Not a good outlook for Canadian Real Estate at least until the end of this decade if not longer. Massive liquidity has flooded the monetary system and runaway Inflation has been entrenched in the Country's Economy until at least the end of this decade. Assets Prices are in Bubble territory, all across the country with clear signs of bursting (CRASH) The fate of Canadian Real Estate will be decided in the coming months with the Unstable, Dark, Cold Freezing Europe, and its "Growing Energy Crisis". Interest rates have to go much much Higher (teen's double digits) to control the runaway inflation. In fact, another "Paul Volker" will be needed to bring the runaway inflation under control and like in the 1980s build a sound economy from the ground up. A new Bank governor (Paul Volker) is needed to act like a "National Hero" to save the Canadian dollar, get rid of the bubble-based economy by raising the rates, and to stop flooding the system with liquidities in the forms of collateral debt/ money printing/quantitative easing/digital cash, etc. Until then, the Inflation SAGA will continue forever.
The core BOC rate is going to 4% min. And prices have hardly reacted to the new environment. This is a overall inflation issue, and rents going up as a result of people holding their properties is a big problem that the BOC will have to deal with. It's a big part of CPI and rates will keep going up to counteract rent inflation. The 0.75% happened and next will be 0.5% in Oct. We will probably see a bull trap this fall, but I see a much bigger drop coming afterward. So keep holding those properties! You'll be down 20% more before you know it. I'd say min, prices need to drop below 2020 prices into the 2018/19 levels. Don't buy a house, don't buy a car. Especially an EV. The prices have been jumping up rationally for EVs.
I think this is the correct take. If any asset going up 20%+ per annum this long isn't 'irrational exuberance' I can't imagine what is. It has to correct at some point. When it was mainly just securities and real estate going up everybody was happy. But energy, transportaiton, basic staples? No way, has to be done now.
Steve just doesn't get it. price stability is the backbone of economy (not RE), central banks wouldnt care if half of the people lost their jobs or default on mortgages if the inflation is not controlled.
investor demand is close to zero, repeated buyers got no new built to move to. first time buyers are those who just got off plane. locals are holding off. that is how the demand will look like. listings may not be high either, although stressed/over levered investors may release a few.
Depends on your financial situation. As a young person I would not be Focused on outlaying more capital to pay down debt that is still cheap on a relative basis
Yeah I has a surplus of about $500 per month. In the UK they have interest-only mortgages, so you can just get cashflow and grow equity if house price increases. Right now I'm happy to just pay the interest.
Toronto Dominion Bank just released its report, according to TD, Canadian Real Estate is going down and going on a very steep slope. TD predicts 20% to 25% drop, it is a very conservative estimate though. Canadian Real Estate is on the bubble and the bubble is about to burst. Affordability & runaway Inflation are two major concerns and both are nowhere near targets. High costs of living are the major drag for real estate in Canada. The Home prices must go down and go down significantly at least 70% - 80% if not the High Costs of living will never go back down and inflation will paralyze the entire monetary system. Real estate investors & homeowners with huge mortgages in Canada are TRAPPED in the real estate bubble. These coming winter months will be crucial months to predict and forecast the fate of real estate in the mid-term. Runaway Inflation will be with us for at least a decade if not longer. Some real estate investors are shortsighted and think the current situation is temporary and transitory, and like the 2008 financial crisis and 2020 pandemic, everything will go back to normal soon, it is NOT! The difference this time is the Global Geopolitical Crisis, with Russia and China stirring the crisis all over the world, leading to global uncertainty and rising inflation. Investors & speculators must make up their minds in the coming months, those days of flipping houses, and making fast & easy profits are gone for good, and won't come around for at least our lifetime again.
At least higher interest rates have fixed the housing crisis otherwise sales would have never slowed down if the demand was real and not just opportunistic because money was free.
@@rh3108 5 rate hikes in a single year… things can change for the worse in 12-18 months Current mortgage Prime Rate 4.7% Current Average Auto Financing Rate 6% Current Stress Test Rate 6.54% Current Average Business loan rate 6%
@@Relaxlifeisshort2 5 rate hikes in a single year. This is a huge mistake Current mortgage Prime Rate 4.7% Current Average Auto Financing Rate 6% Current Stress Test Rate 6.54% Current Average Business loan rate 6%
The era of low interest rates was predicted to be the end of 2021, from here on the BOC rates will rise to atleast 5% by 2023. Unfortunatley, rates will continue to rise for the remainder of this decade.
I think you may be right with regards to it taking them 10 years or so to get rates high enough to break inflation. I expect the election cycle may disrupt rate increases but within 6 months to a year after elections should continue the cycle upwards. If they are serious and independent of political influence then we may get rates to a high enough level sooner.
@@mt8474 I wish I was wrong, but I study patterns in economic and social structures, and this is the trend we are on. It will be 2032 when we will bo on board a new train.
@@goldentiger1841many demographic books were written in the 1980/1990 that predicted by 2025 we would have riots over government debt, taxation, and unemployment if they continued on course. Many solutions were given for Canada and Europe to avoid a Japanese style collapse with the main difference being Japan had always been a Nation of savers despite government fiscal mismanagement as we still had 40 years to prepare. Instead we created Corporate Socialism.
Far higher(+1%) rates coming far sooner by Q4..... and persisting far longer(2023/24) than most all are currently forecasting. IMO, nobody is accurately factoring in the currency debasement "based" COVID liquidity injections globally.... that are now a substantial driver to current appreciated asset bubble valuations ? Central Banks have NO choice but to act as aggressively as possible with rates.... the alternatives being far worse ?
The alternative is far worse? Has anyone done a study on this to point out what exactly is meant by "far worse"? If people start losing homes soon, I don't think there is much worse than that. But more importantly, builders won't be building for less money, that is for sure. Wages aren't going down, which means the cost of labor is still high, price of land is not going down, not on the mainland at least. The price of gas is up, and the price of the material is up and not going down significantly with the imports from china going down. I don't see how the deficiency in housing inventory will fill up, except if people start moving out of major cities, which is a real possibility. That is the only way prices decrease in real estate in these major cities.
@@jupitereye4322 There is always a base for support under any froth.... but unfortunately it is far further lower in relative terms for Real Estate in many markets(GTA/Fraser), all things being 'relative' during any asset valuation correction..... than many as yet are NOT envisioning under the still prevalent and crippling 'Normalcy Bias". While ALL inflation has a currency debasement criterion intrinsic as things cost more..... the 'far worse' scenario unfolding and data supported suggests after 14+ years post the 2008 F/C of ultra accommodative policies/deficits then followed by unprecedented fiscal expansion during COVID.... that the current cpi inflation is indeed very firmly rooted within currency debasement "BASED" Debt Instrument expansion. One needn't look any further than percentages of GDP being conducted within Debt Instruments to "see" the oncoming runaway debasement issue from repo markets to the inverse proportionality of Bonds and everything in between ? A Real Estate CRASH...... call it what it is.... with Insurer involvement and the resultant Financial stresses..... is a moot point if a full blown depression devoid of fiscal/monetary solution is avoided by swift and brutal Rate increases to defend currency valuations. Capeche ? If you wish to work and Pay Bills ? you may need to adjust.... move or relocate accordingly.
@@Observer168 Nothing happened in Canada in 2008. The USA had a mess, but they allowed zero down payment mortgages, and no background credit check... here it's very different.
@@Observer168 You may wish to re-examine current macro environment Vrs the socio-economic fundamentals now unfolding Globally for any comparative analysis to 2008 ? IMO, we are already systemically FAR more precarious ?
Around 33:35 to 34:01… John, it is ok to compare negative points to random dates, like comparing the peek of the market to today to make a sensationalized point and possibly supporting your feelings. At least your numbers are factual, true and well negative. However, you still must be truthful. Even with all the price drops from March to now, there has not been one month that the overall GTA average price dropped below last year's average price. So disparaging other honest and factually correct realtors in your industry is a trait that should be reserved for situations where you are right. This time you are factually wrong. Please check the TRREB stats for the Year over Year prices in the GTA market. Each month both collectively and separately recorded average prices over last year. While the increase got smaller each month, they were increases non the less. From March to August respectively average prices were up 18.5, 15, 9.4, 5.3, 1.2, & 0.9% over last year. Oh, and by the way with 40%+ less activity, no Agents are celebrating. Agents' incomes are more negatively affected by a 40% drop in activity than a 20%-30% drop in prices. And to have both at the same time is certainly not celebratory. With the reach that you have, you should be more reserved in your opinion of other agents, especially when you are wrong about them. Please learn to be more reserved with your answers when it comes to attacking your fellow Agents. Agents that are actually following the facts and not sensationalizing the market because they are emotionally attached or just simply looking for click-bate. John, you should apologize.
Jesus does this host ever go on long-winded commentary, bring back Bains. Interesting though a house in the burbs was $230k back in early 80s. My uncle paid $87k for his similar looking house in the late 80s. Quite the bear market.
![Megan Thee Stallion - Roc Steady (feat. Flo Milli) [Official Video]](http://i.ytimg.com/vi/HozPPyqW0dY/mqdefault.jpg)
Stress test at 8% will be interesting to see how this plays out.
Don't worry once tye lay offs kick in you will see the inventory spike.
Say it with me: dead cat bounce. 🐈 ☠️
Never....
Not a good outlook for Canadian Real Estate at least until the end of this decade if not longer.
Massive liquidity has flooded the monetary system and runaway Inflation has been entrenched in the Country's Economy until at least the end of this decade.
Assets Prices are in Bubble territory, all across the country with clear signs of bursting (CRASH)
The fate of Canadian Real Estate will be decided in the coming months with the Unstable, Dark, Cold Freezing Europe, and its "Growing Energy Crisis".
Interest rates have to go much much Higher (teen's double digits) to control the runaway inflation.
In fact, another "Paul Volker" will be needed to bring the runaway inflation under control and like in the 1980s build a sound economy from the ground up.
A new Bank governor (Paul Volker) is needed to act like a "National Hero" to save the Canadian dollar, get rid of the bubble-based economy by raising the rates, and to stop flooding the system with liquidities in the forms of collateral debt/ money printing/quantitative easing/digital cash, etc.
Until then, the Inflation SAGA will continue forever.
Overseas competitors like China can lower their rates, borrow there, and buy here.
The core BOC rate is going to 4% min. And prices have hardly reacted to the new environment. This is a overall inflation issue, and rents going up as a result of people holding their properties is a big problem that the BOC will have to deal with. It's a big part of CPI and rates will keep going up to counteract rent inflation. The 0.75% happened and next will be 0.5% in Oct.
We will probably see a bull trap this fall, but I see a much bigger drop coming afterward. So keep holding those properties! You'll be down 20% more before you know it. I'd say min, prices need to drop below 2020 prices into the 2018/19 levels.
Don't buy a house, don't buy a car. Especially an EV. The prices have been jumping up rationally for EVs.
I think this is the correct take. If any asset going up 20%+ per annum this long isn't 'irrational exuberance' I can't imagine what is. It has to correct at some point.
When it was mainly just securities and real estate going up everybody was happy. But energy, transportaiton, basic staples? No way, has to be done now.
I've never seen John Pasalis and Rich Dias in the same room together, just saying.
They don't like each other.
Steve were getting murdered by these rates we need the relief you promised!
Relief doesn’t come until the economy hits crisis level. More millionaires are made after a recession than any other time.
@@Observer168 thanks Warren
The focus is mostly on the North American environment but no other external sources that can affect real estate.
Steve just doesn't get it. price stability is the backbone of economy (not
RE), central banks wouldnt care if half of the people lost their jobs or default on mortgages if the inflation is not controlled.
@19:42 "covid related impacts"?
You mean 'lockdown related'?
Millions under lock down in China. Tons of factories are shut down.
Couple more rate hikes and we're going to see plenty of inventory hit the market the next 6 months
investor demand is close to zero, repeated buyers got no new built to move to. first time buyers are those who just got off plane. locals are holding off. that is how the demand will look like. listings may not be high either, although stressed/over levered investors may release a few.
Would you guys pay extra on your variable right now or keep paying the lowest amount possible (I have 4 years left on term).
Depends on your financial situation. As a young person I would not be Focused on outlaying more capital to pay down debt that is still cheap on a relative basis
Im in the same boat, I have increased to accl/ bi-weekly and planning on a lump sum payment soon. but I wouldn't stretch to pay down more.
Yeah I has a surplus of about $500 per month. In the UK they have interest-only mortgages, so you can just get cashflow and grow equity if house price increases. Right now I'm happy to just pay the interest.
Toronto Dominion Bank just released its report, according to TD, Canadian Real Estate is going down and going on a very steep slope. TD predicts 20% to 25% drop, it is a very conservative estimate though.
Canadian Real Estate is on the bubble and the bubble is about to burst.
Affordability & runaway Inflation are two major concerns and both are nowhere near targets.
High costs of living are the major drag for real estate in Canada.
The Home prices must go down and go down significantly at least 70% - 80% if not the High Costs of living will never go back down and inflation will paralyze the entire monetary system.
Real estate investors & homeowners with huge mortgages in Canada are TRAPPED in the real estate bubble.
These coming winter months will be crucial months to predict and forecast the fate of real estate in the mid-term.
Runaway Inflation will be with us for at least a decade if not longer.
Some real estate investors are shortsighted and think the current situation is temporary and transitory, and like the 2008 financial crisis and 2020 pandemic, everything will go back to normal soon, it is NOT!
The difference this time is the Global Geopolitical Crisis, with Russia and China stirring the crisis all over the world, leading to global uncertainty and rising inflation.
Investors & speculators must make up their minds in the coming months, those days of flipping houses, and making fast & easy profits are gone for good, and won't come around for at least our lifetime again.
70-80% down? Okay there, Nostradamus.
At least higher interest rates have fixed the housing crisis otherwise sales would have never slowed down if the demand was real and not just opportunistic because money was free.
Another hike is coming in October 75bps or 100bps
Sure, let’s not forget the businesses that borrowed large amounts of money to expand during the pandemic. Get ready for massive layoffs.
@@Observer168 you should really get educated.
Mass layoffs ok sure
Some hurt and SOME layoffs sure
Not massive layoffs.
@@Observer168 "massive layoffs" from the lowest unemployment rate in history? Not too bad I guess.
@@rh3108 5 rate hikes in a single year… things can change for the worse in 12-18 months
Current mortgage Prime Rate 4.7%
Current Average Auto Financing Rate 6%
Current Stress Test Rate 6.54%
Current Average Business loan rate 6%
@@Relaxlifeisshort2 5 rate hikes in a single year. This is a huge mistake
Current mortgage Prime Rate 4.7%
Current Average Auto Financing Rate 6%
Current Stress Test Rate 6.54%
Current Average Business loan rate 6%
The era of low interest rates was predicted to be the end of 2021, from here on the BOC rates will rise to atleast 5% by 2023. Unfortunatley, rates will continue to rise for the remainder of this decade.
Lol funny guy
Not 5%. Closer to 3.75-4
I think you may be right with regards to it taking them 10 years or so to get rates high enough to break inflation. I expect the election cycle may disrupt rate increases but within 6 months to a year after elections should continue the cycle upwards. If they are serious and independent of political influence then we may get rates to a high enough level sooner.
@@mt8474 I wish I was wrong, but I study patterns in economic and social structures, and this is the trend we are on. It will be 2032 when we will bo on board a new train.
@@goldentiger1841many demographic books were written in the 1980/1990 that predicted by 2025 we would have riots over government debt, taxation, and unemployment if they continued on course. Many solutions were given for Canada and Europe to avoid a Japanese style collapse with the main difference being Japan had always been a Nation of savers despite government fiscal mismanagement as we still had 40 years to prepare. Instead we created Corporate Socialism.
The only stable housing there is, is when you can afford to own.
Far higher(+1%) rates coming far sooner by Q4..... and persisting far longer(2023/24) than most all are currently forecasting.
IMO, nobody is accurately factoring in the currency debasement "based" COVID liquidity injections globally.... that are now a substantial driver to current appreciated asset bubble valuations ? Central Banks have NO choice but to act as aggressively as possible with rates.... the alternatives being far worse ?
The alternative is far worse? Has anyone done a study on this to point out what exactly is meant by "far worse"? If people start losing homes soon, I don't think there is much worse than that. But more importantly, builders won't be building for less money, that is for sure. Wages aren't going down, which means the cost of labor is still high, price of land is not going down, not on the mainland at least. The price of gas is up, and the price of the material is up and not going down significantly with the imports from china going down. I don't see how the deficiency in housing inventory will fill up, except if people start moving out of major cities, which is a real possibility. That is the only way prices decrease in real estate in these major cities.
Millions losing jobs and hundreds of those ending up homeless is far worse. You forgot 2008?
@@jupitereye4322
There is always a base for support under any froth.... but unfortunately it is far further lower in relative terms for Real Estate in many markets(GTA/Fraser), all things being 'relative' during any asset valuation correction..... than many as yet are NOT envisioning under the still prevalent and crippling 'Normalcy Bias".
While ALL inflation has a currency debasement criterion intrinsic as things cost more..... the 'far worse' scenario unfolding and data supported suggests after 14+ years post the 2008 F/C of ultra accommodative policies/deficits then followed by unprecedented fiscal expansion during COVID.... that the current cpi inflation is indeed very firmly rooted within currency debasement "BASED" Debt Instrument expansion. One needn't look any further than percentages of GDP being conducted within Debt Instruments to "see" the oncoming runaway debasement issue from repo markets to the inverse proportionality of Bonds and everything in between ?
A Real Estate CRASH...... call it what it is.... with Insurer involvement and the resultant Financial stresses..... is a moot point if a full blown depression devoid of fiscal/monetary solution is avoided by swift and brutal Rate increases to defend currency valuations. Capeche ?
If you wish to work and Pay Bills ? you may need to adjust.... move or relocate accordingly.
@@Observer168 Nothing happened in Canada in 2008. The USA had a mess, but they allowed zero down payment mortgages, and no background credit check... here it's very different.
@@Observer168
You may wish to re-examine current macro environment Vrs the socio-economic fundamentals now unfolding Globally for any comparative analysis to 2008 ?
IMO, we are already systemically FAR more precarious ?
Around 33:35 to 34:01…
John, it is ok to compare negative points to random dates, like comparing the peek of the market to today to make a sensationalized point and possibly supporting your feelings. At least your numbers are factual, true and well negative. However, you still must be truthful. Even with all the price drops from March to now, there has not been one month that the overall GTA average price dropped below last year's average price. So disparaging other honest and factually correct realtors in your industry is a trait that should be reserved for situations where you are right.
This time you are factually wrong. Please check the TRREB stats for the Year over Year prices in the GTA market. Each month both collectively and separately recorded average prices over last year. While the increase got smaller each month, they were increases non the less. From March to August respectively average prices were up 18.5, 15, 9.4, 5.3, 1.2, & 0.9% over last year.
Oh, and by the way with 40%+ less activity, no Agents are celebrating. Agents' incomes are more negatively affected by a 40% drop in activity than a 20%-30% drop in prices. And to have both at the same time is certainly not celebratory. With the reach that you have, you should be more reserved in your opinion of other agents, especially when you are wrong about them. Please learn to be more reserved with your answers when it comes to attacking your fellow Agents. Agents that are actually following the facts and not sensationalizing the market because they are emotionally attached or just simply looking for click-bate. John, you should apologize.
Jesus does this host ever go on long-winded commentary, bring back Bains. Interesting though a house in the burbs was $230k back in early 80s. My uncle paid $87k for his similar looking house in the late 80s. Quite the bear market.
I have 2 houses and 2 condos under 900 k mortgage in GTA area I work extra and pay extra payment. also 10 months mortgage put aside for emergency.
And your point is? That would serve a better purpose to put on your dating app. Rather than RUclips
@Gabriel Sagula not when rental prices are record high. Why sell when someone else is paying your mortgage? High rate? no problem, higher rrent