I wasn't financial free until my 40’s and I’m still in my 40’s, bought my third house already, earn on a monthly through passive income, and got 4 out of 5 goals, just hope it encourages someone that it doesn’t matter if you don’t have any of them right now, you can start TODAY regardless your age INVEST and change your future! Investing in the financial market is a grand choice I made. Great video! Thanks for sharing! Very inspiring! I love this.
@Manuel Andrea I invest across the top markets but not by myself though. I follow the guidelines of *PRISCILLA DIANE AIVAZIAN* I can correctly say she's worth her salt as an investment advisor as her diversification skills is top-notch, I say this because of the results, as my portfolio grows by averages of 20 to 3O% every month, unlike I can say for my IRA which has just been trudging along. my portfolio just mirrors what she places and not just on some particular industries of my choosing. she gave me that financial freedom I needed
@Manuel Andrea look her up on the internet with her name. she's quite popular for her services as she was recently featured on CNN. She can work with anyone irrespective of where you're located
You said it all. It's hard to predict the future, but one thing you can always rely upon is human GREED. Once stocks start rising again, people are going to think back and kick themselves and ask why they weren't willing to buy things at a 60-80% discount. Interesting I'm also a subscriber of *PRISCILLA DIANE AIVAZIAN* signals and if I were to rate her accuracy, I would say perfect 👌
In 1989 or 1990 my dad was offered 570k for our house in toronto. He wanted 600k. Recession happened, interest rates went up. We sold that house in 1998 for 410k. So house prices can and will go down.
@@m.b5777 inflation takes a basket into account. Real estate is not fairly considered in said basket. It's based of opinion polls, not real sales numbers. Also, in most good neighborhoods in cities houses quadrupled or more since the 90s
It's all part of a plan to keep people poor and desperate. Capitalism has long since been replaced by some rent seeking fraud of an economy with banksters and other con men running the show.
@@luckyPiston i believe gross negligence. The Prime Minister of our country is a drama teacher and the Minister of Finance is a journalist. How can the head of your finance team not have an economics/accountant background? how can your PM never have a track record as a CEO or a different role as a leader of a big entity?
@@Aaron-fb1pq That’s true but Pierre Poilievre isn’t educated either & this is the guy folks what to replace Trudope. Did you know a lot of Liberal, Conservative and NDP MP’s/MPP’s are landlords & own investment properties. Liberals & Conservatives MP’s lead the way: Pierre Poilievre, Phillippe Champagne, Ahmed Hussen, Andrea Horwath etc. These politicians tell poor voters the help with home affordability is the the most laughable part.
My wife and I moved to Vancouver 4 years ago, we both have good jobs making around 100k annual (each). We are in our early/mid 30s and want to have 2 kids but there is no way we can afford a 3 bedroom. What a wonderful time to be alive.
From the perspective of a seller in 2021, the writing was on the wall. I probably could have squeezed out an extra 10% out of the property as we sold very high at the time but it felt sketchy even then. The cheap money for ever thesis seemed like we were being told that potato chips were now a suitable dinner substitute that was nutritious and delicious. You can’t dilute the dollar and you can’t eat chips for dinner without shitting the bed at some point.
@every good thing comes to an end medal?? Not sure your what your talking about. Didn’t lose any money. Sold high, will buy back in low. Growing my capital while I wait. Slow down friend..
When I think about my grandparents generation, they were so frugal and they didn't have debt. They bought what they needed. Today, our economy is built on debt. It's insane and our culture has no concept of financial management. I wish that our education system would teach core financials every single year.
And most of our grandparents started working at 18, today we've got people working part time in the service industry until their mid-twenties before they start their careers and they're shocked at being 6 years behind Boomers in their lives. And that's not even taking into account all the extra modern expenses that we have compared to the antenna on top of their 13 inch cabinet TV days.
The Canadian Housing market has been broken ON PURPOSE for decades. Governments collect taxes based on the value of your property so they have a massive incentive to drive those prices UP. That means easy foreign money coming in from China for decades. That means restrictive bylaws in popular cities to limit density and maximize tax revenue. That means government pressure on banks to lend lend lend and get more buyers in the market. This 'system' is designed to encourage over borrowing and recycle assets of people that fail back into the market after destroying their lives. This happens everytime rates move up sharply. The housing market won't 'crash' from increased rates. It will adjust and continue to push up higher. Real Estate has been the best performing asset typical investors have access to since the invention of the bank almost.
This is why I come back to this channel every time... a lot of boring episodes but also regularly comes episodes really good like this one. Especially when we are in a moment right now that was cooking for a while.
For those who own their own homes ie aggressively paid down their mgt during record low interest rates and have saved for their retirement are about to be rewarded. For 30 years the savers have been punished but things are about to change:)
It's highly leveraged for the people who bought in the last 2 years. Anyone who bought before that has substantial equity and is not overleveraged. I believe the average LTV in Canada is 25%.
You are assuming that people have not used their home equity lines of credit for massive consumption. Wages are very low relative to the cost of living. All the money is coming from lines of credit. People are spending money like crazy and using their homes as ATMs
Steve, it's ok for the market/economy to crash, recession, major recession and or depression. It should of reset in 2008 but we didn't allow it to. The housing market cannot continue to go up at the pace it is and it can't stay at the heights it at.
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Your evaluation is spot on. The Canadian govt shouldn't have pumped the real estate industry back in 2008 but they did without knowing who and why the prices were being driven up. Since then, the real estate sector has been a runaway freight train and nobody has said, this is out of control? Wages etc have been left in the dust. Add in 50k to 60k dollars in land transfer taxes and 5% realtor fees (cough cough excessive fees), unrealistic development fees to build new homes.... think about that. 200k bucks in fees? Add in domestic investors playing the market and we've had stupid for 20 years. Everybody's greedy little paws taking their cut, why would anybody say anything other than wow this is great!! The municipalities, the real estate industry all need to openly talk about who's buying, and which gov't or industry people have added to the unaffordable factor. We now need a bone crushing recession in the real estate market here in Canada. Up until now, it's been no risk buying, which has meant wild bidding for decades. The real estate industry needs to be broken.
Banks are in bed with the federal reserves. You can't trust banks or bank economists, the need for independent advice is required now more than ever. I'm with you, I don't see them raising the overnight above 1.5% before something breaks. Great episode Steve 👊
@EWaste if this keeps going? Has been for 2 years... how much more do people need to see before they flip the switch? Or perhaps the Frog in Pot Theory Holds True... we tolerate the increments until being cooked?
@EWaste Federal Reserve = private banking interests. That is whom they represent first and foremost. The whole idea of some wise man sitting in an ivory tower price fixing (i.e setting interest rates) and counterfeiting (i.e printing money) is absurd. What part of that is Capitalism?
Hey Steve, brilliant piece as always. Important consideration to factor in, is that the Govt needs to reduce inflation. The only way for Govt to slow down high inflation is by creating demand destruction (I.e. Recession). They fully intend to cause prices, incl homes, to fall. IMHO, this is part of the big plan. Any economist who does not understand this, is incompetent. Cheers R
The reason they aren't telling this is because people think a recession is bad. I believe the central banks don't want to cause a panic. Because people go FOMO in the stock and housing markets... With the ton of inflation we just got, a recession would be a good thing... if we don't reverse inflation, we will be in a lot more pain soon. Same thing with unemployment. I hear a lot of people saying "there is no recession, unemployment is low"... hum... unemployment is too low. It's a bad thing. It needs to go up, if we want a good economy. Labor shortage isn't good, especially since the inflation is much much higher than the salary increases... economists already have data on this in the US and Europe.
Steve, in your next video can you address buyers shifting from fixed-rate mortgages to variable? I've heard that typically ~90% of buyers used fixed-rate mortgages, but in the last couple of months this has declined to ~50%. I would assume this allows the impact of high rates to be pushed a bit later, but what will be the other consequences?
Great content as always. Don’t forget about the stress test as well. With rates at 4%, qualifying will be at 6% instead of 5.25% as it currently stands. As rates continue to rise, qualifying for greater loan amounts will be even more difficult.
Not when the banksters get their friends in govt to put taxpayers on the hook for bad mortgages and steal from savers through money printing for the same. It's one big fraud these days.
We are definitely at the top of the housing market pricing. Prices can only go down from here. Real Estate is a long term investment and anyone trying to speculate and expecting to make quick and easy money is about to learn a tough lesson. Yes, prices can go down!! Look back at the 1980’s and early 1990’s for a history lesson.
You're missing the point IMO. Currency is losing value, prices aren't necessarily going up in real terms. Prices are only going up in nominal terms, how low can dollars and government currency go...
We gotta start investing as a country in technology and or the energy sector instead of real estate. How does making real estate more valuable make a country more prosperous?
Hey Steve…thanks for this insight. Huge value in these videos (& the loonie hour)…totally agree with everything you’ve said, but have a query. You’ve suggested an impact on unemployment and the job market. Perhaps I’m being a little obtuse, but wondering if you can elaborate on that. I’m assuming you’re suggesting that as companies struggle with rising costs relative to debt they will be forced to cut back? That being said, what I’m seeing across the board, is that companies are still struggling to employ enough staff to keep up with current work loads (though especially in anything construction-related - I.e. trades but also banks, architecture firms, insurance, other professionals). Would love to hear your thoughts on this…
Housing downturns always bring on the most challenging recessions. Because 70% of Canadians own homes, when values fall so does their wealth and so do bank assets. In other words lending freezes up and the knock on effects are less spending everywhere else. Remember in simple terms, one persons spending is another persons income.
thanks again for all the amazing content. Appreciate it so much. This is such essential knowledge to have and you always have a great summary of whats going on, loonie hour is insanely informative as well. Ive been learning so much from you guys.
Steve great podcast! I do agree with your view… you do say to start collecting cash because of potential deals that can arise, but, can the Canadian dollar support a downturn or will the value of the currency collapse under all this pressure?
8:30 I've been counting on this. Been holding cash for a very long time, my only concern with that is what happens of there are a lot of foreclosures and the banks get into trouble, are they going to do bail-ins?
More important than protecting the housing market, the BOC has to protect its own credibility. They will do what's necessary to keep it. Things should get interesting really fast going forward.
The market is supposed to protect the consumer, not a bunch of cronies sitting at the Bank of Canada. Those guys are into profiting their buddies (the private banks) and then jumping from govt into those high paid jobs at banks as a reward thereafter. We don't need a central bank that is increasingly a source of corruption and cronyism.
I already see an increase in home sales in my neighbourhood (a very difficult neighbourhood to buy into). I suspect that many see the writing on the wall and want to sell their million dollar homes while they can.
Steve, don't forget that as the government measures it, mortgage interest payments COUNT AS consumption. So as interest rates increase, it will read as an acceleration of consumption, not a decline.
Thanks Steve. Very realistic, balanced, and insightful analysis. Let's see how things unfold as the inflation, interest rate, cost-of-living are rising...
Hey Steve, I am surprised that the rates are so low compared to 1989 when I had a rate of 13.25 . John Crow of BOC eventually killed 7-8% inflation rate. Back then stats Canada reported true rate of inflation now it’s lost its way due to political pressures.
And don't forget to also factor in the cost of food and energy inflation going forward... oh boy. Will gas hits $2.25 / liter by summer and $2.50 by 2023?
Great overview (yet again). Thank you. Interesting year ahead for all. Question : where do people's savings go... that went into housing... if they either have to sell at a loss or have to go bankrupt... ? (Perhaps simple question... but many homebuyers maybe don't think about that step...)
I am certain govt will simply dump the losses of real estate defaulters on taxpayers instead of banks that originated the loans. It's a fraud that when banks issue the mortgages, they profit handsomely. But when the losses and defaults show up, the bill is transferred to the taxpayer.
Worse than price crashing it will be the duration properties will be sitting unsold. Am afraid the Chinese are not coming to rescue the housing market this time around. They have their own Evergrande debacle to deal with lol
Hi Steve, Great content as usual. Question for you regarding the balancing act of mortgage rates vs booming local economies in specific regions. With money now flowing into Alberta thanks to the commodities boom I'm having trouble evaluating whether Alberta is likely to continue climbing in value (compare AB growth to Canadian benchmark and we see it's quite reasonable) while the oil, wheat, ag inputs etc are having an extended bull market OR if rising rates will be enough to sink ALL ships and it will suffer price pullbacks despite the strong localized underlying market conditions. What are your thoughts on this? Can a 4-5% interest rate be enough to slow Alberta in the midst of an oil (and other commodities) boom or is this the time to be positioning to take advantage of that market now finally waking up?
Totally agree. The current debt situation is not sustainable. Interest rates will need to go up to curb inflation. Those who just bought into the bubble will be the ones who get hit hardest.
Remember at the beginning of the covid crisis the bank of Canada and cmhc said house prices will go down 20% 🤣🤣 Now when they tell you not to worry they will paul Volcker and rug pull us ? 🤔 I sold one of my properties not out of fear but just to de- leverage and maybe prepare for a new buyers market
@@RelaxedPoo it's was just a investment property 😉 now I'm only carrying about 100k debt on a million dollar property... never sell the home you live in especially if it a 4plexs.. And my stock portfolio is insane if your worried about inflation 🤣🤣🤣 stocks are more liquid
Steve "The Real News" Saretsky Time to sell the farm....80 bucks for two jerry cans of fuel.....Thanks for all the info Boss....trying times for farmers....
Good to see you’re slowly learning how the bond market controls the housing market. I remember when you first started your channel you didn’t even know they where correlated.
The cynic in me feels like the BOC will just buy Canada bonds to keep the rate down. What's another $200B of imaginary debt? Just keep blaming the inflation on COVID, supply lines and Ukraine. If that fails in a few years we can have the "Canadian Homeowners Mortgage Assistance Plan" and send the money straight to the banks.
All media/government/banker always said good on media/ report. Real inflation is > 12%, monthly report said 5.7%. It is deceiving. Market stock will tell. 30 mortgage rate in US is 4.95 now. So 5 year mortgage in Canada will end up around 4.5 up... in a few month. Feb reserved can't do what they want.
Prices might go down, but not completely. Inflation = printed money of 10-15% will offset the slide? Large amount of cash will remain out there. Say if prices are to slide 20%, nominally they will slide only 10% to account for inflated volume of dollars out there?
I agree with what you say (you know these things way better than me). But, home prices may remain the same, however if inflation is high it would essentially mean that the houses are "cheaper" compared to other goods (which means that you are right, but he may have the right number). However, like you I think that things are way worse and the prices will drop, inflation will remain high and the interest rates will have to go higher. Very good News 😃.
The government and banks got us here… what makes you think there was a return ticket? The interest rate increases are going to crush people but so is inflation. Now what ?
My conservative guess is for mortgage rate between five and six by the beginning of 23, Two years of the Feds expanding the money supply and does not mean temporary inflation. There is a price to be paid.
Everyone is going to pay more for debt. It’s not impossible to imagine this. It’s not the end of the world. Some may be forced to sell. Some may go bankrupt. That’s what happens. The BoC is going to do whatever it takes to slow demand and curb further inflation. Everyone should prepare for higher interest costs, continued inflation, home prices falling, and potentially a recession. Hang onto your job!
Hey Steve one more question. You mentioned that there are low inventories. I can go onto zealty right now and there are thousands of houses available in the lower mainland area. Is this just a figure of speech or am I missing something? Not trying to challenge you but just trying to better understand real estate talk.
Yes there maybe thousands on sale now, but if in the past there are TENS of thousands on sale at this time of the year. Then relatively it is record low inventory. It is relative, not absolute numbers...
Flipside argument - most Canadians will manage okay with increases for two reasons: for renters, no impact. And most homeowners are already sitting on plenty of equity pre pandemic. The ones exposed are those who bought in the pandemic, and that is a minority. In addition, labour market is very tight. So therefore BoC can easily raise rates to 4-5%.
As a builder, material prices are to high for prices to come down. The bureaucracy restricting what to build and the energy “climate” factors have driven the price of houses out of control.
Uppa uppa uppa. Variable usually holds a quarter to half point discount to fixed. By April 1 we will have across the board 5 year fixed of around 4/%. The current rate you can get on variable is around 1.5%. BOC is going to catch up in a hurry. This is guaranteed.
Am I missing something or are your mortgage calculations off? Seems like you’re calculating the cost of the mortgage pre-pandemic with the variable mortgage rate (1.5% from what you’re saying) and then you’re choosing to use the 5-year fixed rate to calculate the mortgage costs now (3.5%, you say 4% soon). Fixed variables rates are 1.95% right now, not much different from 2020. Looking for some clarity if possible! Thanks
Paid my last mortgage in 2018......and ready for the real estate downturn.. Similar in 2005 in the US...interest rate was flat at 1%......2006 reset at 5%......housing crash.....2013 fire sale from the bank...original owner pay $225 000US got it for $45 000US cash buy couple property in beautiful WestPalmBeach FL.... Aslo in 2013 the CAN$ was at par with the $US.....2022 Zillow avdvertise the similar property at $255 000US I'm Canadian and I live in Montreal.......Price is Montreal is madness....all rental property are cash negative.....all rental property was bought before 2007 ..... I always move when crisis happen
Inflation is running at 8% in Canada/US. It is NOT coming down any time soon. The 40 year bull market in bonds just died. Rates in Canada/US are moving higher. Inflation is the problem NOT deflation. US consumers can handle it. Canada? We will see…
Starting mid-2022, 50% drop in nominal prices over 3-4 year period. Still, that means 1/2 million for a decent SFH in Van suburbs, but at least average FTB will have a chance. Of course psychologically it'll be very hard to buy as herd will be well and truly spooked.
@@jamesburns679 yes rates matter, but not necessarily. Thing about a mania is it needs to keep expanding. So-called 'soft landings' or plateauing in prices/sentiment don't happen. And when it stop expanding goes the other way, the logic keeping it afloat falls apart and it collapses in on itself, usually quite dramatically. Of course industry insiders and the highly levered will insist on the 'soft landing' story
More like 80% except govt will jump in with taxpaer and savers money to "help" the banksters and real estate flippers who got caught on the wrong side of the trade.
@@mth469 which is why both the 50% and 80% predictions you both make are laughable. Remember housing is a complex and time consuming transaction. Could it drop 25-30%? For sure and I actually think that’s quite plausible but to drop 50-80%? The stock market doesn’t do that and it’s extremely liquid - seconds long transactions. Housing is a weeks or months long transaction, bigger capital and like the stock market the advice to someone whose house has gone underwater is to wait it out and it will go back up. Not to mention Steve’s call-out that the political class won’t allow and will swoop in with lower rates or other means to correct things. I think the thing all of the doomsayers are missing in their apocalypse predictions is that housing prices haven’t gone up….the value of the dollar has gone down! Nothing has made your house more valuable - did you do Reno’s? Did your acreage or square footage increase? No it just went up 50%…that tells you that the value of the dollar went down dramatically because 40% of dollars got created in the last 2 years. So you can’t put that genie back in the bottle and it’s a global thing not just Canada. So could housing prices fall, sure but they’ll be back because there are so many new dollars that have been created in the system and it’s those now worth-less dollars that are driving up prices not some unique thing in housing (albeit I think there are elements of mania as people realize how much less their dollars are worth and scramble to buy real assets which will endure versus the rapidly depreciating dollar that’s out of all of our control which is why I give credence to a reasonable correction but there is so much cash on the sidelines that buyers and investors will swoop in and accumulate any dip below 10% and fill that gap.
Hi Steve. I watched the whole video. You are clearly right on about the double whammy of rising prices and rising interest rates on the cost to refinance. My question is how the release of the so called Green Bonds into the market will affect this theory?
I believe it's called plausible denialability either with government officials or the BoC. Everyone wants credit when assets are increasing but point fingers when the party is over. Never seen you so bearish.
I wasn't financial free until my 40’s and I’m still in my 40’s, bought my third house already, earn on a monthly through passive income, and got 4 out of 5 goals, just hope it encourages someone that it doesn’t matter if you don’t have any of them right now, you can start TODAY regardless your age INVEST and change your future! Investing in the financial market is a grand choice I made. Great video! Thanks for sharing!
Very inspiring! I love this.
@Manuel Andrea I invest across the top markets but not by myself though. I follow the guidelines of *PRISCILLA DIANE AIVAZIAN* I can correctly say she's worth her salt as an investment advisor as her diversification skills is top-notch, I say this because of the results, as my portfolio grows by averages of 20 to 3O% every month, unlike I can say for my IRA which has just been trudging along. my portfolio just mirrors what she places and not just on some particular industries of my choosing. she gave me that financial freedom I needed
@Manuel Andrea look her up on the internet with her name. she's quite popular for her services as she was recently featured on
CNN. She can work with anyone irrespective of where you're located
You said it all. It's hard to predict the future, but one thing you can always rely upon is human GREED. Once stocks start rising again, people are going to think back and kick themselves and ask why they weren't willing to buy things at a 60-80% discount. Interesting I'm also a subscriber of *PRISCILLA DIANE AIVAZIAN* signals and if I were to rate her accuracy, I would say perfect 👌
What
Quality content, videos like this and analysis from an expert goes a long way.
Well said, their insight really helps, that's why I am now being coached by one, Edwin Earl.
@@finntomkins6825 hello Finn, can you kindly link me to one? i would also like some assistance.
INVESTWITHEARL
on telegram
I laughed so hard when you said “the government is handing out checks to fight inflation” history has taught us nothing.
150 😂🤣🤣😂😂😂🤣🤣😂😂😂🤣🤣😂😂
😂🤣🤣😂😂😂🤣🤣😂😂😂🤣🤣😂😂
Me too.
The govt is borrowing, to pay checks to reduce effects of its borrowing.
This is not true at all well not here is Québec, they're handing checks because we are going into an election :P
@donald richie WOW.. amazing to see here who traded with Mrs Vanessa Lawrence , i am currently on my portfolio has grown tremrndously
@donald richie _This is not the first time i am hearing of this woman woman and her exploit trading world but i have no idea on how to reach her_
As a wise man once said, "The budget will balance itself!"
Hahahahahahahahah
It always does
The hardest part of a small 10 billion dollar deficit is the first trillion dollars of deficit.
You mean serial groper clown shoes
@@OffTheBeatenPath_ the groper was 100 times the president the "big guy" is .
We have a potato as a president
In 1989 or 1990 my dad was offered 570k for our house in toronto. He wanted 600k. Recession happened, interest rates went up. We sold that house in 1998 for 410k. So house prices can and will go down.
I wish. How was was housing inventory back then?
600k in 1990 is a massive mansion, no?
$600k in 1990 = $1.1 million today according to bank of Canada inflation calculator. But that is a fake low number. Actual inflation = over $2 million
@@m.b5777 inflation takes a basket into account. Real estate is not fairly considered in said basket. It's based of opinion polls, not real sales numbers. Also, in most good neighborhoods in cities houses quadrupled or more since the 90s
@@m.b5777 I bought a house in 1999 for $330K which has recently sold (not by me, I sold it a long time ago) for over 2M.
Not only mortgage doubles but prices for gas, grocery etc too. Putting even more pressure on the households.
It's all part of a plan to keep people poor and desperate. Capitalism has long since been replaced by some rent seeking fraud of an economy with banksters and other con men running the show.
@@mth469 It was ether engineered or gross negligence, living in a post neanderthal world im inclined to believe the later.
@@luckyPiston i believe gross negligence. The Prime Minister of our country is a drama teacher and the Minister of Finance is a journalist. How can the head of your finance team not have an economics/accountant background? how can your PM never have a track record as a CEO or a different role as a leader of a big entity?
@@Aaron-fb1pq That’s true but Pierre Poilievre isn’t educated either & this is the guy folks what to replace Trudope. Did you know a lot of Liberal, Conservative and NDP MP’s/MPP’s are landlords & own investment properties. Liberals & Conservatives MP’s lead the way: Pierre Poilievre, Phillippe Champagne, Ahmed Hussen, Andrea Horwath etc. These politicians tell poor voters the help with home affordability is the the most laughable part.
My wife and I moved to Vancouver 4 years ago, we both have good jobs making around 100k annual (each). We are in our early/mid 30s and want to have 2 kids but there is no way we can afford a 3 bedroom. What a wonderful time to be alive.
That’s been Vancouver for the last 15 years… Calgary is catching up. But much easier here then there still.
Way way worse now than 4 years ago - prices up like 40% in the housing market since then, maybe more.
From the perspective of a seller in 2021, the writing was on the wall. I probably could have squeezed out an extra 10% out of the property as we sold very high at the time but it felt sketchy even then. The cheap money for ever thesis seemed like we were being told that potato chips were now a suitable dinner substitute that was nutritious and delicious. You can’t dilute the dollar and you can’t eat chips for dinner without shitting the bed at some point.
I can eat chips 😋 for dinner.
And wash it all down with a soda.
That was freaking awesome. So true. If I only ate chips I would crap everything. Looks like we are going to see a lot of crap. Lol
@every good thing comes to an end medal?? Not sure your what your talking about. Didn’t lose any money. Sold high, will buy back in low. Growing my capital while I wait. Slow down friend..
@every good thing comes to an end I think we see this playing out in different ways. Good luck..
@every good thing comes to an end
you gotta pay
to play
When I think about my grandparents generation, they were so frugal and they didn't have debt. They bought what they needed. Today, our economy is built on debt. It's insane and our culture has no concept of financial management. I wish that our education system would teach core financials every single year.
And most of our grandparents started working at 18, today we've got people working part time in the service industry until their mid-twenties before they start their careers and they're shocked at being 6 years behind Boomers in their lives. And that's not even taking into account all the extra modern expenses that we have compared to the antenna on top of their 13 inch cabinet TV days.
The government doesnt teach finances in school for the same reason they have stopped teaching civics. Control.
The Canadian Housing market has been broken ON PURPOSE for decades. Governments collect taxes based on the value of your property so they have a massive incentive to drive those prices UP. That means easy foreign money coming in from China for decades. That means restrictive bylaws in popular cities to limit density and maximize tax revenue. That means government pressure on banks to lend lend lend and get more buyers in the market. This 'system' is designed to encourage over borrowing and recycle assets of people that fail back into the market after destroying their lives. This happens everytime rates move up sharply. The housing market won't 'crash' from increased rates. It will adjust and continue to push up higher. Real Estate has been the best performing asset typical investors have access to since the invention of the bank almost.
these guys get it
atlease they only milking not killing the sheep.
I think this time they are going for the kill
Excellent content couldn’t agree more Steve. Thanks for doing the leg work and sharing!!
Got the first thumbs up.
This is why I come back to this channel every time... a lot of boring episodes but also regularly comes episodes really good like this one. Especially when we are in a moment right now that was cooking for a while.
For those who own their own homes ie aggressively paid down their mgt during record low interest rates and have saved for their retirement are about to be rewarded. For 30 years the savers have been punished but things are about to change:)
Living beyond your means is going to take a bit out your ass now.
Great video today! It's going to be so interesting to see what these yields do moving forward.
It's highly leveraged for the people who bought in the last 2 years. Anyone who bought before that has substantial equity and is not overleveraged. I believe the average LTV in Canada is 25%.
25% ? Really?
@@Depto228 easy to do. Property value has doubled since 2016
You are assuming that people have not used their home equity lines of credit for massive consumption. Wages are very low relative to the cost of living. All the money is coming from lines of credit. People are spending money like crazy and using their homes as ATMs
@@m.b5777 it's not my assumption. It came in a report. I'm .mortgage broker. Peope who realestate do not over consume.
@@RobertKleinMortgages in 2019 ltv was 57.8%
Thanks for these tips! I’m a regular family man who has limited financial savvy and this helps a lot.
🙏🏻
Well said... thanks for the info
Turn off the lights, the party's ooOOveerrrr! Libs bout to go HAM! On a serious note, it is concerning how quickly rates are going up.
Steve, it's ok for the market/economy to crash, recession, major recession and or depression. It should of reset in 2008 but we didn't allow it to. The housing market cannot continue to go up at the pace it is and it can't stay at the heights it at.
If anyone thinks property prices will increase year on year needs their head examined.
Lolz bro get over 2008. It should have reset in the 70’s. That’s really when the embedded growth obligation can started getting kicked down the road.
Exactly. A long overdue correction would be healthy for the real estate market in Canada.
@@segasys1339 WTFhappendin1971?
@@nickfawcett324 indeed.
Like a cruise ship making a U turn. I like that analogy. Steve was on point in this one .
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Your evaluation is spot on.
The Canadian govt shouldn't have pumped the real estate industry back in 2008 but they did without knowing who and why the prices were being driven up. Since then, the real estate sector has been a runaway freight train and nobody has said, this is out of control? Wages etc have been left in the dust. Add in 50k to 60k dollars in land transfer taxes and 5% realtor fees (cough cough excessive fees), unrealistic development fees to build new homes.... think about that. 200k bucks in fees? Add in domestic investors playing the market and we've had stupid for 20 years. Everybody's greedy little paws taking their cut, why would anybody say anything other than wow this is great!!
The municipalities, the real estate industry all need to openly talk about who's buying, and which gov't or industry people have added to the unaffordable factor.
We now need a bone crushing recession in the real estate market here in Canada. Up until now, it's been no risk buying, which has meant wild bidding for decades. The real estate industry needs to be broken.
Thank you for sharing your wisdom with us!
Banks are in bed with the federal reserves. You can't trust banks or bank economists, the need for independent advice is required now more than ever.
I'm with you, I don't see them raising the overnight above 1.5% before something breaks.
Great episode Steve 👊
@EWaste I think politics are more to blame then banks tbh, jerome powell started getting a lot more honest after his reappointment.
@EWaste if this keeps going? Has been for 2 years... how much more do people need to see before they flip the switch?
Or perhaps the Frog in Pot Theory Holds True... we tolerate the increments until being cooked?
@EWaste
Federal Reserve = private banking interests.
That is whom they represent first and foremost.
The whole idea of some wise man sitting in an ivory tower price fixing (i.e setting interest rates) and counterfeiting (i.e printing money) is absurd.
What part of that is Capitalism?
@@mth469 every major media organization tells me that is what capitalism is supposed to be.
Excellent video!! Keep up your great research.
Hi••••
Hey Steve, brilliant piece as always. Important consideration to factor in, is that the Govt needs to reduce inflation. The only way for Govt to slow down high inflation is by creating demand destruction (I.e. Recession). They fully intend to cause prices, incl homes, to fall. IMHO, this is part of the big plan.
Any economist who does not understand this, is incompetent. Cheers R
The reason they aren't telling this is because people think a recession is bad. I believe the central banks don't want to cause a panic. Because people go FOMO in the stock and housing markets...
With the ton of inflation we just got, a recession would be a good thing... if we don't reverse inflation, we will be in a lot more pain soon.
Same thing with unemployment. I hear a lot of people saying "there is no recession, unemployment is low"... hum... unemployment is too low. It's a bad thing. It needs to go up, if we want a good economy. Labor shortage isn't good, especially since the inflation is much much higher than the salary increases... economists already have data on this in the US and Europe.
Excellent video! Hit the nail on the head!
Hi•••
Really good info. Will be interesting to watch.
Steve, in your next video can you address buyers shifting from fixed-rate mortgages to variable? I've heard that typically ~90% of buyers used fixed-rate mortgages, but in the last couple of months this has declined to ~50%. I would assume this allows the impact of high rates to be pushed a bit later, but what will be the other consequences?
It’s usually about 60% fixed vs variable. That has flipped in last couple years
That’s a good question, do we have statistics of % of fixed vs variable mortgage in Canada ? At the moment ? I can’t find it.
Great content as always. Don’t forget about the stress test as well. With rates at 4%, qualifying will be at 6% instead of 5.25% as it currently stands. As rates continue to rise, qualifying for greater loan amounts will be even more difficult.
Bingo
1.95% fixed payment variable rate 5 year mortgage from TD last week.
mine I just a refi at 1.62% (TD Prime - 1.24%) but then it's 40% LTV....and my payments are 85% principal.
My mortgage is up for refinancing in May. I don't think I can't wait until then.
Thank you Steve
what time frame do you see
for real correction to start?
Hi••••
Like everything, housing are worth what someone willing pay for it and a lot of people forget the carrying cost of real estate is costly.
Hosing costs what banks lend for houses.
Not when the banksters get their friends in govt to put taxpayers on the hook for bad mortgages and steal from savers through money printing for the same.
It's one big fraud these days.
Sleeping outside carries more risk
We are definitely at the top of the housing market pricing. Prices can only go down from here. Real Estate is a long term investment and anyone trying to speculate and expecting to make quick and easy money is about to learn a tough lesson. Yes, prices can go down!! Look back at the 1980’s and early 1990’s for a history lesson.
and yet if you bought and held and it's a place to live for 20 years, you'd always be far ahead.......yes prices go up/down in the short term.
Liberal immigration plan says hold my beer
You're missing the point IMO. Currency is losing value, prices aren't necessarily going up in real terms. Prices are only going up in nominal terms, how low can dollars and government currency go...
I looked for you on Spotify but I could only find August 2019. Great video!
Awesome video! Great insights thanks
Hi••
We gotta start investing as a country in technology and or the energy sector instead of real estate. How does making real estate more valuable make a country more prosperous?
Hey Steve…thanks for this insight. Huge value in these videos (& the loonie hour)…totally agree with everything you’ve said, but have a query. You’ve suggested an impact on unemployment and the job market. Perhaps I’m being a little obtuse, but wondering if you can elaborate on that. I’m assuming you’re suggesting that as companies struggle with rising costs relative to debt they will be forced to cut back? That being said, what I’m seeing across the board, is that companies are still struggling to employ enough staff to keep up with current work loads (though especially in anything construction-related - I.e. trades but also banks, architecture firms, insurance, other professionals). Would love to hear your thoughts on this…
Housing downturns always bring on the most challenging recessions. Because 70% of Canadians own homes, when values fall so does their wealth and so do bank assets. In other words lending freezes up and the knock on effects are less spending everywhere else. Remember in simple terms, one persons spending is another persons income.
@@saretsky oh duh. Makes sense. Thanks!
thanks again for all the amazing content. Appreciate it so much. This is such essential knowledge to have and you always have a great summary of whats going on, loonie hour is insanely informative as well. Ive been learning so much from you guys.
👊🏼
Thanks for update
Hi••••
...thank you Steve ...great education for us green economy students
Thanks for info Steve. All makes sense as usual
great vid
Hi••••
Steve great podcast! I do agree with your view… you do say to start collecting cash because of potential deals that can arise, but, can the Canadian dollar support a downturn or will the value of the currency collapse under all this pressure?
8:30 I've been counting on this. Been holding cash for a very long time, my only concern with that is what happens of there are a lot of foreclosures and the banks get into trouble, are they going to do bail-ins?
More important than protecting the housing market, the BOC has to protect its own credibility. They will do what's necessary to keep it. Things should get interesting really fast going forward.
Central banks will always choose inflation over recession
The market is supposed to protect the consumer, not a bunch of cronies sitting at the Bank of Canada. Those guys are into profiting their buddies (the private banks) and then jumping from govt into those high paid jobs at banks as a reward thereafter.
We don't need a central bank that is increasingly a source of corruption and cronyism.
Great insight Steve. Thank you.
I already see an increase in home sales in my neighbourhood (a very difficult neighbourhood to buy into). I suspect that many see the writing on the wall and want to sell their million dollar homes while they can.
Great video 💥
Steve, don't forget that as the government measures it, mortgage interest payments COUNT AS consumption. So as interest rates increase, it will read as an acceleration of consumption, not a decline.
Hi••
What percentage are they adjustable rate mortgages?
Great video, Thank you
Hi••••
Thanks Steve. Very realistic, balanced, and insightful analysis. Let's see how things unfold as the inflation, interest rate, cost-of-living are rising...
🙏🏻
Hey Steve, I am surprised that the rates are so low compared to 1989 when I had a rate of 13.25 . John Crow of BOC eventually killed 7-8% inflation rate. Back then stats Canada reported true rate of inflation now it’s lost its way due to political pressures.
And don't forget to also factor in the cost of food and energy inflation going forward... oh boy. Will gas hits $2.25 / liter by summer and $2.50 by 2023?
Best unfiltered RE market analysis out there!
Hi••••
"It was a very good call"
Humble AND handsome!
Thank you Steve!
Thank you, would you recommend to take variable 3.72% or fixed 1.7% mortgage rate right now?
It would be interesting if Mr. Saretsky could point out times in the past when house prices went down.
Great Video!
Thanks Steve!
Steve, you are such a big fan of tesla please tell me you are a shareholder? If so, since when? Gave this a couple shares. Very insightful.
at what extend to variable mortgage move, compare to the fixed one?
Great overview (yet again). Thank you. Interesting year ahead for all.
Question : where do people's savings go... that went into housing... if they either have to sell at a loss or have to go bankrupt... ?
(Perhaps simple question... but many homebuyers maybe don't think about that step...)
Obviously their savings will be lost
I am certain govt will simply dump the losses of real estate defaulters on taxpayers instead of banks that originated the loans.
It's a fraud that when banks issue the mortgages, they profit handsomely. But when the losses and defaults show up, the bill is transferred to the taxpayer.
Prices will not go down. They will hover.
@@mth469 100% agree... additionally "ponzi schemes" are fraudulent too... is what frothy asset bubbles tend to be... housing anyways.
Worse than price crashing it will be the duration properties will be sitting unsold. Am afraid the Chinese are not coming to rescue the housing market this time around. They have their own Evergrande debacle to deal with lol
Isn't canada a much better option for Chinese considering the evergrand bs. And chinese housing bs in general
What do we think this does for equity markets?
Hi Steve,
Great content as usual. Question for you regarding the balancing act of mortgage rates vs booming local economies in specific regions. With money now flowing into Alberta thanks to the commodities boom I'm having trouble evaluating whether Alberta is likely to continue climbing in value (compare AB growth to Canadian benchmark and we see it's quite reasonable) while the oil, wheat, ag inputs etc are having an extended bull market OR if rising rates will be enough to sink ALL ships and it will suffer price pullbacks despite the strong localized underlying market conditions.
What are your thoughts on this? Can a 4-5% interest rate be enough to slow Alberta in the midst of an oil (and other commodities) boom or is this the time to be positioning to take advantage of that market now finally waking up?
I think Alberta will still remain stable. Perhaps a flattening in prices. Hard to say.
Totally agree. The current debt situation is not sustainable. Interest rates will need to go up to curb inflation. Those who just bought into the bubble will be the ones who get hit hardest.
Remember at the beginning of the covid crisis the bank of Canada and cmhc said house prices will go down 20% 🤣🤣
Now when they tell you not to worry they will paul Volcker and rug pull us ? 🤔
I sold one of my properties not out of fear but just to de- leverage and maybe prepare for a new buyers market
Thank you for your sacrifice! now that you liquefied a property the market is sure to continue its 🚀🚀🚀🚀
@@RelaxedPoo it's was just a investment property 😉 now I'm only carrying about 100k debt on a million dollar property... never sell the home you live in especially if it a 4plexs..
And my stock portfolio is insane if your worried about inflation 🤣🤣🤣 stocks are more liquid
Arent most people on variable with cap rates though?
Steve "The Real News" Saretsky Time to sell the farm....80 bucks for two jerry cans of fuel.....Thanks for all the info Boss....trying times for farmers....
Good to see you’re slowly learning how the bond market controls the housing market. I remember when you first started your channel you didn’t even know they where correlated.
The cynic in me feels like the BOC will just buy Canada bonds to keep the rate down. What's another $200B of imaginary debt? Just keep blaming the inflation on COVID, supply lines and Ukraine. If that fails in a few years we can have the "Canadian Homeowners Mortgage Assistance Plan" and send the money straight to the banks.
All media/government/banker always said good on media/ report. Real inflation is > 12%, monthly report said 5.7%. It is deceiving. Market stock will tell. 30 mortgage rate in US is 4.95 now. So 5 year mortgage in Canada will end up around 4.5 up... in a few month. Feb reserved can't do what they want.
Of course, other costs like food, transportation, etc are also rising a lot. This make higher mortgage payments very difficult.
Hi••
Steve, cash is a great idea but not in Canadian currency, USD or Swiss Francs.
Steve, how much of a correction do you expect in the housing market?
Prices might go down, but not completely. Inflation = printed money of 10-15% will offset the slide? Large amount of cash will remain out there.
Say if prices are to slide 20%, nominally they will slide only 10% to account for inflated volume of dollars out there?
I agree with what you say (you know these things way better than me).
But, home prices may remain the same, however if inflation is high it would essentially mean that the houses are "cheaper" compared to other goods (which means that you are right, but he may have the right number). However, like you I think that things are way worse and the prices will drop, inflation will remain high and the interest rates will have to go higher.
Very good News 😃.
The government and banks got us here… what makes you think there was a return ticket? The interest rate increases are going to crush people but so is inflation. Now what ?
Inflation will hit hard on working class but not the rich. They will take inflation but not the Interest rate hike.
My conservative guess is for mortgage rate between five and six by the beginning of 23,
Two years of the Feds expanding the money supply and does not mean temporary inflation.
There is a price to be paid.
There a certain number they need to hit and hold. Either it goes way up or it stays at 6% to 8 % next 10 years
Everyone is going to pay more for debt. It’s not impossible to imagine this. It’s not the end of the world. Some may be forced to sell. Some may go bankrupt. That’s what happens. The BoC is going to do whatever it takes to slow demand and curb further inflation. Everyone should prepare for higher interest costs, continued inflation, home prices falling, and potentially a recession. Hang onto your job!
Hey Steve one more question. You mentioned that there are low inventories. I can go onto zealty right now and there are thousands of houses available in the lower mainland area. Is this just a figure of speech or am I missing something? Not trying to challenge you but just trying to better understand real estate talk.
are they actual houses, or are they developments, yet to be built
From a factual data perspective inventory is at or near record lows across the lower mainland.
Yes there maybe thousands on sale now, but if in the past there are TENS of thousands on sale at this time of the year. Then relatively it is record low inventory. It is relative, not absolute numbers...
Flipside argument - most Canadians will manage okay with increases for two reasons: for renters, no impact. And most homeowners are already sitting on plenty of equity pre pandemic. The ones exposed are those who bought in the pandemic, and that is a minority. In addition, labour market is very tight. So therefore BoC can easily raise rates to 4-5%.
You are assuming that people have not been using their home equity lines of credit for massive consumption
@@m.b5777 maybe in Toronto or Vancouver but not as much elsewhere
My mortgage is due in 7 months. I don’t know whether to go fixed or variable? What would you suggest? Where should I look for the correct advice?
Hi••••
As a builder, material prices are to high for prices to come down. The bureaucracy restricting what to build and the energy “climate” factors have driven the price of houses out of control.
Hi••••.
What about the holders of variable rates. Where are the overnight rates likely to go?
Uppa uppa uppa. Variable usually holds a quarter to half point discount to fixed. By April 1 we will have across the board 5 year fixed of around 4/%. The current rate you can get on variable is around 1.5%. BOC is going to catch up in a hurry. This is guaranteed.
Am I missing something or are your mortgage calculations off? Seems like you’re calculating the cost of the mortgage pre-pandemic with the variable mortgage rate (1.5% from what you’re saying) and then you’re choosing to use the 5-year fixed rate to calculate the mortgage costs now (3.5%, you say 4% soon). Fixed variables rates are 1.95% right now, not much different from 2020. Looking for some clarity if possible! Thanks
No. 5 year fixed rate mortgages got as low as 1.4% during the pandemic
Hey Steve, looking to get my first home in Calgary/Airdrie. Do you have any insight, should I buy now or wait?
You're the best
Paid my last mortgage in 2018......and ready for the real estate downturn..
Similar in 2005 in the US...interest rate was flat at 1%......2006 reset at 5%......housing crash.....2013 fire sale from the bank...original owner pay $225 000US got it for $45 000US cash buy couple property in beautiful WestPalmBeach FL....
Aslo in 2013 the CAN$ was at par with the $US.....2022 Zillow avdvertise the similar property at $255 000US
I'm Canadian and I live in Montreal.......Price is Montreal is madness....all rental property are cash negative.....all rental property was bought before 2007 .....
I always move when crisis happen
Inflation is running at 8% in Canada/US. It is NOT coming down any time soon. The 40 year bull market in bonds just died. Rates in Canada/US are moving higher. Inflation is the problem NOT deflation. US consumers can handle it. Canada? We will see…
Not letting the markets function without meddling is the problem.
Starting mid-2022, 50% drop in nominal prices over 3-4 year period. Still, that means 1/2 million for a decent SFH in Van suburbs, but at least average FTB will have a chance. Of course psychologically it'll be very hard to buy as herd will be well and truly spooked.
All depends if rates keep rising.
@@jamesburns679 yes rates matter, but not necessarily. Thing about a mania is it needs to keep expanding. So-called 'soft landings' or plateauing in prices/sentiment don't happen. And when it stop expanding goes the other way, the logic keeping it afloat falls apart and it collapses in on itself, usually quite dramatically. Of course industry insiders and the highly levered will insist on the 'soft landing' story
More like 80%
except govt will jump in with taxpaer and savers money to "help" the banksters and real estate flippers who got caught on the wrong side of the trade.
@@mth469 which is why both the 50% and 80% predictions you both make are laughable. Remember housing is a complex and time consuming transaction. Could it drop 25-30%? For sure and I actually think that’s quite plausible but to drop 50-80%? The stock market doesn’t do that and it’s extremely liquid - seconds long transactions. Housing is a weeks or months long transaction, bigger capital and like the stock market the advice to someone whose house has gone underwater is to wait it out and it will go back up. Not to mention Steve’s call-out that the political class won’t allow and will swoop in with lower rates or other means to correct things.
I think the thing all of the doomsayers are missing in their apocalypse predictions is that housing prices haven’t gone up….the value of the dollar has gone down! Nothing has made your house more valuable - did you do Reno’s? Did your acreage or square footage increase? No it just went up 50%…that tells you that the value of the dollar went down dramatically because 40% of dollars got created in the last 2 years. So you can’t put that genie back in the bottle and it’s a global thing not just Canada. So could housing prices fall, sure but they’ll be back because there are so many new dollars that have been created in the system and it’s those now worth-less dollars that are driving up prices not some unique thing in housing (albeit I think there are elements of mania as people realize how much less their dollars are worth and scramble to buy real assets which will endure versus the rapidly depreciating dollar that’s out of all of our control which is why I give credence to a reasonable correction but there is so much cash on the sidelines that buyers and investors will swoop in and accumulate any dip below 10% and fill that gap.
@@BA-kp1us You need to check history. 50% off nominals, 3-7 year period is average. Dozens of examples. Canada isnt special.
Let's face it. No matter how smart anybody is. No one knows what is in store for us ! unprecedented times.
Great video!!! I refuse to buy in at these crazy prices. It will happen we just need to be patient…What goes up will eventually come down 👍🏼
Hi••••.
Hi Steve. I watched the whole video. You are clearly right on about the double whammy of rising prices and rising interest rates on the cost to refinance. My question is how the release of the so called Green Bonds into the market will affect this theory?
I believe it's called plausible denialability either with government officials or the BoC. Everyone wants credit when assets are increasing but point fingers when the party is over. Never seen you so bearish.