Liberty

Just don't forget to put a negative value on saving too much for retirement, spending years of your life that you'll never get back piling on money that won't make you happier than the opportunity cost. To invert, if you're not putting a value on your time and a risk on waiting too long to retire, then why not wait to have $50m or whatever? And why not only spend 1% a year to be really really certain. %1 of $50m is still $500k/year, that should be enough to buy the basics of life, I think.

https://www.bloomberg.com/news/articles/2017-04-24/home-capital-founder-soloway-to-step-down-after-osc-allegations Soloway out at HCG. Still looking for a CEO and a CFO...

This is my preferred approach: http://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/

Same. I have an earlier edition and it's gigantic.

An interesting take on how to separate bubbles from mere overvaluation (h/t @ac_eco): http://www.mauldineconomics.com/the-10th-man/how-to-identify-bubbles#

I'm more interested in how these things affect market psychology. When things are disconnected from fundamentals, changes in fundamentals don't matter that much. If people start believing that maybe RE doesn't always go up, things can get really interesting.

Here we go. Ontario Premier Kathleen Wynne will roll out a 15 per cent “non-resident speculation” tax to help cool down southern Ontario’s real estate market. "A key plank in that would be the 15 per cent surcharge on offshore speculators, who are estimated to make up just 5 per cent of the current market." "Among more than a dozen measures in the government’s housing affordability plan will be some kind of clampdown on domestic housing speculators — though they will not face a 15 per cent tax." "Also, there will be an expansion of rent controls to all buildings. Currently, only those built before 1991 are protected from massive increases. Under the amendment developed by Ballard, rent hikes on all newer units would be limited to the inflation rate, which was at 2 per cent in February." https://www.thestar.com/news/queenspark/2017/04/20/wynne-to-slap-15-per-cent-tax-on-foreign-real-estate-speculators.html

http://www.financialpost.com/m/wp/news/fp-street/blog.html?b=business.financialpost.com/news/fp-street/osc-accuses-home-capital-of-misleading-disclosure-after-uncovering-fraud-in-mortgage-broker-channel

Townhouse, 200K to 250K range, 155 listings https://www.realtor.ca/Residential/map.aspx#CultureId=1&ApplicationId=1&RecordsPerPage=9&MaximumResults=9&PropertySearchTypeId=1&PriceMin=200000&PriceMax=250000&TransactionTypeId=2&StoreyRange=0-0&BuildingTypeId=16&BedRange=0-0&BathRange=0-0&LongitudeMin=-76.44504615117185&LongitudeMax=-75.3601462488281&LatitudeMin=45.14675498339527&LatitudeMax=45.538639257203286&SortOrder=A&SortBy=1&viewState=m&Longitude=-75.90259619999999&Latitude=45.3430362&ZoomLevel=11&PropertyTypeGroupID=1 Exactly, that's not the average Ottawa house, that's a bunch of tiny, old, ugly, mostly row-houses on the periphery or in poorer neighborhoods (I'm not judging, I lived in Vanier for a few years... It was a rush when the SWAT team busted the neighboors...) with no or little yard. I don't know about you, but I wouldn't pay $230k to live there (and you know all these places look better on the listing photos than in person...)

And at least in the US, you have two important advantages that help people afford more expansive houses than equivalent in Canada: Mortgage interest is deductible, it isn't here. And you have these super long 30-year fixed loans (great deal: If rates go up, you keep your lower rate, if they go down, you refinance lower). Here these don't exist and the vast majority of people have 5-year fixed rates that they have to renew every 5 years at whatever rates exist at the time, though lately I hear that more people are going with variable or shorter durations to help reduce their monthly payments.

Can you show me a 223k listing in Ottawa please? Disclosure: I live in the Ottawa region.

OSC on HCG: http://www.osc.gov.on.ca/documents/en/Proceedings-SOA/soa_20170419_home-capital.pdf Yikes!

Don't worry about it. The MLS chart actually disproves Frank's point. The only reason it looks like SFH have gone up more than apartments is because the scale is linear rather than logarithmic. That always makes the higher line on the chart look steeper when in percentage terms, it isn't. If you look at the numbers, two storey SFHs start at $355K and end at $960, an increase of 270%. Apartments start at $150K, and end at about $425K, an increase of 283%. Thank you, very insightful comment.

Cohodes saying that the guy that HCG brought in to be "Vice President of Underwriting" is out (without a press release): If true this certainly looks bad after all the recent turmoil with management...

Also, those figures seem understated? I remember the February numbers stating that SFD in Toronto were $1.6 mln while the average house (condo, SFD, semi's, etc) reached $1.1 mln. I recognize the chart is dated for Jan 2017 but that seems like too big of a leap in one month. Possibly the difference between "greater toronto" and toronto itself. Would have to look at the methodology.

Do you have a zero-based version of that MLS chart? I think if those lines all had the same starting point it would be easier to compare them. Clearly one is crazier than the others, but all of those don't look sustainable at all for an asset class that historically follows inflation and wages.

Are your prices adjusted for inflation? As you can see from the graph I posted earlier, after the smaller late-80s bubble burst in TO, it took over 20 years to get back to the same point inflation-adjusted.

Personally I'm in a less frothy part of the country, but I rent because I don't think buying is a good use of capital right now. I've always said that I had no idea about the timing of the market, I just know that if something overpriced because ridiculously overpriced, it doesn't mean that you were wrong to pass on it when it was merely overpriced, just that now the risk is even greater if you buy. I wouldn't buy a Toyota Corolla for $50k, and if 5 years later Corollas are $90k, it doesn't mean I was wrong to not buy it at 50k... If I had been shorting the market for years, that would be considered "wrong" as the carrying costs of the short plus the huge appreciation would make it pretty hard to dig out of that hole. But I'm living in a place that I quite like, I don't feel I'm making sacrifices (and I've actually learned quite a lot from each subsequent place I've rented -- if I had bought a house 5 years ago, it probably would've been the wrong type of house in the wrong area). It's significantly cheaper than owning, and I've put much more money aside that has been growing well in the meantime. Even if the market never corrects, I'm in a better position to buy now than I was 5 years ago, so it's been win-win for us.

Avg condo price in 416 in September 2015 (not that long ago, just 1 year and 7 months) was $418,603, so that's an increase of 31.5% since. The only way that can be considered tame is by comparing it to houses on Toronto... https://www1.toronto.ca/City%20Of%20Toronto/Economic%20Development%20&%20Culture/Business%20Pages/Reports%20&%20Data%20Centre/Economic%20Bulletin/Toronto-Economic-Bulletin_March-2017.pdf

All the rationalizations for current RE prices in Toronto will be interesting to revisit in the future. Toronto had more cranes than any other city in North America (in fact, I think I remember that at one point it had more cranes than many other big cities combined), house prices recently went up by 33% from an already very elevated level, everybody's obsessed with real estate, there are bidding wars for million-dollar decrepit old shacks and sellers refuse to have inspections done... There's nothing fundamental about the situation, it's animal spirits. When it corrects, it'll overshoot in the other direction, as it usually does when things get this crazy.

When prices go up 33% in a year, it totally discourages sellers with a different kind of FOMO. Those who considered selling are thinking, if I just wait a bit more, I'll make hundreds of thousands of dollars more of this free money, everybody tries to time the peak, that's why people weren't selling their Nortel stock that had gone up hundreds of percents in a short period of time.

Lots of people called a bubble for the dot com, but even more people kept buying stocks. Same thing is happening now with real estate, but it's just in the recent past that there's been more agreement about the bubble...

https://beta.theglobeandmail.com/news/national/ontario-considers-housing-tax-for-non-resident-speculators/article34731629/?ref=http://www.theglobeandmail.com&cmpid=rss1&click=sf_globe&service=mobile

btw, for a longer-form interview with Cohodes, check out episode 7 here: https://www.grantspub.com/podcasts.cfm Not saying it'll change anyone's mind, but this is better than a BNN segment...