earn as much as 2.5 times the amount they provided the student. But investors also assume the risk that the graduates could end up at low paying jobs, or worse, unemployed. ”
“In that sense, it’s kind of like venture capital for college students. If they do well, the investors do well, but both sides have risk. And since it is the universities that are forking over the bulk of the financing for ISAs , they have an extra incentive to ensure that their product (a four-year college education) is valuable. “
It used to be scholarships.
I first thought you cited a satirical article like Modest Proposal by Jonathan Swift. ISAs are a real thing!
‘Future-income share agreements.’
Perfect for a pension plan investment portfolio, lol.
Whose cockamaime idea is this? The DOE? The Education Foundation? Or a consortium of luxury apartment developers?
Yet another attempt to justify the continued skyrocketing cost of education. And enslave college graduates not only to an increasingly massive loan, but also limit their income potential for a decade. (And how much you wanna bet that within a generation, grads will have their incomes reduced for 20 years rather than 10?)
Perfect!
How about reducing tuition by 80% instead? How about eliminating PC rules that favor the incompetent? How about draining universities of their tens of billions in endowments before asking witless students to pony up even more cash?
My take is a lot of degrees are past their prime like gender ethic studies liberal arts do you really need a fine arts theater communication degree…..unless you intend to be a teacher where union rules dictate you must have a 4 yr degree before you can apply
My reason is those in the PC areas are there for life and when they retire do we really need any more diversity officers in college or in the corporate world? seems a total waste of money to even offer those courses today.
And communication degrees why not get you own domain name .com, and post stuff you created on your own website, if you want to be a writer journalist video producer, artist, post a daily weekly articles editorials, have an active FB page better to have 500 active followers posting 100 replies daily then 5000 posting 20.
I’m not sure how long the entrenched status quo will hang on to its must have that piece of paper, instead of proving your skills on line so everyone can see.
We need more hands on people like Mike Rowe and his trade skills program
This sounds similar to the indentured servitude concept of years past.
Canada seems to be on the brink of collapse.
Toronto should be interesting. House prices 13 x income.
I didn’t realize until I read what Ben posted today, how close the property developers are with the Canadian government. It sounds like they are pretty much one and the same. It’s like, the inmates truly have taken over the asylum up there.
That big Expo they did. The sad thing about it, they were blatantly preying upon people with gambling problems and gambling addictions. 15,000 people. Just a ’sign of the times’.
With 33% annual appreciation. How far can you stretch a rubber band before it breaks?
their central bank will print some money to save home owners.
how far can we leverage home prices?
I did not know this was a thing:
http://www.news.com.au/finance/real-estate/controversial-new-rentbidding-app-a-threat-to-affordability/news-story/9b613807f501927e93b3c1c90e83b07d
Read and weep. Ours is not a small gobmint.
https://en.wikipedia.org/wiki/List_of_federal_agencies_in_the_United_States
“A line-up of personalities preached that, despite record-high Toronto house prices, now is actually an ideal time to buy.”
There has never been a better time to buy… Always and everywhere.
“The latest Toronto Real Estate Board data showed the average selling price in March surged 33.2 per cent year-over-year to reach $916,567. That marked an acceleration in price growth after the 27.7 per cent year-over-year rise in February that sparked a renewed wave of concerns about housing affordability across the Greater Toronto Area. TREB told BNN the price growth in March was the fastest since 1989.”
The rate of appreciation has accelerated to a 2 1/2 year period for prices to double. Isn’t a collapse pretty much baked into the cake at this point?
Yeah, when the SFR hit one million (not long ago), they were “gee whiz!” Now it’s coming up on two million and they are freaking out. So was it a bubble at 1M? Or 500k?
What goes on in the mind of a degenerate gambler that leads him to believe that paying a 300% premium for a depreciating asset and then financing it is profitable?
2 million houses for a population of 2 million.
No problem there right?
“If real estate were a religion, Joseph would be a believer.”
For the record, Joseph was Jesus’s father and a carpenter.
And it is his statue which often is buried to bring good luck in SoCal home sales.
Not Joe the plumber?
Kent, WA Rental Rates Crater 12% YoY
https://www.zillow.com/kent-wa/home-values/
Rule #1 if you’re making Monet you never tell anyone how
the economy has reached escape velocity! lmfao
If you want to convince strangers to send you money in the mail then send to me a post-paid envelope and ten dollars and I will tell you how it can be done.
If you pukes want a good read you might want to give this article a shot …
“Wells Fargo’s wheels are falling of the stagecoach”
http://www.sandiegoreader.com/news/2017/jan/11/citylights-wells-fargo/#
A couple of important take-aways …
“In general, banks move in packs. It would be surprising if Wells Fargo were a lone wolf,” says Partnoy.
“Banks are still a mystery, a black box. They are such an important part of our economy. You would think there would be pressure to look inside banks [more thoroughly]. But markets don’t seem to care because banks [appear] profitable.”
what is so mysterious about creating credit out of thin air and collecting interest from people?