I live in on these ghost town streets in Markham street is filled with 5M+ dollar mansions and all of sudden are up for sale. The entire street here every other house
I feel like there could be a government policy that could ease the housing crisis, but still keep have rates low. A "renters registry" for example, where it's monitored what you pay in rent to a landlord, so that it can be taxed properly, and be used as a credit system for renters when asking for a mortgage. A variable tax based on property ownership, principle at 0 on sale, second home at 25%, third at 50%, 4+ at 100%. Also changing the principle resident exemption to once every 5 years, to stop flipping issue and investment flipping. Thoughts?
The unfortunate part is that the government does not want do bring down home values because that would lower gdp and transition us into visible stagflation
@@travisirmen4200 but do they care about the long run ? All politicians and officials seem to make things look rosy during their term and let the next guy in line take the blame.
Thank you so much for the videos Steve. I grew up in Vancouver, my parents don’t own a home and I’ve been trying to make up/down of what’s going on. The loonie hour is great ✊. Please keep them coming, I’ve learned a lot and I enjoyed your videos 🇨🇦
I own two investment properties. And I am in support of raising interest rates. Inflation is out of control and beating people down. If my investments take a haircut its for the best. They are long term holds. Very dissatisfied with this country on multiple fronts
Does the lack of supply influence the desirability of real estate for investors? I imagine if there was an abundance of properties available that would put downward pressure on rental prices, making it harder for investors to justify the higher purchasing prices as they’d be harder to recoup.
No because in the current market, supply can't increase due to the amount of investors. The only way out would be to rebalance principle ownership vs investment. Separate tax and protocols for each reason.
Love your videos Steve, I appreciate the way you give a detailed yet understandable breakdown of what is going on. And in a concise time frame. I find your videos extremely helpful as a first time home buyer. Keep them coming!
Wonderful insight! My mortgage term is coming up in June and I was debating between fixed or variable. Now I know what to do. Greatly appreciate your effort in this space.
Thanks for the video. BOC always follows the US Fed interest rate, what if BOC's interest rate hike causes a housing market correction, but the US fed does not want to lower their interest rate at that time. In that scenario, what would BOC do? Lower its interest rate or keep it with the US?
I think the Bank of Canada is waiting to see if the FED is really going to lift interest rate in March. If Fed does, then there is no excuse for Canada not to lift.
I'm glad that my home prices are growing. I've been able to level up with the bank's money. When it finally goes bust I'll hodl my assets until it rises again!! Get into the club while you can.
This is what recessions were for, fresh start. Stagnation is never good for anybody. I rather go through 2 years of pain if we learn something from it, like never going below 2% and no QE under any circumstances.
Incredible education. Incredible job of tying together & explaining the bigger pic. Wikip actually shows govt debt now ~3trill... 10.5m households.... so 285k/household... plus 2-2.5T HH debt. Sure spending has been increasing.. & govt can say they are having fun spending $$ & gdp is rising.. but at the expense of those that try to save/don't take others money -debt. Far too easy for a few politicians to spend 'someone else's money'... & when cookie jar is open to all future generations - have a few issues.
the price will stay high for a little longer and it will come down a bit when rates are up. Trudeu never worries about the budget, “it will balance itself”
@@jeffhuang5415 Indeed. It says as much about the people taking the guidance as giving it. If someone takes advice or gets a plumbing job done because he is the son of a plumber who has no plumbing background, credentials and was a ski instructor they ar free to do so too but the probability of it being a bad job is higher and the insurance isn't going to underwrite that claim either. So while we are all free to make our own choices can we/should we be abdicated from the consequences of those choices?
@@grildcheez1504 that's the beauty of internet, you never know who is the PhD of plumming. I see people are quite happy taking advice from a plumming supplies salesman on RUclips.
The cost of new housing is so unaffordable you're always going to have a supply problem. If the landing rate went from quarter percent to 1.25%, the federal government's debt servicing cost would quadruple they go into default.
@@kqh123 The question is what demand ? Who actually qualifies for million dollar mortgages all these people? I guess if you can get financing for a $2 million new construction build that's fine but I don't think most people can.
I agree with you Steve. Issue is we let ginnie out of the box very early and now it is a monster it is hard to put back in the bottle we may need a drum now not a bottle. Some adjustments will be made but not expecting it to go back alot. We are already short of housing but at the same time damages from storms, flooding or bllzzards are removing more availability. Housing is just not raw material but skilled labor as well. So it is hard to increase capacities at higher paces. Regarding interest rate. People are paying that money directly or indirectly any way.
Good video. I think the term "demand" can be a bit misleading to non-experts; people think demand means "how much people want a house", but it really means "how much people are willing to pay for a house". Expressing it that way makes it much clearer why low interest rates fuel demand.
I'd disagree that Trudeau doesn't want Austerity. Or some form of it, anyways. WEF Dabos 2030 vision is some hybrid version of it, that Trudeau admires. He wants to join UN Council, or be a bigger part of it anyways. His legacy is what really at the moment?! Followed his daddy's footsteps and got a shoehorn in... I don't know. Covid Policies are a form of austerity and central control.
Hey Steve thanks for the video! One thing that you mentioned wasn't clear. Isn't the rate fixed for around 1 trillion dollar debt that's already issued. So why will future rate increases affect that debt. As I understand it will make issuance of future bonds difficult for the government.
It will make it harder to pay down as less money go's to the principal, also servicing the debt at higher interest rate will suck up a much larger portion of tax revenue
Thanks for clarifying! I was thinking that these governments have issued so much debt in the past 2 years that they would not need more at least for a short term.
@@kqh123 That's right, also Freeland was getting hammered about that in the house but her attitude was the cheap money will never run out which really makes you wonder what the BOC and the Govt are up too !
2-3 rate hikes will filter into the housing market and may slow it down but approx $800,000 price increases on Detach houses, and approx $500,000 on semi/townhomes and continuing to increase since covid, will not ! How does that work?
MMT is coming. Mark my words. There is no way that this debt will ever be paid. We need to continuously to go deeper and deeper in debt and give the illusion that the economy can continue to grow in a finite world.
The inflation/low interest rates/high home prices story is a story all around the world. Please enlighten me on any world class city that one can buy a detached house in with a 200k family income. Sure, some places like Singapore are fighting against speculation with higher taxes, (and I’m all for that) but that still doesn’t change the fact that the horse had already left the barn. The game has changed for us, we have seen the transition from affordability to unaffordability. We have crossed that bridge and we aren’t going back. Vancouver is one of the most beautiful places on earth, and Canada, for all its warts is widely regarded as one of the very best countries to live in. And yes, the governments would love to inflate their debt away. It is either that or austerity. And austerity is even less popular. So inflation it will be, for now, and there will be winners and losers because of it. If nothing else, can we at least agree on this 1) a fifty basis point hike will not suddenly make a detached house affordable for everyone again.
how stupid to blame the supply. No matter how many houses you build at this financial situation it make sense for everybody to by as many as possibly , so houses will be like gold for people to hoard no matter how many one builds.
But who will be able to afford to buy a home if it will continually become more and more expensive to do so? There is insufficient wage growth in Canada to keep up with housing prices? Where is this ultimately going?
Bwahahahahaha.... I get such a kick out of this.... the BoC clip was especially hilarious ! So it's a 'supply' problem in Real Estate.... same as it's a variable rate selection problem..... LOL ! These people really are the "gang that couldn't shoot straight".... Barney Fife would be proud !
@@saretsky thats what I thought ... wouldn't that make the rising cost of the fed government servicing debt (with an increase in interest rates) less of a factor, seeing as the BofC owns something like 50% of government debt. They would just get the interest back anyways
Vancouver council has voted to explore ways to allow as many as six homes to be built on any residential lot in the city as part of its quest to find ways to make more housing accessible to current and would-be residents. That move puts Vancouver in the company of a cluster of cities in Canada and the United States - including Minneapolis, Minn.; Portland, Ore.; Toronto; and Los Angeles - that are grappling with rising housing costs and complaints that middle-class people are being pushed out of major cities. The jurisdictions are also introducing new property-use policies aimed at putting more people on the same amount of land.
How long do you think the housing market continues rocketing up? What is the ceiling if any? Im in a 5 year old build area of GTA where townhouses are at 1 million semis are touching 1.5 and smaller detached are close to 2. If this isn't a bubble what is?
Sovereign debt bubbles will not burst precisely because the 'debt' issuance, ie bonds is arbitrary. Money is always debt, so monetizing the debt is tautological. Central banks are just buying up bonds they didn't really need to issue in the first place. The money was already spent into existence before the government bonds were created. Ask Steve Keen, he will confirm this.
@@luckyPiston The point is that private debt, credit that which is issued by the banks is debt and a solvency issue, something which must be paid back. But there is no public debt solvency issue with a free floating fiat currency. Higher interest rates on government bonds can always be paid by increasing public 'debt' to do so, and if demand for bonds is lacking then they can be purchased directly by central banks, which is another way of saying they needn't have been created in the first place to facilatate government money creation other than as a market convention. Japan proved this decades ago. The true solvency issue for a free float fiat currency comes from inflation/currency debasement.Ie If you allow deficits to grow but they are facilating poorly directed government spending and/or a private debt boom in land speculation, both leading to huge malinvestments and inflation and eventually a 2008 type bust in priavte debt (I expect 2026/7 for the next GFC), trust can be lost in the currency and it's value plummets leading to imported inflation and other problems. So we still need to address private debt, house price inflation etc and general productivty. Take care of those and the public debt will fall as a result relative to where it would need t obe with all those issues in play, but it's not an issue in and of itself.
@@schumanhuman Ive been wondering how far the govt is gonna take this money printing thing and their refusal to address the real estate bubble, the govt loves its cheap money but how long can you run an economy like that ?
@@luckyPiston Depends. Regarding currencies, If every central bank is essentially doin the same, then there is no reason why it cannot continue indefinitely as all currencies are only a mark of value relative to eachother. Unless all major economies go into hyperinflation and we all fall back on barter public debt can keep growing indefinitely. Private bank debt which is mostly mortgages, because it needs to be paid back is different and has it's own more immediate dynamic. The historic trend first in the UK and now centered around the US is land prices cycle on average every 18.6 years (See Homer Hoyt and later Fred Harrison), Canada somewhat dodged the bullet after 2008, but along with Australia and New Zealand now sit amongst the most over priced, therefor when the now almost universally synchronised bubble bursts most likely in 2026/7 they are likely to be the worst hit if they do not at least ameliorate the land price inflation somewhat beforehand. Just think how high public debt will have to grow in the 2030's after the next GFC, especially with slowing global demographics..We are all turning Japanese to some extent.
The low interest rates play another role in that rental property is one of the only ways to get any type of yield. When I used to sell US rentals to Canadians I would joke about 2.5% cap rates here. Now it is like "where else am I going to get 2.5%". There is also a growing movement to give UBI to lower income Canadians which is to say just let inflation run, monetize the debt and "damn the torpedoes".
Govt (taxes, regulations, control etc) has made business a bad investment in Cda... so money is not flowing to improve innovation or business...... so flows to housing. As long as it goes up - it is a good investment... but the real gdp of people is increasingly just becoming their house or houses and the ave gdp/capita is not rising... or rising in proportion that debt is rising... Accountability is completely gone .. & no accountability means will be incredible mis-management.. (so power will abuse & no power will get screwed)... then will have to fail. So who has power... Govt..
Rooming houses are infamous for awhile in some parts of the GTA. Also I have seen rows of big detached homes in wealthy suburbs with parked 8-10 vehicles (mostly pick up trucks). I lived in a neighbourhood where every house had an illegal basement suites for renting. Houses are being split up, but it barely makes a dent in any of the big issues.
CPI is high right now, but does it make sense to raise interest rates as the economy slows? I think they’re likely to drive the country right into a recession if they do that.
I'm happy they didn't raise rates. Markets have already tumbled since they "announced" hikes. Plus, I bought my first home in 2021 and have variable. So I'll be happy with low rates 🙏
@@MM-qv5lf ummm dude, I paid for the home last year, after they'd gone up 20%..... It's called saving and investing. You act like I got the house for cheap 🤣 maybe I sacrificed more than you/others. But it would be pretty shitty after they said they will not be raising the rates, so I bought even after the huge increase in cost, for then to them hike up the rates and fuck me and everyone else who bought a house in 2021 (hundreds of thousands of Canadians).
@@TheWoodfordreserve Hey S.J. in case you didn't read my post, I AM A FIRST TIME HOMEBUYER. You think I liked paying an extra $150,000 on my townhouse than it would've cost in 2020??? Nope, but I did, because I needed a home, I'm a first time buyer and I'm in my mid 30's, if they were to hike rates now then I, along withe everyone else who saved up enough to buy their first home last year, will be under water. They said they weren't going to raise the rates much, they should stick to what they say. I can't believe you said that about first time homebuyers without reading that I am one... Clown.
Don't you think the sweet spot they're trying to hit is an interest rate that stops real estate increases AND decreases? A point where the price stays the same to give them time to pay off the debt?
Hi Steve, I live in Toronto and I am curious if you would still say it’s ok to start as a Real Estate person right now considering how the market is going? I am looking into getting my license however it’s going to take a few months and by the end of the year if the market crashes… would it be worth it.
Correct me if I'm wrong, but in my opinion what needs to change is the investment benefits for multiple home owners. Everyone and their dog wants a rental income these days, but everyone cannot be a landlord. If people started selling their rental properties and air bnb properties, that would free up tons of homes across the country. We don't have a housing shortage, we have an influx of "investors". Don't get me wrong, there will always be landlords and we need them to a certain degree, but too many people are now jumping on that wagon. I work in construction, and always laugh when they say "build more homes, FASTER" LOL 😆 there will just be more investors buying those units, so, again I think the problem is with homes being viewed as investments rather than homes.
I would be to sell a rental house and not have the hassles and uncertainty that goes with it but putting cash in the bank earning negative interest makes it a stupid thing to do. If one could get 5% from a GIC it would make sense.
Only a global downturn caused by people loosing trust of fiat currency will resolve in hiking interest rate to save the trust, otherwise, what’s the incentives to hike rates?
Looking at all the benefits this govt provides i think it may justify keep house prices elevated to pay for all social benefits. Some homes are getting sold 2-3 times in 10 yr period. Generating more cash flow and revenue for the govt. If you see home ownership rates it is still in inline with historical periods. Not everyone should be owning a home. Lots of properties are -ve cash flows for investors which may be okay depending on the wealth these investors generated in such a short time. We also see the debt is getting passed to the immigrants, who are bringing lots of wealth from their home countries.
govt only benefiting some... but at COST to others.. Govt makes nothing - just takes from one, pays selves, then passes some on to others that will vote for them. Not sure that immigrants bring in that much money on ave... mostly come so can get money/benefits etc
Steve, can you clarify something about the the $1T fed debt. Isn't this mostly long term debt and therefore unaffected by short term rise in rates? You make it sound like the government debt servicing increase in real time with the overnight rate. Is this true?
You are missing the major problem with economy of not only Canada but whole western countries The question is if somebody gets loan with low interest rate why this person goes and buys a property which is not producing anything ? Why this person dose not establish a productive business like a bakery? To produce more bread to lower the price of bread ? I will tell you why ! Because productive sector doesn’t provide profit !! It is the inherent problem with an economy which is all about profit
Why would anyone want to start a business like a bakery when the government basically took a giant dump on small businesses? How many businesss were left to die over the last 2 years? Canada is not the greatest country to start a business.
@@JaBlanche where is the best place to start a business? Everywhere is the same story So it is not about this country or that country , it is about the system that is outdated
Can you and the guys talk a bit more about potential for mortgage fraud in Canada. It's not NINJA style like '07 in the US, but anecdotally I'm hearing about certain brokers being able to get anyone qualified. The stress test is what it is but there's exceptions and most of the participants in the mortgage market are incentivized to push a mtg through.
Steve: beside being great of what you do! Than you for put out these great contents: you tube channel is time consuming. Have you considered getting into politic: our government more talent people like you? Thanks!
Uncontrolled Inflation will crash the economy. Inflation will drive up costs and put immense pressures on debt burdened borrowers. They had the opportunity to use the pandemic as the scape goat as to why everything crashed. Never let a good disaster go to waste and they failed to capture the opportunity. They need to allow for a crash to default on the debt and allow it all to unravel and then build back better under normal economic conditions. Even at the cost of bankrupting most and causing mass starvation.
We are going to play a game of chicken with the bond market. Thats what they are doing. Then yield curve control will be done after countries stop buying our debt after the next currency defense.
Steve, this is pretty gloomy. But, sigh, nobody said life will be easy or fair. Question: can this in any way give the Canadian dollar a whack? I know you said all the big central banks are doing this crazy shit, but it feels Canada has lost grip/solvency more than, say, USA or some overseas countries. What does this outlook on Canada translate into through the lens of foreign currencies or relative comparison to US or overseas assets?
I think at a minimum the Canadian dollar will go back down to about 50- 60 cents US. The US might suffer but at least they are large enough to maintain value globally. I'm hoping to convert to US what I can, definitely don't want Canadian or crypto.
Benny Tal, makes some very interesting statements in this interview (ruclips.net/video/YoTNBI9zxM4/видео.html), Steve, including the accusation that officials in Canada are low-balling stats on new household formation by 30K to 40K. In part, he suggests that the Feds are admitting foreigners as Non-permanent Residents (NPRs), then converting the NPRs to "residents" at a time of their convenience. Would love to hear your take on Tal's assessment, including his preface comment that Canada's economy is going, "forward" because of high immigration numbers, in spite of her debt problems, inflation, etc. Thanks for all the hard work you put into this channel!
I am a little confused here, we have been subsidizing our global economy with money printing and now they want to stop doing what is keeping the false economy on life support!? How has anything changed here we are still printing and buying our own debt and when they put up interest rates it will drive the economy down and out of commission which is what happened every time we've tried this in the past this is why we are still printing money. Lets be honest here what in the hell did you think was going to happen when you just start printing money and buying your own debt? The best part is when people say its not a problem because you are indebted to yourself.....WTF are you saying now>?! People are so ignorant on this subject that it has allowed these criminals to keep doing what they've been doing BUT the Government wouldn't allow this to happen, well the politicians are in on the scam as well. Not many know about the money system either this is going to hurt people hope you don't have a lot of debt!
2% is still low. From there they can just cycle it back down. This has been the preferred stratagy over bonds since 2008. Correct me if I'm wrong but the alternative is far more dire. We also have to remember this isbnot a Canadian problem, it's a global issue. If Canada were to act on it's own we would no longer be competitive on a global scale and our dollar value would crumble.
…. Bought a home in 1995 for $200k from someone who paid $350k This time I will buy one more for $700k from someone who paid $1.4MM 😄😄 That’s what happens in a major recession…
@@blakeacheson9387 I think there is No way out.. Should treat the losses as sunk cost and move on like prudent managers - Either that or look at Turkey to see what can happen if inflation takes off - then the Table under the House of Cards also goes.
@@manaskar6389 I agree under normal circumstances....but letting the housing market fail would basically put Canada into a great depression....either way we have catastrophe....letting the RE fail guarantees it...they are trying to kick the can
You think? Must have taken years of school to figure that out. I found a T shirt for you, it's a pic of avocado with a bag of chips and guacamole, the caption says "buy the dip".
@@donm2067 An interesting, albeit condescending take Donny. Your watching the same market as I am, does it look confident at the moment? Yes sir, I most certainly will be buying the dip.
@@ootoobin considering most of the trading is done by programs, I don't know and don't care. I buy hard assets. Once I see a few big name companies go bankrupt, day traders hurling themselves off tall objects, I will buy into the market. There's a lot of parallels between what's going on now and the book "death of money". Stunning and brave BTFD.
@@donm2067 I’m not in a contest with you Don. The proof of the pudding is in the eating, all your doing is measuring your success off something that hasn’t happened yet. You do you Donny boy.
The one and most important things everyone always forgets to talk about is revenue from energy and natural resources , when you choke those revenue streams out because they are now dirty and evil (without a backup plan) you should be prepared be broke ass moving forward and except that you no longer have first world status !!!!
I live near Toronto and have noticed that condo are going up everywhere and single home are a lot less then 15 years ago
Steve, just wanted say thanks for the continuing outstanding content here and the loonie hour!
Appreciate the support
loonie hour is on fire lately
I live in on these ghost town streets in Markham street is filled with 5M+ dollar mansions and all of sudden are up for sale. The entire street here every other house
Love your honesty and realness when taking about this stuff. Hard to come by these days
👊🏼
I feel like there could be a government policy that could ease the housing crisis, but still keep have rates low.
A "renters registry" for example, where it's monitored what you pay in rent to a landlord, so that it can be taxed properly, and be used as a credit system for renters when asking for a mortgage.
A variable tax based on property ownership, principle at 0 on sale, second home at 25%, third at 50%, 4+ at 100%. Also changing the principle resident exemption to once every 5 years, to stop flipping issue and investment flipping.
Thoughts?
The unfortunate part is that the government does not want do bring down home values because that would lower gdp and transition us into visible stagflation
@@JF-mu3rk true, however when they pick up the tab for wild amounts of homelessness.... it would be way cheaper in the long run.
@@travisirmen4200 but do they care about the long run ? All politicians and officials seem to make things look rosy during their term and let the next guy in line take the blame.
Thanks Steve! Appreciate your efforts
Gotta love the smirk on Tiff Macklem‘s face when he passes the buck!
His smirk is awful. Whenever he talks about the housing market he smirks
Thank you so much for the videos Steve. I grew up in Vancouver, my parents don’t own a home and I’ve been trying to make up/down of what’s going on. The loonie hour is great ✊. Please keep them coming, I’ve learned a lot and I enjoyed your videos 🇨🇦
I own two investment properties. And I am in support of raising interest rates. Inflation is out of control and beating people down. If my investments take a haircut its for the best. They are long term holds. Very dissatisfied with this country on multiple fronts
Same
Same here, it's for the greater good.
what rates do you have now?
Thanks Steve!
Thank You for all of your videos that you did.
Has BOC become Political Bank of Christiya Freeland?? She is biggest borrower and Spending like drunkard sailor.
Hey, hey and up she rises.
Amazing video, this nails it really well
Thank you for all of the information that you put out!
Does the lack of supply influence the desirability of real estate for investors? I imagine if there was an abundance of properties available that would put downward pressure on rental prices, making it harder for investors to justify the higher purchasing prices as they’d be harder to recoup.
Quite possible
No because in the current market, supply can't increase due to the amount of investors. The only way out would be to rebalance principle ownership vs investment. Separate tax and protocols for each reason.
Crazy stuff - BOC basically told people, rush and buy homes now before rates rise. Bubble will inflate even more.
Thank you for produced consistent great videos of Canadian Real Estate & Economy!!!
👊🏼
Love your videos Steve, I appreciate the way you give a detailed yet understandable breakdown of what is going on. And in a concise time frame. I find your videos extremely helpful as a first time home buyer. Keep them coming!
Another great video Steve!! Thanks so much!!
Wonderful insight! My mortgage term is coming up in June and I was debating between fixed or variable. Now I know what to do. Greatly appreciate your effort in this space.
Variable is a full 1.50% lower than fixed. The BOC will not be able to get off 6 rate hikes. Even then, you would just be at even.
"will hike in March" I'm not so sure anymore buddy. I have lost all hope
They will. It’s a shoe in
Under rated channel.
Thanks for the video. BOC always follows the US Fed interest rate, what if BOC's interest rate hike causes a housing market correction, but the US fed does not want to lower their interest rate at that time. In that scenario, what would BOC do? Lower its interest rate or keep it with the US?
Great breakdown can't agree more !!
I think the Bank of Canada is waiting to see if the FED is really going to lift interest rate in March. If Fed does, then there is no excuse for Canada not to lift.
Canada's solution to the inventory / supply problem is continued population growth. Nice.
If we don't replenish the population we'll be in an even bigger problem!!
I'm glad that my home prices are growing. I've been able to level up with the bank's money. When it finally goes bust I'll hodl my assets until it rises again!! Get into the club while you can.
Awesome video Steve! Thank you.
@5:11 you see her pop her head up like she's shocked someone had the balls to ask that question..
This is what recessions were for, fresh start. Stagnation is never good for anybody. I rather go through 2 years of pain if we learn something from it, like never going below 2% and no QE under any circumstances.
what is qe?
@@chriswhynder8311 quantitative easing aka printing money
@@klrrafman gotcha
@@klrrafman i agree
I used to laugh at people who said "this time is different", but this time they are right. Rates will not return to historically normal levels.
Incredible education. Incredible job of tying together & explaining the bigger pic. Wikip actually shows govt debt now ~3trill... 10.5m households.... so 285k/household... plus 2-2.5T HH debt. Sure spending has been increasing.. & govt can say they are having fun spending $$ & gdp is rising.. but at the expense of those that try to save/don't take others money -debt. Far too easy for a few politicians to spend 'someone else's money'... & when cookie jar is open to all future generations - have a few issues.
👏👏very nice and clearly explained Steve.
the price will stay high for a little longer and it will come down a bit when rates are up. Trudeu never worries about the budget, “it will balance itself”
It's almost like taking financial advice from a ski instructor.
@@grildcheez1504 we get it, you didn't like Mike Harris.
@@grildcheez1504 we all take advices that we want to take, dont we. so people give advices they want to give.
@@jeffhuang5415 Indeed. It says as much about the people taking the guidance as giving it. If someone takes advice or gets a plumbing job done because he is the son of a plumber who has no plumbing background, credentials and was a ski instructor they ar free to do so too but the probability of it being a bad job is higher and the insurance isn't going to underwrite that claim either. So while we are all free to make our own choices can we/should we be abdicated from the consequences of those choices?
@@grildcheez1504 that's the beauty of internet, you never know who is the PhD of plumming. I see people are quite happy taking advice from a plumming supplies salesman on RUclips.
Supply needs to expand. In. Ontario Dalton. McGuinty stopped development. With. Oak. Ridges. Moraine and build within not out
Great job Steve, keep it up.
The cost of new housing is so unaffordable you're always going to have a supply problem.
If the landing rate went from quarter percent to 1.25%, the federal government's debt servicing cost would quadruple they go into default.
Rate drops = demand increases
@@kqh123 The question is what demand ? Who actually qualifies for million dollar mortgages all these people? I guess if you can get financing for a $2 million new construction build that's fine but I don't think most people can.
Good points! Fedral Govt is the biggest borrower but bank of canada has to follow USA Fed rates
Thank you for the context and why variable rates are lower. It rings true with me.
Why would changing rates affect previously issued debt? Aren't those bonds issued at the previous rates?
I agree with you Steve. Issue is we let ginnie out of the box very early and now it is a monster it is hard to put back in the bottle we may need a drum now not a bottle. Some adjustments will be made but not expecting it to go back alot. We are already short of housing but at the same time damages from storms, flooding or bllzzards are removing more availability. Housing is just not raw material but skilled labor as well. So it is hard to increase capacities at higher paces. Regarding interest rate. People are paying that money directly or indirectly any way.
Good video. I think the term "demand" can be a bit misleading to non-experts; people think demand means "how much people want a house", but it really means "how much people are willing to pay for a house". Expressing it that way makes it much clearer why low interest rates fuel demand.
I'd disagree that Trudeau doesn't want Austerity. Or some form of it, anyways. WEF Dabos 2030 vision is some hybrid version of it, that Trudeau admires. He wants to join UN Council, or be a bigger part of it anyways. His legacy is what really at the moment?! Followed his daddy's footsteps and got a shoehorn in... I don't know. Covid Policies are a form of austerity and central control.
Hey Steve thanks for the video! One thing that you mentioned wasn't clear. Isn't the rate fixed for around 1 trillion dollar debt that's already issued. So why will future rate increases affect that debt. As I understand it will make issuance of future bonds difficult for the government.
It will make it harder to pay down as less money go's to the principal, also servicing the debt at higher interest rate will suck up a much larger portion of tax revenue
This debt matures all the time. Most of the debt issued is shorter duration, ie a couple of years.
The debt matures, and new debt needs to be issued to replace the old debt. The higher rates apply to the new debt
Thanks for clarifying! I was thinking that these governments have issued so much debt in the past 2 years that they would not need more at least for a short term.
@@kqh123 That's right, also Freeland was getting hammered about that in the house but her attitude was the cheap money will never run out which really makes you wonder what the BOC and the Govt are up too !
2-3 rate hikes will filter into the housing market and may slow it down but approx $800,000 price increases on Detach houses, and approx $500,000 on semi/townhomes and continuing to increase since covid, will not !
How does that work?
MMT is coming. Mark my words. There is no way that this debt will ever be paid. We need to continuously to go deeper and deeper in debt and give the illusion that the economy can continue to grow in a finite world.
I think the decision to keep rates is political rather than financial .
Both
The inflation/low interest rates/high home prices story is a story all around the world. Please enlighten me on any world class city that one can buy a detached house in with a 200k family income. Sure, some places like Singapore are fighting against speculation with higher taxes, (and I’m all for that) but that still doesn’t change the fact that the horse had already left the barn. The game has changed for us, we have seen the transition from affordability to unaffordability. We have crossed that bridge and we aren’t going back. Vancouver is one of the most beautiful places on earth, and Canada, for all its warts is widely regarded as one of the very best countries to live in. And yes, the governments would love to inflate their debt away. It is either that or austerity. And austerity is even less popular. So inflation it will be, for now, and there will be winners and losers because of it. If nothing else, can we at least agree on this 1) a fifty basis point hike will not suddenly make a detached house affordable for everyone again.
how stupid to blame the supply. No matter how many houses you build at this financial situation it make sense for everybody to by as many as possibly , so houses will be like gold for people to hoard no matter how many one builds.
But who will be able to afford to buy a home if it will continually become more and more expensive to do so? There is insufficient wage growth in Canada to keep up with housing prices? Where is this ultimately going?
Bwahahahahaha....
I get such a kick out of this.... the BoC clip was especially hilarious ! So it's a 'supply' problem in Real Estate.... same as it's a variable rate selection problem..... LOL !
These people really are the "gang that couldn't shoot straight".... Barney Fife would be proud !
What do thing the supply market? Are they wanting to bulldog single home or condo add to the problem.
Steve.. don't interest payments from central bank debt just get deposited in the federal gov treasury?
Interest accrued to the central bank is ultimately returned to the federal government
@@saretsky thats what I thought ... wouldn't that make the rising cost of the fed government servicing debt (with an increase in interest rates) less of a factor, seeing as the BofC owns something like 50% of government debt. They would just get the interest back anyways
I would love to know this answer as well. The government borrowing from itself pays interest to itself.
Vancouver council has voted to explore ways to allow as many as six homes to be built on any residential lot in the city as part of its quest to find ways to make more housing accessible to current and would-be residents.
That move puts Vancouver in the company of a cluster of cities in Canada and the United States - including Minneapolis, Minn.; Portland, Ore.; Toronto; and Los Angeles - that are grappling with rising housing costs and complaints that middle-class people are being pushed out of major cities. The jurisdictions are also introducing new property-use policies aimed at putting more people on the same amount of land.
will soon look like the slums of Argentina
How long do you think the housing market continues rocketing up? What is the ceiling if any? Im in a 5 year old build area of GTA where townhouses are at 1 million semis are touching 1.5 and smaller detached are close to 2. If this isn't a bubble what is?
It's like every elite in Canada has a disdain for real questions. No accountability whatsoever.
When can we buy Loonie Hour merch?
Sovereign debt bubbles will not burst precisely because the 'debt' issuance, ie bonds is arbitrary. Money is always debt, so monetizing the debt is tautological. Central banks are just buying up bonds they didn't really need to issue in the first place. The money was already spent into existence before the government bonds were created.
Ask Steve Keen, he will confirm this.
Whats the point you are trying to make ?
@@luckyPiston The point is that private debt, credit that which is issued by the banks is debt and a solvency issue, something which must be paid back. But there is no public debt solvency issue with a free floating fiat currency.
Higher interest rates on government bonds can always be paid by increasing public 'debt' to do so, and if demand for bonds is lacking then they can be purchased directly by central banks, which is another way of saying they needn't have been created in the first place to facilatate government money creation other than as a market convention. Japan proved this decades ago.
The true solvency issue for a free float fiat currency comes from inflation/currency debasement.Ie If you allow deficits to grow but they are facilating poorly directed government spending and/or a private debt boom in land speculation, both leading to huge malinvestments and inflation and eventually a 2008 type bust in priavte debt (I expect 2026/7 for the next GFC), trust can be lost in the currency and it's value plummets leading to imported inflation and other problems. So we still need to address private debt, house price inflation etc and general productivty. Take care of those and the public debt will fall as a result relative to where it would need t obe with all those issues in play, but it's not an issue in and of itself.
@@schumanhuman Ive been wondering how far the govt is gonna take this money printing thing and their refusal to address the real estate bubble, the govt loves its cheap money but how long can you run an economy like that ?
@@luckyPiston Depends. Regarding currencies, If every central bank is essentially doin the same, then there is no reason why it cannot continue indefinitely as all currencies are only a mark of value relative to eachother. Unless all major economies go into hyperinflation and we all fall back on barter public debt can keep growing indefinitely.
Private bank debt which is mostly mortgages, because it needs to be paid back is different and has it's own more immediate dynamic.
The historic trend first in the UK and now centered around the US is land prices cycle on average every 18.6 years (See Homer Hoyt and later Fred Harrison), Canada somewhat dodged the bullet after 2008, but along with Australia and New Zealand now sit amongst the most over priced, therefor when the now almost universally synchronised bubble bursts most likely in 2026/7 they are likely to be the worst hit if they do not at least ameliorate the land price inflation somewhat beforehand.
Just think how high public debt will have to grow in the 2030's after the next GFC, especially with slowing global demographics..We are all turning Japanese to some extent.
Yes Steve keen is brilliant
Thanks
The low interest rates play another role in that rental property is one of the only ways to get any type of yield. When I used to sell US rentals to Canadians I would joke about 2.5% cap rates here. Now it is like "where else am I going to get 2.5%". There is also a growing movement to give UBI to lower income Canadians which is to say just let inflation run, monetize the debt and "damn the torpedoes".
UBI is coming eventually regardless..........automation will reduce the need for 50%+ of the current jobs.
So we crater the economy, create and issue welfare to ourselves and then what ?
Govt (taxes, regulations, control etc) has made business a bad investment in Cda... so money is not flowing to improve innovation or business...... so flows to housing. As long as it goes up - it is a good investment... but the real gdp of people is increasingly just becoming their house or houses and the ave gdp/capita is not rising... or rising in proportion that debt is rising... Accountability is completely gone .. & no accountability means will be incredible mis-management.. (so power will abuse & no power will get screwed)... then will have to fail. So who has power... Govt..
Allow all homes to be split into apartments and double occupancy
That's a band aid solution. Rates need to rise.
In many immigrant houses it is already much higher than double occupancy
Rooming houses are infamous for awhile in some parts of the GTA. Also I have seen rows of big detached homes in wealthy suburbs with parked 8-10 vehicles (mostly pick up trucks). I lived in a neighbourhood where every house had an illegal basement suites for renting. Houses are being split up, but it barely makes a dent in any of the big issues.
You can lock the fixed rate, but not the prime rate of the variable.
CPI is high right now, but does it make sense to raise interest rates as the economy slows? I think they’re likely to drive the country right into a recession if they do that.
It is not fair for seniors Zero interest on savings to fund speculators
I'm happy they didn't raise rates. Markets have already tumbled since they "announced" hikes. Plus, I bought my first home in 2021 and have variable. So I'll be happy with low rates 🙏
Will you still be happy when your grocery bill jumps by 100% or more?
Same here, housing to the moon.
Yeah you're happy, but hundreds of thousands, perhaps millions of the Canadians now can't even dream of owning a home. So yeah, good for you!
@@MM-qv5lf ummm dude, I paid for the home last year, after they'd gone up 20%..... It's called saving and investing. You act like I got the house for cheap 🤣 maybe I sacrificed more than you/others. But it would be pretty shitty after they said they will not be raising the rates, so I bought even after the huge increase in cost, for then to them hike up the rates and fuck me and everyone else who bought a house in 2021 (hundreds of thousands of Canadians).
@@TheWoodfordreserve Hey S.J. in case you didn't read my post, I AM A FIRST TIME HOMEBUYER. You think I liked paying an extra $150,000 on my townhouse than it would've cost in 2020??? Nope, but I did, because I needed a home, I'm a first time buyer and I'm in my mid 30's, if they were to hike rates now then I, along withe everyone else who saved up enough to buy their first home last year, will be under water. They said they weren't going to raise the rates much, they should stick to what they say. I can't believe you said that about first time homebuyers without reading that I am one... Clown.
All municipalities need to expand their borders by 20% and start building. The federal and provincial need to fund. water and sewer projects
nah we already got enough urban sprawl...........build up not out.
Don't you think the sweet spot they're trying to hit is an interest rate that stops real estate increases AND decreases? A point where the price stays the same to give them time to pay off the debt?
Hi Steve, I live in Toronto and I am curious if you would still say it’s ok to start as a Real Estate person right now considering how the market is going? I am looking into getting my license however it’s going to take a few months and by the end of the year if the market crashes… would it be worth it.
Correct me if I'm wrong, but in my opinion what needs to change is the investment benefits for multiple home owners. Everyone and their dog wants a rental income these days, but everyone cannot be a landlord. If people started selling their rental properties and air bnb properties, that would free up tons of homes across the country.
We don't have a housing shortage, we have an influx of "investors". Don't get me wrong, there will always be landlords and we need them to a certain degree, but too many people are now jumping on that wagon. I work in construction, and always laugh when they say "build more homes, FASTER" LOL 😆 there will just be more investors buying those units, so, again I think the problem is with homes being viewed as investments rather than homes.
I would be to sell a rental house and not have the hassles and uncertainty that goes with it but putting cash in the bank earning negative interest makes it a stupid thing to do. If one could get 5% from a GIC it would make sense.
It looked like senior deputy Rogers was going to break her pen in half while answering that question.
Only a global downturn caused by people loosing trust of fiat currency will resolve in hiking interest rate to save the trust, otherwise, what’s the incentives to hike rates?
So what do you do as an individual Canadian investor?
Looking at all the benefits this govt provides i think it may justify keep house prices elevated to pay for all social benefits. Some homes are getting sold 2-3 times in 10 yr period. Generating more cash flow and revenue for the govt. If you see home ownership rates it is still in inline with historical periods. Not everyone should be owning a home. Lots of properties are -ve cash flows for investors which may be okay depending on the wealth these investors generated in such a short time. We also see the debt is getting passed to the immigrants, who are bringing lots of wealth from their home countries.
govt only benefiting some... but at COST to others.. Govt makes nothing - just takes from one, pays selves, then passes some on to others that will vote for them. Not sure that immigrants bring in that much money on ave... mostly come so can get money/benefits etc
@@Feedback4Utoday it used to be the case but they pay Lot upfront
It's true, there's no going back
debt clock says 1.2 Trillion, your share $31,753
and rising approx. $31,753 per second. so start makin babies Canada!
at the current rate will be at 2 trillion plus this time next year.
Steve, can you clarify something about the the $1T fed debt. Isn't this mostly long term debt and therefore unaffected by short term rise in rates? You make it sound like the government debt servicing increase in real time with the overnight rate. Is this true?
Everything happens for a reason prices are going up in every country.
What do you think the reason is
Corruption
No way out huh.
You are missing the major problem with economy of not only Canada but whole western countries
The question is if somebody gets loan with low interest rate why this person goes and buys a property which is not producing anything ? Why this person dose not establish a productive business like a bakery? To produce more bread to lower the price of bread ? I will tell you why ! Because productive sector doesn’t provide profit !! It is the inherent problem with an economy which is all about profit
Why would anyone want to start a business like a bakery when the government basically took a giant dump on small businesses? How many businesss were left to die over the last 2 years? Canada is not the greatest country to start a business.
@@JaBlanche where is the best place to start a business? Everywhere is the same story
So it is not about this country or that country , it is about the system that is outdated
Can you and the guys talk a bit more about potential for mortgage fraud in Canada. It's not NINJA style like '07 in the US, but anecdotally I'm hearing about certain brokers being able to get anyone qualified. The stress test is what it is but there's exceptions and most of the participants in the mortgage market are incentivized to push a mtg through.
Steve: beside being great of what you do! Than you for put out these great contents: you tube channel is time consuming. Have you considered getting into politic: our government more talent people like you? Thanks!
No I prefer to run a business for now.
Well what happens if the debt bubble bursts? oh they print?
Is that a red Rennie water bottle?
Oof maybe haha
Uncontrolled Inflation will crash the economy. Inflation will drive up costs and put immense pressures on debt burdened borrowers. They had the opportunity to use the pandemic as the scape goat as to why everything crashed. Never let a good disaster go to waste and they failed to capture the opportunity. They need to allow for a crash to default on the debt and allow it all to unravel and then build back better under normal economic conditions. Even at the cost of bankrupting most and causing mass starvation.
Government love your property tax.
Government is afraid to go after the rich.
Renting is as expensive as buying a house... just saying
Oh baby
We are going to play a game of chicken with the bond market. Thats what they are doing. Then yield curve control will be done after countries stop buying our debt after the next currency defense.
Steve, this is pretty gloomy. But, sigh, nobody said life will be easy or fair. Question: can this in any way give the Canadian dollar a whack? I know you said all the big central banks are doing this crazy shit, but it feels Canada has lost grip/solvency more than, say, USA or some overseas countries. What does this outlook on Canada translate into through the lens of foreign currencies or relative comparison to US or overseas assets?
I think at a minimum the Canadian dollar will go back down to about 50- 60 cents US. The US might suffer but at least they are large enough to maintain value globally. I'm hoping to convert to US what I can, definitely don't want Canadian or crypto.
Yeah man, go long USDCAD
Maybe. We have a lot more debt and fiscal management is a disaster
LETS GO TRUCKERS!!!!!
I wish my home prices went up. This is bullcrap! Can they just raise rates in BC and Ont please? Lol
..That we are Fu*ked?
Benny Tal, makes some very interesting statements in this interview (ruclips.net/video/YoTNBI9zxM4/видео.html), Steve, including the accusation that officials in Canada are low-balling stats on new household formation by 30K to 40K. In part, he suggests that the Feds are admitting foreigners as Non-permanent Residents (NPRs), then converting the NPRs to "residents" at a time of their convenience. Would love to hear your take on Tal's assessment, including his preface comment that Canada's economy is going, "forward" because of high immigration numbers, in spite of her debt problems, inflation, etc.
Thanks for all the hard work you put into this channel!
Benjamin Tal hit the dislike button on this one
Great comment
I am a little confused here, we have been subsidizing our global economy with money printing and now they want to stop doing what is keeping the false economy on life support!? How has anything changed here we are still printing and buying our own debt and when they put up interest rates it will drive the economy down and out of commission which is what happened every time we've tried this in the past this is why we are still printing money. Lets be honest here what in the hell did you think was going to happen when you just start printing money and buying your own debt? The best part is when people say its not a problem because you are indebted to yourself.....WTF are you saying now>?! People are so ignorant on this subject that it has allowed these criminals to keep doing what they've been doing BUT the Government wouldn't allow this to happen, well the politicians are in on the scam as well. Not many know about the money system either this is going to hurt people hope you don't have a lot of debt!
2% is still low. From there they can just cycle it back down. This has been the preferred stratagy over bonds since 2008. Correct me if I'm wrong but the alternative is far more dire.
We also have to remember this isbnot a Canadian problem, it's a global issue. If Canada were to act on it's own we would no longer be competitive on a global scale and our dollar value would crumble.
Steve "Kabuki" Saretsky.
…. Bought a home in 1995 for $200k from someone who paid $350k
This time I will buy one more for $700k from someone who paid $1.4MM
😄😄
That’s what happens in a major recession…
did you watch the video....if housing drops 50% you'll be in a soup line....the entire house of cards comes tumbling down
Thats fine if it happens to the speculators.
@@manaskar6389 except it's everyone...the entire market comes down...watch the video
@@blakeacheson9387 I think there is No way out.. Should treat the losses as sunk cost and move on like prudent managers - Either that or look at Turkey to see what can happen if inflation takes off - then the Table under the House of Cards also goes.
@@manaskar6389 I agree under normal circumstances....but letting the housing market fail would basically put Canada into a great depression....either way we have catastrophe....letting the RE fail guarantees it...they are trying to kick the can
I tend to think the market confidence comes not from raising, but EXTENDING the low rates.
You think? Must have taken years of school to figure that out.
I found a T shirt for you, it's a pic of avocado with a bag of chips and guacamole, the caption says "buy the dip".
@@donm2067 An interesting, albeit condescending take Donny. Your watching the same market as I am, does it look confident at the moment?
Yes sir, I most certainly will be buying the dip.
@@ootoobin considering most of the trading is done by programs, I don't know and don't care. I buy hard assets. Once I see a few big name companies go bankrupt, day traders hurling themselves off tall objects, I will buy into the market.
There's a lot of parallels between what's going on now and the book "death of money".
Stunning and brave BTFD.
@@donm2067 I’m not in a contest with you Don. The proof of the pudding is in the eating, all your doing is measuring your success off something that hasn’t happened yet.
You do you Donny boy.
@@ootoobin dude all you have done is be ignorant and refused to have a moral compass... Hardly impressive.
The one and most important things everyone always forgets to talk about is revenue from energy and natural resources , when you choke those revenue streams out because they are now dirty and evil (without a backup plan) you should be prepared be broke ass moving forward and except that you no longer have first world status !!!!
For the algorithm