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ALWAYS CONSULT YOUR INVESTMENT PROFESSIONAL BEFORE MAKING ANY INVESTMENT DECISION

March 9, 2018 | How Hard Can it Be?

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.

If you missed it, here’s the big jobs news. In the US a surge as more than three hundred thousand positions added last month, but wages did not swell much. The stock market loved that. Up she went 440 points.

Also greasing the increase was the Trumpster-Rocket Man summit now planned for May, which means there’s reason once again to have puppies and children (in that order). No fire and fury. No nukes. Just hugs. Since holocausts and Armageddons are bad for corporate profits, this is progress.

In Canada, more job gains after that disaster last month. The unemployment rate dipped a little, but at the same time almost 40,000 full-time workers lost their paycheques while 54,700 part-time positions were created. Meanwhile the dollar ticked a little higher on confirmation from the protectionist White House that Canada will be exempted from the fat tariffs on imported metals that Trump signed into law Thursday afternoon. Hamilton is safe.

Whazzit mean?

Simple. Central bankers in both countries will do exactly what they were planning in 2018, and that is to continue increasing rates in a gradual and relentless fashion. Markets give overwhelming odds that the Fed will pop the week after next, with our guys following on Wednesday, April 18th. The prime rate will then be 3.7% at the big banks, with the minimum mortgage stress test rate rising to 5.39%.

Yes, you’re right. Smack in the middle of rutting season, when house lust hormones rage, traditionally resulting in a surge of listings, sales and prices. The contrast this year with spring of 2017 is likely to be extreme. Hallelujah. A year ago we were nuts.

This blog reported last March:

All you need to know about how Toronto real estate happened last Saturday. Fifteen thousand people packed a tacky seminar on how to get rich buying property. Yes, in Toronto – now one of the most inflated, bubbly, frothy, horny housing markets on the planet, where prices rose 27% in a year and, according to Tony Robbins, they can never go down.

Robbins, of course, is a motivational speaker who knows diddly about Toronto real estate. The same with some dude named Pitbull. He spoke, too. And the kid realtor who hosts “Love it or List It” in Vancouver. And did I mention there were 15,000 others? They all paid between $50 and $150 for a seat, so the organizers made millions – which went to Robbins, the doggy guy et al.

The event was a ‘real estate wealth expo’, not aimed at helping people buy a home to live in, but full of encouragement to borrow massively and – as soon as possible – grab real estate as an investment. No money down. Rent it out. Watch it soar. How hard can that be?

Oh wait…

Apparently the insanity ain’t over. This time around organizers of a repeat event expect another 15,000 people to come to a Toronto seminar featuring a fading film star (Sylvester Stallone), some former baseball guy (A-Rod), Pitbull (huh?) and a totally smoking real estate agent named Jin. But there’s a big difference in 2018 – it’s now called the “Real Estate, Bitcoin and Wealth Expo.” Hey, two looming financial disasters for the price of one!

So what do seminar organizers, condo developers, real estate agents and reality TV show producers know that this blog’s apparently never learned? Simple. People believe what they want to believe. Alternative facts are better than real ones. Human nature never changes. Greed and fear motivate. Celebrity sells. And we’re a nation of needy, gullible financial illiterates.

Despite all the headwinds – rising rates, sticky prices, stress tests, choking debt and punitive taxes – people will continue to buy houses even when they cannot afford to. The market will stagger along until it stops, when the last ones in will be truly pooched.

The advice here is a copy of that twelve months ago. If you made money on real estate that you don’t wish to lose, sell. If you want to buy, wait. If you have urges of any kind then, for the love of God, stay away from the Metro Toronto Convention Centre on April 7th

 

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March 9th, 2018

Posted In: The Greater Fool

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