Author: garth turner

News that 2,000 unsold and spanking new condos sit empty in Vancouver – where everyone says there’s a ‘housing crisis’ – made it onto the international scene this week. The story was picked up in the UK, for example, as an example of Canadian silliness.

Fears are, say analysts in YVR, the number could swell to a breathtaking 3,500 soon. And this week a new development planned for Burnaby was cancelled for lack of buyer interest.

Well, West Coast snowflakes, cry us a river. Your former mayor (now the fedfederal housing minister) will need his Big Boy pants to wade into the swamp of condo misery known as the GTA.

Look at this chart. The Hub tells us the current number of new and unclaimed condos in this one market (Hamilton was thrown in) now totals 23,918. That’s ten times the grief being felt in 604.

Source: The Hub, Urbanation, Park Home NKO

“The Toronto condo market is on the brink of a historic collapse,” says the site, hyperventilating. This total includes almost 11,000 in pre-con, another eleven thousand being built and two thousand finished and vacant. In addition, there’s the assignment market – where desperate investors who have not yet closed on their units are trying to unload, often taking a deep loss to do so.

Oh wait. And what about the resale market?

Yup. Another 15,000 condo units are currently available in the GTA and the suburban arc surrounding it.

So, what happened? How can there be so many less-expensive housing units on the market, with sales crashing, at the same time the federal and provincial governments are desperate to get more of them built?

Multiple reasons. Too many units are one-bedders, less than 600 square feet and unhappy places for kid-rearing. Rents are going down (off 6% in a year) so investors who bought units to lease out are staring at negative cash flow. Immigration levels have been slashed and Canada’s population might actually start to decline next year. Less rental demand. Condo costs are jumping – property taxes, insurance premiums and maintenance fees are all in a spiral. Parking is a bummer as most new developments offer few car spaces. And condo financing rates aren’t cheap. Investors need a big downpayment and are closing with mortgages in the mid-4% range.

Sales are a disaster.

In its latest monthly report the region’s builders counted just 385 deals – one-tenth the norm. That is down 68% from last year and sits 87% below the ten-year average. Of those sales, only 160 were condos, leaving a massive 17-month supply of inventory

Laments the industry:

“New home sales in the GTA have plummeted to catastrophic lows, and without urgent government action, we risk long-term damage not just to housing supply, but to the broader economy. If this were the auto sector, governments would be lining up with support. Let’s not forget: the housing and development industry in the GTA directly employs 285,000 people, results in $16.9 billion in wages, and creates $60.8 billion in economic activity. This is not a fringe issue – it’s a cornerstone of our economy.”

Swelling inventory and languishing sales are resulting in a cascade of project cancellations. Thousands of units have been yanked. Construction on average is down 80% from this time last year. The Ontario government’s plan to have 1.5 million new units constructed has gone up in smoke. When buyers stay home, builders cannot finance or get shovels in the dirt. Typically, 70% of a project must be pre-sold before a lender will pony up the money for development. Right now a builder is lucky to sell 10% or 15% of his planned units.

Despite this, prices are falling too slowly to entice buyers. The average selling price peaked at $710,000 three years ago, and is now just shy of $690,000. That’s only a 3% discount, but gaining momentum in certain areas. As mentioned, assignment sales are more dramatic – but the ‘bargains’ are relative to nose-bleed pre-con valuations of three and four years ago.

Some economists are calling for a total price reduction of 15%, maybe 20%, before a bottom is hit for condos. That moment is expected to come by the end of 2025.

Realtor lock boxes containing keys for listed units in Number One Bloor, a 76-storey midtown Toronto condo tower.

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But, of course, all this is speculation in a world where the US president is rogue, tariffs could crush us, the Canadian economy could slip into recession and key sectors – cars, lumber, steel – have been targeted for pain.

Lots to worry about. But it could also change fast. Lately the Toronto stock market has been hitting all-time record highs, which makes you wonder what institutional investors and savvy traders know that you don’t. After all, if we get a new trade deal with America, if interest rates decline a few times and if Drake doesn’t tour we might all feel lighter and hopeful again.

Are we truly on the verge of collapse? Or headed for opportunity? The industry keeps telling us a halt in construction now means a potentially wild price escalation in a few years when a shortage truly occurs.

Here we go. Back to the future.

About the picture: “We ran into this guy on a river trip on the island,” writes Ryan in BC (this is a species-neutral safe-space blog). “I’d never seen one like it before and fear it may be an invasive species. the world is changing, perhaps we can change the term ‘invasive species’ for ‘new nature’ , it might be a little less protectionist.”

To be in touch or send a picture of your beast, email to ‘garth@garth.ca’.

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Yesterday we discussed the rash thing that tuba-playing, cowboy-punk loving former YVR mayor and spouse of a climate and racial action advocate, Gregor Robertson, had to say about house prices.

Will they come down, Minister?, he was asked.

“No,” he replied. And then a bunch of other words, none of which mattered as much.

As stated here, there’s no desire on the part of any government to have real estate values crash. They can’t, unless we want a smoky hole in the middle of the economy. Recall that over 60% of the nation’s GDP comes from consumer spending. And if real estate – the basic repository of family net worth – collapses, you know what consumers will do. Panic. Retrench. Circle the wagons. Turtle. Adios, GDP.

So, not happening. Gregor’s being straight with you. No elected person (at least the sane ones) will push policies to destroy homeowners’ equity. That’s why they have latched on to the ‘build, baby, build’ mantra even in the teeth of evidence supply is already overwhelming demand.

Complicating this is the price of mortgages. Like rents, they have been slowly coming down. History tells us repeatedly that when the cost of money falls remarkably, borrowing spikes and house prices are driven higher.

Could this happen again? Like it did during Covid? Instead of whimpering and dying as we were expected to do, Canadians tanked up on cheap house loans and drove property values wild.

We’ll get some sense of this two weeks from tomorrow when the Bank of Canada sets its policy rate. That decision was complicated this morning as the latest inflation number was published. Thanks to Carney peeling back the carbon tax, and a Trump-induced drop in world oil demand, inflation here sank to 1.7% (from 2.3% the previous month).

Yes, that’s below the CB’s target, and would normally suggest rates be cut – especially when the labour market is weak (as we learned a few days ago). In fact, until early this morning most economists were blithely forecasting our guys would cut rates by a quarter point on June 4th, then maybe twice more during the summer and fall.

That would take the policy rate down to 2% – a far cry from the 5% it was pushed up to in order to quell inflation. Variable-rate mortgages would fall immediately, and fivers likely drift down into the mid-3% range at the Big Banks and maybe 2.99% at the souvlaki-and-loans place on the Danforth. In short, enough to rekindle some extra demand in houses, which have slowly melted in price (but are still far above pre-pandemic levels).

But not so fast. That 1.7% is deceiving, say analysts. Look what’s lurking below.

Gas prices were the big driver of the most recent stat, and lately oil has become more expensive. If you exclude energy, inflation last month was a beefy 2.9%, a jump from March. “A big bump in core was driven heavily by food prices,” says BMO, “which have been running hot on a seasonally adjusted basis in the past three months. A weak loonie at the start of the year, and tariffs on some U.S. imports have combined to drive grocery prices northward.”

Trump tariffs are also hitting cars, with prices rising about 3%.

“The big relief from lower gasoline prices in April masked an unfriendly inflation picture beneath the surface,” say the bank economists. “Some of that upswing in underlying prices appears related to the simmering trade war, with food and vehicle prices showing some real power. In other words, there are two conflicting special factors at play here, both of which should fade over time. This leaves the Bank of Canada in a spot, as their two main measures of core are now running at their fastest pace in a year—i.e., back before they began cutting rates. After a weak jobs report handed the Bank a good reason to cut, this back-up in core above 3% pretty much washes that away.”

The boys at CIBC back this up.

“While headline inflation was in line with our forecast, core measures looked stronger than anticipated which puts a question mark over our forecast for a 25bp cut at the June meeting,” they conclude.

The eyes now turn to the next report on how well the economy is doing. Has Trump freaked people out? Is the tariff news making more folks anxious about their jobs? Or the value of their RRSPs and tax-free accounts? Did the federal election just upset everyone as the blues said Canada is broken and the reds claimed we’re under attack?

Dunno. But that sure-thing rate cut in two weeks is now off the table. Mortgages at the banks will stay in the mid-4% range. The spring real estate will continue to bleed out. The standoff between low-ball vultching buyers and stubborn, offended sellers will go on. Prices may erode around the edges – especially for those poor condos – but no crash.

Maybe it’s time to stop expecting politicians to fix this, so they can stop pretending they can.

About the picture: “We’ve now been clients for almost 7 years!  Best decision we’ve ever made,” writes Mike in his MSU. “And I’ve been a follower of your blog for as long as I can remember.   Enclosed is photo of our dog Jack, which Cathy and I hope you can use it. Our dear boy left us about a year ago.  We would be very happy to have this photo of him in a peaceful sleep on his queen size bed make it into your blog.”

To be in touch or send a picture of your beast, email to ‘garth@garth.ca’.

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As detailed here the other day, the first misstep of the Carney Libs was to push a budget off into the future. Sure, there are reasons. Good ones. But why feed the barbarians so early?

Now, gulp, the second hunk of red meat.

The new housing minister, Gregor Robertson, was on his way to the first cabinet meeting when reporters attacked, asking him if he thought home prices needed to come down.

“No,” he said – a word that he will never, ever get past. “I think that we need to deliver more supply, make sure the market is stable.”

Stability is a good thing. Dog only knows we could use more of it, especially from our dodgy American friends. But in this instance, stable means status quo, and that is exactly the opposite of what a lot of young voters asked for, or expect.

Well, we know what lies ahead now. Robertson confirms that the new Liberal government will pursue the same failed policies as the old Trudeau one, and also espoused by the defeated Poilievre forces. Ottawa believes it has a vested interest in maintaining the equity of current homeowners, preventing any meaningful price collapse and hoping that – somehow – enough new units of pre-fab homes on distant plots of land will sate the kiddos.

But it won’t.

Shiny new federal housing minister Gregor Roberston. The latest sacrifice.

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As this pathetic blog has pointed out with nauseating frequency, we do not lack houses to buy. Inventory is rising in all major markets. The sales-to-new-listings ratio has tanked in the GTA and beyond. There will be about 30,000 new condo housing units coming onstream in that one market alone this year, while 17,000 already sit unsold and unloved.

Nationally sales are down and available properties are swelling like a python with gas. MLS is currently showing 327,115 resale properties up for grabs across the country – a big jump in the last ninety days. On top of that are new build offerings.

In Toronto there is a seven-month supply of condos. In Vancouver active listings are running 47.6% above the 10-year average. Of every ten homes for sale in that city, just one is receiving an offer within a month. This ratio means, simply, it’s a buyer’s market.

In Calgary listings are up 115% year/year. Days on market have increased over 40%. There’s been a jump of 177% in months of supply. In Halifax, agent/blogger Jeremiah Wallace says: “We’re seeing the gap between new listings and sales widen again, a sign of shifting balance in the market. Despite this, prices are holding steady, especially in the single-family segment, where homes are still selling close to their list prices.”

And that’s exactly the reality. Listings up. Sales languishing. Prices are, well, stable. There’s been a slow melt in the largest urban centres, but no collapse. No crash, No capitulation. And everywhere there is abundant supply. In fact it is exceeding demand across Canada.

So how will increasing the supply further bring prices down when an overabundance at this moment is not?

Answer: it won’t.

Moreover for the federal government to get back into the house-building business will take years. Even with pre-fabricated homes and standardized designs. Land has to be serviced, infrastructure built, trades, developers, materials and financing arranged, plus agreements reached with municipalities and agencies.

The odds of Gregor failing in this position were at least 70% that day he accepted. The odds now, after the “no” comment, are probably 100%.

The federal government can’t build enough ‘affordable’ homes in the next four years to make any meaningful dint on the market – and we have no idea what the word actually means. Is an affordable home one that sells for $900,000 in YVR, or $300,000 in Halifax? Will newbie buyers want a glorified mobile home, or worry about the potential resale value? And should taxpayers – via reduced costs being offered to these builders – be subsidizing the housing costs of others?

Nobody has this figured out yet. Expectations should remain low. Only Mr. Market can make real estate accessible again, and he ain’t paying attention at the moment. The only relative bargains around are (as we described recently) in the assignment market for urban condos, which is more than saturated with supply and limited in appeal.

In short, Robertson will probably blow up. The more he talks, the faster it will happen.

About the picture: “You have posted a picture of Tilly before,” writes HG, “now she will be 2 years old in July. Here she opened her eyes just as I was taking the photo. She still enjoys meeting everyone and barking out to all people and dogs. A yorkie trying to run her world.”

To be in touch or send a picture of your beast, email to ‘garth@garth.ca’.

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Jann Arden called them ‘pricks’. In return (she says) they threatened her. And so the latest social media ugliness unravels between the iconic Calgary-based musical artist and the folks who want Alberta to be a separate country or, even better, part of the USA.

Since the Carney victory a few scant weeks ago, the steamy little issue of secession has fired up again. Some people think that two million votes on a referendum (which will never happen) would justify making 41 million of us poorer. Many of them like MAGA, too. They love Pierre Poilievre. And Danielle Smith. Plus Preston Manning.

Alberta will never leave Confederation, of course. The Clarity Act makes that impossible. Besides, the vast majority of people in that province are proud of Canada and happy to be a part of it. Sometimes they elect weird, extreme leaders. But we all have our moments.

Anyway, here’s a suggestion for Jann as she fights the traitorous trolls: use facts.

Late last week the rating agency Moody’s downgraded America’s credit rating. This was a big deal, since it’s the last of the majors to admit the US is on a poor economic trajectory.

Said Moody’s: “This reflects the increase over more than a decade in government debt and interest payment ratios to levels that are significantly higher than similarly rated sovereigns.”

By the way, the agency had given America a perfect credit rating every year since 1917. So what happened now?

Lots. The States carries a federal debt load of $36.22 trillion, and Trump’s current budget bill will increase that pronto by $4.5 trillion. He wants to seriously cut corporate taxes, reduce personal taxation and increase defence spending while saying tariffs will help pay for it. But Moody’s and everyone else sees a chaotic, incoherent, haphazard trade strategy coming out of the White House which is helping to increase inflation, reduce consumer spending and hasten a global recession.

So Moody’s says things will deteriorate. Federal debt will equal 135% of GDP within a decade (it’s now at 126.4%). As the Biden years ended, that ratio was just 98%.

Now, it’s clear the US remains an economic powerhouse. Nine of the ten largest corporations in the world are based there. The rater admits that America, “retains exceptional credit strengths such as size, resilience and dynamism and the continued role of the US dollar as the global reserve currency”. Without a doubt your investment portfolio should maintain 30% exposure to American markets with a quarter of your assets denominated in US$.

But join them? Nah. Not a chance.

Let’s compare with Canada. Moody’s maintains a triple-A rating for this country, which is the highest possible and superior to that of Trumpland. Our outlook is called ‘stable’ and that of America has been degraded. We have the lowest-possible risk of default and no change is indicated in our credit rating, based on the current government and economic projections. The agency says it is confident in “Canada’s strong economy, well-developed institutions, and effective policy responses.” Our currency is also rated triple-A, “reflecting Canada’s strong policy effectiveness and open capital account.” Plus, we have one of the most stable banking sectors on the planet.

All facts, Jann. Here’s some more.

While the US debt-to-GDP ratio is 126%, ours is 106%. The American federal debt (in Canadian dollars) is $46 trillion. Ours is $1.2 trillion. The American economy (at $30 trillion) is 15 times larger than ours. But their federal debt loan is almost 30 times greater. About 28 million Americans have no health care coverage of any kind. That number here is about zero. If you’d like more stats, Ms Arden, check out this blog post.

Finally, remind the whackos buying ‘Alberta Republic’ ball caps what happened the last time a political movement came along focussed on macho cowboyism (when Pierre was 12). The Reform guys never achieved power but managed to cleave Conservative support, throw a bunch of elections and keep Liberals in office for another ten years. It all led to the extremist Poilievre party that just turned an historic 20-point lead into a defeat.

That’s the thing about pricks. They think with the wrong organ.

About the picture: “Here’s YoYo the Canadian Cocker Spaniel showing his specialty – food bowl diving,” writes John, in Ottawa. “If you squint at it, it kind of looks like he’s graphing global trust of the USA by month. Ok, maybe not, but dogs are smarter than we think…”

To be in touch or send a picture of your beast, email to ‘garth@garth.ca’.

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   By Guest Blogger Ryan Lewenza

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It’s been a little over a month since Trump’s “Liberation day”, where he announced massive tariffs on China and other nations, and Trump is now doing a major reversal by slashing these tariff rates on Chinese goods for the next 90 days.

On April 2nd President Trump announced an additional 34% tariff on Chinese goods. China then responded with similar retaliatory tariffs, and Trump, never to be bullied around, countered by increasing the tariff rate to a whopping 145%. Surprising Trump and his administration, China countered again by raising their tariff rate on US imports to 125%.

Ladies and gentlemen, we got ourselves a full-blown trade war between the two largest and most powerful nations in the world. Clearly, tariff rates at these levels would wipe out almost all trade between the two nations, which as, US Treasury Secretary, Scott Bassett stated, is effectively a “trade embargo”.

Cargo shipments coming from China into US ports are plunging with scheduled vessels coming into the Port of Los Angeles (accounts for 40% of all containerized cargo entering the US) down 40% on a week-over-week and year-over-year basis. This has led to concerns over the negative economic impact of these tariffs and that the US could start seeing shortages in some products.

Just imagine how irate some US consumers will get over not being able to purchase and set off fireworks on the 4th of July or not being able to put up new lights at Christmas time!

Scheduled vessels coming into the Port of Los Angeles are down over 40%

Source: Wabtac Corporation, Port of Los Angeles. Week of May 25-31

In China, exports account for 20% of their economy and with their housing market in the dumps, China was in an economic bind and needed to find an off ramp fast. So, over the weekend, Scott Bassett and the US trade team met with Chinese trade officials to see if they could find a deal and de-escalate the situation. Apparently, it was a very productive meeting with both countries agreeing to lowering their tariffs over the next 90 days, giving them time to work out a detailed trade agreement.

The US is lowering its tariff rate from 145% to 30% on most goods (10% base tariff and 20% existing fentanyl tariffs), while China will lower its tariff rate from 125% to 10% for the next 90 days. So, we have a major de-escalation of the tariff war, and we could be through the worst of this period.

Markets reacted very positively to this announcement as it was viewed as a best-case scenario. Going into these discussions and the US officials saying these are just talks to begin future talks, few were expecting any major announcements or breakthrough. But this isn’t the end. Now the hard work really begins as they work through the details of a future trade agreement.

The US wants China to purchase more US goods, to reduce the large trade deficit which was US$295 billion last year, and they want China to open up their markets so US companies can do more business there. If they cannot reach a deal over the next 90 days, then we could see tariffs ratchet back up.

It’s important to note that with this lowering of the tariff rate that the effective tariff rate for Chinese goods is still at 33%, which is the highest of any country. According to a recent Yale Budget Lab report, the total US average effective tariff rate is at 17.8% (this is after the lowering of China and other tariff rates), which marks the highest tariff rate since 1934.

This rate is still very high and will likely add to inflationary pressures in the coming months, which is a concern and something we’ll be monitoring very closely.

US average effective tariff rate since 1790

Source: the budget lab

So, this is a big reversal from Trump and a de-escalation, which we view as a big positive for the economy and markets. But we’re not out of the woods yet and the next 90 days will be critical to see if the US can get a workable and enduring long-term deal with China. Stay tuned.

Ryan Lewenza, CFA, CMT is a Partner and Portfolio Manager with Turner Investments, and a Senior Investment Advisor, Private Client Group, of Raymond James Ltd.

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A day after we got to look under the hood of the Carney government came word of the first misstep. No budget.

“Colour me unimpressed,” said cowboy chief bank economist Derek Holt. “I still don’t like this one bit. Canadians have a right to know the state of the government’s finances—like how bad are they now—and the planned consequences to deficits and debt. Otherwise, it feels like Canadians basically wrote a blank cheque on April 28th when they granted a minority government to the Liberal Party.”

He’s right, of course. We need to know.

Yes, yadda, yadda, yadda, there’s a volatile and uncertain trade war going on. Planning is hard. Yeah, Parliament will not be sitting for long before a scheduled break, so little time for debate or amendments. And, yup, we don’t need a wild non-confidence budget vote right now followed by another election.

So, politically, no budget is the chicken thing to do. But it also may show Carney’s naivete. We need the shiny new PM to be decisive, show leadership and (mostly) break from the Trudeau past of spendy wokeness. Canadians supported this guy because he had the whiff of being a progressive conservative. So, act like it.

Now, do you recall December 16th?

That day then-finance minister Chrystia Freeland was to deliver her fall economic statement. That was the last fiscal and economic update Canadians heard, and it might as well have been a decade ago. Trudeau was still running in the next election. The Libs were at 16% in the polls. Trump had not yet taken office. PP was set to rule. There were no tariffs, retaliatory tariffs, reciprocal tariffs or sectoral tariffs. We had not yet heard of Liberation Day. Stock markets were ducky.

And yet, Canada’s finances were rough.

That morning Freeland capriciously, dramatically quit in a hissy fit designed to be the first of her moves to become the next PM by cutting Justin off at the knees. (She failed.) The economic statement was nonetheless tabled in Parliament, and gave us more reasons she was bailing.

The government had broken its pledge to keep the deficit (the amount it spends in a year more than it collects) below $40 billion. Oops – it came in at a massive $62 billion for the current fiscal year. The estimate for the next year was $48 billion – but that was before the tariffs, rising unemployment and the spectre of recession.

Despite that, the Trudeauites proposed another $23 billion in net-new measures, including a couple of billion to finance that Christmas GST holiday – which Freeland blasted as a political gimmick.

Well, it got worse. And still is. Deficits are added to the federal debt, which (as I write this) is $1.246 trillion and rising $4.557 million per hour. Despite Bank of Canada interest rates having plopped down from the 5% level as inflation eased, it still costs us a ton of money to finance this debt.

Debt service charges are almost $24 billion this year and will rise to $70 billion annually within four years. If the Carney team turns on the taps, it will be more. If a recession robs tax revenue, more again. If Trump tariffs our buns off, more.

That amount of money would eliminate the deficit, bolster healthcare, meet our NATO defence commitments and even pay Mr. Poilievre’s parliamentary pension.

This is why deficits matter and the budgets that track them, report them and tell you about them. “Parliament is the place to discuss, debate and pass a Budget in an open democracy,” Holt rightly says. Freeland should not have walked out hours before her report was due. Too much drama. Carney should not balk at fully informing the nation of our finances, rather than making us wait almost a year after the last reckoning.

Bad decision, Big Daddy. You’re still on a short leash.

About the picture: “This is Jonesy and Luna,” writes Ted in Albefrta, “watching anything but the news.”

To be in touch or send a picture of your beasts, email to ‘garth@garth.ca’.

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Anne and her squeeze had a deer fence built at their summer place this past winter. The job was fine. Paying for it turned controversial.

“I received a price for completion by text,” she tells me. “I asked for a proper invoice, and was refused…. Along with the explanation ‘If you get my drift’”.

Yes, the fencing guy wanted to be paid in cash. With no record the work had ever been done.

“I was shocked and wanted to correct the situation… My husband said, “Don’t rock the boat, just pay the bill”. So I did, by e-transfer…..  But I will never ask him / them to do work for us again… but that doesn’t solve the national problem. There used to be an anonymous snitch line. Is there still one?”

Last week when we all discussed rock-licking bullion lovers on this pathetic blog, several posters suggested gold is great for making money and evading taxation. After all, you can just hand it to your kid.

Of course, it’s not that easy. Like all investment assets, gold must turn into cash to be useful in financing life. That act is a taxable one, with the capital gain assessed. The same for gifting your rocks to someone else. Also a taxable event. And, yes, eventually they’ll catch up when the cash exchange happens.

Anyway, during that convo I mentioned that holding gold to escape tax is evasion. Not only is that illegal, but it’s amoral, unethical and unjustifiable.

Anne liked that sentence. “I am trying to find a quote from your excellent writing on those who do not charge taxes and work under the table,” she says. “Not only do I want to memorize the quote, I would like some “Garth methods” of explaining to a workman bidding on a job, that I will not hire him because of his stance on taxation.”

The best guess is that roughly $40 billion a year owed to the government remains unpaid because people cheat. Like the deer fence dude. Canadians would love to think fancy corporate accountants mining tax loopholes are the villains, but legal tax avoidance is not the same as evasion. The former is clever.  The latter is a crime. You can go to jail for it or, more likely, face serious financial reversal.

If people paid what they owe on work they perform the federal government this year could balance its books, not run a deficit, not add to the debt, reduce the costs of financing and hopefully provide better health care or have more than a week’s worth of ammo for the Canadian Forces. (We may need it on the southern border.)

When someone working on your house asks for cash, “so you don’t have to pay the tax” it’s not about avoiding HST on the job. Instead, the guy wants money which will not be declared, not added to his taxable income and remain completely untaxed in his hands – not yours. Meanwhile you’re likely paying these funds to him out of savings or cash flow on which you paid income tax.

There is only one reason you’re asked for cash payments – by the fencer, the cleaning lady, the driveway sealing company, the mechanic or the roofer – and that is tax evasion. By agreeing, you’re facilitating it, encouraging it, allowing it and condoning it.

Moreover, you’re taking a financial risk as well as abetting an ethical breach. If the work done turns out to be shoddy, substandard or wrong, there is no paper contract or receipt to fall back on. If the worker never calls or texts you after complaining, it’s over. Poof.

Why do so many people practice tax evasion?

Some will tell you it’s political, to starve the government, punish politicians for bad spending or simply because ‘they waste all my money’. But that’s crap. People practice evasion because they’re greedy, selfish, unsocial, irresponsible and it’s cool to cheat the government if it enriches the individual. When enough folks do it – yet still demand full public services, including cops, doctors, teachers, EMS, garbage collection, soldiers, nurses and firefighters – we get a financial crisis. Like now.

Societies break down when we let this happen. When we encourage it. When governments give up and turn a blind eye to unpaid taxes. That was on my mind when, ages ago, I briefly ran the CRA. Here’s a media report from that time.

EDMONTON: The Federal government will declare an income tax amnesty for Canadians who have fallen behind on their taxes, Revenue Minister Garth Turner said, “Were not going to prosecute, ‘we are not going to throw you in jail. If you need two years to pay, fine, that’s cool,” Turner said. Under the amnesty, taxpayers could contact Revenue Canada and work out a flexible payment plan that avoids running up penalties and fees.

That little exercise brought in billions. Maybe it’s time for a rerun.

By the way, Anne, the feds certainly do have a way for you to snitch on the cheaters. The ‘Leads Program’ investigated over 36,000 people last year. Details are here.

If you want a better country, be a better citizen.

About the picture: “I cannot believe that my 8 month old Griffon Bruno has moved his mother called Miss Jilly in,” writes Elsbeth, in Hampshire, England. “It is the expressions on their faces that cracks me up. Miss Jilly, the black one, thinking ‘is this ok that I’m in the basket too’ and the ‘so what are you going to do about it” look on her son Bruno’s face, the brown one, which is so human like. Reminds me of a USA President somehow.”

To be in touch or send a picture of your beast, email to ‘garth@garth.ca’.

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As this post is being written (Tuesday morning) the wait time to cross from Canada to the US on the Peace Bridge at Buffalo/Niagara Falls is… 0 minutes. As in, ‘zero’, according to the US Customs and Border Protection Agency.

Car traffic between Windsor and Detroit has fallen by 83,000, compared to last year. Stats Can says the number of Canadians crossing back home in March fell 32%.

A TikTok vid being viewed widely features a 20-something Canadian woman who says US Customs held her at the airport for five hours, searched her luggage, interrogated and fingerprinted her and then denied her entry to the States where she would be on a one-hour layover for a flight from Toronto to Brazil. Reasons unknown. Maybe her Arab name. Maybe because, though a citizen, she was born elsewhere. Maybe because she looks kinda brown. Get a visa, she was told, although Canadians do not need them.

Now university teachers are being warned about the border. “Given the rapidly evolving political landscape in the United States and reports of individuals encountering difficulties crossing the border, CAUT strongly recommends that academic staff travel to the U.S. only if essential and necessary. Academics should carefully consider what information they have, or need to have, on their electronic devices when crossing borders and take actions to protect sensitive information where necessary.”

Especially at risk, the profs are being told, is anyone who has ever dissed America on social media (who hasn’t?) or identifies as transgender. Meanwhile border guards have the absolute right to seize and search any laptop or phone, to detain people without charge, deny entry or assign a Canadian to detention without legal representation.

The American authorities, who routinely collect biometric data on visitors coming to 57 US airports, now plan on photographing occupants of all vehicles leaving the country to ensure travel documents are in compliance. In addition, roadblocks are suddenly common between US and Canadian border points. Says American customs: “As part of its national security mission U.S. Customs and Border Protection routinely conducts inspections on outbound traffic. These inspections are a vital tool in apprehending wanted individuals as well as in seizing a variety of contraband.”

Canadians made 670,000 fewer trips to the States last month. No bloody wonder. Air travel to the US from here has fallen 20%. WestJet just nixed a bunch of flights south because people do not want to venture into America. The Florida real estate market is a disaster with an historic number of listings (and crashing sales) as thousands and thousands of Canadians scramble to exit.

Says a tourism industry report on the economic crunch now hitting border communities: “Official data reveals that US travel service exports — covering international spending on hotels, restaurants, and entertainment — dropped by over seven percent in March. Excluding the pandemic period, this represents one of the most significant contractions in nearly twenty-five years. The tourism decline is hitting hospitality, retail, and service industries particularly hard, raising concerns over slowing growth and the possibility of job reductions in tourism-reliant regions.”

It’s estimated US small businesses dependant on Canadian cash have shed 14,000 employees to date.

This month American officials started comprehensive searches of all vehicles exiting the US for Canada at the Peace Arch bridge (Blaine Washington and Surrey BC) causing a massive traffic jam on the south side and a 3.5 hour wait to exit the republic of tyranny and suspicion.

Source: Nolan Baker, The Northern Light (Blaine)

No wonder border crossings from BC into the States dropped by 51% last month. Nobody wants to be thrust into a confrontational, unfriendly and potentially dangerous situation that could result in unreasonable delay and even detention.

The economic consequences of this MAGA excess and American border paranoia will be far-reaching. Canadians spend billions a year travelling through the US. We own tens of billions in US real estate. Border communities all along the 8,891 km-long stretch between our two nations will feel the pain. It’s already whacking Port Huron and Niagara Falls and attracting international attention. Before the orange guy arrived, our peaceful and friendly common border was a global envy. Now it feels like a trip to East Germany.

Give thanks you live on the free side.

About the picture: “Ruby is a dual doggie citizen Canada/Mexico,” writes Simon. “She lives in  Vancouver for 6 months and Baja the other 6. She doesn’t like the icy salty sidewalks and likes hiking in the Arroyo and chasing bugs.”

To be in touch or send a picture of your beast, email to ‘garth@garth.ca’.

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Now, aren’t you glad you didn’t panic, sell and bury your cash in the backyard after Liberation Day?

Sure. Because here we be. On Capitulation Day.

Tariff Man has flipped another flop, and Mr. Market can now see the beginning of the end of a failed 19th Century economic policy that made sense when robber barons had side whiskers, side wenches and side arms. As investors awoke today they learned the US had blinked and China winked. Ridiculous and destructive tariffs on both sides are being seriously reduced. At first for 90 days. But probably forever (at least for the rest of the Trump dynasty).

As we all know, having a fight between the largest and second-largest global economies is insane. The whole uber-tariff strategy of 47 is insane. Flipping off your best friends, allies and trading partners (us) is insane. Disrupting global trade and expecting other countries to paper over your inability to run an economy and raise enough taxes, is insane.

Well, as tariffs fall apart for the orange guy, this week he moves on to be feted by the Saudis, gifted a $700 million airplane in Qatar, greet a hostage in Gaza and try to grease Zelenskyy into surrender. Markets could not be happier. As far as Wall and Bay Streets are concerned, Trump can stay away until 2028.

World stocks exploded higher on the opening today. The S&P 500 was ahead 3%. The tech-heavy Nasdaq added 4%. All the disastrous losses after the president held up a whimsical chart of ‘reciprocal’ tariffs on a huge list of nations (and some penguins) have been regained.

Markets across the globe come roaring back

Source: New York Times

No wonder.

Trump was forced to back down on a most of his draconian, weird actions. Car tariffs scaled back. Months-long ‘pauses’ on others. A hasty, patchy deal with the UK. Negotiations with Canada. Now ending the war with China. Meanwhile the US Federal Reserve held firm, warning about the consequences of the (insane) White House policy and refusing to be cowed into slashing rates.

Jerome Powell is a hero. And Trump hates him for that.

Meanwhile Elon Musk has skulked out of Washington as judges overturn many of his actions to gut government, which have ignited widespread protest. He’s back at Tesla, where sales have sunk 20% and profits crashed 70% as consumers turn against Muskism. His departure is symbolic of the chaotic retreat that led to this new China deal.

Also symbolic is the Canada-US border. The bridges are basically empty of cars. Canadian citizens of colour or with foreign-sounding names or who were born outside of the country (like 52% of the Toronto population) are being screened, harassed and denied entry by American border officials at crossings and airport customs locations.

MAGA has gone too far to survive. Attacking universities which allow free speech. Deporting people without due process. Punishing law firms that acted against Trump. Retreating from science and vaccines. And pushing an economic agenda which the IMF says will make the entire world poorer.

So as markets see the end of this nightmarish presidential strategy – mere months since it began – we’re back to concentrating on the essentials. Corporate earnings. Innovation. Consumer spending. Monetary policy. And, yup, it’s party time.

Source: CNN

Only days ago it was extreme fear driving markets down. Today the greed-o-meter was lit as billions of dollars poured back into equities. The US dollar went up (ours went down). Bitcoin lost $1,500. Gold prices tumbled almost 3%. The S&P will likely have its best day since Trump’s embarrassing Rose Garden made-for-TV trade flop. US tariffs on China are going from 145% to 30%. Chinese tariffs on American goods drop from 125% to 10%.

This is consistent with the US-UK deal, which also settled at a levy of 10%. And it gives hope that the Carney crew can negotiate a deal with Washington that settles somewhere between that number and 0%.

As for people worried about their TFSAs, retirement savings and house downpayment funds, you can stop. We’ve just been through an episode that should reinforce what this pathetic blog has told you over and over and again.

Stay balanced and diversified. Have global exposure. Keep a quarter of your portfolio in US-denominated assets. Do not sell into a storm. Stuff your tax shelters. Focus on your long goal. And never bet against America. Even now.

About the picture: “I’m a privileged millennial problem,” writes Andrew, in Vernon. “I’ve read your blog for 4-5 years now and I think I’m doing a good job of staying the course. Thanks for all you do. Really helped me stay the course. Keep the blog going. This is my dog, Memphis.”

To be in touch or send a picture of your beast, email to ‘garth@gartth.ca’.

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Will a new cabinet make houses cheaper?

We’ll see. The shiny new PM unveils his team this week. Choices for finance minister and the housing czar will be interesting. The Carney plan to rescue real estate is based on lower building costs and whipping up a mess of pre-fab affordable stuff. But as with the last plan (and the one the Cons proposed) it’s all dependant on whether or not the buyers show up.

Lately they’re turtling. Looks like that will continue. Especially in those parts of the country – southern Ontario, the Lower Mainland, Calgary – where US tariffs bite a little harder. The more integrated we are with the Americans, the more it blows.

Like K-W, for example. The Kitchener-Waterloo-Cambridge region is home to a high tech sector massively tied to the States plus car parts and assembly plants requiring an American customer base. Layoffs and shutdowns have already been announced. And the housing market has felt it.

“Home sales remain notably below the ten-year average,” say local realtors. “What we’re seeing is a clear market rebalancing, with inventory levels up 75% above the ten-year average and nearly four months of supply across all property types. This shift is creating more opportunities for buyers who now have more time for due diligence and negotiations, while sellers are adapting to a market that demands strategic pricing and patience.”

Sales in the area are way below the decade-long average while inventory is higher and prices have backed off in the same slow melt hitting most of the country. In short, buyers have way more choice. There’s less competition. Sellers are more willing to barter. But prices are still ridiculous. A single-family home in this place – a three-hour drive to Toronto – still costs almost a million dollars. In contrast, the average home price a half-hour from Chicago (where the new Pope grew up) is $150,000 US.

Prices have dropped a little more in the Big Smoke. The average Toronto property has given up $35,000 in three months. It’s a similar story in Vancouver and Calgary, with higher inventory and sales that have dropped by 20% or more.

Last week Trump said tariffs on Canada aren’t going away. A reporter asked why. He said, “That’s just the way it is.”

Such American-MAGA arrogance. It’s hard to see how any Canadian government can break through this. But maybe she can charm the old buzzard. Let’s hope.

Meanwhile the question is whether Canadians will muster up the courage to take on more debt and start writing offers. Job security confidence has dropped back to Covid we’re-all-gonna-die levels. Only 44% of us feel secure at work and a third of Canadians are uncertain they will still be employed in a few months. The savings rate is up because the spending rate is down.

BMO just discovered 74% of Canadians expect a recession. Only 14% of people are planning to buy a home this year. Half think it’s a worse time to make an offer, despite the fact prices are down and choice plentiful

This is why the inventory of unsold new homes in both the GTA and Vancouver is surging higher. At the same time up to 30% of all “new” listings in the GTA are actually re-listings as worried sellers try to make their properties look fresh, and maybe nip the ask a little.

This is a real estate world on hold. It’s a standoff. Owners don’t want to believe the bottom will fall out of the market. Shoppers are waiting for exactly that. Meanwhile the next jobs report is forecast to be a weak one, beaten up by tariffs, and the Bank of Canada is expected to react with a rate cut in early June.

It won’t matter. Rates (and prices) have to fall further before demand rekindles. The entire year of 2025, in other words, will be a wipeout for the industry. By Christmas we could have 3% mortgages and 2022 prices, plus a federal government shovelling money into throwing up more walls. But unless people feel hopeful about their employment, finances and future, nothing matters.

If Trump and his tariffs had not arrived this year, we’d be having a different conversation. We might also have a different government. And PM. We might have seen FOMO return and a spring market with swelling sales, bidding wars and higher prices.

Weird how things turn out, isn’t it? Go Mélanie.

About the picture: “I’ve been reading your blog since 2009. How things have changed since then!” writes Anne, in Toronto. “Here’s a picture of my friends’ one-eyed American rescue dog, Ripley. She was found wandering in the woods with her siblings, led by a sweet Rottweiller who was definitely not the mother. The mystery was never solved but everyone found a good home. Despite only having one eye Ripley was unmatched in catching balls and Frisbees. She left us recently after a long happy life.”

To be in touch or send a picture of your beast, email to ‘garth@garth.ca’.

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