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"Canada's big housing markets in 'Goldilocks moment." CBC News, October 12, 2017 Mr Soper, president and CEO of Royal LePage also declared that Canadian housing is 'just right' if we are to use his metaphor: Canadian housing is enjoying a Goldilocks moment — not too hot, and not too cold.

Look for headlines soon to come out of Toronto documenting their experience of renovictions. Everyone has to pay more for housing now because of 9 years of ZIRP & NIRP 

FROM Alberto Gallo, Bloomberg, August 2017

Economists are split on why inflation has lagged gains on growth and unemployment. The Fed has reassured low inflation is temporary, but many believe structural factors will keep inflation lower for longer than traditional models suggest. We are in that camp.

​The scars left on the economy by the prolonged recession -- such as workers permanently dropping out of the workforce, new technologies that maximize sharing of existing resources, falling demographics, and a general weakening of labor bargaining -- are all responsible for keeping inflation subdued.

If inflation is likely to remain low due to structural factors, then QE may be less useful than previously thought. In fact, continuing QE can expose markets and the economy to two risks.

The first is that over time, persistent low interest rates may become self-defeating. Absent a fiscal policy stimulus, low interest rates may lose their impact or even become deflationary: aging populations save more to make up for lower returns, firms invest in new technologies employing fewer workers, and workers who were trained in sectors that were booming during the crisis remain permanently out of the workforce. 

The second risk is that QE will generate dangerous side effects, including asset bubbles, rising wealth inequality, and a misallocation of resources in the economy. Negative or zero rate polices have pushed investors into search-for-yield strategies, distorting the risk premium in credit and volatility. QE has favored the haves over the have-nots, contributing to wealth inequality and to an asset-rich, wage-poor recovery.

​Finally, NIRP/ZIRP can encourage resource misallocation by keeping alive zombie companies.

Capitalism Doesn't Work at 0%

"It would pay to travel to Mars because the returns here on Earth are very very low."
​Bill Gross, June 2016

CLICK IMAGE TO ENLARGE Thanks to @Hutchyman for the sale and BC Assessment data in the mashup above.​

On the way up in price it was easy. Make an offer higher than list price with few conditions if any and provide the vendor with everything they wanted and voilà, you own the asset if you managed to out-guess the competitive bidders lined up on their phones.

With a 25% drop in sale price, the GRM has dropped nearly 6 points (lower is better) and the CAP Rate has gone up 40 basis points (higher is better) which not a huge move but the yield on investment (ROI) has increased to more than twice the 10 year bond return and that provides an investor the incentive in a ZIRP environment to buy and hold and allow other people's money (the tenant's) to turn debt into equity.
(2013 Case Study)

Thanks to Steve Saretsky, Realtor for his
Vancouver Real Estate Market Update February 2017

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Hilliard MacBeth posted an interesting chart comparing the BIS housing price index data of Australia, Canada, U.S. Germany and Japan. I have mashed it up here adding inset charts of the BIS (Bank of International Settlements) debt service ratios and debt to GDP. Here is Hilliard's original post from December 9, 2016. And the charts left are from the OECD via the IMF showing the recent ranking of cities with respect to house price to rent and house price to income ratios. Canadians in Vancouver and Toronto are up against extreme increases in housing costs and no doubt conversations around the kitchen table probably include migration to more affordable housing jurisdictions and employment opportunities. ​

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​​I covered this observation in early 2014 with my post of "German Housing", and I regularily publish the census density of Canada as well. The point is really about the Social Contract we should be developing. We have an under supply of affordable housing in Canada because we the electorate do not have representation. ​

"Selective Populism" – The People, conceived monolithically, have a Common Will, distinct from and superior to the viewpoint of any individual. As no mass of people can ever be truly unanimous, the Leader holds himself out as the interpreter of the popular will (though truly he dictates it). Fascists use this concept to delegitimize democratic institutions they accuse of "no longer represent[ing] the Voice of the People."
​
"Newspeak" – Fascism employs and promotes an impoverished vocabulary in order to limit critical reasoning.​

Word of the Year: "Post Truth"

Walter White: The New DEA Nominee

Bob Dylan: Only a Pawn in Their Game

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Toronto Condos pile up on a 21 year high. "10,368 condos were completed in January 2015 in Toronto a record 21 year high and 8x the average over the last 10 years." said Sal Guatieri, BMO Economist Rent Reduction Time Condo Glut? Yes. The lower chart shows a snapshot of houses and apartments for rent in the 6 biggest Canadian metros. What vacancy rate does your real estate investment model use?

"Rent... Don't Buy" Kevin O'leary

Relative Income Hypothesis
Most economists think about aggregate consumption through the lens of Friedman’s permanent income hypothesis or Modigliani’s life-cycle hypothesis. But long ago there was a third contender, Duesenberry’s relative income hypothesis, which argued that household consumption decisions are powerfully shaped by the behavior of their reference group.

Institute for New Economic Thinking grantees Christian Belabed and Thomas Theobald and their co-authors have revived this old theory as a hypothesis to explain the apparent statistical link between rising income inequality and current account deficits.  The middle class, so the argument goes, is just trying to keep up with the consumption norms of the upper class, which keep expanding as more aggregate income flows upward. 

Duesenberry’s hypothesis arose from a melding of ideas from social psychology with ideas from economics. Revising his hypothesis is one way to bring economics back into contact with psychology and help the discipline get closer to understanding realistic conceptions of human behavior. That’s new economic thinking.

"Free will is an illusion so convincing that people simply refuse to believe that we don’t have it. In Free Will, Sam Harris combines neuroscience and psychology to lay this illusion to rest at last. Like all of Harris’s books, this one will not only unsettle you but make you think deeply. Read it: you have no choice."
Jerry A. Coyne, Professor of Ecology and Evolution at The University of Chicago, and author of Why Evolution is True.

"You know something is happening but you don't know what it is, do you Mr Jones"

The id (German: Es) is the unorganized part of the personality structure that contains a human's basic, instinctual drives. Id is the only component of personality that is present from birth. It is the source of our bodily needs, wants, desires, and impulses, particularly our sexual and aggressive drives. The id contains the libido, which is the primary source of instinctual force that is unresponsive to the demands of reality. The id acts according to the "pleasure principle"—the psychic force that motivates the tendency to seek immediate gratification of any impulse—defined as, seeking to avoid pain or unpleasure (not 'displeasure') aroused by increases in instinctual tension. If the mind was solely guided by the id, individuals would find it difficult to wait patiently at a restaurant, while feeling hungry, and would most likely grab food from neighbouring tables. (Wikipedia)

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In the OECD, German households on average spend 21% of their gross adjusted disposable income on keeping a roof over their heads and 93% of people say they are satisfied with their current housing situation, more than the OECD average of 87%. This high level of subjective satisfaction reflects Germany’s good performance in objective housing indicators. SOURCE

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CBC DOC ZONE VIDEO "The Condo Game"

CLICK IMAGE TO VIEW CBC DOC ZONE VIDEO "The Condo Game"

Can the strata corporation use the Contingency Reserve to fund repairs? What options are available to fund the repairs?

According to the BC Strata Property Act, monies in the Contingency Reserve Fund can be used for emergency repairs without approval from the owners. Beyond emergencies, owners must give their approval at a general meeting to use these funds.

The strata corporation has two options for raising money:

1) The strata corporation can borrow money and collect additional amounts from owners each month to repay the loan

2) Special assessments can be levied against each strata unit

Either course of action requires approval by the owners at a general meeting of the strata corporation.

What happens if not all owners are able or willing to contribute their share of the repair costs?

Once the strata corporation has approved a resolution to levy special assessments, the Strata Property Act provides remedies for those who do not pay on time. Ultimately, the strata corporation can place a lien against the strata lot requiring it to be sold and monies owing to the strata corporation are collected from the sale proceeds.