July 6, 2017

The Million Dollar Question, Or Maybe Two Or Three

A report from the Canadian Press. “The number of homes sold last month in the Greater Toronto Area plunged a whopping 37.3 per cent compared with a year ago, the city’s real estate board said Thursday after Ontario introduced measures aimed at cooling the housing market. The Toronto Real Estate Board said 7,974 homes changed hands in June while the number of new properties on the market climbed 15.9 per cent year-over-year to 19,614. ‘We are in a period of flux that often follows major government policy announcements pointed at the housing market,’ Tim Syrianos, president of the Toronto Real Estate Board, said in a statement.”

“There have been growing worries that overheated prices in Vancouver and Toronto could be a problem for the broader economy, especially if there is a sudden decline in housing prices sparked by higher interest rates. The Bank of Canada has recently signalled that time is running out for the rock bottom interest rates it put in place in 2015 to cushion the blow of a sudden decline in global oil prices.”

The Calgary Herald. “New listings greatly outpaced resale demand in June as the city’s improving housing market led more Calgarians to put their homes on the market. Apartment and condo sales slumped in June, declining almost 8 per cent from a year ago, to 286 units. Year-to-date sales remain up 8.6 per cent from 2016, however unsold inventory is 7 per cent higher than 2016. Listings in the apartment category jumped 20 per cent. As of June, the benchmark price for an apartment style product was $265,800, about four per cent below last year’s levels.”

“‘While there were many buyers waiting for lower prices to step into the housing market, there were also many sellers waiting until prices stabilized before listing their home,’ said CREB president David P. Brown.”

From CBC News. “Vancouver’s empty homes tax came into effect over the weekend, causing some property owners to scramble to rent, sell or find a way around the fees, according to one property manager. Cameron Fazli is with Re/Max Crest Realty. He has seen a spike in calls from concerned owners looking for advice and solutions, he told CBC guest host of On The Coast Gloria Macarenko. ‘We are getting a lot of calls from people who are unsure what they are going to do,’ Fazli said. ‘There is a lot of uncertainty and definitely a lot of unhappy property owners.’”

“He recently met with a woman who owns three empty properties in Vancouver — and says one of them is now listed for rent, another will be listed shortly and she is thinking of selling the third. ‘This is a scenario of someone who is kind of in a panic now and needs to rent them out,’ he said.”

From News 1130. “It is the million dollar question in our real estate market — or maybe the two or three million dollar question — when will Metro Vancouver’s housing bubble burst? Other hot global markets have been hit by a drop in Chinese investment in 2017 but the local housing scene seems to keep defying expectations, according to a story featured recently in Business Insider.”

“But at least one local realtor sees nothing but price increases in Vancouver’s near future, even as sales in the city’s luxury segment have dropped since introduction of a 15 per cent foreign buyers’ tax last year and China has clamped down on capital outflows.”

“‘There seems to be a slow down at the higher end. We’ve seen that not only in sales but in terms of the actual dollar volume spent,’ says Steve Saretsky with Sutton West Coast. ‘To put that into context, the amount of dollars spent on Vancouver homes above two million dollars has dropped five per cent while the total dollars spent on homes above three million dollars in Vancouver has dropped 12 per cent,’ he tells NEWS 1130.”

“‘Real estate markets that saw locals scramble to cash in on foreign buyers are now noticeably cooler. Toronto is seeing new listings hit an all-time high, coupled with a massive dip in sales,’ writes Daniel Wong. ‘New Zealanders who were complaining about a ‘flood’ of Mainland Chinese buyers, are now complaining about the market cooling faster than expected. Australia’s leading property analyst is now telling people to prepare for a 10 per cent drop in prices soon.’”

“Wong — who is a contributing editor for Better Dwelling – believes that while Chinese investors were buying a lot of international real estate, ‘over-excited locals’ bought into the narrative way too much. ‘Countries that are nice, but not global leaders got way too excited that they were the next ‘New York.’ Canadians after all, have been heavy real estate speculators without Chinese influence. Now that mainland Chinese buyers aren’t buying in any significant quantity, buyers are finding themselves in an existential real estate crisis,’ he writes. ‘Is a 30 percent rise in a single year a justifiable increase in property prices? We’ll find out.’”

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Comment by Mr. Banker
2017-07-06 09:31:42

“‘Is a 30 percent rise in a single year a justifiable increase in property prices? We’ll find out.’”

Bahahahahahahahahahahahahaha … does such a question really need to be asked?

Comment by Ben Jones
2017-07-06 09:42:20

‘It is the million dollar question in our real estate market — or maybe the two or three million dollar question’

I remember when reports out of Toronto started to say, “what was one million is now two.” If you look at the photos, it’s just ordinary shacks. And they talk about how much more rational Canadian regulators are.

‘The Bank of Canada has recently signalled that time is running out for the rock bottom interest rates it put in place in 2015 to cushion the blow of a sudden decline in global oil prices’

When so many central bankers are talking about raising rates at the same time, it suggests they got together and made the decision.

Comment by Karen
2017-07-06 11:39:25

When so many central bankers are talking about raising rates at the same time, it suggests they got together and made the decision.

The msm would have you believe only conspiracy theorists believe such things.

Comment by Ben Jones
2017-07-06 12:53:22

I read it in the MSM and posted it in the comments here recently. It’s called a coordinated action.

Comment by Raymond K Hessel
2017-07-06 18:13:15

As I predicted…Da Boyz would exit the pump & dump just before Goldman Sachs ordered its helmet-haired hobbit at the Fed to hike rates and implode its Ponzi market and asset bubbles. Let the Great Muppet Slaughter of 2017 commence.


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Comment by Karen
2017-07-07 13:31:57

Wow that’s interesting. I wonder why the PTB decided to go public with this.

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Comment by Rentor
2017-07-06 13:02:46

What is the empty house tax and do they have to pay property taxes on top of that? Also is empty house tax deductible or is it a penalty?

Comment by oxide
2017-07-06 16:06:03

Ben, I put this in the previous thread too… can you find a nice picture to post for Jeff/phony scandals?

Comment by Raymond K Hessel
2017-07-06 17:33:25

A “nice picture” isn’t going to help Jeff with what’s he’s going through.

Comment by San Diego RE Bear
2017-07-06 09:58:17


Just sent an e-mail to you about an event. :D

Hi everyone else!

Comment by San Diego RE Bear
2017-07-06 09:59:27

Whoops - at your name@gmail.com account in case you have too many accounts like I do.

Comment by scdave
2017-07-06 10:25:57

Hi. Where you been ?

Comment by San Diego RE Bear
2017-07-06 10:46:14

Hi Dave:

Kansas. :D Not much time to be online anymore and am afraid to read stuff due to having bought a house five years ago. (In KS. Under $100k. Living is much easier here.

Read that you were in San Diego last month. Any interest in coming down on Friday, 7/21 for a day? That’s my bubble day. :D

Hope all is well with you!

Comment by Taxpayers
2017-07-06 13:11:24

2012 was a good year to buy
Too bad KS raised taxes

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Comment by San Diego RE Bear
2017-07-06 16:33:55

KS cutting income taxes to the wealthy almost destroyed the state. We had no growth at a time the rest of the nation was recovering from the great recession. Brownback’s economic policy means I pay huge sales taxes and high property taxes. MY income tax reduction was almost nothing, and the little gain I saw was demolished by the increase in every other tax and fee in the state. I am thrilled Kansas raised taxes (still only about 1/2 of CA mind you) and am hopeful that investments into the state will mean the younger generation will stop fleeing it!

Comment by oxide
2017-07-07 04:30:06

How do people feel about high sales taxes? Are they buying less stuff? Lots of conservatives want a VAT or sales tax instead of income tax, but I don’t think they realize the effect that would have on an economy that depends 70% consumer spending. In a word, it would kill it. Impulse buying would come to a screeching halt, which is enough to kill most of the malls, a lot of the home improvement, any kind of hobbies, most restaurants, and anything is even a little better than Wal-Mart price and quality. Not to mention durable goods like cars or appliances.

Comment by acutehemroid
2017-07-07 06:14:45

I live in Louisiana. We have the highest sales tax in the nation, which is more of a burden on the middle and working class than the well-off. Our State is dependent upon oil and natural gas revenue to the tune of approximately 30% of our unencumbered Sate budget. We have a $25B budget with the Feds contributing ~$13B to that and cannot be altered, cut, or redistributed. This leaves $12B as a working budget which is funded to approx $3.5B with oil and gas revenue. Sales tax and income tax make of the rest of the money. Note that sales tax is not only feeding the State Gov’t but the Parish and municipal govt’s, too. Yes, it is regressive.
P.S. I would dearly love to get away from oil and gas revenue. It’s always been a pain to have to budget oil and gas, because the price fluctuates so much. Note that Venezuela is not in the crapper because it is socialist or Communist or some such silliness. It is in the crapper because of the price of oil. If there was such a thing as Satan, oil would be Satan’s blood. I used to work in oil and have grown to hate it.

Comment by San Diego RE Bear
2017-07-07 06:25:29

One of the issues in my town is that about 70% of the population that works here does not live here. Property taxes and income taxes are less in other states and I live 15 minutes from MO, OK, and AR. I just bought a car in MO, but paid the sales tax in KS (which I prefer even though it’s more. I want my money to stay in my community.) But of course, every time I go shopping in MO my sales tax dollars stay there. (My town is too small to have much shopping choices, so I often have to leave town and it’s a choice of 35 minutes to MO or 2+ hours to Kansas City. However, lots of people go to MO to do grocery and other shopping because of lower taxes, even if they live in town.

We’re almost 10% on everything. This is extremely regressive and we have a huge poverty problem in my corner of the state. I do not think the high sales tax is doing anything to relieve that. But the cities have little choice when the state can’t pay for education, etc. We already have schools closing early each year and teachers fleeing because of low pay and horrible conditions. I really like it here, but if I had children I might not feel the same way.

Most people don’t have a choice to go to another state to shop, but I do think the high sales tax is a reason people here do so.

Comment by rms
2017-07-07 07:31:48

“How do people feel about high sales taxes?”

Fuel taxes are generally spent on roadway improvements and repairs, but sales taxes seem to end up in the “general fund” where they’re frittered away on the poor without any expectations other than a vote.

Comment by scdave
2017-07-06 15:53:16

Nice. That sounds pretty dam affordable as compared to San Diego. Hope you are doing well. The 21st ?? I will be on the coast in southern Oregon…Sorry. ☹️

How far are you from Kansas City Royals baseball stadium ?

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Comment by San Diego RE Bear
2017-07-06 16:18:34

I’m about 2.5 hours from the center of KC. Sorry, no idea where the stadium is. There’s a team in Kansas?

Except for seeing people, I would rather be in Oregon. Even San Diego is too warm for me in the summer.

Hopefully, Ben will have another meet-up soon. Seems about time for another crash, so it would feel familiar.

I’m just looking forward to a day of talking about economics, because I don’t do that much here.

Comment by rms
2017-07-06 18:10:29

“I’m just looking forward to a day of talking about economics, because I don’t do that much here.”

Conversation Topics in Kansas:

1. The Weather

2. Darned Hoosiers

3. Where’s Toto?

Comment by San Diego RE Bear
2017-07-07 06:27:57

The weather. I never used to follow weather until I moved here. (OK, in San Diego little reason too. It’s gonna be sunny and warm or sunny and hot.) But here I have two apps I check daily, and I made sure I bought a house with a basement since Joplin happened 7 months after I moved here. However, other than hot and humid, I love weather. Rain, snow, (not ice), etc. Ever changing here. :D

Comment by oxide
2017-07-06 16:11:21

Wow, going Oil City-ish. Good for you. Oil City towns are excellent places for above-average incomes. If I had different talents and education, I would thing about working as something not too demanding, like insurance agent or a half-time lawyer, in an Oil City type town.

When I lived in the Midwest, I made a good income, my bosses made even better incomes of $150K+. The town had quite a few neighborhoods within a 10-minute drive from the office, where modest houses could be had for under $125K, easily. These guys could have lived there and done very well, but oh no, they were just too darn good for that. Instead, most of them opted for the fancy car and the newer cheaply built small mansions on the outskirts of town.

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Comment by San Diego RE Bear
2017-07-06 16:22:18

Actually, I’m in a former mining town, now a University town. It’s in the lush, green, too much dang mowing part of KS. Incomes are definitely not good in this town, and recent governmental trickle down theories failed hugely. So high property taxes, very high sales tax (on everything even food) and low income taxes to the 1%, especially the ones with names that sound like coke. :D So I doubt this would be a town you would go for, but it is a really nice place to live and I really do love my little 1300 sq ft cottage.

Comment by Hi-Z
2017-07-07 12:20:27

Florida has NO income tax and does just fine. State Sales tax is 6%, with up to 1% optionally added at county level.

Comment by Ben Jones
2017-07-06 10:17:36

‘while Chinese investors were buying a lot of international real estate, ‘over-excited locals’ bought into the narrative way too much. ‘Countries that are nice, but not global leaders got way too excited that they were the next ‘New York.’

And NYC is in the crapper. As you’ll see tomorrow, prices are headed down in New Zealand, have been for a while in Australia, Malaysia and India. Africa/Arab states are a disaster.

Comment by Sean
2017-07-06 10:24:30

In other words “Its not the Chinese fault, it’s the locals fault for buying a place where they live.”

Comment by Rentor
2017-07-06 13:09:28

It’s the fault of central governments to allow a Chinese housing bubble to occur in their country.

Comment by Rentor
2017-07-06 13:06:52

Do you have graphs which show Indian house prices in dollars because the Indian Rupee has been in decline for years?

Comment by Professor Bear
2017-07-06 23:32:05

At what point will the march to affordable home prices finally reach coastal California?

Comment by aNYCdj
2017-07-06 10:39:38

I Am a Millennial Who Just Went to Kmart for the First Time Ever and Couldn’t Believe This Place


Comment by oxide
2017-07-07 06:11:47

Good thing that Millenial woman didn’t try to buy anything. Kmart have so many coupons and rewards (at least they did last time I was in one) that it takes forever to check out. Kmart can’t seem to figure out that offering sales and coupons and rewards makes them especially vulnerable to immigrant buyers who use coupons and rewards as an opening to wear down the cashiers with haggling.

KMart wasn’t always like this. I used to go to a Kmart 20 years ago and they were pretty nice, they even had a diner/cafeteria that was popular with the grayhairs. Now the place is just bad vibes all around.

Comment by In Colorado
2017-07-07 07:47:42

The one in our little burg looks better, but the handwriting is on the wall. Kmart and Sears will be joining Montgomery Ward in Yesterland soon enough.

Comment by Carl Morris
2017-07-07 10:18:26

Now the place is just bad vibes all around.

In rural areas it seems like Walmart is fine, but here in San Jose there are bad vibe issues with Walmart too, the decay just isn’t as advanced. I used to always wonder why city people were so prejudiced toward Target and away from Walmart but now I see. They are definitely targeting different demographics here.

Comment by Taxpayers
2017-07-06 13:23:22

IL going bk and zillow calls chighetto up 3%

Comment by palmetto
2017-07-06 14:00:16

what a friggin’ joke. PB called it zilldo the other day, priceless.

Comment by palmetto
2017-07-06 13:59:03

Shout-out to jeff. I know it sux right now, but please don’t lose it, buddy. There’s people who care about you. Stay steady, bro’.

Comment by Apartment 401
2017-07-06 15:45:30

What’s going on with phony?

Comment by palmetto
2017-07-06 16:22:13

It’s in the thread before this one. He said he lost his 23 year old daughter a week ago Tuesday. I don’t know any more than that, but you’ll see in the posts. It’s affecting him pretty badly.

Comment by Tarara Boomdea
2017-07-06 18:43:35

I have a daughter close to that age. I can’t even imagine. My heart goes out to you, Jeff.

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Comment by jane
2017-07-06 18:55:30

To Jeff/ phony scandals - May the wind be at your back until you are back on course. Losing a child is the very worst thing that can ever happen to a parent. My heart goes out to you.
Best, Jane

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Comment by Lurker
2017-07-06 17:33:10

Didn’t get a chance to post yesterday - my condolences for your profound loss.

Comment by palmetto
2017-07-06 14:04:20

Anything on the Mexican housing market? It’s sort of interesting, we see stuff on the US, of course, and Canada, Western Europe, Africa, Saudi and UAE, China and a bunch of Asian countries, India, Malaysia, Australia, NZ. But not so much south of the border, although I think I recall some stuff on Colombia and Brazil.

Comment by Raymond K Hessel
2017-07-06 17:35:19

I don’t know about the Mexican housing market, but violence there - most of it in the border states - is hitting all-time highs.


Comment by frankie
2017-07-06 14:07:29

While perusing this most excellent blog the following advertisement popped up

Invest in Liverpool Apartments - 15% discount - ends soon
3 iconic residential towers looking over the city & river. 6.5% NET p.a. assured

forgive me if I don’t click on the link or agree with them that 6.5 net is assured, it isn’t and they are being economic with the actuality. Desperate times if they are reliant on the readers of this blog to invest in housing.

Comment by Jingle Male
2017-07-06 14:53:56

LOL, yes and in England of all places….bubble market, though the currency is down.

Comment by butters
2017-07-06 19:27:06

Anytown USA…bubble market, currency is/will be down.

Comment by Raymond K Hessel
Comment by Raymond K Hessel
2017-07-06 18:28:17

The genius “investors” who snapped up German and Japanese bonds at negative yields must be drinking heavily right about now.


Comment by butters
2017-07-06 19:22:51

Freaking eye opening!

Is this China or Midwest?


Comment by Blue Skye
2017-07-07 05:07:14

Miles of open land and “million dollar houses” with just a few feet between them.

Comment by oxide
2017-07-07 08:44:56

I agree Blue. That would have been ugly even if they had finished it. And… these were supposed to be vacation homes? In the middle of Missouri? I didn’t see a lake over a river or a beach or ski resort of any kind. What kind of vacation are people taking?

Comment by George M
2017-07-06 19:41:28

“The borrowing and spending binge by Canadian households, businesses and governments (all levels) continues unabated. Growing the debt in the economy significantly faster than the economy itself grows seems to have developed into a way of life in Canada.”

Canadian total (household, business, and all levels of government) debt numbers as of the end of March, 2017


Comment by Raymond K Hessel
2017-07-06 19:54:14

But…but…our Keynesian central planners and central bankers assured us that debt-fueled “growth” was the key to permanent prosperity!


Comment by Raymond K Hessel
2017-07-07 06:05:09

10-year bond yields in the PIIGS are starting to surge. If this keeps up, the ECB can-kicking is going to quickly run out of road.


Comment by rms
2017-07-07 07:49:08

The Germans (remember the camps) will cover the shortfall.

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