Toronto`s Real Estate Bubble
- Thread starter AndreiAngelkovski
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Rickson9, If you stopped being a keybord-warrior and actually worked in the Real Estate industry, you would have noticed that Toronto is going down since a few months.
A supply and demand curve, and a tiny bit of common sense is all you need,
Sincerly,
Valmont.
A supply and demand curve, and a tiny bit of common sense is all you need,
Sincerly,
Valmont.
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You misread. Read this:
You said that you are able to give precise predictions. Still waiting. Anything more 'precise'? And by 'precise' I mean a date that we can all mark down in our calendars? Anything?
I'll just assume that you've given up and accepted that you were mistaken if you haven't answered by the next post. Good luck!
You said that you are able to give precise predictions. Still waiting. Anything more 'precise'? And by 'precise' I mean a date that we can all mark down in our calendars? Anything?
I'll just assume that you've given up and accepted that you were mistaken if you haven't answered by the next post. Good luck!
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Right now. Look the numbers 
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Hi Michael:
I'll be there in January but here's my (3) "two bit prediction" now for mid to late 2013.
Nominal Canadian 10Y Bond Yields will either stay "as is" around 175~185 basis points or will decrease further.
http://www.bloomberg.com/quote/GCAN10YR:IND
Real 10Y Yields (Nominal minus Inflation) will compress to "Negative" 50 basis points from the current (-30bp).
http://www.bloomberg.com/quote/GCDGIN10:IND
Cap Rates will compress further.
I'll be there in January but here's my (3) "two bit prediction" now for mid to late 2013.
Nominal Canadian 10Y Bond Yields will either stay "as is" around 175~185 basis points or will decrease further.
http://www.bloomberg.com/quote/GCAN10YR:IND
Real 10Y Yields (Nominal minus Inflation) will compress to "Negative" 50 basis points from the current (-30bp).
http://www.bloomberg.com/quote/GCDGIN10:IND
Cap Rates will compress further.
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[quote user=Darr]
Hi Michael:
I'll be there in January but here's my (3) "two bit prediction" now for mid to late 2013.
Nominal Canadian 10Y Bond Yields will either stay "as is" around 175~185 basis points or will decrease further.
http://www.bloomberg.com/quote/GCAN10YR:IND
Real 10Y Yields (Nominal minus Inflation) will compress to "Negative" 50 basis points from the current (-30bp).
http://www.bloomberg.com/quote/GCDGIN10:IND
Cap Rates will compress further.
I'll look forward to your prediction in January! Your current predictions are certainly against consensus/conventional wisdom that rates have nowhere to go but up. Would you like to write me an inflation linked mortgage for a real yield of 1%?
Regards,
Michael
Hi Michael:
I'll be there in January but here's my (3) "two bit prediction" now for mid to late 2013.
Nominal Canadian 10Y Bond Yields will either stay "as is" around 175~185 basis points or will decrease further.
http://www.bloomberg.com/quote/GCAN10YR:IND
Real 10Y Yields (Nominal minus Inflation) will compress to "Negative" 50 basis points from the current (-30bp).
http://www.bloomberg.com/quote/GCDGIN10:IND
Cap Rates will compress further.
I'll look forward to your prediction in January! Your current predictions are certainly against consensus/conventional wisdom that rates have nowhere to go but up. Would you like to write me an inflation linked mortgage for a real yield of 1%?
Regards,
Michael
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Hey Micheal
If everyone is on the same side of the boat, I stand a better chance of staying dry on the other side.
I see you remembered our discussion about the inflation linked mortgage inquiry. I'm not into writing OTC products unless I choose the inflation benchmark and it won't be the highly manipulated CPI. Maybe perhaps using either Bullion or the RICIÂ-A
If everyone is on the same side of the boat, I stand a better chance of staying dry on the other side.
I see you remembered our discussion about the inflation linked mortgage inquiry. I'm not into writing OTC products unless I choose the inflation benchmark and it won't be the highly manipulated CPI. Maybe perhaps using either Bullion or the RICIÂ-A
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[quote user=Darr]Hey Micheal
If everyone is on the same side of the boat, I stand a better chance of staying dry on the other side.
I see you remembered our discussion about the inflation linked mortgage inquiry. I'm not into writing OTC products unless I choose the inflation benchmark and it won't be the highly manipulated CPI. Maybe perhaps using either Bullion or the RICIÂ-A
An excellent point in your boat analogy, although I think it's always wise to avoid being contrarian for the sake of being contrarian. The trouble I have with a "lower for longer" thesis is that the risk-reward is asymetric. Borrowing short/lending long in hopes of rates staying low has a low potential upside in this rate environment, but a high level of exposure to a rate shock. Even if that shock is unlikely, the consequences are significant.
Which is why I was kidding about borrowing money with a floating principal value. Although it's kind of an interesting exercise, it's not a good fit for my situation. I do actually think you could create a synthetic product similar to a gold denominated mortgage fairly easily, with a combination of a regular fixed income product where some of the coupon is diverted to paying the net debit for options on futures.
Regards,
Michael
If everyone is on the same side of the boat, I stand a better chance of staying dry on the other side.
I see you remembered our discussion about the inflation linked mortgage inquiry. I'm not into writing OTC products unless I choose the inflation benchmark and it won't be the highly manipulated CPI. Maybe perhaps using either Bullion or the RICIÂ-A
An excellent point in your boat analogy, although I think it's always wise to avoid being contrarian for the sake of being contrarian. The trouble I have with a "lower for longer" thesis is that the risk-reward is asymetric. Borrowing short/lending long in hopes of rates staying low has a low potential upside in this rate environment, but a high level of exposure to a rate shock. Even if that shock is unlikely, the consequences are significant.
Which is why I was kidding about borrowing money with a floating principal value. Although it's kind of an interesting exercise, it's not a good fit for my situation. I do actually think you could create a synthetic product similar to a gold denominated mortgage fairly easily, with a combination of a regular fixed income product where some of the coupon is diverted to paying the net debit for options on futures.
Regards,
Michael
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Michael- I totally agree that one should not be a contrarian just for the sake of being one. However, I`m not reading any solid reasons backed by facts justifying rising rates. All I hear and read are as follows:
-They (rates) can`t go much lower
-They`re at historic lows
-Eventually they must rise, and my personal favorite,
-Because THEY said so
Here`s my thought against rising rates in one sentence:
Rising bond yields are very unlikely unless our elected officials wish to commit political suicide by collapsing the solvency of most Canadian households, Exporters, leveraged Banks and the province of Ontario whose debt service is already on the edge of the fiscal cliff.
Risk-reward could be asymmetrical at this point or it may not:
http://en.wikipedia.org/wiki/Hungarian_peng%C5%91_hyperinflation#Hyperinflation
I really don`t know the answer to that but Maynard Keynes may have given us a `roadmap` clue decades ago about today's low interest rates :
`The market can stay irrational longer than you can stay solvent.`
-They (rates) can`t go much lower
-They`re at historic lows
-Eventually they must rise, and my personal favorite,
-Because THEY said so
Here`s my thought against rising rates in one sentence:
Rising bond yields are very unlikely unless our elected officials wish to commit political suicide by collapsing the solvency of most Canadian households, Exporters, leveraged Banks and the province of Ontario whose debt service is already on the edge of the fiscal cliff.
Risk-reward could be asymmetrical at this point or it may not:
http://en.wikipedia.org/wiki/Hungarian_peng%C5%91_hyperinflation#Hyperinflation
I really don`t know the answer to that but Maynard Keynes may have given us a `roadmap` clue decades ago about today's low interest rates :
`The market can stay irrational longer than you can stay solvent.`
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Hello,
I absolutely wasn't saying you were being contrarian for it's own sake, just that it's something to be avoided. I don't necessarily disagree that rates are likely to stay low for awhile for political reasons, it's just that I have a hard time knowing how long that will be. The arguments presented in the paper for higher rates are not especially cogent, and I definitely agree that there would be serious political consequences to higher rates, as well as that the gov't/BOC will only be willing to take those consequences in the face of persistent and noticeable inflation.
Which is why the risk reward feels asymetrical to me. If 5 year money for one of my residential investments is at 3.5%, I can save less than 1% per year by going short on my mortgages. That won't make any difference to me in the long term. But if I was floating and rates spiked to fight high inflation, I would be at risk.
Huge inflation would likely be a significant benefit to me, as I own significant hard assets supported by fixed rate debt, and work in a commodity producing industry.
In the same way, I'm staying short with fixed income investments. If long bonds pay 2%, but have huge convexity, there's limited upside (presuming rates stay positive, I suppose) but potentially significant downside.
Regards,
Michael
I absolutely wasn't saying you were being contrarian for it's own sake, just that it's something to be avoided. I don't necessarily disagree that rates are likely to stay low for awhile for political reasons, it's just that I have a hard time knowing how long that will be. The arguments presented in the paper for higher rates are not especially cogent, and I definitely agree that there would be serious political consequences to higher rates, as well as that the gov't/BOC will only be willing to take those consequences in the face of persistent and noticeable inflation.
Which is why the risk reward feels asymetrical to me. If 5 year money for one of my residential investments is at 3.5%, I can save less than 1% per year by going short on my mortgages. That won't make any difference to me in the long term. But if I was floating and rates spiked to fight high inflation, I would be at risk.
Huge inflation would likely be a significant benefit to me, as I own significant hard assets supported by fixed rate debt, and work in a commodity producing industry.
In the same way, I'm staying short with fixed income investments. If long bonds pay 2%, but have huge convexity, there's limited upside (presuming rates stay positive, I suppose) but potentially significant downside.
Regards,
Michael
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Agreed- I have a hard time with that call also.
But I'm just seeing a lot of monetization which encourages cap rates to compress further as they follow bond yields. If inflation accelerates without GDP growth, the central bank (BOC) will also be forced to intervene on an unsterilized basis and making the situation worse. There is no longer any buffer to pull a 1980 Volcker.
IMHO, I can`t see any GPD growth in the near future with consumers already over-leveraged and make up 70% of the economy. Rising rates will push them and others over the fall.
PS. I think long bond investors should be more concerned with purchasing power than convexity, IMHO again.
But I'm just seeing a lot of monetization which encourages cap rates to compress further as they follow bond yields. If inflation accelerates without GDP growth, the central bank (BOC) will also be forced to intervene on an unsterilized basis and making the situation worse. There is no longer any buffer to pull a 1980 Volcker.
IMHO, I can`t see any GPD growth in the near future with consumers already over-leveraged and make up 70% of the economy. Rising rates will push them and others over the fall.
PS. I think long bond investors should be more concerned with purchasing power than convexity, IMHO again.
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Some believe that rates won't rise. Great. Now, how do we make money? I apologize if this is blunt, but this thread is starting to sound like the conversations of my financially-challenged friends who regurgitate and parrot financial op-ed pieces while I sit trying to look interested sipping my Bruichladdich 16.
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I have a signicant (to me anyway) amount of mortgage debt. An accurate interest rate forecast would allow me to optimize my renewals, which happen every year.
Of course, if I knew rates were going to stay flat, I could always sell puts on a long bond etf.
Regards,
Michael
Of course, if I knew rates were going to stay flat, I could always sell puts on a long bond etf.
Regards,
Michael
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Stop being a keyboard warrior, go learn about business, and do something, Rickson9.
Sincerly,
Valmont
Sincerly,
Valmont
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You make money by speculating and trading on insider information like those that have made their fortunes since August 15, 1971. Currencies are backed with nothing but hot air. We are living in the largest scale `Ponzi Scheme` in the history of humanity. There are no investors left. Real investors seek a return on capital. Speculators seek capital appreciation. We are now all but a bunch of leverage junkies that shouldn`t dare call ourselves investors.
The best way to get ahead is not to play. Income producing RE with little or no leverage is the best fixed income proxy by far. Have gold as a large component of your cash. Buy agricultural commodities for appreciation that`s required regardless of economic conditions. When this global bubble bursts the best man will have conserved 50% of his net worth in real terms.
And for God`s sakes man, stop slurping that Scottish mash. This is North America! Drink Woodford Reserve Whisky and buy a gun.
The best way to get ahead is not to play. Income producing RE with little or no leverage is the best fixed income proxy by far. Have gold as a large component of your cash. Buy agricultural commodities for appreciation that`s required regardless of economic conditions. When this global bubble bursts the best man will have conserved 50% of his net worth in real terms.
And for God`s sakes man, stop slurping that Scottish mash. This is North America! Drink Woodford Reserve Whisky and buy a gun.
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Valmont - As Rickson has been open for years on his real estate rental properties, and the other non-real estate business's that he owns, this comment does not make much sense.
You have been writing posts as if readers are supposed to assume you have exceptional expertise and success, and should defer to your expertise. You have given readers no reason why they should do this. I'm sure you have useful knowledge to provide others so it would be helpful if you disclosed your real estate investments, and where your perspective is coming from to establish credibility. As most frequent posters on this site have met in person, know the posters business and real estate investment background, and are therefore familiar with the perspective / bias of the poster, your contributions would be of greater value to the community.
You have been doing this at the same time as insulting and dismissing the view points of other posters. It would be appreciated if this stopped too.
[quote user=MaximeValmont] Stop being a keyboard warrior, go learn about business, and do something, Rickson9.
Sincerly,
Valmont
You have been writing posts as if readers are supposed to assume you have exceptional expertise and success, and should defer to your expertise. You have given readers no reason why they should do this. I'm sure you have useful knowledge to provide others so it would be helpful if you disclosed your real estate investments, and where your perspective is coming from to establish credibility. As most frequent posters on this site have met in person, know the posters business and real estate investment background, and are therefore familiar with the perspective / bias of the poster, your contributions would be of greater value to the community.
You have been doing this at the same time as insulting and dismissing the view points of other posters. It would be appreciated if this stopped too.
[quote user=MaximeValmont] Stop being a keyboard warrior, go learn about business, and do something, Rickson9.
Sincerly,
Valmont
- Joined
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[quote user=Darr]
You make money by speculating and trading on insider information like those that have made their fortunes since August 15, 1971. Currencies are backed with nothing but hot air. We are living in the largest scale `Ponzi Scheme` in the history of humanity. There are no investors left. Real investors seek a return on capital. Speculators seek capital appreciation. We are now all but a bunch of leverage junkies that shouldn`t dare call ourselves investors.
The best way to get ahead is not to play. Income producing RE with little or no leverage is the best fixed income proxy by far. Have gold as a large component of your cash. Buy agricultural commodities for appreciation that`s required regardless of economic conditions. When this global bubble bursts the best man will have conserved 50% of his net worth in real terms.
And for God`s sakes man, stop slurping that Scottish mash. This is North America! Drink Woodford Reserve Whisky and buy a gun.
Such a cynical perspective! Much appreciated however. I never thought about investing in "agricultural commodities". I'm actually involved in the extreme opposite - "consumer brands". Cheers!
You make money by speculating and trading on insider information like those that have made their fortunes since August 15, 1971. Currencies are backed with nothing but hot air. We are living in the largest scale `Ponzi Scheme` in the history of humanity. There are no investors left. Real investors seek a return on capital. Speculators seek capital appreciation. We are now all but a bunch of leverage junkies that shouldn`t dare call ourselves investors.
The best way to get ahead is not to play. Income producing RE with little or no leverage is the best fixed income proxy by far. Have gold as a large component of your cash. Buy agricultural commodities for appreciation that`s required regardless of economic conditions. When this global bubble bursts the best man will have conserved 50% of his net worth in real terms.
And for God`s sakes man, stop slurping that Scottish mash. This is North America! Drink Woodford Reserve Whisky and buy a gun.
Such a cynical perspective! Much appreciated however. I never thought about investing in "agricultural commodities". I'm actually involved in the extreme opposite - "consumer brands". Cheers!