Steve Saretsky
3195 Oak Street V6H 2L2 Vancouver, BC, Canada

Canadians continue to plow money into the Real Estate market. According to Stats Canada, Gross residential investment surged to an unprecedented $160.2 billion in the third quarter, almost 9% more than the previous quarterly record of $147.5 billion at the end of 2017. Per a recent article from the Financial Post, housing accounted for 37% of overall investment, while business spending on machinery and equipment and intellectual property dropped to 28.2%, the highest and lowe...Continue reading

Bank of Canada governor Tiff Macklem says he’s not worried about a housing bubble. His comments follow the banks decision this past week to maintain current stimulus, keeping rates at 0.25% and continuing their QE program which is currently running at a pace of $4B per week. These programs will remain in place until the recovery is well underway. Make no mistake, the current froth emanating out of the housing market is a result of the banks actions, whether they want to tak...e responsibility for it or not. Ironically, Macklem flagged the housing market as a key risk back in 2013 when he was deputy governor at the Bank of Canada. In 2013, Macklem publicly stated the growth in household debt and house prices was not sustainable. Since then, national home prices, as measured by the home price index, shows home prices are up 71%, an average annual growth rate of just over 10%. In other words, you’ve had double digit house price inflation, yet the banks official CPI inflation metric suggests annual inflation has miserably failed to hit their mandated 2% target. Perhaps we are measuring inflation incorrectly? However, don’t expect any sudden revelation from the central bank. With inflation hovering below 1%, Macklem said the central bank is more worried about deflationary pressures than any temporary overshoot of its 2% target. We are aiming for 2% but we are going to use the band and we are going to use the risk management framework to get there as quickly as possible, he said. Yes, stimulus is here to stay, and if the Bank of Canada still thinks there’s no housing bubble, then you probably ain’t seen nothing yet. The Bank of Canada owns 36% of the government bond market today, and they are comfortable growing to 50%. At the current pace of buying they have another year of QE on the table before they reach that target. However, if you think they’ll suddenly remove the punch bowl once they hit that target you are sorely mistaken. Drink up! https://stevesaretsky.com/not-sustainable/

Single family housing is driving the majority of the strength in the Vancouver housing market. Speculative behavior is ramping up with endless monetary and fiscal stimulus flooding financial markets. I discuss further in this interview with BNN Bloomberg. https://www.bnnbloomberg.ca//single-family-detached-homes-

THANK YOU!! . 57 sales and over $55M worth of Vancouver Real Estate sold this year! ... . A personal best and something I never could have imagined back in April when our housing market was shut down and the economy was in free-fall. Thank you to all my great clients, you make my job fun. And of course, to my amazing assistant/CEO @cristinaxm for keeping everything together.

Join me tonight at 6pm PST. I'll be hosting a Holiday AMA on YouTube Live. Let's chat financial markets, real estate, and more.. Join here https://youtu.be/hqzWJfecVJI

Against all odds, the Canadian housing market continued its torrid pace, ripping to new highs in the month of December. The Canadian Real Estate Association announced national home sales printed new highs for the calendar year. Yes, 2020 was full of surprises, and the depth of our nations housing fetish was certainly one of them. There was a total of 551,392 home sales recorded in 2020, surpassing the previous high set in 2016 when a wave of offshore money flooded the market.... This time around the story is much different. This surge in buying activity has been prompted by several conditions. First and foremost, back in March/ April, policy makers had a decision. Pump the financial system full of liquidity and support asset prices, or do nothing and watch households collapse under a mountain of debt, while sending home prices tumbling. Four hundred billion dollars worth of Quantitive Easing later, combined with an immediate relaxation in capital reserve requirements for the banks, and a generous mortgage deferral program for the people, and there you have it. Not only did we save home prices, we actually increased them. A miraculous accomplishment despite all odds. Home prices closed out the year up 13%, making a mockery of forecasters. I don’t want to get into the societal ramifications, that’s a story for another time, but one that will certainly have to be dealt with. Today, people are bored at home and wanting more space. The banks are flush with cash and are actively incentivizing people to take out new mortgages. These are the types of concoctions that spur housing booms. And that’s exactly what we have. While home prices are up 13% across the board, the majority of the strength is concentrated in the single family housing market where prices were up a staggering 16%, compared to a mere 4% increase in the condo market. New listings have failed to keep up with the frenzied buying activity. In fact, active listings for sale dropped below 100,000 for the first time in 30 years. There’s just 2.1 months of supply on the market, indicating significant upside potential for home prices. The reality is, months of inventory will need to double from here in order to ease upwards pressure on prices. This level of price appreciation should concern policy makers, although I think they are more concerned about getting through this economic recession, if you can even call it that. The gilded recession has been most generous to homeowners in Ottawa, Moncton, and Montreal, where home prices are up 22, 19, and 18 percent respectively. https://stevesaretsky.com/the-gilded-recession/

My latest YouTube video covers my closing thoughts on the year and what I believe is in store for the Canadian housing market in 2021. https://youtu.be/4GVf3eWirss

We’re back! Episode 5 with Yahoo Finance. As always we dissect what is happening in the Vancouver & Toronto real estate market. In this episode we cover the record low inventory in Vancouver’s single family housing market. If you’re looking for a house under $2M, inventory has never been more constrained. And why John thinks the Downtown Toronto condo market has not bottomed! https://ca.finance.yahoo.com//editors-edition-why-home-pri

As the pandemic rages on, and government mandated shut-downs ramp up, Canadians have a bit more spare time this holiday season. Bored and stuck at home, Canadians are doing what they do best, buy real estate. In what is normally considered the slowest time of the year for residential real estate, buyers have been incredibly active this year. It is expected that 2020 will mark a new record high for annual home sales across Canada, once December figures come out. And while we d...Continue reading

The latest Saretsky Report is now out! In this edition: - Home sales surpassed the 2015 bull market, hitting new record highs in December. On a year-over-year basis, home sales jumped 54%. Pent-up demand has fully transitioned into a new bull market. - Most of the strength today is concentrated in the detached market, this is largely a result of a severe shortage of inventory for sale. The only time inventory has been this low was in December 2015, when prices were accelera...ting nearly 25% on an annualized basis. - Both condo sales and new listings surged to record highs in December, leaving the market in balanced conditions. Investors are slowly returning to the market despite continued weakness in the rental market. - The mortgage deferral cliff appears to be morphing into a bunny hill. As of the end of November, 93% of all mortgage deferrals have now expired. There are about 45,000 mortgages still in deferral across the nation, which, even if forced into foreclosure, would leave inventory below 2019 levels. - Despite three million Canadians losing their job, household net worth jumped $600B in Q3 2020. Why? Real Estate price inflation. Policy makers continue to support the housing market and we see no end to fiscal and monetary support anytime soon. Full report here: https://bit.ly/38FWky9

Last week we discussed the ongoing dispute in New Zealand, where the finance minister has been arguing with the head of the central bank to consider house prices in their central bank monetary policy framework. Like nearly everywhere else in the world, New Zealand is grappling with a severe housing affordability crisis. Despite pulling numerous policy levers, house prices continue to inflate. The last lever, raising interest rates, remains off the table. Things have only gott...Continue reading

As everybody is well aware, housing is THE pillar supporting the Canadian economy. It is also responsible for burdening households with a mountain of debt. In fact, the majority of Canadian household debt, 69 per cent, is made up of mortgage debt and by continuing to pile on more debt, house prices have increased, contributing to a 70% increase in the aggregate net worth of Canadian households since the end of 2010. And so, when the economy plunged into a deep recession, it’s... no surprise policy makers were so quick to intervene. The Bank of Canada’s quantitative easing program ran into overdrive. Remember, Quantitative easing involves, large-scale purchases of government bonds which lower the interest rates or ‘yields’ on those bonds. This pushes down on the interest rates offered on loans (eg mortgages or business loans) and is designed to stimulate the economy by boosting a wide range of financial asset prices. Yes, rising real estate prices are quite literally the desired outcome. Ironically, when Bank of Canada Governor, Tiff Macklem, was asked this past week about concerns over rising debt loads and home prices, the Governor naturally downplayed those concerns. Quoting, it’s certainly something that we’re watching, housing markets have come back very strongly, interestingly the strength has been a little less focused than usual in Toronto & Vancouver, and a little bit more spread across the country, which is a good thing. We’re not seeing the kind of frothy housing markets that we saw in 2016. Really? National home sales are now on pace to have their best year ever, following another record high for the month of November. In fact, 2020 home sales will surpass previous highs set in 2016, with home prices now rising faster than 1% per month. This is despite mounting job losses and near zero population growth. There are zero fundamentals supporting the rise in the housing market, other than the Bank of Canada’s printing press and people’s fears of a currency continuing to lose purchasing power. When you consider the fact the printing press will run in overdrive until the economic recovery remains well underway, and inflation remains sustainably at 2%, I would argue these fears are warranted. After all, official inflation metrics are questionable at best, and subject to manipulation. https://stevesaretsky.com/no-froth/