Just like markets don’t go straight up and down, inflation also doesn’t just roll over and go straight down. One of the biggest worries they had on this CPI is that Services are now adding to the core rises in inflation. People are demanding higher wages because of the increased cost of goods. But when wages go up, corporations don’t just absorb those costs because they only care about profits. So then they raise the costs of goods again and the cycle of inflation starts over….. That’s why they raised interest rates so high in the 80’s. The Strong job market is only adding to this because companies will pay to fill positions which will only inflate wages further. They are definitely going to miss again on the inflation as you suggested though. We can only cross our fingers and hope it’s not by a lot…. So good to hear a real estate agent speak honestly about where mortgage rates are heading and what real values of housing should be. And you are spot on that this is the return to the 2-4% real rates era. The negative real rates experiment for the last 10-12 years failed and only made the rich richer, housing unattainable for the 99% and made retirement close to a dream for most….
He speaks honestly? 9 months ago steve said they cant raise rates. every time he has given an opinion hes fairly wrong with the big stuff..Now he just is saying what news articles tell him. 98% of his followers dont own anything. So hearing rates rising gives them hope still. Lol
Another banger. Would love to hear your take on how the rental market is effected by this in the mid-term (6-12mos). Feels like there should be more demand for rentals, however, I’m also noticing rents possibly starting to decline. Could just be the time of year or it could be the start of a major poop storm. It’s a battle between the “I’m just going to wait for the market to rebound and rent it out” crowd (deflationary pressure on rents) and the “I need out of this now” crowd (less rental supply but downwards pressure on sale prices which, in turn, may still result in rents declining).
Who has their house paid off? It's the 60yo+ crowd who bought them at 200k$ or less. How much money do you need to make to qualify for an 700k$ mortgage? What percentage of Canadian house holds, especially young ones that are forming families. This is such a dumpster fire, look at market place mortgage fraud.
there are so many people with regular jobs who got million dollar mortgages for poorly built townhouses. They think paying off one million dollar mortgage is gonna be easy
Hey Steve, have you seen the latest CBC Marketplace episode on Mortgage Fraud in Canada? It was outrageous, would love to see you talk about it in a video!
It was an incredible article. Amazing how many mortgage brokers and realtors were willing to commit fraud to get people into houses. Such a high percentage of them did that for the undercover CBC people that it makes me question how much of our real estate in Canada has been sold to unqualified people. I’d love to see Steve and Rich and Keith highlight this in the loonie hour show too.
@@jamesheron2282 The investigation showed 6/10 agents were willing to commit fraud and there are 16,000 cases of fraud flagged MONTHLY.. crazy yet all regulators turning a blind eye
@@ronbonora7872 this has been happening for decades. Has nothing to do with recent policy or rate changes. Fraud is embedded in real estate practice by a massive portion of the industry. There’s a few honest folks out of every dozen but without stricter rules they probably lose out than their coworkers commuting the fraud
@@jamesheron2282 The cold call part was the dumbest Do you remember calling around for weed 10 years ago, no criminal admits to illegal dealings with a cold call.
There going 75 after the CPI print this week in the states. Tiff not going to make the same mistake as Australia after seeing what happened to AUD after only increasing 25bps and watch the Canadian dollar become the Canadian Peso
Some ppl have VRMs from a few years ago which we're set up at 25 yrs amortization with super low rates. As the banks are not updating payments the adjusted amortization is now over 50 yrs. There is going to be a lot of shocked faces at renewal.
We may not be seeing feb prices for another 7 yrs. Even if interest rates start to come down. Assuming interest rates start coming down to 3.5 percent by july of next year. Most of the investors and first time buyers will be out of savings due to high interest rates and high prices.
Hard to say. Could be 2 years could be 7.. no one knows. All depends when they drop rates and when. But it will return and exceed peak prices in 10 yrs.
HI Steve most Townhouse 2bed 2bath +den price at this time is almost 700k in Frazer Valley. Do you think by early next year the price would go down between 500k to 600k?
The only immediate impact to housing prices from the rise in interest rates is scaring new buyers primarily. Most people have fixed rates and until they start coming to renewal, it takes time to see prices really come down. But when it starts coming down, it will come down fast as more and more people “need” to sell. As other suggested, Q2 or Q3 will likely be the start of it.
They won't stop raising rates because they keep creating inflation (cutting $1600 cheques to the homeless + free housing, rent assistance, etc. etc.). Keep positioning to milk that yield boys
It' a 7-10 year wait on affordable housing through house connections. People with disabilities have more chance to die than to get a liveable place to rent.
@@stephnicaise Inflation is the result of more money chasing fewer goods and services. The "chasing" is money velocity (speed at which money changes hands). Poor people tend to spend money as soon as they receive it, often even before. They also produce the least assuming income is correlated with value creation. My point was that this "fight against inflation" will be ongoing because they are raising rates on one end but subsidizing consumption on the other. You can exploit this by taking part in the various yield plays in a rising rate environment until the day comes where assets will be on sale.
Bahahahahahahaha! You think cheques to low income families are to blame for the exploitation of the housing market? Because people were given a half months rent? 🙄 Until the over exploitation of the real estate investment market is fixed, inflation can't come down. 28% of the CDI is shelter related costs..... meaning every time a rate hike goes up, there is an inflation kick back due to shelter costs.... so inflation can't come down till housing plummets.
once the layoffs gain momentum in the new year and hiring stops, maybe not in the Public Sector, that will help reduce rents just as cost of borrowing will deflate home prices. Going forward energy, food, and essentials will be our inflationary items. The question will be if housing and consumables drop faster to bring down the CPI. Even if CPI flattens as a result of this I think over the next 9 months that by summer when we've lost 250,00-500,000 jobs, possibly more, people will care about a lack of employment opportunities and food going up double digits versus a drop in laptop prices. Many Western Countries have prevented farmers from using fertilizers in the fight against global warming. This, along with normal droughts and floods annually around the world, will likely put a strain on food production next year and until going forward as long as politicians continue limiting food production in the Western World and paying farmers around the world to not farm. In a few years when people have been starving those insect manufacturing plants will be up and running and we'll embrace what ever processed food they are willing to provide us. Kidding. It will probably take longer than a couple of years.
I don't want my house to have less value but there has been way too much profit and greed including government greed. Not enough units built and too much immigration in a short time. My HELOC interest rate has added 600.00 per month to my interest. I am usually not paying much attention to the housing market.
Calgary down less then gta and Vancouver but also Calgary didn’t see a crazy spike in prices like Toronto etc. i bet you those areas are still up more compared to a Calgary property.
Oil prices after the midterms are going to decide where rates go. Plus housing is going to continue to plague cpi. 8 pct mortgage rates and they stay is now on the table for the future
Great vid - u should do a video with a MTG broker on the recent fraud special from CBC marketplace. How prominent u think this issue is/was and what impacts, if any, it could have.
Steve - as you pointed out, people are sitting on the sidelines waiting to see what happens. At what point do you think people will panic and capitulate and start selling at a progressively faster pace? Ie... prices may not decline or even shallowly but still decide it's better to get out now than wait for further potential losses.
loll.. 1) We're already in a recession... only low IQ/slow ppl dont know this. They will continue raising.. We're going over 5% by March. Be ready for a shock.
Data, statistics and the slanted metrics used to quantify them are one thing. Consumer sentiment, the ability to service ones debt and real world political consequences are another. The problem with some of this so called data is it appears to be harvested in some kind of unworldly vacuum by people who appear to be totally detached from reality whether by design or otherwise..I've adapted a new mantra for the times "I'll believe it when I see it"
People secured mortgages so don't need to sell. Buyers looking for a better price. But supply is not there. Renters locked into condos. Homeowners not selling.
Thanks Steve, nice commentary. Given how closely tied house prices are to maximum achievable leverage, I am still waiting to see both the peak interest rates and the duration at which rates remain above 2.5% (which is a rough estimate of where Canada's long-run interest rates will have to sit with current population projections). I suspect we are looking at ongoing downward price declines until the end of 2023. After that, the rate at which prices flatten or rise will likely be heavily dependent on the forward rate projections. I suspect we will see a fairly prolonged period of a couple of years with rates above 3%, which will keep prices flat for several years. Certainly this is what the big banks (now that they have caught on to the BOC plans) have started to predict. This is of course all speculative. A big recession could throw this out of whack. On the flip side, a sudden reversal of rate increases, perhaps driving rates down below 2% by the end of next year, while unlikely, could certainly put a lot of steam back into the market given how much demand there is from potential homeowners. It's a complete guessing game, but there is a lot of benefit in waiting for people who can do it.
At present renting is cheaper than paying mortgage payment. 5-6 normal mortgage rate to stay longer period than most people think until trillion dollars gone out of household income to super lenders.
People need to stop spending money, especially borrowed money. Things will settle in 2 years. I don't really see a problem unless you are over leveraged, in which case, get out of debt, short term pain will lead to long term gain.
I believe that the rate will increase by 75BPS on October 26th. The low interest rate party is over folks. The interest rate will have to be higher then the rate of inflation. I see interest rates going north of 7.5 percent in the next year. The real estate market will tumble just like the stock market will!
Yup. More likely hood of 75 than 50. 6% mortgage rate across the board by Oct end. Most likely over 7-8% by early next year. And people don't realize that we don't need 10% interest rate to crumble. The amount of indebtedness today, 7-8% rate today is equivalent to 20% of 1980s.
"Sales Decline" putting downward pressure on prices ... but "Rents Increase" .... this scenario only works because there is a shortage in supply combined with Landlords passing on increased mortgage financing costs to renters .... this scenario in my opinion will start to dissolve when we get farther into the "Enforced Recession" the World's Federal Institutions are leading us all into .... while new job numbers continue to decline and heating fuel and diesel costs continue to rise over the winter the spring housing markets see the "Kick in the Ass" we are all expecting ... a good percentage of those people holding back on listing will adding to housing inventories in order to take their profits from the last 15 years of Interest Rate Stupidity. ...
@@davidkania3720 I often wonder when I see so many people spouting this tagline that the wef have since removed if your doing nothing but keeping that idea alive. Normalizing it to the point that we just let it happen
How can you claim any knowledge of economics while saying “the days of sub-two percent inflation are gone”. It inflation remains above 2-3% it means the eventual death of our currency, period. The fact that so many in the investment class are willing to sacrifice this for their own short-term gain is ridiculous.
You are arguing for stop to rate hikes so that the housing bubble you profit from won’t collapse, meanwhile everyone surviving on a non-indexed pension will be eating cat food. Don’t be so selfish.
I just sold for 10% less than the highs last spring. I’m still happy with that. I’m hoping to gain it back on the flip side when I buy in a few months. Poor us. We only doubled or tripled our money since 2015. Lol. Hopefully it cools the market enough to buy and sell real estate normally again.
The bond market is point to 4.5-5% rates near term. I'd say later in Q1. I wouldn't touch the overpriced Canadian real estate market with a 10 foot pole. Our house is nearly paid off but buying another property isn't an attractive option until we see a capitulation.
@@j.r.m.1884 Sorry, when I said 4.5-5% I was referring to the base BOC/US Fed rate. Now whether they are willing to go where the bond market is predicting is another thing. The NASDAQ had a break below it’s 200 week moving average and the SPY is right on its 200 week so the Fed might, and in my opinion should, be less aggressive with their hikes otherwise we might see another 2008 panic. Yes, the markets are that panicked. Last time we saw breaks like this was 2008, 2000 and 1990.
If home prices drop, yet interest rates go up does that mean monthly mortgage payments will be higher than when home prices were high, which means there will be no new home buyers because they are all prices out. 🤔 Like this is great the million dollar home could move to $500K but if that does happen ppl may have to qualify at 10% interest 🙄which sadly nobody will, however for those who do monthly mortgage payments look like $4500 per month. What a 💩 sandwich, who wants a bite...
Steve, I don’t track how rent/ shelter component in the CPI print is being calculated. Higher interest rates = more renters= more demand=higher rental rates=higher shelter print= higher interest rates. It’s a snake eating itself. With that said, why are rents topping out or coming off? Are people literally just out of money or moving in with family ? Few qualify at 8%. Bc flooding with newcomers. Good to own in the core right now.
Many detached houses for lease listed on MLS outside Toronto have stopped increasing or gone down in price and are still not renting. It's because detached homes are usually rented by families and families don't want to move during the school year. Some homes have been vacant since July and landlords who bought in the past two years are facing negative cash flow with decreasing home values. See for yourself on house sygma. I'm in a suburb north of Toronto and I see it all around me. A house not far away from me was first listed at 3100 in August, now its at 2600 and still on the market. Similar things must be happening in the Fraser valley. Most people claiming rents are skyrocketing are talking about the condos in the city core.
Right that makes sense. Far less demand with most things in the city fully back and functioning .I suppose some thought Covid would shut down everything forever.
I don't think inflation is going down to the 2% range that the BOC is targeting. In fact, I think that's "Pie in the Sky". The BOC is going to try to convince us that a higher target rate of inflation is better for us. Based on 25 years of capital market experience and past chair of a CFA derivatives committee, I view the recent rate of change numbers as just noise and clearing the foam off the top. Where do we go from here? Personally, and I may be wrong (it would not be the first time), I think inflation is here to stay in ways that no one can contemplate. The central banks are stuck and are not going to collapse the collateral value of the banking system especially the USD as the global reserve currency. Having said that, keep in mind that the central bank's role is adding liquidity to the banking system by expanding the money supply and consequently diluting the purchasing power of the currency. They are not there to keep stable prices as the narrative goes. SO, where does the average guy hedge himself? Call me stupid, but I think Real Estate prices are going to go up after the froth has been scooped off the top.
What you said makes some sense after 2025. In the meantime expect 5% rates by March and they’ll hold there till end of 2023. At that point if inflation is still over 5% then rates will go up higher. I expect the US to go to 5%, but the Bank of Canada might chicken out at 4.25 or 4.5 but if that happens expect a 0.70 or even 0.67 exchange rate by February and higher inflation in canada
Raising interest rates this aggressively is becoming a known fact it is not lowering inflation. Real inflationary culprits: corporate pricing, energy costs and supply chain disruptions. blame is on the hard working homeowners where it should be pointed at trudeau and tiff himself
Higher interest rates take 12-18 months to work their way through the economy and have/show their effect. Best to be patient and understand why it’s happening. I’d your worried it probably means you borrowed way too much than you comfortably can afford and might need to sell some investments, find a better job or a second job to generate more income
@@jmela1370 not quite..im debt free. No mortgage. No loans. Its just irresponsible what the boc is doing. Targetting home owners when the bigger issue is gov't
@@baseline6786 The bank of Canada isn’t targeting homeowners in any way. The bank of Canada was too lenient on debt by allowing interest rates to go down to 0.25% and taking advice from the government to print so much money so bond yields also dropped so low. By allowing people to borrow much more than they can comfortably afford they’ll be in trouble now as interest rates get back to ‘Normal’ levels at 5%. If Normal level interest rates aren’t good then that shows how super low interest rates that you’re still hoping for have broken the system and why it’s even more urgent to fix the broken system and return to normal.
There is still a lack of supply in the lower mainland that will not resolve for a long time. Housing prices will gradually fall (as interest rates rise) but it doesn’t seem likely they will crash. Sorry eternal pessimists!!
Peak inflation.... lol.... 1) Oil production curtailments from Saudi and the rest of OPEC+ is going to force energy prices higher. The USA will try to fight it by releasing oil from their SPR but eventually they will need to buy back all that oil at a premium price to replenish it for a real emergency. The result? - Energy prices are going right back up forcing the CPI higher. They could rely more on Canada for cheaper oil, but their obsession with "green energy" can't allow them to do that. 2) Ongoing war between Russia and Ukraine (where Putin's strategy is to drag conflict into the dead of winter and use his energy stranglehold on Europe to inflict maximum pain and damage) - Europe will get desperate for energy, forcing energy prices higher. Given the importance of Russia and Ukraine in the global commodities market, prices of most commodities will go up aka higher inflation 3) Western governments have lost their minds and are literally gearing up to fight inflation by borrowing and spending even more money... (liberals in Canada and Biden in the US have inflation fighting bills that will spend billions of dollars into the economy) ..... I'm surprised you still think that inflation has peaked already after just a couple of months and given all of these tailwinds that remain for it.... Again, stagflation is more likely than anything. This battle for financial stability and control is far from over. Best of luck to everyone.
![Kodak Black - Catch Fire [Official Music Video]](http://i.ytimg.com/vi/A4ch-olIuZo/mqdefault.jpg)
Looks like they're not reversing like you said they would... Good old 90s
he is a dreamer mate! LOL
With oil prices and in general energy prices ramping up again moving into the winter, inflation with go higher again.
$32,000 weekly profit Our lord Jesus have lifted up my Life!!!
Wow!!!🥺
You see many people remain poor because of ignorance.
@@georgewilliams257
Not because of ignorance, but because of too many scammers in the business
@Loveth kim Spencer
Really you know him?, I even thought I'm the only one he has helped walk through the fears and falls of forex trading
Expert Derek James services is the best, I got a brand new Lambo last week and paid off my mortgage loan thanks to his wonderful services!
What were GVR, GTA detached prices the last time fixed was at 6.2% @steve? And when they were at 7.2%? Would love the data point, thanks if you oblige
Just like markets don’t go straight up and down, inflation also doesn’t just roll over and go straight down. One of the biggest worries they had on this CPI is that Services are now adding to the core rises in inflation. People are demanding higher wages because of the increased cost of goods. But when wages go up, corporations don’t just absorb those costs because they only care about profits. So then they raise the costs of goods again and the cycle of inflation starts over….. That’s why they raised interest rates so high in the 80’s.
The Strong job market is only adding to this because companies will pay to fill positions which will only inflate wages further. They are definitely going to miss again on the inflation as you suggested though. We can only cross our fingers and hope it’s not by a lot….
So good to hear a real estate agent speak honestly about where mortgage rates are heading and what real values of housing should be. And you are spot on that this is the return to the 2-4% real rates era. The negative real rates experiment for the last 10-12 years failed and only made the rich richer, housing unattainable for the 99% and made retirement close to a dream for most….
He speaks honestly? 9 months ago steve said they cant raise rates. every time he has given an opinion hes fairly wrong with the big stuff..Now he just is saying what news articles tell him.
98% of his followers dont own anything. So hearing rates rising gives them hope still. Lol
Another banger. Would love to hear your take on how the rental market is effected by this in the mid-term (6-12mos).
Feels like there should be more demand for rentals, however, I’m also noticing rents possibly starting to decline. Could just be the time of year or it could be the start of a major poop storm.
It’s a battle between the “I’m just going to wait for the market to rebound and rent it out” crowd (deflationary pressure on rents) and the “I need out of this now” crowd (less rental supply but downwards pressure on sale prices which, in turn, may still result in rents declining).
Who has their house paid off? It's the 60yo+ crowd who bought them at 200k$ or less.
How much money do you need to make to qualify for an 700k$ mortgage? What percentage of Canadian house holds, especially young ones that are forming families.
This is such a dumpster fire, look at market place mortgage fraud.
there are so many people with regular jobs who got million dollar mortgages for poorly built townhouses. They think paying off one million dollar mortgage is gonna be easy
@@m.b5777 waiting on it to "inflate" away like the prior generations.
The average age of covid death in Canada 83.3...Hope it was all worth it!
🤫… the sheeple don’t like that kind of talk haha
Hey Steve, have you seen the latest CBC Marketplace episode on Mortgage Fraud in Canada? It was outrageous, would love to see you talk about it in a video!
It was an incredible article. Amazing how many mortgage brokers and realtors were willing to commit fraud to get people into houses. Such a high percentage of them did that for the undercover CBC people that it makes me question how much of our real estate in Canada has been sold to unqualified people. I’d love to see Steve and Rich and Keith highlight this in the loonie hour show too.
@@jamesheron2282 you got that right! it is a mess. With rates increasing many realtors and brokers will do anything to try to make a buck!
@@jamesheron2282 The investigation showed 6/10 agents were willing to commit fraud and there are 16,000 cases of fraud flagged MONTHLY.. crazy yet all regulators turning a blind eye
@@ronbonora7872 this has been happening for decades. Has nothing to do with recent policy or rate changes. Fraud is embedded in real estate practice by a massive portion of the industry. There’s a few honest folks out of every dozen but without stricter rules they probably lose out than their coworkers commuting the fraud
@@jamesheron2282 The cold call part was the dumbest
Do you remember calling around for weed 10 years ago, no criminal admits to illegal dealings with a cold call.
If US market is pricing 75 rate hike for FED in November.
why would BOC will go with 50 . Can we afford on $CAD side ?
I agree with you!
There going 75 after the CPI print this week in the states. Tiff not going to make the same mistake as Australia after seeing what happened to AUD after only increasing 25bps and watch the Canadian dollar become the Canadian Peso
Some ppl have VRMs from a few years ago which we're set up at 25 yrs amortization with super low rates. As the banks are not updating payments the adjusted amortization is now over 50 yrs. There is going to be a lot of shocked faces at renewal.
We may not be seeing feb prices for another 7 yrs. Even if interest rates start to come down. Assuming interest rates start coming down to 3.5 percent by july of next year. Most of the investors and first time buyers will be out of savings due to high interest rates and high prices.
Hard to say. Could be 2 years could be 7.. no one knows. All depends when they drop rates and when.
But it will return and exceed peak prices in 10 yrs.
@@baseline6786 no one knows now a days 10 yrs is like a century. Things a so fast we are seeing everything in same year
HI Steve most Townhouse 2bed 2bath +den price at this time is almost 700k in Frazer Valley.
Do you think by early next year the price would go down between 500k to 600k?
Give it till q2 to q3 next year and you will see major price drops.
@@cricketlovervaruns thanks I have plan to buy townhouse 2023 2 or 3story 2bed 2bath+den
@@inmyview6564 same here. but on the sidelines till minimum 6 months after BoC pauses rate hikes so around summer/fall of next year.
The only immediate impact to housing prices from the rise in interest rates is scaring new buyers primarily. Most people have fixed rates and until they start coming to renewal, it takes time to see prices really come down. But when it starts coming down, it will come down fast as more and more people “need” to sell. As other suggested, Q2 or Q3 will likely be the start of it.
Weren't you saying at some point that RE won't be going down?
6% is just a marker on the way to 10%. Housing downturn is just getting started.
Probability of 75 bases point is more than 50 bases point for October.
50 bases point increase should or will happen in December 2022.
Great explanation of the markets...I hope you can get into details about other debts Canadians have.....like Heloc debt...
They won't stop raising rates because they keep creating inflation (cutting $1600 cheques to the homeless + free housing, rent assistance, etc. etc.). Keep positioning to milk that yield boys
It' a 7-10 year wait on affordable housing through house connections. People with disabilities have more chance to die than to get a liveable place to rent.
@Nick D your take on inflation is that it’s caused by poor people??
@@stephnicaise Inflation is the result of more money chasing fewer goods and services. The "chasing" is money velocity (speed at which money changes hands). Poor people tend to spend money as soon as they receive it, often even before. They also produce the least assuming income is correlated with value creation.
My point was that this "fight against inflation" will be ongoing because they are raising rates on one end but subsidizing consumption on the other. You can exploit this by taking part in the various yield plays in a rising rate environment until the day comes where assets will be on sale.
Bahahahahahahaha! You think cheques to low income families are to blame for the exploitation of the housing market? Because people were given a half months rent? 🙄
Until the over exploitation of the real estate investment market is fixed, inflation can't come down. 28% of the CDI is shelter related costs..... meaning every time a rate hike goes up, there is an inflation kick back due to shelter costs.... so inflation can't come down till housing plummets.
@@nickd9274 you’re not including the production variable. Inflation is multivariable, and not as strait forward as you’re putting it.
once the layoffs gain momentum in the new year and hiring stops, maybe not in the Public Sector, that will help reduce rents just as cost of borrowing will deflate home prices. Going forward energy, food, and essentials will be our inflationary items. The question will be if housing and consumables drop faster to bring down the CPI. Even if CPI flattens as a result of this I think over the next 9 months that by summer when we've lost 250,00-500,000 jobs, possibly more, people will care about a lack of employment opportunities and food going up double digits versus a drop in laptop prices.
Many Western Countries have prevented farmers from using fertilizers in the fight against global warming. This, along with normal droughts and floods annually around the world, will likely put a strain on food production next year and until going forward as long as politicians continue limiting food production in the Western World and paying farmers around the world to not farm.
In a few years when people have been starving those insect manufacturing plants will be up and running and we'll embrace what ever processed food they are willing to provide us. Kidding. It will probably take longer than a couple of years.
I don't want my house to have less value but there has been way too much profit and greed including government greed. Not enough units built and too much immigration in a short time. My HELOC interest rate has added 600.00 per month to my interest. I am usually not paying much attention to the housing market.
If we will go this way we will reach 10% soon, houses will decline in price significantly
good
Calgary down less then gta and Vancouver but also Calgary didn’t see a crazy spike in prices like Toronto etc. i bet you those areas are still up more compared to a Calgary property.
Oil prices after the midterms are going to decide where rates go. Plus housing is going to continue to plague cpi. 8 pct mortgage rates and they stay is now on the table for the future
Great vid - u should do a video with a MTG broker on the recent fraud special from CBC marketplace. How prominent u think this issue is/was and what impacts, if any, it could have.
Worst is yet to come but I’m not leaving. Wealth is built in sh$tty times!
100%
I don't think this is the bottom, but exiting all markets and trying to time the bottom is the worst strategy in the history of time
1000%
Steve - as you pointed out, people are sitting on the sidelines waiting to see what happens. At what point do you think people will panic and capitulate and start selling at a progressively faster pace? Ie... prices may not decline or even shallowly but still decide it's better to get out now than wait for further potential losses.
Hey Steve, will BOC cut interest rates if we hit a recession?
loll.. 1) We're already in a recession... only low IQ/slow ppl dont know this. They will continue raising.. We're going over 5% by March. Be ready for a shock.
We will follow America first.
@@fionarofl The US won’t need to cut interest rates when the recession hits. Canada might need QE but then the loonie will drop to 0.65 or 0.60
Data, statistics and the slanted metrics used to quantify them are one thing. Consumer sentiment, the ability to service ones debt and real world political consequences are another. The problem with some of this so called data is it appears to be harvested in some kind of unworldly vacuum by people who appear to be totally detached from reality whether by design or otherwise..I've adapted a new mantra for the times "I'll believe it when I see it"
YUP. there are many dreamers, especially real estate agents and many mortgage brokers! LOL
This was an under rated comment
Inflation 👍👍👍👍 was waiting long time for it.
Any news on Dec 1 meet up?
Everyone I know has money 💰. Strange, eh? Will wages ever go up? Realtors aren't smiling much these days!
What’s the ticker on yahoo finance for the can-05y ?
I can confirm that rents are coming down in at least one US market (Phoenix)
People secured mortgages so don't need to sell. Buyers looking for a better price. But supply is not there. Renters locked into condos. Homeowners not selling.
Gonna crash another 50% from here
Matthew, please remember to cite the source- it was me!
Thanks Steve, nice commentary.
Given how closely tied house prices are to maximum achievable leverage, I am still waiting to see both the peak interest rates and the duration at which rates remain above 2.5% (which is a rough estimate of where Canada's long-run interest rates will have to sit with current population projections).
I suspect we are looking at ongoing downward price declines until the end of 2023. After that, the rate at which prices flatten or rise will likely be heavily dependent on the forward rate projections. I suspect we will see a fairly prolonged period of a couple of years with rates above 3%, which will keep prices flat for several years. Certainly this is what the big banks (now that they have caught on to the BOC plans) have started to predict.
This is of course all speculative. A big recession could throw this out of whack. On the flip side, a sudden reversal of rate increases, perhaps driving rates down below 2% by the end of next year, while unlikely, could certainly put a lot of steam back into the market given how much demand there is from potential homeowners.
It's a complete guessing game, but there is a lot of benefit in waiting for people who can do it.
Thanks Steve. Good stuff as usual.
Another great episode thanks
It's ok. Just pay more. What choice do people with mortgages variables have?
Run faster on that hamster wheel bitchez
Move to fixed over 2 or 3 years while you can still get them at 5%.
Calgary is a great place to live. We're getting inundated by BCers in the last 6 months
Lots of liberals heading to Alta. Good luck with that
At present renting is cheaper than paying mortgage payment. 5-6 normal mortgage rate to stay longer period than most people think until trillion dollars gone out of household income to super lenders.
Sounds like the party is over.
it is over mate!
60/40 just getting crushed by this. Glad I'm 26, not 66.
60/40 not getting crushed as much as 80/20 or all equity portfolio
If you were 66 you’d have substantial equity.
Did anyone see rates going this high last year?
40 yrs of rate hikes in usa. If repeating then rates should drop in half mid next yr.
People need to stop spending money, especially borrowed money. Things will settle in 2 years. I don't really see a problem unless you are over leveraged, in which case, get out of debt, short term pain will lead to long term gain.
Rent prices are going to tank
I believe that the rate will increase by 75BPS on October 26th. The low interest rate party is over folks. The interest rate will have to be higher then the rate of inflation. I see interest rates going north of 7.5 percent in the next year. The real estate market will tumble just like the stock market will!
Yup. More likely hood of 75 than 50. 6% mortgage rate across the board by Oct end. Most likely over 7-8% by early next year. And people don't realize that we don't need 10% interest rate to crumble. The amount of indebtedness today, 7-8% rate today is equivalent to 20% of 1980s.
@every good thing comes to an end LOL. depressed fellow.
I agree with you RonnieBoy
"Sales Decline" putting downward pressure on prices ... but "Rents Increase" .... this scenario only works because there is a shortage in supply combined with Landlords passing on increased mortgage financing costs to renters .... this scenario in my opinion will start to dissolve when we get farther into the "Enforced Recession" the World's Federal Institutions are leading us all into .... while new job numbers continue to decline and heating fuel and diesel costs continue to rise over the winter the spring housing markets see the "Kick in the Ass" we are all expecting ... a good percentage of those people holding back on listing will adding to housing inventories in order to take their profits from the last 15 years of Interest Rate Stupidity. ...
T Mac about to cause the big R
I mentioned not long ago that I could see rates going up to 10%. This may just happen
How do you figure? Core inflation is 7%, and rolling over. Can see 6% for 2-5 years, but not 10.
I really don't think 10 is possible.. but honestly tiff could be just doing what the WEF tells him, making it so we all own nothing
@@mattslowikowski3530 inflation is much higher though enjoy the ride.
@@thanks4that261 you gór that right. 2030 you will own nothing and be happy
@@davidkania3720 I often wonder when I see so many people spouting this tagline that the wef have since removed if your doing nothing but keeping that idea alive. Normalizing it to the point that we just let it happen
Just pay more and more mortgage now. Can't afford anything else.
How can you claim any knowledge of economics while saying “the days of sub-two percent inflation are gone”. It inflation remains above 2-3% it means the eventual death of our currency, period. The fact that so many in the investment class are willing to sacrifice this for their own short-term gain is ridiculous.
You are arguing for stop to rate hikes so that the housing bubble you profit from won’t collapse, meanwhile everyone surviving on a non-indexed pension will be eating cat food. Don’t be so selfish.
I just sold for 10% less than the highs last spring. I’m still happy with that. I’m hoping to gain it back on the flip side when I buy in a few months. Poor us. We only doubled or tripled our money since 2015. Lol. Hopefully it cools the market enough to buy and sell real estate normally again.
No one cares
"Double or tripled"?
Because there's no way of knowing for sure.
@@dman9416 I thought it was good comment. More productive then yours at the very least.
Sounds like a good plan. Few months is too soon imo. I'm doing something similar with one but am waiting a year or two.
Lol "d man" and "pickle media" coming at you raging. They seem hard. ;)
Real Estate discovers Bond Market.
The bond market is point to 4.5-5% rates near term. I'd say later in Q1. I wouldn't touch the overpriced Canadian real estate market with a 10 foot pole. Our house is nearly paid off but buying another property isn't an attractive option until we see a capitulation.
Yeah, I agree. 6% is looking more like next year, maybe Q1 or maybe we don’t get that high lol 🤞🏻🤞🏻🤞🏻
@@j.r.m.1884 Sorry, when I said 4.5-5% I was referring to the base BOC/US Fed rate. Now whether they are willing to go where the bond market is predicting is another thing. The NASDAQ had a break below it’s 200 week moving average and the SPY is right on its 200 week so the Fed might, and in my opinion should, be less aggressive with their hikes otherwise we might see another 2008 panic. Yes, the markets are that panicked. Last time we saw breaks like this was 2008, 2000 and 1990.
If home prices drop, yet interest rates go up does that mean monthly mortgage payments will be higher than when home prices were high, which means there will be no new home buyers because they are all prices out. 🤔 Like this is great the million dollar home could move to $500K but if that does happen ppl may have to qualify at 10% interest 🙄which sadly nobody will, however for those who do monthly mortgage payments look like $4500 per month. What a 💩 sandwich, who wants a bite...
Your dog has hiccups Steve
Steve, I don’t track how rent/ shelter component in the CPI print is being calculated.
Higher interest rates = more renters= more demand=higher rental rates=higher shelter print= higher interest rates.
It’s a snake eating itself.
With that said, why are rents topping out or coming off? Are people literally just out of money or moving in with family ?
Few qualify at 8%. Bc flooding with newcomers. Good to own in the core right now.
Many detached houses for lease listed on MLS outside Toronto have stopped increasing or gone down in price and are still not renting. It's because detached homes are usually rented by families and families don't want to move during the school year. Some homes have been vacant since July and landlords who bought in the past two years are facing negative cash flow with decreasing home values. See for yourself on house sygma. I'm in a suburb north of Toronto and I see it all around me. A house not far away from me was first listed at 3100 in August, now its at 2600 and still on the market. Similar things must be happening in the Fraser valley. Most people claiming rents are skyrocketing are talking about the condos in the city core.
Right that makes sense.
Far less demand with most things in the city fully back and functioning .I suppose some thought Covid would shut down everything forever.
I don't think inflation is going down to the 2% range that the BOC is targeting. In fact, I think that's "Pie in the Sky".
The BOC is going to try to convince us that a higher target rate of inflation is better for us.
Based on 25 years of capital market experience and past chair of a CFA derivatives committee, I view the recent rate of change numbers as just noise and clearing the foam off the top.
Where do we go from here?
Personally, and I may be wrong (it would not be the first time), I think inflation is here to stay in ways that no one can contemplate.
The central banks are stuck and are not going to collapse the collateral value of the banking system especially the USD as the global reserve currency.
Having said that, keep in mind that the central bank's role is adding liquidity to the banking system by expanding the money supply and consequently diluting the purchasing power of the currency.
They are not there to keep stable prices as the narrative goes.
SO, where does the average guy hedge himself?
Call me stupid, but I think Real Estate prices are going to go up after the froth has been scooped off the top.
What you said makes some sense after 2025. In the meantime expect 5% rates by March and they’ll hold there till end of 2023. At that point if inflation is still over 5% then rates will go up higher.
I expect the US to go to 5%, but the Bank of Canada might chicken out at 4.25 or 4.5 but if that happens expect a 0.70 or even 0.67 exchange rate by February and higher inflation in canada
Raising interest rates this aggressively is becoming a known fact it is not lowering inflation. Real inflationary culprits: corporate pricing, energy costs and supply chain disruptions. blame is on the hard working homeowners where it should be pointed at trudeau and tiff himself
Higher interest rates take 12-18 months to work their way through the economy and have/show their effect. Best to be patient and understand why it’s happening. I’d your worried it probably means you borrowed way too much than you comfortably can afford and might need to sell some investments, find a better job or a second job to generate more income
@@jmela1370 not quite..im debt free. No mortgage. No loans. Its just irresponsible what the boc is doing. Targetting home owners when the bigger issue is gov't
@@baseline6786 The bank of Canada isn’t targeting homeowners in any way. The bank of Canada was too lenient on debt by allowing interest rates to go down to 0.25% and taking advice from the government to print so much money so bond yields also dropped so low. By allowing people to borrow much more than they can comfortably afford they’ll be in trouble now as interest rates get back to ‘Normal’ levels at 5%. If Normal level interest rates aren’t good then that shows how super low interest rates that you’re still hoping for have broken the system and why it’s even more urgent to fix the broken system and return to normal.
As always
Seriously though thank you appreciate your work
Teach a man to fish - not give free fish - if liberals stopped spending we would all recover.
Rich back tracked on dancing on the unfortunate first time home owner in last broadcast.
he does a lot of back tracking! LOL
LOVE IT!!! CRASH AND BURN IT TO THE GROUND!!!!!!!!!!!!!!!!!!
In process
🇨🇦🇨🇦🇨🇦🍺🍺
First
Congrats man, great accomplishment 👏
@@thanks4that261 Thank you. I appreciate the recognition for the work I have done 😁
Who cares on this channel
There is still a lack of supply in the lower mainland that will not resolve for a long time. Housing prices will gradually fall (as interest rates rise) but it doesn’t seem likely they will crash. Sorry eternal pessimists!!
Max, you might want to read the stats on the tidal wave of new housing that is going to swamp the market in the next few months lol
@@DTrent-uy1wl Tidal wave? Okay I’m waiting….
Peak inflation.... lol.... 1) Oil production curtailments from Saudi and the rest of OPEC+ is going to force energy prices higher. The USA will try to fight it by releasing oil from their SPR but eventually they will need to buy back all that oil at a premium price to replenish it for a real emergency. The result? - Energy prices are going right back up forcing the CPI higher. They could rely more on Canada for cheaper oil, but their obsession with "green energy" can't allow them to do that. 2) Ongoing war between Russia and Ukraine (where Putin's strategy is to drag conflict into the dead of winter and use his energy stranglehold on Europe to inflict maximum pain and damage) - Europe will get desperate for energy, forcing energy prices higher. Given the importance of Russia and Ukraine in the global commodities market, prices of most commodities will go up aka higher inflation 3) Western governments have lost their minds and are literally gearing up to fight inflation by borrowing and spending even more money... (liberals in Canada and Biden in the US have inflation fighting bills that will spend billions of dollars into the economy) ..... I'm surprised you still think that inflation has peaked already after just a couple of months and given all of these tailwinds that remain for it.... Again, stagflation is more likely than anything. This battle for financial stability and control is far from over. Best of luck to everyone.
👍