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November 29, 2017 | Updates

A best-selling Canadian author of 14 books on economic trends, real estate, the financial crisis, personal finance strategies, taxation and politics. Nationally-known speaker and lecturer on macroeconomics, the housing market and investment techniques. He is a licensed Investment Advisor with a fee-based, no-commission Toronto-based practice serving clients across Canada.

First an update on Bitcoin. It was dangling below the $10,000 US mark when this blog last strayed into the morass of cryptocurrencies (Monday night). Well, on Tuesday it smashed that barrier, then roared ahead to $11,500 yesterday making geniuses of all the blog dogs who bought hours earlier. Then it crashed, losing 20% of its value in five hours before settling well below the ten grand mark.

Predictably, bitcoin saw a surge of buying just as it hit the peak – so intense major exchanges crashed under the traffic. Of course, all those new bitcoiners joined the party just before losing their shorts. Surprise!

Don’t like volatility? Shun this sucker.

Now an update on Evan. I heard from the poor sop again. After being humiliated here by two hundred strangers, his love life savaged, you’d expect his tail to be firmly planted between his legs and his confidence puddled. But lo, he started to man up.

“So I read your blog and to say I was startled by what I read was an understatement,” he reports. “I’m not that persona of a man that is portrayed. Emotional, definitely. Incompetent and pathetic, definitely not. You owe me a drink. I’ll tell you my story as a man.”

Evan. Dude. We’re pulling for you. Heed the comments. Better yet, have her read them. Stay well clear when it happens. A helmet would help.

And an update on Vancouver. What a disaster on wheels. As this blog’s being written, the snooty elves and lefty clowns making up YVR’s council are voting on a ‘bold’ housing strategy aimed at making real estate more affordable. If passed, there’s a 100% chance it will succeed – in fact the house-horny citizens of Van could witness a mother of a correction.

Of course, BC was the first jurisdiction to pass a xenophobic, anti-Chinese 15% surtax on real estate purchases by offshore buyers. Then it imposed an empty-house tax which is really just another hit on wealthy people masquerading as a way of getting more rental units to market. Of course a rich guy with a $5 million house who stays there five months of the year will now pay more than $4,000 a month in tax unless he rents it out. How insane is that? Is there a big need in YVR for places leasing for $20,000?

Of course, mortgage rates are rising, and will be going up again as the Fed and the BoC raise the cost of money next month and into 2018. Plus we have the universal stress test adding 2%, starting in a few weeks – expected to reduce overall credit by about 20%. Mortgage guys and realtors are petrified at the potential.

Meanwhile Vancouver has lowered the hammer on AirBnB, while the socialists running the province have further restricted investment by non-residents, and are actively plotting a serious speculation tax. But there’s more – which brings us to this new strategy. The crushing final blow.

If enacted, Van will actually ban all non-residents from owning real estate. That will come with an extra speculation tax, an increased luxury tax and the rezoning of vast neighbourhoods to allow higher densities so nice, old retired couples can live next door to hipsters with whiskers, and learn all about the country’s new cannabis laws.

Maybe Mayor Gregor Robertson didn’t catch the latest news from CMHC. The federal housing agency, responsible for insuring every high-ratio mortgage in the land, reported Wednesday the volume of business it did in the latest three-month period crashed by 44% from year-ago levels. The reason? Buyers with less than 20% to put down on a house must now pass a stress test to prove they could handle the payments if rates rose a couple of points.

Of course, most can’t. So they didn’t buy, or borrowed the down at the Bank of Mom to avoid the test. And it’s for exactly this reason that, starting in four weeks, every single purchaser – regardless of the amount they have as a down payment – must face the same hurdle. You can imagine the result.

Vancouver prices have gone stupid in recent years because of speculation, as real estate was transformed into a financial commodity. Like bitcoin. That was supposed to be money, but has ended up being simply a way to make it.

So once it becomes clear politicians have diddled enough to ensure that making profits buying and selling YVR houses is impossible, the market will react. The mayor says average families should be able to afford average houses there. That’s his holy grail. Fair enough. Household income is about $80,000 in Vancouver, so real estate would have to correct by about 70%.

At least we now know where to send Evan.

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November 29th, 2017

Posted In: The Greater Fool

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