Refreshing... Finally someone that hit the real driver of the markets -availability of credit I have had discussions with many mortgage & real estate professionals that always point to supply and demand as the only market mover If 100 people bid on the same house, they would say - demand far outstrips supply But if only 1 person can get a mortgage (availability of credit)....
Remove taxpayer guarantees on all mortgage loans banks issue. Watch real estate prices fall to market levels. But more likely we will see debasentnof the currency which once again steals from savers, wage earners and pensioners rather than banksters.
Real estate world has been padding neighborhoods for years ... the low interests rates just made it ten times worse. The whole system needs a shakeup in Canada. Soon only two demographics will be able to afford a decent home, the rich, and the upper middle class. Everyone else will be living in condos or subjected to unreasonable rent.
Great video, people need to hear this. With rampant credit growth, there needs to be growth in jobs and opportunity to pay down the mortgages. Jobs and opportunity are shrinking in Canada, despite what we may be told.
@@charliec.5514 yeah that does happen, RUclipss fault. Just click the notification button off, then click it back on. Then you should be notified from there onward.
Totally agree about the supply of credit. Especially when you have people who refinance to use as down payments on the next property and repeat. Banks make it too easy to leverage up and create more demand than supply could ever satisfy.
Banks don't bare the cost of any default. They have got cronies in govt to ensure the taxpayer pays for all defaults via money printing, fancy schemes to transfer money to banks called stimulus and outright bailouts.
Hey Sharing, you asked for an update on my finances back last June 2020. My net worth has gone up considerably, both in my stocks and my tenant is paying down my mortgage faster than ever. Will get a raise this summer and we are busier than ever at my job. Also made a decent amount on bitcoin, life has never been better. See i told you I would still be around :)
It's funny how people still dont understand what you are saying. I was a housing permabear until I saw what the government was doing by devaluing the CAD (aka pesos) I tell them to just go to the grocery store and compare the food prices from last year.
Mostly it's done by banks making taxpayers insure all sub prime mortgage loans for low premiums well below market rates. That way banks issue mortgages with no fear of ever losing any money when the mortgage defaults. Losses are always offloaded on the taxpayer. So why wouldn't banks issue mortgages and why wouldn't real estate prices run up. It's moral hazard up the wazoo.
But those A-holes at that central bank have been trying to convince us that inflation is at 2%... LOL... Riiiiiiight. But the blame is on the house owners - aka "evil capitalists" causing "runaway housing prices" - just in case people starts to catch on. This is the stuff they need to teach in high school, not macro econ first and second year university.
@@JaBlanche Ultimately prices will crash as the ability to dump the real estate gbling losses of bankers onto the backs of taxpayers is not infinite. Plus it's becoming glaringly obvious that it is a rent seeking scam destroying the productive economy.
@@mth469 I don't think that will happen in premium locations. The hard asset by nature off-sets inflation. Unless people are speculating on a very tight budget, most people will be paying the same mortgage. If there is a problem, housing in metropolis probably won't see too much of a hit. Rent is actually "productive". It provides one with a shelter to live and function comfortably. Try going to work while sleeping on the streets. A bunch of people put in alot of time to build it so the robust structure can slowly be "consumed". If a plumber fixes my pipe, it better last decades. So I certainly cannot tell the plumber that his 2 hours isn't worth 250 just because he left the house after the job is finished.
My worries comes down to if most citizens have no money to put down as downpayment for housings for a prolonged period of time. In addition, the landlord's will have hard time renting out houses too and will soon forced to default mortgage. If and when immigration is allowed and reopened by the time vaccine rolls around. IF WE STILL DON'T HAVE MONEY, THE CHINESE WILL COME OVER AND BUY EVERYTHING (I'm chinese myself, but God damn)
Watch George Gammon; he is a RE guru; and he says he'd never buy properties in Canada and Australia at these prices. It's like purchasing a Ford EcoSport for $1 Mil; good luck reselling that.
What happens when all the home owners that paid 1-2% for papers that allowed them to purchase an 800k town house in Brampton lose their job at Amazon or local gas station?
What makes that hard is that there's so much work available in Vancouver (especially if you're in commercial construction), and BC has some of the best scenery and natural resources in the world.
@@polskiewinnipeg According to a couple of aggregate websites, Winnipeg's average carpenter wage is around $24 per hour. Average for Vancouver is around $29 per hour. All ticketed carpenters I know in the city are making at least $35. The projects we have up north pay out far more than that as well.
Hey, Steve. Thanks, as always, for a great content. I’m always looking forward to Saturday updates. Let me pick your brain on this: I understand the current system, and the governments pumping the money into the system, and forcing new housing loans. I’m looking from the other end of the equation. People taking on these loans and buying houses $1.5M and higher. How are they going to pay down their debt? The local wages have been stagnant for the last god knows how long, and I don’t see them raising anytime soon. So, more people are buying more properties at the higher prices, with same or even lower (considering the current situation) salaries. How should we look at this?
I feel sad that when people congrats me the assets’ price go higher. Though I’m making money, the more painful things the high price delays me from expanding. If assets price drop 30%, I will be all in. Will refinance all my properties use all credits I have to go grab everything I can buy.
Great video Steve. I can't believe that residential mortgage credit is growing faster than it did in 2016! I think the difference is that it's not just BC and Ontario this time, now it's red hot RE markets all across Canada!
Me and the wife have decided to move to Mexico, Canada is way over priced for what you get, its BS how this country is ran into the ground. We are on the 10 year plan.
@@Observer168 lowest bidder wins 98% of the time and its a race to the bottom in Residential builds, and I'm too small for commercial builds. My company is based off of small commercial renos, Residential renos, service calls, or the odd Residential build that is looking for it done right, not done cheap. I'm currently in my 1st year of a carpentry ticket, but by the time I'm 39 ish ill have my electrical RSE, FSRB, Solar endorsement and carpentry red seal. From there I'll build small, quality builds, do home inspections (ridiculous amount of money in that joke job), retire early in Mexico with a house I build, and try not to die too early or too late lol.
@@donm2067 I am also a contractor and yes sometimes it gets competitive but everyone has a threshold in which they say no and walk away. Most contractors I know are still doing very well and you should be doing pretty good yourself. Maybe you haven't been around long enough to meet the really good clients. Just remember to do your best to keep your reputation and you will run into some very good paying clients that will pay for your work. My advice is to stay away from the cheap clients if you can. Your right about home inspectors making crazy amounts of money since they charge about $450 for about 2 hours worth of work.
@@Observer168 I just pig tailed a house for a couple for a real estate deal, the inspector saw aluminum wiring. Great, fantastic, glad you could identify it, it gave me work but they missed the deck that was ready to fall down on the front and rear, bad support, 11/4" nails in the hanger and only one per face (4 total in 1 hanger). They paid 400k for a stock 1974 house interior, nothing done except what I did... in the middle of nowhere. They are mostly 600$ now around our area. I'm 35, and maybe I started too late in my life, but everything costs a fortune now, the realtors are eating everyone's lunch, the shabby contractors run after the crumbs, and were left with the crumbs of the crumbs... Ola Mexico.
@@donm2067 Even in Vancouver the good inspectors only charge around $450 but these guys are doing at least 5 inspections per day so they are making crazy money. It's never too late to start as a contactor or home inspector because there's still tons of money to be made. "Shabby" people always chase after crumbs because it's the "Outstanding" people that make the bread.
What you are saying makes a lot of sense. I'm just surprised by the level of demand for credit. People are willing to take on my debt in the form of a mortgage even during the pandemic. I wonder what is driving that demand, the fear of higher prices? Strange times.
People are aware all nations are desperate to devalue their currencies so are moving into assets. Debt costs almost nothing and gets you more assets. If you already have assets right now the amount of free $ you can leverage off of those assets is unbelievable but (as Steve said) banks won't lend much for business but will lend a lot for housing.
@@saretsky There seems to be a general thought that the BoC and the Feds can taper this credit growth at some point... but are we not well past that now? It appears they need to accelerate the inflation more and more or the system will collapse.
@@rometimed1382 Fair comment. Not sure how this all ends. I like hard assets as insurance, trying to avoid any major damage from the end of all this currency and market manipulation.
All your videos are great, but this was your best in a while Steve. Clear, concise, and to the point. Powerful information for the average person summed up in under 15 minutes.
Really appreciate the way you explained how paying off debt takes money out of the system. Stopped me in my tracks as I was listening. Proceeded to replay that part 3 times. Thanks for that. Had a real "ah-ha" moment today.
@@saretsky You made it very clear. The creation of money with credit is pretty obvious, but the deletion by paying it off isn't. I never thought about it and most people probably haven't either. It really explains why Freeland said she wants to make a plan to force people to spend the money they have been saving recently.
Interests can stay low for a very long time. Interest rates in Canada remained low for almost a decade after 2008 and I see the same thing happening after the pandemic. People waiting for a crash can keep on waiting for a very long time.
Exactly. People may not be wrong on where things leads but often think things happen far quicker than they end up doing. Certainly there are inflationary forces but equally there are deflationary pressures as well, and as always. Its not like those in charge are completely stupid, they have a pretty good idea what they are doing. Plenty of armchair quarterbacks without a clue though. My personal bet is aligned to yours that inflation is slow to increase. Meanwhile as housing takes off we'll need to do a more focused approach to keep the RE market from overheating that is separate from just raising rates. Spiking RE prices causes a lot of issues, better to keep controlled more predictable growth and they'll need to do that far more delicately than with a sledgehammer.
@@RainCity3rd I'm incredibly skeptical they can control real estate price stability and now that real estate is moving into the 30%+ range of the whole economy of Canada they will need to accelerate the price increases of real estate higher and higher. Could you imagine the growth that is going to be needed to propel the markets up higher without massive liquidity injections all time? 20% this last year is the beginning of a melt-up, IMO, where we will see another 30-50% increase in house prices very quickly... then a period of stagnation and an incredible collapse. IMO rates can basically never go up again (barring some miracle). The moment rates go up the Canadian economy is done. With where real estate is now as GDP each 1% increase in rates would wipe 2-3% of GDP off and shrink home prices by 10-15%.
@@rometimed1382 disagree with your premise that they need to keep increasing prices 30 to 50% why? They can also use other policies to help control RE prices besides only using interest rates. If prices go up 50% and then crash 50% we are back to level at today's price. The not recent to buy and those that put the least down are in the most risky positions. That isn't new. If this is in 3 hrs 5 or 10 yrs so what. Just saying oh prices are going to crash without a timeline isn't a useful prediction. And if your prediction is it's going to go up 30 to 50% then really should buy a lot and then sell into the increases and divest out as prices go up...
Canadian housing will never reset to reasonable levels. Strip 90% from current prices and you still have an expensive national market. There are far too many interested power players (feds, real estate corps, offshore investors, banks) that have too much at stake to let that happen. Housing is propped up in Canada, stock market in the States.
After 30 percent gain, as someone who wants to get into detached homes in Toronto, should buyer wait for a year or two until the market is more or less balanced or compete with ten other offers?
@@saretsky I don’t mind waiting as I do have places to live, just not a detached home. Finances are pretty solid so I can still afford and live in it for at least 10 years. But the competition is really scary. I just don’t know if I should pay so much more than someone who bought last year even though I know long term should be good. Really appreciate your insights.
Media is owned by corporations and require advertisement / sponsorship dollars from the same. CBC, though it is taxpayer funded, has to push the narrative of the ruling party which was put in place by the above corporations ironically. The news thus ends up being only what corporations and banks want you to hear. They certainly don't want you to know how they are fleecing the public.
The limit for real estate prices is a function of the mortgage rates and the incomes of purchaser. If we assume peoples incomes will more or less stagnate going forward ( due to the economic effects of the crisis ) , then the primary driver is the mortgage rate. We are already seeing rates under 2%. The next step is to extend the terms. 40 - 50 and 75 yr mortgage terms will be needed to keep the game going.
"Congratulations, it's a boy. Do you want to sign him up for an 85 year mortgage, or will you have him take the premium 75 year mortgage plan instead?"
Here in Toronto, the spread between a condo in the city and a house in the suburbs has never been bigger. Do you think this will go on after the economy opens up?
I like your analogy now and this is the real deal . but when you talk with the yahoo finance ..... all is about market is going high . this was a very good conceptual understanding . I sold my house in last march and will get in when market softens up , thanks for your input
Steve, have you had any exposure to the channel The Money GPS? I think the two of you could give an interesting take on some of the macro aspects going on in Canada.
I think in the end it will all come down to one word confidence. When the world loose confindentence in the Federal Reserve, run for the hills. Confidence is the key.
I think you got some of the theory analysis right, but lacking a few points. Banks are lending however for residential buyers in major Canadian markets you still need to do conventional mortgage with 20% down and banks need to look at your debt ratio. Banks are not just giving out free money without some basis to lend it out. The Vancouver still has strong demand so to paint the picture that it's because of free money sustaining the real estate asset class then it is minsinformed
The intention was not to pump up assets prices but to lubricate the system and inject fuel to engines of the economy. The assets appreciation is only a byproduct as there are only so many “reservoirs” that can take in the credit/ money flow. You can only eat 3 meals a day but you can buy unlimited houses if you have unlimited money. Money flows just like water which goes to places where it can be contained and saved. So whenever central banks print money, it can only flood “shallow surfaced economies “ for a while and the majority of the money would eventually go to “financial reservoirs” which include equities, bonds, commodities and real estate.
This is great content and I appreciate your explanation. I don't understand how this will work in the long run if people's disposable income continues to be squeezed by rent/mortgage payments, yet their income increases incrementally, if at all. Sure, the government can provide more free money to individuals, but at the end of the day, more goods and services need to produced. Otherwise, the standard of living is at risk of decreasing despite the feeling of wealth because of housing prices. What happens when the baby boomers retire? Will they sell their homes to downgrade? Will they transfer their homes to their offspring? Will they sell their other assets to live and support their expenses? I understand what the government is doing and why they chose to prop up the housing market. I understand if they tighten credit, it will cause a huge economic downturn as households are unable to pay their debt obligations. We can't ignore the fact that the economy should not be the housing market. It is only one good out of a basket of goods and services, albeit a typically pricier good relative to others. I am concerned about the economic management of the country.
I agree credit availability leads to asset inflation, however in the long run with income levels to pay those debts not rising in proportion could lead to economic instability right? What are some other factors do you think would keep higher asset values? Why have you become so bullish?
But immigrants are bound by economic constraints such as income they could generate in Canada so in the long run I don’t see how they can sustain such high debt burden.
This is really interesting finally I can understand. Wow it is simply amazing. What was also an eye opener is when you mention that the banks are not lending to Entrepreneur obviously his credit cannot be insured by the Canadian Mortgage and Housing Corporation so they will not land him money.
The banks will loan unlimited amounts on insured (CMHC) mortgages as they have nothing to lose. This leads to the strange situation where if you have an uninsured mortgage and you put down a higher down payment you pay a higher interest rate.
Just curious how commercial real estate prices are doing? Do you see any recent changes? The ability to work from home seems like it SHOULD affect valuations and lease renewals, but... we all know the markets are all just crazy these days.
It's clear the government, globalists, elites and big tech are colluding for the great reset. 50% unemployment is imminent. A credit liquidity crisis will follow.
Interest rates are only one component of the carrying cost of a home. Property taxes and utilities will be increasing faster then wage growth. People need to pay more attention to the financial position of the Municipality they are purchasing in. Remember your property taxes are based on the wealth of your home, not your income.
Very disturbing scene yesterday on my street (Montreal). So I walked down my street just to take some fresh air and I see a bunch of people lining up to visit the ugliest house on the street. Its an 1930 2X 2 bedroom Duplex, No basement, no Parking. There was not even a For Sale sign yet ! and you had all these potential buyers driving Audis and BMWs scrambling to find parking on the street to visit this POS property ! Just by looking at their cars you knew they would never send one night in that property: so obviously all investors. I should have gone in and visit... May be its common in Vancouver/Toronto ut in Montreal its all new and its very disturbing
Update: Now I understand: the price is 349 000$ which is probably the lowest listing price for a Duplex in Montreal. But still the commotion it created is indicative a bubble,
@@simonkurz8603 Lachine: and in the bad part of Lachine I must add. Its as ghetto as it get . I love my neighborhood, but that's the truth MLS® Number: 22049444
Midterms? We don't have midterm elections in Canada, that's a USA thing. We've got our federal election for the house of commons, provincial elections for our provincial parliaments, and municipal elections for city hall. All seats in the house of commons are up for election in the federal election, we don't split it and retain certain seats through the federal general election like the Americans do.
As I can tell, it is really hard to get home mortgage in Canada than many other countries. Maybe an increased supply of credit is a reason behind, but it’s still very well controlled in Canada financial system than many other countries
Great video as always Steve! I think that Canada will try to continue this charade until a catalyst comes that prevents them from doing so. This catalyst will likely be a stock market crash, along with a possible global economic collapse shortly after that. Unfortunately, Canada would not be immune to a slowdown in the global economic system. That being said, they will try to blow up this bubble for as long as they can, but we are already reaching the point where interest rates are essentially as low as they can go. At some point, there won't be anyone else left to borrow more easy money to buy a house. Another possibility is that inflation will increase and the gov't and BoC will have a huge problem if they attempt to raise rates.
not how muni taxation work. If every property doubled in Price and the mini budget was exactly the same, you would not pay double the tax year 2 you would pay exactly the same amount @ half the mill rate. the tax owed on ones property is reverse engineered based on the estimated budget needed and the portion of the value of your property as a portion of the total values of all properties. I'd had my taxes go down while my place went up 15% in value.... because single family and commercial went up more so my portion of the total went down.
Hi Steve, what do you mean when a visa credit is paid off, it's money disappeared out of the circulation disappeared?? Did you mean an account paid off and closed off? I mean I paid all my credit cards but I still have them available. Great POV! The best yet! @9:31
What our economy needs, is productive capacity. It’s all upside down. There should be, mandated incentive, to get small business going, not more welfare. If farmers, R & D, and manufacturers, don’t have the easiest credit of all, we are stupid. Without that, nothing else matters. But you guys know this already. Rant, rant, rant.
I started a small electrical contracting company late last year, I can't get any credit what so ever from anybody, "banks are risk adverse to small business due to covid, were not sure if you'll be around next year to pay off the loan", that's what I was told.
Could be a very very long time. There are examples of places with far more debt that have no issues before of it. Of course too much debt slows down growth as everyone is busy paying interest than consuming. Though that interest does also contribute to the economy just not as much as other products and services do. Also remember Debt allows the economy to grow as it creates money out of thin air. It just front loads that money whereas the payment often years or decades later. If inflation spikes there is a lot of trouble. If inflation is controlled people get used to it and make decisions to slowly reduce overall debt. Money supply constructs and the domestic economy slows. It is certainly not if we are sitting on the edge of a cliff.
It will implode soon as they have no other tool to use since they have already lowered interest rates to near 0. Money printing isn't going to help either because if they keep printing then it will only cause inflation since the value of money would decrease and prices of everything would increase, Money printing decreases our purchasing power, it primarily makes the wealthy better off while destroying lower and middle class folks.
@@mqs9239 Sort of. Except that the vast majority of middle class Canadians own their houses which represents most of their savings so a crash in real estate would be far worse than the slow erosion of their purchasing power. Lowest classes generally dont have savings to erode away. Now to address your first point they certainly have other tools to use though and they will have to use them to keep interest rates low but at the same time cool housing so that it doesn't overheat with these low interest rates. What seems to be happening right now is the low rates and positively for the future turnaround + probably a bit of pent of demand from 2020 that held off has resulted in a big imbalance between supply and demand. It will be interesting to see if this quickly comes back into balance or if price increases lead to fomo to push more and more people to buy in a positive feedback loop. In such a case they will need to cool the market but not with interest rates. Maybe just restrict pumping up liquidity will be enough to push the banks away from being so free with lending. Maybe they will need some other measures. Ironically if you are worried about inflation owning real estate is classically a good hedge. At least as long as you don't have too high a mortgage on it. Let's be honest any changes implemented are going to disproportionately hurt the poor and make the rich richer. The rich have power, the middle class think they are rich or want to be rich and vote for things that are favorable to the rich even often to their own detriment and the poor have little power and don't vote as much. Canada just favors homeowners as the US favors stock owners. Even if we let the RE market crash that's really not great for anyone including renters. Many renters still would not buy if you halved prices.
@@RainCity3rdyou are forgetting something, they don't own their houses , the banks do. The average Canadian pays mortgage and is heavily indebted to the banks.
@@RainCity3rd the last time there was a debt crises like this was 2007 before the housing market crashed. Too much leverage, too much debt, economy greatly wounded, and millions of jobs lost many of which are permanently lost.
@@ootoobin I guess so. 🏡 unless people start living in 🏕 , or start making bed in those empty mall. That’s a shelter too. I will do that if I am single. Save Money.
Kai the thing is, people make these well meaning comments a lot and I tend to agree, right up until the point where you start thinking about the mechanics of it. When you do that, it turns into a horrible idea. Housing is best left to as free a market as possible. Sometimes that’s not so good, but it is the best system we have that suits the most people as possible.
@@ootoobin 1 bed 630 sq ft apt in a 70 year old apt in Vancouver is 1700-2000/month My place has no dishwasher, tiny kitchen, one bathroom, a fridge a bit bigger than a beer fridge and about 60% smaller than my buddy's fridge in the suburbs. I'd say it's basic
Billy Bob Mirango See, here we go. The shelter immediately turns into including location. Of shelter is a right and that includes where the shelter is, how do we decide who lives where?
Steve Saretsky.I would really like to know who these buyers are that are driving the market,demographics included.In my community supply is very tight and the influx of buyers seems to be retired Vancouverites, boomers who have cashed in on their overpriced homes,but who is stepping up and dishing out a million plus for a 80's detached bungalow in the burbs of Van to fill the void left by these boomers selling, more of the same but from other markets outside of SW B.C.? With Van condo sales in a glut if that's even the case anymore I wouldn't think it would be them upgrading to a detached home,doesn't make sense or does it.It's not foreign buyers or is it.Could it partly be first time gen x buyers who previously only rented? Perplexed watching this fast paced merry go round.The narrative around people wanting more space as a result of covid although compelling is incomplete to my thinking.
You can issue all the credit you want, but there must be demand for that to create velocity, according to you I think. We seem to be seeing a lot of demand from local buyers and when immigration is allowed to resume there will be even more demand to own and rent. If this is correct real estate still has a lot of pent up momentum that makes it a good investment. Correct or am I wrong?
You should be aware that huge correction is coming... even crises in one of central banks. Probably they will just call it reset or something but whatever they will call it system will break. All assets will be affected for a short period... Real estate, stocks, gold, bitcoin, everything... after that correction period best assets in that environment will explode. So I would not get in real estate or stocks just right now... not even in gold miners or such.
Logically what will follow next after that system collapse will be governments go after all that real estate assets... which means rising all kind of taxes that are connected with real estate. Somebody will have to pay for that ink. They can't tax physical gold or bitcoin so real estate will be affected the most by new taxes.
@@mth469 Bitcoin can't be banned or confiscated, only way is shot down internet. Few countries tried banning and failed. Quite opposite will happen in future, governments will get in race to buy btc because btc will end up in reserve currency basket.
@@erwian73 It's easy to.ban. 10 year jail sentence for anyone caught holding to trading bitcoin. Criminal record will prevent that person from ever getting a job. 90% of people will stop using it.
@@mth469 I strongly encourage you to inform yourself better now than when BTC goes above 100k which will be in near future. Governments already embraced BTC around the globe. Agencies in USA like FinCEN literally made crypto legal payment system... BTW to get my crpyto i didn't have to send anybody my ID so how can somebody put me in jail even if communist's regime wins on next election? How? BTC is future and as soon people realized that they can get on the train and benefit.
If anyone here complains about Steve's content or his "conflict of interest" as a real estate agent, go check out Owen Bigland channel. No content other than "markets will always go up" and no opposing discourse on comments. Any RE negative comments get deleted immediately. You don't like Steve's content. Don't watch it. You want financial advice? Pay for an advisor. Nobody is forcing you to watch this free channel.
Ben is definitely part of the cast on BNN. Wish Amanda would pose more challenging questions - sounded like a bank infomercial. What we really need is multiple viewpoints. Mainstream media has become a guard dog with no teeth. Keep up the good work Steve!
The only thing I don't agree is the part where you say people are paying their debt. They just don't. I mean, they couldn't before, they can't now either. Bunch of my friends with poor salary are still spending as much, if not more than ever. And look at the amount of people pushing their mortgage payment later.. and I don't think this is all sustainable. For how long can it persist I don't know, because 2008-2009 lasted 11 years so....
Great analysis of the supply of credit and it’s correlation to house prices. Does this apply to all price bands? Or does it just really effect entry level and mid range prices? Again, as always great video Steve
@@saretsky dont we have high unemployment now, 213,000 let go in Jan.. i would think people would be getting nervous and looking to downsize no? would that not make sense..reduce debt?
Ottawa guarantees all these junk loans for banks. The dangers of stuffing govt with those colluding with banksters and those who finish up their career in govt by jumping into a highly paid job waiting for them in the banking sector = CORRUPTION.
Yup... it is what it is..... HOWEVER, markets should be thriving on their own: RE, stock, BTC, coins and stamps, stocks and bonds, rolex watches, etc... It is completely UNHEALTHY for the gov to be the market master and sole reason for a market to thrive or not. The reality is it cannot go on forever. Printing endless money will destroy a currency and create movement of money out of Canada. If RE doesn't matches wages, then this will be a push factor (which we have already seen) relocating new and talented tax payers away from Vancouver and TO and Canada. RE is an overpriced ponzi scheme right now. Better find something else to store value. At the rates we are going, an average SDH in Vancouver in 13 years will be 5M. Wages are not going up and with covid they are going down. I don't think average renters or owners can afford a $5M home in East Van...LOL.I think it is better to look at other asset classes at this point. Last I looked, spot silver is under 35$...... Silver has massive upside I think vs RE.
@@saretsky Steve... it may be all relative but that doesn't mean it is ok or healthy economically. If it is not healthy it must corrected or crash. If you are dismissing the issue (I'm not sure if you are dismissing it), then stating it is all relative is like saying, everybody is doing crack so it's not really a problem because everyone is doing it. Being that it is relative because all countries are printing money doesn't negate the fact that GVRD RE is absurdly overpriced looking at all the logical fundamentals. Also, all countries printing money doesn't negate the fact that other assets are a better buy than GVRD RE (silver, gold, mining royalties/stocks, maybe consumables like Walmart etc). Walmart being that it has weathered every economic storm.
@@saretsky for sure... as I replied... it is what it is. Many people made money in the dot com bubble....until they did not. There comes a time when risk to return as well as other numbers do not make sense on certain investments. When I look at the numbers and I see how much it takes to be in the GVRD RE asset class...no thanks! It is too much exposure to risk and downside. I am certainly not the only one with similar thoughts. Also, you realize by reading dialogue on your channel and others' giving logical counter views is informing and part of the change of systems. take care Steve
Money is created when banks loan out money Since they loan out far more than they have in deposits. So when you pay off your loan, a portion of the money you pay back disappears. Only the net change matters, as in are more loans being set up or is more being paid off.
You can basically shove the Main Street economy off a cliff, but the market economy keeps going. There’s been a bull market in real estate - for decades. Somewhat ironically, the banks have also been in a bull market. So has rail. It’s much bigger than just housing. It’s all dependants on interest rate declines, which will probably continue. But once rates go into the negative, what then?
Canada's fertility rate hit record lows last year, as I predicted. With housing like this, it will fall lower. Immigration has no impact on fertility rate, never has, never will.
It appears like Steve decided to come out and say "hello you fools heading for a cliff" moment today. Bravo sir !! Blame HGTV !! For bankers, this is a collateral value game of survival.....what is high will fall, what is low is in prison. Time will expire as cans can only be kicked so far; all in money is finite and of confidence.
@@saretsky youtube video: "Canada checks all 5 boxes for a forthcoming debt crisis" from Pierre is a surprisingly well laid out argument but sadly his only solution to this crisis is to create jobs.
Refreshing...
Finally someone that hit the real driver of the markets -availability of credit
I have had discussions with many mortgage & real estate professionals that always point to supply and demand as the only market mover
If 100 people bid on the same house, they would say - demand far outstrips supply
But if only 1 person can get a mortgage (availability of credit)....
Remove taxpayer guarantees on all mortgage loans banks issue.
Watch real estate prices fall to market levels.
But more likely we will see debasentnof the currency which once again steals from savers, wage earners and pensioners rather than banksters.
Real estate world has been padding neighborhoods for years ... the low interests rates just made it ten times worse. The whole system needs a shakeup in Canada. Soon only two demographics will be able to afford a decent home, the rich, and the upper middle class. Everyone else will be living in condos or subjected to unreasonable rent.
Great video, people need to hear this. With rampant credit growth, there needs to be growth in jobs and opportunity to pay down the mortgages. Jobs and opportunity are shrinking in Canada, despite what we may be told.
huh? the numbers that came out clearly show job losses... its not some conspiracy...
Wow, just looking that your subscribers have ramped up huge. Well done man, you deserve it. Long haul of good content for years.
So either they continue to keep credit availability high or the housing market prices crash?
I am always looking forward to your insight every week. Keep it coming.
@@charliec.5514 yeah that does happen, RUclipss fault. Just click the notification button off, then click it back on. Then you should be notified from there onward.
Totally agree about the supply of credit. Especially when you have people who refinance to use as down payments on the next property and repeat. Banks make it too easy to leverage up and create more demand than supply could ever satisfy.
Banks don't bare the cost of any default. They have got cronies in govt to ensure the taxpayer pays for all defaults via money printing, fancy schemes to transfer money to banks called stimulus and outright bailouts.
Hey Sharing, you asked for an update on my finances back last June 2020.
My net worth has gone up considerably, both in my stocks and my tenant is paying down my mortgage faster than ever. Will get a raise this summer and we are busier than ever at my job. Also made a decent amount on bitcoin, life has never been better.
See i told you I would still be around :)
It's funny how people still dont understand what you are saying. I was a housing permabear until I saw what the government was doing by devaluing the CAD (aka pesos)
I tell them to just go to the grocery store and compare the food prices from last year.
Mostly it's done by banks making taxpayers insure all sub prime mortgage loans for low premiums well below market rates.
That way banks issue mortgages with no fear of ever losing any money when the mortgage defaults. Losses are always offloaded on the taxpayer.
So why wouldn't banks issue mortgages and why wouldn't real estate prices run up.
It's moral hazard up the wazoo.
But those A-holes at that central bank have been trying to convince us that inflation is at 2%... LOL... Riiiiiiight. But the blame is on the house owners - aka "evil capitalists" causing "runaway housing prices" - just in case people starts to catch on. This is the stuff they need to teach in high school, not macro econ first and second year university.
At least you came to your senses. We still have many perma who still don’t get it.
@@JaBlanche
Ultimately prices will crash as the ability to dump the real estate gbling losses of bankers onto the backs of taxpayers is not infinite.
Plus it's becoming glaringly obvious that it is a rent seeking scam destroying the productive economy.
@@mth469 I don't think that will happen in premium locations. The hard asset by nature off-sets inflation. Unless people are speculating on a very tight budget, most people will be paying the same mortgage. If there is a problem, housing in metropolis probably won't see too much of a hit.
Rent is actually "productive". It provides one with a shelter to live and function comfortably. Try going to work while sleeping on the streets. A bunch of people put in alot of time to build it so the robust structure can slowly be "consumed". If a plumber fixes my pipe, it better last decades. So I certainly cannot tell the plumber that his 2 hours isn't worth 250 just because he left the house after the job is finished.
Gotta love when people proclaim “supply and demand” of housing, but ignore the supply and demand of money.
My worries comes down to if most citizens have no money to put down as downpayment for housings for a prolonged period of time. In addition, the landlord's will have hard time renting out houses too and will soon forced to default mortgage.
If and when immigration is allowed and reopened by the time vaccine rolls around. IF WE STILL DON'T HAVE MONEY, THE CHINESE WILL COME OVER AND BUY EVERYTHING
(I'm chinese myself, but God damn)
I've been following Steve since before it was cool.
Since 2017, every Saturday !!
It feels weird if I don't start my Saturday with him
Thank you for the weekly video. I appreciate it.
Haha me too, I think! Well I believe when I started watching he had 1000 subs. Congrats on the success Steve!
Idek how I found him... but it was like striking gold.
inflation hidden in housing loans and low return equities is a recipe for financial disaster... cash is trash until there is a giant sale
Watch George Gammon; he is a RE guru; and he says he'd never buy properties in Canada and Australia at these prices. It's like purchasing a Ford EcoSport for $1 Mil; good luck reselling that.
What happens when all the home owners that paid 1-2% for papers that allowed them to purchase an 800k town house in Brampton lose their job at Amazon or local gas station?
Sell to another foreigner. Hot potato hot potato. Haha
Leave Vancouver behind, actually, Canada for that matter
What makes that hard is that there's so much work available in Vancouver (especially if you're in commercial construction), and BC has some of the best scenery and natural resources in the world.
@@-Keith- low construction wages, its 10-20% lower then in manitoba
@@polskiewinnipeg According to a couple of aggregate websites, Winnipeg's average carpenter wage is around $24 per hour. Average for Vancouver is around $29 per hour. All ticketed carpenters I know in the city are making at least $35. The projects we have up north pay out far more than that as well.
Hey, Steve. Thanks, as always, for a great content. I’m always looking forward to Saturday updates. Let me pick your brain on this: I understand the current system, and the governments pumping the money into the system, and forcing new housing loans. I’m looking from the other end of the equation. People taking on these loans and buying houses $1.5M and higher. How are they going to pay down their debt? The local wages have been stagnant for the last god knows how long, and I don’t see them raising anytime soon. So, more people are buying more properties at the higher prices, with same or even lower (considering the current situation) salaries. How should we look at this?
I feel sad that when people congrats me the assets’ price go higher. Though I’m making money, the more painful things the high price delays me from expanding. If assets price drop 30%, I will be all in. Will refinance all my properties use all credits I have to go grab everything I can buy.
Great video Steve. I can't believe that residential mortgage credit is growing faster than it did in 2016! I think the difference is that it's not just BC and Ontario this time, now it's red hot RE markets all across Canada!
world
Me and the wife have decided to move to Mexico, Canada is way over priced for what you get, its BS how this country is ran into the ground. We are on the 10 year plan.
Aren’t you a electrician? You should be making tons of money.
@@Observer168 lowest bidder wins 98% of the time and its a race to the bottom in Residential builds, and I'm too small for commercial builds. My company is based off of small commercial renos, Residential renos, service calls, or the odd Residential build that is looking for it done right, not done cheap.
I'm currently in my 1st year of a carpentry ticket, but by the time I'm 39 ish ill have my electrical RSE, FSRB, Solar endorsement and carpentry red seal. From there I'll build small, quality builds, do home inspections (ridiculous amount of money in that joke job), retire early in Mexico with a house I build, and try not to die too early or too late lol.
@@donm2067 I am also a contractor and yes sometimes it gets competitive but everyone has a threshold in which they say no and walk away. Most contractors I know are still doing very well and you should be doing pretty good yourself. Maybe you haven't been around long enough to meet the really good clients. Just remember to do your best to keep your reputation and you will run into some very good paying clients that will pay for your work. My advice is to stay away from the cheap clients if you can. Your right about home inspectors making crazy amounts of money since they charge about $450 for about 2 hours worth of work.
@@Observer168 I just pig tailed a house for a couple for a real estate deal, the inspector saw aluminum wiring. Great, fantastic, glad you could identify it, it gave me work but they missed the deck that was ready to fall down on the front and rear, bad support, 11/4" nails in the hanger and only one per face (4 total in 1 hanger). They paid 400k for a stock 1974 house interior, nothing done except what I did... in the middle of nowhere.
They are mostly 600$ now around our area.
I'm 35, and maybe I started too late in my life, but everything costs a fortune now, the realtors are eating everyone's lunch, the shabby contractors run after the crumbs, and were left with the crumbs of the crumbs...
Ola Mexico.
@@donm2067 Even in Vancouver the good inspectors only charge around $450 but these guys are doing at least 5 inspections per day so they are making crazy money. It's never too late to start as a contactor or home inspector because there's still tons of money to be made. "Shabby" people always chase after crumbs because it's the "Outstanding" people that make the bread.
What you are saying makes a lot of sense. I'm just surprised by the level of demand for credit. People are willing to take on my debt in the form of a mortgage even during the pandemic. I wonder what is driving that demand, the fear of higher prices? Strange times.
People are aware all nations are desperate to devalue their currencies so are moving into assets. Debt costs almost nothing and gets you more assets. If you already have assets right now the amount of free $ you can leverage off of those assets is unbelievable but (as Steve said) banks won't lend much for business but will lend a lot for housing.
@@rometimed1382 I'm not sure people are aware. Only a small percentage of the people I know have any clue about these matters.
@@nickb8002 or they know the common Vancouver phrase "real estate only goes up in value"
@@saretsky There seems to be a general thought that the BoC and the Feds can taper this credit growth at some point... but are we not well past that now? It appears they need to accelerate the inflation more and more or the system will collapse.
@@rometimed1382 Fair comment. Not sure how this all ends. I like hard assets as insurance, trying to avoid any major damage from the end of all this currency and market manipulation.
You hit the hammer on the head here. The price of this policy is populism.
All your videos are great, but this was your best in a while Steve. Clear, concise, and to the point. Powerful information for the average person summed up in under 15 minutes.
Always the truth, such a great channel with a young mind to lead the way! Good work Steve!
So better to sell house or rent it out?
Oh Zimbabwe, Can't wait for negative rates, so excited to use this cheap credit
Really appreciate the way you explained how paying off debt takes money out of the system. Stopped me in my tracks as I was listening. Proceeded to replay that part 3 times. Thanks for that. Had a real "ah-ha" moment today.
@@saretsky You made it very clear. The creation of money with credit is pretty obvious, but the deletion by paying it off isn't. I never thought about it and most people probably haven't either. It really explains why Freeland said she wants to make a plan to force people to spend the money they have been saving recently.
Interests can stay low for a very long time. Interest rates in Canada remained low for almost a decade after 2008 and I see the same thing happening after the pandemic. People waiting for a crash can keep on waiting for a very long time.
Exactly. People may not be wrong on where things leads but often think things happen far quicker than they end up doing. Certainly there are inflationary forces but equally there are deflationary pressures as well, and as always. Its not like those in charge are completely stupid, they have a pretty good idea what they are doing. Plenty of armchair quarterbacks without a clue though. My personal bet is aligned to yours that inflation is slow to increase. Meanwhile as housing takes off we'll need to do a more focused approach to keep the RE market from overheating that is separate from just raising rates. Spiking RE prices causes a lot of issues, better to keep controlled more predictable growth and they'll need to do that far more delicately than with a sledgehammer.
@@RainCity3rd I'm incredibly skeptical they can control real estate price stability and now that real estate is moving into the 30%+ range of the whole economy of Canada they will need to accelerate the price increases of real estate higher and higher.
Could you imagine the growth that is going to be needed to propel the markets up higher without massive liquidity injections all time?
20% this last year is the beginning of a melt-up, IMO, where we will see another 30-50% increase in house prices very quickly... then a period of stagnation and an incredible collapse.
IMO rates can basically never go up again (barring some miracle). The moment rates go up the Canadian economy is done. With where real estate is now as GDP each 1% increase in rates would wipe 2-3% of GDP off and shrink home prices by 10-15%.
@@rometimed1382 disagree with your premise that they need to keep increasing prices 30 to 50% why?
They can also use other policies to help control RE prices besides only using interest rates.
If prices go up 50% and then crash 50% we are back to level at today's price. The not recent to buy and those that put the least down are in the most risky positions. That isn't new. If this is in 3 hrs 5 or 10 yrs so what. Just saying oh prices are going to crash without a timeline isn't a useful prediction. And if your prediction is it's going to go up 30 to 50% then really should buy a lot and then sell into the increases and divest out as prices go up...
Bro! I saw this CIBC guy on the news RUclips channel, and I was like “lmfao is this guy fucking serious?!”
Canadian housing will never reset to reasonable levels. Strip 90% from current prices and you still have an expensive national market. There are far too many interested power players (feds, real estate corps, offshore investors, banks) that have too much at stake to let that happen. Housing is propped up in Canada, stock market in the States.
After 30 percent gain, as someone who wants to get into detached homes in Toronto, should buyer wait for a year or two until the market is more or less balanced or compete with ten other offers?
@@saretsky I don’t mind waiting as I do have places to live, just not a detached home. Finances are pretty solid so I can still afford and live in it for at least 10 years. But the competition is really scary. I just don’t know if I should pay so much more than someone who bought last year even though I know long term should be good. Really appreciate your insights.
Thank you for the video Steve. Why do you think the media is avoiding speaking about this issue?
Media is owned by corporations and require advertisement / sponsorship dollars from the same.
CBC, though it is taxpayer funded, has to push the narrative of the ruling party which was put in place by the above corporations ironically.
The news thus ends up being only what corporations and banks want you to hear.
They certainly don't want you to know how they are fleecing the public.
What’s your opinion on renewing my mortgage fixed or variable?
When does it end?
@Steve Saretsky is this a code for something?
The limit for real estate prices is a function of the mortgage rates and the incomes of purchaser. If we assume peoples incomes will more or less stagnate going forward ( due to the economic effects of the crisis ) , then the primary driver is the mortgage rate. We are already seeing rates under 2%. The next step is to extend the terms. 40 - 50 and 75 yr mortgage terms will be needed to keep the game going.
"Congratulations, it's a boy. Do you want to sign him up for an 85 year mortgage, or will you have him take the premium 75 year mortgage plan instead?"
Here in Toronto, the spread between a condo in the city and a house in the suburbs has never been bigger.
Do you think this will go on after the economy opens up?
Isn't this approach from the BoC also devaluing the Canadian dollar? i.e. accelerating inflation?
Much better content than last week's rant.
I like your analogy now and this is the real deal . but when you talk with the yahoo finance ..... all is about market is going high . this was a very good conceptual understanding . I sold my house in last march and will get in when market softens up , thanks for your input
Agreed, so the question is, where do we go from here? Ignore the spike in housing market and continue to invest in it?
Steve, have you had any exposure to the channel The Money GPS? I think the two of you could give an interesting take on some of the macro aspects going on in Canada.
They should let the market do it's thing, that's the healthiest. Propping things up artificially only makes the inevitable crash worse.
I think in the end it will all come down to one word confidence.
When the world loose confindentence in the Federal Reserve, run for the hills.
Confidence is the key.
The bigger they are the harder they fall.
Another great video-
Thanks for you hard work.
I watch these every weekend. Great work Steve. Liked.
Agreed 100%... i got a preapproval for $X... three months later i reapplied and now the big six bank offerred me $X + $100k... 6x household income...
Which bank is offering a mortgage at 6x income?
I think you got some of the theory analysis right, but lacking a few points. Banks are lending however for residential buyers in major Canadian markets you still need to do conventional mortgage with 20% down and banks need to look at your debt ratio. Banks are not just giving out free money without some basis to lend it out. The Vancouver still has strong demand so to paint the picture that it's because of free money sustaining the real estate asset class then it is minsinformed
The intention was not to pump up assets prices but to lubricate the system and inject fuel to engines of the economy. The assets appreciation is only a byproduct as there are only so many “reservoirs” that can take in the credit/ money flow. You can only eat 3 meals a day but you can buy unlimited houses if you have unlimited money. Money flows just like water which goes to places where it can be contained and saved. So whenever central banks print money, it can only flood “shallow surfaced economies “ for a while and the majority of the money would eventually go to “financial reservoirs” which include equities, bonds, commodities and real estate.
when the DJ (fed) is playing music, just keep dancing (buy stocks/real estate/bitcoin)
This is great content and I appreciate your explanation. I don't understand how this will work in the long run if people's disposable income continues to be squeezed by rent/mortgage payments, yet their income increases incrementally, if at all. Sure, the government can provide more free money to individuals, but at the end of the day, more goods and services need to produced. Otherwise, the standard of living is at risk of decreasing despite the feeling of wealth because of housing prices. What happens when the baby boomers retire? Will they sell their homes to downgrade? Will they transfer their homes to their offspring? Will they sell their other assets to live and support their expenses?
I understand what the government is doing and why they chose to prop up the housing market. I understand if they tighten credit, it will cause a huge economic downturn as households are unable to pay their debt obligations. We can't ignore the fact that the economy should not be the housing market. It is only one good out of a basket of goods and services, albeit a typically pricier good relative to others. I am concerned about the economic management of the country.
Price has risen too high how far this would go?
I agree credit availability leads to asset inflation, however in the long run with income levels to pay those debts not rising in proportion could lead to economic instability right? What are some other factors do you think would keep higher asset values? Why have you become so bullish?
Immigration
But immigrants are bound by economic constraints such as income they could generate in Canada so in the long run I don’t see how they can sustain such high debt burden.
This is the first video I have watched that makes sense what the banks are doing, unfortunately its all about the banks.
Great work Steve. Wow !
This is really interesting finally I can understand. Wow it is simply amazing. What was also an eye opener is when you mention that the banks are not lending to Entrepreneur obviously his credit cannot be insured by the Canadian Mortgage and Housing Corporation so they will not land him money.
Business loans are very very very hard to get right now. Very easy to get mortgages still.
The banks will loan unlimited amounts on insured (CMHC) mortgages as they have nothing to lose. This leads to the strange situation where if you have an uninsured mortgage and you put down a higher down payment you pay a higher interest rate.
Sure but you also don't have to pay several grand in CMHC. You are still better off with 20% down and 20 points higher rate.
Are there resources to become better educated on this subject>?
Just curious how commercial real estate prices are doing? Do you see any recent changes? The ability to work from home seems like it SHOULD affect valuations and lease renewals, but... we all know the markets are all just crazy these days.
They are preparing to pull the rug out at anytime.
@hmm1488 would you mind sharing some of those reasons?
Who's they?
It's clear the government, globalists, elites and big tech are colluding for the great reset. 50% unemployment is imminent. A credit liquidity crisis will follow.
@@jrock2617 100% unemployment
Interest rates are only one component of the carrying cost of a home. Property taxes and utilities will be increasing faster then wage growth. People need to pay more attention to the financial position of the Municipality they are purchasing in. Remember your property taxes are based on the wealth of your home, not your income.
Very disturbing scene yesterday on my street (Montreal). So I walked down my street just to take some fresh air and I see a bunch of people lining up to visit the ugliest house on the street. Its an 1930 2X 2 bedroom Duplex, No basement, no Parking. There was not even a For Sale sign yet ! and you had all these potential buyers driving Audis and BMWs scrambling to find parking on the street to visit this POS property ! Just by looking at their cars you knew they would never send one night in that property: so obviously all investors. I should have gone in and visit...
May be its common in Vancouver/Toronto ut in Montreal its all new and its very disturbing
Update: Now I understand: the price is 349 000$ which is probably the lowest listing price for a Duplex in Montreal. But still the commotion it created is indicative a bubble,
What neighborhood?
@@simonkurz8603 Lachine: and in the bad part of Lachine I must add. Its as ghetto as it get . I love my neighborhood, but that's the truth
MLS® Number: 22049444
Home prices in Southern Ontario and Vancouver are ridiculous. I wonder when is the midterm election?
Midterms? We don't have midterm elections in Canada, that's a USA thing. We've got our federal election for the house of commons, provincial elections for our provincial parliaments, and municipal elections for city hall. All seats in the house of commons are up for election in the federal election, we don't split it and retain certain seats through the federal general election like the Americans do.
@@-Keith- we will have a no confidence vote sooner or later
Thanks for a excellent explanation 👍
As I can tell, it is really hard to get home mortgage in Canada than many other countries. Maybe an increased supply of credit is a reason behind, but it’s still very well controlled in Canada financial system than many other countries
Part of why we didn't have the same issues as the USA in 2008.
The power of fractional reserve banking system. Anyway thank you Steve for the great video.
Thanks, Steve.
Houses in Abbotsford have been bid up 200k over an already high asking price. Thanks for coming out from Vancouver.
Wait, Benjamin says no speculation? I bid full price sight unseen on a property in Abbotsford an hour after listing. Sold over asking.
Chilliwack the same 200k over asking
Great video as always Steve! I think that Canada will try to continue this charade until a catalyst comes that prevents them from doing so. This catalyst will likely be a stock market crash, along with a possible global economic collapse shortly after that. Unfortunately, Canada would not be immune to a slowdown in the global economic system. That being said, they will try to blow up this bubble for as long as they can, but we are already reaching the point where interest rates are essentially as low as they can go. At some point, there won't be anyone else left to borrow more easy money to buy a house. Another possibility is that inflation will increase and the gov't and BoC will have a huge problem if they attempt to raise rates.
My man spitting facts!
Also driving up the municipal homeowner taxation which increases their funding.
not how muni taxation work. If every property doubled in Price and the mini budget was exactly the same, you would not pay double the tax year 2 you would pay exactly the same amount @ half the mill rate. the tax owed on ones property is reverse engineered based on the estimated budget needed and the portion of the value of your property as a portion of the total values of all properties. I'd had my taxes go down while my place went up 15% in value.... because single family and commercial went up more so my portion of the total went down.
Policy makers basically kicked the can down the road. When the time comes look out below!
They don't really have an option.
Hi Steve, what do you mean when a visa credit is paid off, it's money disappeared out of the circulation disappeared?? Did you mean an account paid off and closed off? I mean I paid all my credit cards but I still have them available. Great POV! The best yet! @9:31
What our economy needs, is productive capacity. It’s all upside down. There should be, mandated incentive, to get small business going, not more welfare. If farmers, R & D, and manufacturers, don’t have the easiest credit of all, we are stupid. Without that, nothing else matters.
But you guys know this already.
Rant, rant, rant.
Yes it's the opposite of this. It's much easier to get credit to purchase non-productive assets or to spend on consumption.
I started a small electrical contracting company late last year, I can't get any credit what so ever from anybody, "banks are risk adverse to small business due to covid, were not sure if you'll be around next year to pay off the loan", that's what I was told.
@@donm2067 and fair enough. Would you loan out your own money? I certainly would not.
@@rometimed1382 spending on consumption boots the economy...
@@RainCity3rd i don't have the ability to do fractional reserve banking either.... or be back stopped by the government..
When do you think they will tighten up on the lending? Do you think this pumping of assets will continue into 2022?
When do you see the debt implode? seems everyone is leverage to their eyeballs
Could be a very very long time. There are examples of places with far more debt that have no issues before of it. Of course too much debt slows down growth as everyone is busy paying interest than consuming. Though that interest does also contribute to the economy just not as much as other products and services do. Also remember Debt allows the economy to grow as it creates money out of thin air. It just front loads that money whereas the payment often years or decades later. If inflation spikes there is a lot of trouble. If inflation is controlled people get used to it and make decisions to slowly reduce overall debt. Money supply constructs and the domestic economy slows. It is certainly not if we are sitting on the edge of a cliff.
It will implode soon as they have no other tool to use since they have already lowered interest rates to near 0. Money printing isn't going to help either because if they keep printing then it will only cause inflation since the value of money would decrease and prices of everything would increase, Money printing decreases our purchasing power, it primarily makes the wealthy better off while destroying lower and middle class folks.
@@mqs9239 Sort of. Except that the vast majority of middle class Canadians own their houses which represents most of their savings so a crash in real estate would be far worse than the slow erosion of their purchasing power. Lowest classes generally dont have savings to erode away.
Now to address your first point they certainly have other tools to use though and they will have to use them to keep interest rates low but at the same time cool housing so that it doesn't overheat with these low interest rates. What seems to be happening right now is the low rates and positively for the future turnaround + probably a bit of pent of demand from 2020 that held off has resulted in a big imbalance between supply and demand. It will be interesting to see if this quickly comes back into balance or if price increases lead to fomo to push more and more people to buy in a positive feedback loop. In such a case they will need to cool the market but not with interest rates. Maybe just restrict pumping up liquidity will be enough to push the banks away from being so free with lending. Maybe they will need some other measures.
Ironically if you are worried about inflation owning real estate is classically a good hedge. At least as long as you don't have too high a mortgage on it.
Let's be honest any changes implemented are going to disproportionately hurt the poor and make the rich richer. The rich have power, the middle class think they are rich or want to be rich and vote for things that are favorable to the rich even often to their own detriment and the poor have little power and don't vote as much. Canada just favors homeowners as the US favors stock owners. Even if we let the RE market crash that's really not great for anyone including renters. Many renters still would not buy if you halved prices.
@@RainCity3rdyou are forgetting something, they don't own their houses , the banks do. The average Canadian pays mortgage and is heavily indebted to the banks.
@@RainCity3rd the last time there was a debt crises like this was 2007 before the housing market crashed. Too much leverage, too much debt, economy greatly wounded, and millions of jobs lost many of which are permanently lost.
Banks used to issue credit via Oil companies before switching to real estate! The EROI on oil went from 100:1 to like 15:1
One of our basic need is shelter. How can we fulfill this need if we can’t afford it.
I guess your right. Are we talking basic shelter though?
@@ootoobin I guess so. 🏡 unless people start living in 🏕 , or start making bed in those empty mall. That’s a shelter too. I will do that if I am single. Save Money.
Kai the thing is, people make these well meaning comments a lot and I tend to agree, right up until the point where you start thinking about the mechanics of it. When you do that, it turns into a horrible idea. Housing is best left to as free a market as possible. Sometimes that’s not so good, but it is the best system we have that suits the most people as possible.
@@ootoobin 1 bed 630 sq ft apt in a 70 year old apt in Vancouver is 1700-2000/month
My place has no dishwasher, tiny kitchen, one bathroom, a fridge a bit bigger than a beer fridge and about 60% smaller than my buddy's fridge in the suburbs.
I'd say it's basic
Billy Bob Mirango See, here we go. The shelter immediately turns into including location. Of shelter is a right and that includes where the shelter is, how do we decide who lives where?
Holy crap Steve. Are you allowed to tell the truth?
Steve Saretsky.I would really like to know who these buyers are that are driving the market,demographics included.In my community supply is very tight and the influx of buyers seems to be retired Vancouverites, boomers who have cashed in on their overpriced homes,but who is stepping up and dishing out a million plus for a 80's detached bungalow in the burbs of Van to fill the void left by these boomers selling, more of the same but from other markets outside of SW B.C.? With Van condo sales in a glut if that's even the case anymore I wouldn't think it would be them upgrading to a detached home,doesn't make sense or does it.It's not foreign buyers or is it.Could it partly be first time gen x buyers who previously only rented? Perplexed watching this fast paced merry go round.The narrative around people wanting more space as a result of covid although compelling is incomplete to my thinking.
You can issue all the credit you want, but there must be demand for that to create velocity, according to you I think. We seem to be seeing a lot of demand from local buyers and when immigration is allowed to resume there will be even more demand to own and rent. If this is correct real estate still has a lot of pent up momentum that makes it a good investment. Correct or am I wrong?
@@saretsky Thanks!
Another good one. if the real estate market blows up so does Canada
No just banksters.
The too big to fail lie is destroying the real economy - the one and only too big to fail.
You should be aware that huge correction is coming... even crises in one of central banks. Probably they will just call it reset or something but whatever they will call it system will break. All assets will be affected for a short period... Real estate, stocks, gold, bitcoin, everything... after that correction period best assets in that environment will explode. So I would not get in real estate or stocks just right now... not even in gold miners or such.
Logically what will follow next after that system collapse will be governments go after all that real estate assets... which means rising all kind of taxes that are connected with real estate. Somebody will have to pay for that ink. They can't tax physical gold or bitcoin so real estate will be affected the most by new taxes.
@@erwian73
They can ban Bitcoin holding and trading and similar for gold too.
@@mth469 Bitcoin can't be banned or confiscated, only way is shot down internet. Few countries tried banning and failed. Quite opposite will happen in future, governments will get in race to buy btc because btc will end up in reserve currency basket.
@@erwian73
It's easy to.ban.
10 year jail sentence for anyone caught holding to trading bitcoin. Criminal record will prevent that person from ever getting a job.
90% of people will stop using it.
@@mth469 I strongly encourage you to inform yourself better now than when BTC goes above 100k which will be in near future. Governments already embraced BTC around the globe. Agencies in USA like FinCEN literally made crypto legal payment system... BTW to get my crpyto i didn't have to send anybody my ID so how can somebody put me in jail even if communist's regime wins on next election? How? BTC is future and as soon people realized that they can get on the train and benefit.
If anyone here complains about Steve's content or his "conflict of interest" as a real estate agent, go check out Owen Bigland channel. No content other than "markets will always go up" and no opposing discourse on comments. Any RE negative comments get deleted immediately.
You don't like Steve's content. Don't watch it. You want financial advice? Pay for an advisor. Nobody is forcing you to watch this free channel.
100%% correct. STEVE IHAVE READ THAT THE GOVT IS THINKING ABOUT PRINCIPAL HOME TAX, WHICH ALREADY EXISTS IN THE USA, HOPEFULLY WE CAN IT IN CANADA
Americans can deduct their mortgage payments on their income tax
Ben is definitely part of the cast on BNN. Wish Amanda would pose more challenging questions - sounded like a bank infomercial. What we really need is multiple viewpoints. Mainstream media has become a guard dog with no teeth. Keep up the good work Steve!
The only thing I don't agree is the part where you say people are paying their debt. They just don't. I mean, they couldn't before, they can't now either. Bunch of my friends with poor salary are still spending as much, if not more than ever. And look at the amount of people pushing their mortgage payment later.. and I don't think this is all sustainable. For how long can it persist I don't know, because 2008-2009 lasted 11 years so....
More great content !
Excellent explanation. Love your channel.
Interesting way of looking at this
We know somethings not right
Great analysis of the supply of credit and it’s correlation to house prices. Does this apply to all price bands? Or does it just really effect entry level and mid range prices?
Again, as always great video Steve
what would happen to our society if the home values are way less than the mortgage amount owed?
@@saretsky dont we have high unemployment now, 213,000 let go in Jan.. i would think people would be getting nervous and looking to downsize no? would that not make sense..reduce debt?
"the banks are basically in control of the asset class"
(and Ottawa's in control of the flow of new customers for them to lend to)
Our neighbourhoods are pwned by people who don't know who Pearson airport is named after
But they sure have fancy tastes and a lot of capital they need to park
Ottawa guarantees all these junk loans for banks.
The dangers of stuffing govt with those colluding with banksters and those who finish up their career in govt by jumping into a highly paid job waiting for them in the banking sector = CORRUPTION.
Immigration skyrocketed from 89 onward. It didn't stop a 40% decline in prices.
@@fixitslick then why don’t you tell them?
Only way to have more taxes through the pricing of homes and bigger government. Both are destroying our economy
Yup... it is what it is..... HOWEVER, markets should be thriving on their own: RE, stock, BTC, coins and stamps, stocks and bonds, rolex watches, etc...
It is completely UNHEALTHY for the gov to be the market master and sole reason for a market to thrive or not. The reality is it cannot go on forever. Printing endless money will destroy a currency and create movement of money out of Canada. If RE doesn't matches wages, then this will be a push factor (which we have already seen) relocating new and talented tax payers away from Vancouver and TO and Canada.
RE is an overpriced ponzi scheme right now. Better find something else to store value. At the rates we are going, an average SDH in Vancouver in 13 years will be 5M. Wages are not going up and with covid they are going down. I don't think average renters or owners can afford a $5M home in East Van...LOL.I think it is better to look at other asset classes at this point.
Last I looked, spot silver is under 35$...... Silver has massive upside I think vs RE.
@@saretsky
Steve... it may be all relative but that doesn't mean it is ok or healthy economically. If it is not healthy it must corrected or crash. If you are dismissing the issue (I'm not sure if you are dismissing it), then stating it is all relative is like saying, everybody is doing crack so it's not really a problem because everyone is doing it.
Being that it is relative because all countries are printing money doesn't negate the fact that GVRD RE is absurdly overpriced looking at all the logical fundamentals.
Also, all countries printing money doesn't negate the fact that other assets are a better buy than GVRD RE (silver, gold, mining royalties/stocks, maybe consumables like Walmart etc). Walmart being that it has weathered every economic storm.
@@saretsky
for sure... as I replied... it is what it is.
Many people made money in the dot com bubble....until they did not. There comes a time when risk to return as well as other numbers do not make sense on certain investments. When I look at the numbers and I see how much it takes to be in the GVRD RE asset class...no thanks! It is too much exposure to risk and downside. I am certainly not the only one with similar thoughts.
Also, you realize by reading dialogue on your channel and others' giving logical counter views is informing and part of the change of systems.
take care Steve
Steve nails it once again... biggest housing bubble in history
Thanks Steve.
I guess you can’t say it’s not working...
What do you mean when "the money is destroyed" when debt is paid down? Such an interesting idea.
Money is created when banks loan out money Since they loan out far more than they have in deposits. So when you pay off your loan, a portion of the money you pay back disappears. Only the net change matters, as in are more loans being set up or is more being paid off.
You can basically shove the Main Street economy off a cliff, but the market economy keeps going. There’s been a bull market in real estate - for decades. Somewhat ironically, the banks have also been in a bull market. So has rail. It’s much bigger than just housing. It’s all dependants on interest rate declines, which will probably continue. But once rates go into the negative, what then?
Canada's fertility rate hit record lows last year, as I predicted. With housing like this, it will fall lower. Immigration has no impact on fertility rate, never has, never will.
It appears like Steve decided to come out and say "hello you fools heading for a cliff" moment today. Bravo sir !! Blame HGTV !! For bankers, this is a collateral value game of survival.....what is high will fall, what is low is in prison. Time will expire as cans can only be kicked so far; all in money is finite and of confidence.
Steve, can you interview with Pierre Poilievre?
Pierre is another empty suit, don't be fooled by words, watch his actions.
@@saretsky youtube video: "Canada checks all 5 boxes for a forthcoming debt crisis" from Pierre is a surprisingly well laid out argument but sadly his only solution to this crisis is to create jobs.
its debt to the end user, not credit, this may confuse the uninformed
Would love to see Pollievere on here too. Maybe the greasy goblin herself would rebut in a follow-up.
"So choke on that... Millennials."
Steve Saretzky
🤣 😂 🤣 😂 🤣
Great as always Steve, informative and entertaining.