Toronto’s detached real estate is showing signs of improvement, but it’s far from a recovery. Toronto Real Estate Board (TREB) numbers show prices are down by tens of thousands of dollars in June. The lower prices did provide a little motivation for buyers, sending sales up from last year. Don’t get too excited though, it was still the second worst June in at least 7 years for detached sales.
The Price of Detached Real Estate Is Down Over 9%
The price of a detached home across Toronto is down a lot from last year. TREB reported a benchmark price of $931,600 in June, a 9.3% decline from last year. The City of Toronto reported a detached benchmark of $1,119,400, a 7.14% decline from last year. There is some minor bull fodder in these numbers, which is the size of the declines have gotten smaller.
Toronto Detached Benchmark Price
The price of a typical detached home across the Toronto Real Estate Board, in Canadian dollars.
Source: TREB, Better Dwelling.
The size of declines for the detached benchmark shrunk slightly. TREB’s 9.3% decline in June is off of the low 10.3% decline in April 2018. The City of Toronto’s 7.14% decline is just off of the 9.55% decline we saw in April as well. A decline is still a decline, but it’s worth watching this indicator for signs of improvement.
Toronto Detached Benchmark Percent Change
The 12 month percent change of a typical detached home across the Toronto Real Estate Board.
Source: TREB, Better Dwelling.
The Median Sales Price of Detached Real Estate Is Down Over 2%
Not a fan of CREA’s benchmark price? The median sale price is also showing declines for detached homes. TREB reported a median detached sale price of $857,000, a 2.16% decline. The City of Toronto saw a median detached sale price of $1,035,000, a 4.63% decline. Remember, a median sale price won’t account for a change in quality or size, like the benchmark. It is helpful for tracking dollar flow direction.
Toronto Detached Average Sale Price
The average sale price of a detached house in the Toronto Real Estate Board.
Source: TREB, Better Dwelling.
The Average Sales Price of A Detached Home Is Down Almost 2%
The average sale price of a detached home made small declines compared to last year. TREB had an average sale price of $1,033,574 in June, a 1.9% decline. The City of Toronto’s average detached price fell to $1,354,429, a 2.4% decline from last year. Average sale prices aren’t great for determining how much you would pay. Once again, only amateurs use this number for figuring out a home price. It’s actually a better indicator of upgrade flow.
Toronto Detached Average Sale Price Change
The 12 month percent change of average sale price across across TREB.
Source: TREB, Better Dwelling.
Greater Toronto Detached Sales Are Up Over 4%
Detached home sales picked up, finally showing positive growth. There were 3,589 detached sales in June, an increase of 4.02% from last year. The City of Toronto represented 885 of those sales, representing a 4.36% increase from last year. The good news? This is the first year-over-year increase for detached sales in 14 months. The bad news? We’re comparing it to the worst June in seven years, so it’s a sandbagged number to beat. In case you’re wondering this June (2018) was the second worst June for detached sales in at least seven years.
Toronto Detached Sales Vs. New Listings
The total number of detached sales, compared to the number of new detached listings per month.
Source: TREB, Better Dwelling.
Greater Toronto Detached Inventory Rises 11%
The number of new detached listings dropped considerably. There were 8,417 new detached listings across TREB, a decline of 17.98%. The City of Toronto represented 1,793 of those new listings, down 14.45% from last year. The huge drop in new listings wasn’t quite enough to bring down inventory.
Active detached listings, the total available for sale, is slightly higher than the same time last year. TREB has 12,486 active listings at the end of June, an 11.06% increase. The City represented 2,260 of those active listings, up 2.91% from last year. Inventory is seeing significant growth in the suburbs, compared to the city.
Toronto Active Listings
The total number of detached listings available.
Source: TREB, Better Dwelling.
June wasn’t a great month for detached sales, with prices continuing to decline. The price of a typical detached home is down at least $85,000 from last year, which is a hard pill to swallow. More people did take advantage of the declines, sending sales higher than last year. Though the market still printed the second worst June in at least 7 years. We’ve been hearing the word “recovered” being thrown around, but that’s a generous use of the word.
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Pop? Tick tock. BD4L.
Interesting numbers, still negative overall but I can’t help thinking that some people are thinking this is the bottom of the barrel and want to jump in at these “bargain bin” prices.
Only time will tell, but I think once the masses realize the years of 10%+ price growth YoY are over they may unload their investment properties.
48% of new condos taken possession of in 2017 were by imvestors. 44% of which had negative carry. I’m sure the stuff pre sold in 2015-2017 which will be hitting the market over the next couple years had an even higher concentration. All those buyers will be facing higher rates when it’s time to pay up
We neeedz tha popz…so says my bulldog.
Still could see a bit of a bull trap throughout summer and fall if a bunch of people see this as a buying signal. Get a pre approval today before the hike and you save .25% on both your rate and the stress test. Think the credit cycle contraction will work it’s magic soon enough though.
That being said, some guy on twitter (so take it with a grain of salt) did a breakdown of gta sales and price by property type. Detached, semi, townhouse and condo were all down MOM from May, however, more detached and semi sold as a % of total sales and therefor brought the benchmark up MOM from May. Condo sales were down YOY.
Speculation ahead – This could be close to peak condo. I assume that few first time buyers can afford semi or detached. Assume most of these sales are to people switching homes or upgrading from condo. Gap between condo and sfh hasn’t been this small in years. If enough people start to try and upgrade from condo to sfh as record condo development hits the market, this could be what finally breaks the condo market. I see 1 bd condos as the market floor, once they start to drop in price, no more upgrade flow , and I think that’s when it really starts to get ugly. Keep an eye on condo sales and listings
*Condo sales down MOM from May. All other property types up for MOM sales
Speaking of which
https://www.google.ca/amp/s/www.bloomberg.com/amp/news/articles/2018-07-10/toronto-condo-starts-hit-30-year-high-to-lead-canada-home-surge
– Multiple-unit urban starts were up 46 percent, with a 231 percent increase in Toronto for that segment of the market.
Totally agree. The new mortgage regulations aren’t much more than a calming salve, interest rates are still incredibly low by historical standards,
and we’re not even into the foothills in terms of scaling the mountains of accumulated debt. The average buyer is still blissfully unaware of any economic downturn on the horizon, the economy is chugging along fine, employment numbers are good, aside from Vancouver and Toronto their is no housing bubble, Montreal and Ottawa are percolating.
Makes sense that house sales and prices are hanging tough. With the narrowing condo/house price gap narrowing some boomers who swapped their family homes for condos in recent years are now selling selling them and jumping back into 2- 3 bedroom houses!
It may indeed be a Goldilocks moment, but when Papa bear gets back there’s going to be hell to pay!
Meanwhile in the US: Homeowners are sitting on a record amount of cash — and not tapping it. (Homeowners now have a collective $5.8 trillion in tappable equity, the highest volume ever recorded)
Seems opposite to Canada.
https://www.cnbc.com/2018/07/09/homeowners-sitting-on-record-amount-of-cash-and-not-tapping-it.html
Something no news entity in Canada is likely to report, that CNBC just did:
“Home prices are also rising so quickly that some markets are overheating, with sales slowing even as prices rise. That is a red flag to all homeowners because prices, historically, eventually follow sales.”
Maybe some of them remember the lesson from 10 years ago
Two of your graphs demonstrate sudden and rapid shifts. A relatively flat curve, to a spike, to a rapid fall off. These curves mean only one thing. A rapid change in the equilibrium point. A drastic change in underlying fundamentals. Where the intersection of two curves WAS, the intersection just vanished. The metric has no idea of where to go, except that it is going to reappear somewhere else.
But there ARE people who understand what is happening. The head economist for google is one. To get to this position, you can not be a laggard. You have to KNOW what you are doing, and have some very high level of intelligence.
So lets see what he has to say about discontinuous graphs.
https://cruel.org/econthought/essays/multacc/kaldcyc.html
‘The rest of the story then follows in reverse. At E in Figure 6, we are at a pretty low output level and thus capital decumulates and so K declines from K2 past K0 and then on towards K1. In the meantime, our lower two equilibrium begin to move towards each other and A and B meet and merge at point F at Y1 (equivalent to our old A=B). Note that the stability arrows in Figure 6 are such that now we must have a catastrophic jump in output from F to point G (the high equilibrium to which point C moved to as capital fell from K2 to K1). From G, the process then begins again as capital rises at high output levels from K1 to K0 and onto K2.’
Most economic theories define metrics using a straight line, or perhaps an exponential line. But the lead economist at google says ‘not true’. these metrics curves can be s-shaped, meaning that there are perhaps two, three, or even more equilibrium points. When the curves shift subtly, changing shape, moving up or down, or changing slope, these equilibrium points shift and sometimes disappear. When an intersection, or equilibrium point, disappears, there is a radical sudden and dramatic shift in equilibrium. What WAS a stable point, as indicated by indicators, no longer exists. Catastrophe theory is being called upon to explain these multiple intersections of non-linear graphs.
An illustration of this principle is demonstrated here
https://opinionator.blogs.nytimes.com/2012/10/08/dangerous-intersection/?rref=world&module=ArrowsNav&contentCollection=Opinion&action=click®ion=FixedRight&pgtype=Blogs
An example of an economic metric changing shape is the introduction of compound interest,
See for example http://www.businessinsider.com/compound-interest-is-responsible-for-modern-civilization-2013-6
The simple interest curve, applied to bonds, for instance, is flat. The same interest period after period. Another straight line can intersect it at only one point. The compound interest curve is exponential. A strait line can potentially intersect it at two points, meaning there are two equilibrium points. There are those who say that compound interest (introduced on a wide scale in the 1500’s) is the foundation of our modern financial system. There are those who say that the exponential nature of it is the foundation of the inevitable collapse of our financial system. But there are also wise theorists who are attempting to describe what happens when the equilibrium point on an exponential graph becomes unstable, and disappears, only to instantaneously reappear somewhere much lower on the curve. That is, the exponential growth curve appears to reset, and growth begins all over again from a much lower point.
But whatever, it does serve to illustrate the point that economic metric curves are not always linear.
And non-linear curves lead to the potential for there to be multiple intersections, multiple equilibrium points, and for these equilibrium points to suddenly disappear when the curves move. Not just shift along the curve, but disappear altogether.
Another really great illustration of this is the demand-price curve. Everyone knows that it is linear, right? As the price goes up, demand falls. Yet De Beers has made a fortune proving this is not true. It’s called the effects of advertising. ‘Diamonds are a girl’s best friend’. If diamonds were cheap, there would be some great demand for them. As they get more expensive, demand drops off. Yet if the price continues to increase, demand INCREASES. More people want them, BECAUSE they are expensive. De Beers keeps the supply low enough, that the intersection between supply and demand is highly profitable. Yet there is another intersection point. Industrial diamonds. De Beers keeps the supply of gem diamonds low, by grinding up the huge excess into industrial diamonds. The exact same product, but sold at a different intersection point between supply and demand for the diamonds for industrial use.
Does this look like the curve in the real estate industry today? The demand curve RISING as prices also rise? Weird. The ability for and the power of advertising to re-shape the metrics curves. The deliberate manipulation of FOMO to raise prices AND demand.
Okay, so this is a conflagration of multiple curves. Decreasing supply leads to increasing price. But the increasing price is supposed to LIMIT demand, not INCREASE it. No matter what the price, every gal (almost) wants a diamond ring on her finger. Yet how many of you know that before De Beers coined the phrase ‘diamonds are forever’ diamonds were not really in high demand to be high priced? But all changed in 1938.
Modern evolved economic theory is a tough nut to crack. Not everyone can understand it. Vanishing equilibrium points and the instantaneous switching from one point to another without going through any intermediate points along the line is is unfathomable to many. it’s like quantum physics and quantum tunneling. An electron going from one point to another without being in the space between, Armchair physicists have a great deal of problems with this.
As intelligence goes, economists are pretty low on the totem pole. They can’t handle curvy graphs, so they keep them straight. Much easier to develop theories around simple lines, simple calculus, integrals, and derivatives. Harper couldn’t get a degree in anything else, so he got one in economics.
The fact is, you can’t pretend any more to be some economic expert, some great predictor of economic trends, unless you DO understand at least the main thrust of modern theories on the intersection of curves. The reality that most economic curves are not straight lines, and the sudden discontinuities caused by vanishing equilibrium points and changing curve shapes.
It’s like saying you are an expert in particle physics, without understanding quantum effects. Like, wow. Antimatter, for instance. Yet antimatter is produced in thunderstorms. A natural phenomena. And quantum tunneling is the only credible explanation for photosynthesis. Electrons are here, and then they are there, without going through the in-between. Quantum effects are real, they are observable, and nature really doesn’t care if you understand them or not. The limits of human understanding has never been a limiting factor in the real world.
Modern intersection theory and suddenly changing equilibrium points is alive and well in economics, for those who take the time to understand it. And just like that electron in quantum tunneling, and the existence in nature of anti-matter, it describes perfectly how an economy can flip from one state to another, without really going through any interim steps, and how the intersection of two points moving along a curve in opposite directions can lead to their annihilation. it just jumps from one to the other, and no single metric indicator can predict it without looking at what is happening to the other metric curves. The indicator just slides along the curve, until it just vanishes.
Sorry for the discontinuity of the post, but apparently there is a term that automatically sends a post to the never-never land of ‘your post is awaiting moderator approval’, so I had to edit it out.
Most economic theories define metrics using a straight line, or perhaps an exponential line. But the lead economist at google says ‘not true’. these metrics curves can be s-shaped, meaning that there are perhaps two, three, or even more equilibrium points. When the curves shift subtly, changing shape, moving up or down, or changing slope, these equilibrium points shift and sometimes disappear. When an intersection, or equilibrium point, disappears, there is a radical sudden and dramatic shift in equilibrium. What WAS a stable point, as indicated by indicators, no longer exists. Catastrophe theory is being called upon to explain these multiple intersections of non-linear graphs.
An illustration of this principle is demonstrated here
https://opinionator.blogs.nytimes.com/2012/10/08/dangerous-intersection/?rref=world&module=ArrowsNav&contentCollection=Opinion&action=click®ion=FixedRight&pgtype=Blogs
Yawn…. Really JT,your narrative is that this is the new economy and no one, other than a select few, understand this mystical cabal? Are the illuminati manipulating the fundamentals of money supply to keep this train going? To what end and why? people are saddled with debt, can barely survive any sort of unexpected expenses, are spending well over 50% of their income on housing, but everything is ok? I’m going to suggest you aren’t even in Canada, probably a US or China troll or maybe just a rich chinese guy out west with no insight into the populous… all you have to do is talk to people on the streets to understand the situation. But please, link to more articles. Rates up tomorrow or October, it doesn’t matter because the inflationary price increases we’re seeing will kill discretionary anyway and by that token BoC will have to raise rates. Tick tock my friend. BD4L.
I am saying that we have just gone through a period where the intersection of the graphs has gone through a discontinuity.
I am saying that it takes a very modern approach to the study of this phenomena in order to understand it.
I am saying that all the hypothesizing as to what is going to happen based in indicators that no longer work as indicators is futile.
I am saying that the economy is in really deep dodo, deeper than perhaps most people realize, and that in five years nothing is going to look as it should, according to the old indicators and the old theories.
I am saying that, just like today, in five years most people are going to be running around trying to understand something that is not understandable in any previous context, using any previous tools.
I am saying that in order to understand what is happening, some completely new modeling and data techniques are going to be required – we need new tools.
I am saying that seven years ago, not even the brightest minds, including Carney, had a clue as to what was happening, or what was going to happen in the future, and nothing has changed about our understanding..
I am saying that hypothesis expressed today by the brightest minds are going to be just as reliable as hypothesis were seven years ago – that is to say, completely incorrect.
I am saying that it is impossible to make sense of this, and the best one can do is to just present the data as it becomes known, to study it, forget about making projections, and wait and see where the new reality takes us.
I am saying that, if one of the brightest minds in economics, the head of google economics, is presenting a new way of looking at things, that completely describes what is happening today and why, then perhaps he is on to something and just maybe we need to look at how he is doing it.
I am saying that right now, without stronger tools, models, and analysis, we are just whistling dixie.
I am saying that, despite any predictions and prognostications we make about what SHOULD happen, the economy is going to do what the economy is going to do, and it is going to do it based on rules that we barely understand today.
I am saying that BD is doing a very good job of coalescing the information, and presenting it, but BD should stop trying to force it into a mold that no longer exists. Neither BD, nor almost anyone else, knows what the new mold looks like.
I am saying that the economy is going to unfold in a way that is going to make a mockery of almost everyone.
I am saying that housing prices could just as easily keep going up, perhaps exponentially, despite what they SHOULD do, or fall pitifully low, the bottom falling out, or stay stagnant, oscillating above and below an equilibrium value. Exuberant money is completely unpredictable until it runs out. Just look at the stock market since the middle of last year. By every previous metric, every previous analysis, it should have tanked.
I am saying that when the economic system is, or appears to be, broken, anything is fair game to predict, until we actually understand where the new curves are, what shape they are, and where they are relative to each other.
I am saying that, what looks to be bananas cockeyed cuckoo crazy, is really following some system that we just do not yet understand, but it IS following a system, a pattern.
I am saying that, in some future analysis, economists will be able to make sense of this mess, but probably not today.
I am saying that, in all honesty, the only thing that is going to get us out of this mess are interest rates around 3% and until that happens the system will not reset, but in doing so it is going to cause intense pain. But that is just a pure unsubstantiated conjecture. I am just as prone to believe that it is too late. Not since before interest was outlawed by legislation as usury, pre-1500’s, have we had effectively zero interest rates for so long.
I am saying that, no matter what interventions are attempted, America is finished as the leading economic power, and will probably jump into a very deep recession without any warning or any indicators the way it did in 2008, but this time the collapse will be deeper, far more painful, and relatively permanent, and the cause of this will inevitably be discovered as the act that the American economy has been, over the last decade or so, transitioning from a growth to a maintenance mode as far as production and consumption is concerned, and that capital will just continue to accumulate and not find anywhere to be ‘invested’, except in exuberant spending.
I am saying that It is potentially possible, and foreseeable, that housing prices will continue to escalate, because of exuberant money, until a handful of landlords end up owning all housing stock, as homeowners are forced into bankruptcy and forced to sell to the only people with any money because, well, they have accumulated ALL of the capital, and they have gained it through even modest interest. Once you have all of the capital, you can spend whatever is necessary to buy real estate. A bottomless pit. And whatever is paid out for the real estate just comes back in the form of rent. A return to old feudal land barons. No matter what happens to interest rates, because any increase is too little, too late. The damage is done, the equilibrium has shifted. The house of cards is falling, and once it starts, it cannot be stopped.
I am saying that, in my estimation, the only way out ‘softly’ for America is to find another way to redistribute this accumulating and concentrated capital into the hands of all Americans (through social spending) to socially benefit everyone, or suffer a division of wealth unknown since the kings were deemed to own everything in the kingdom.
And I am saying that, unless redistribution of wealth is made soon, the only way to reset will be a revolution or war, just as has always happened in the past. Unless someone can figure out what the hell is happening, and how to predict it and intervene – how to control it. Except that I truly believe someone HAS figured out how to control it, and they ARE controlling it. The name Robert Mercer comes to mind – google it. No mystical cabal, no Illuminati, an actual name. And he is not manipulating it, he is just using his understanding of it.
I am saying that I believe that the money supply is irrelevant, because money itself has lost all relevance. If a bank can just keep paying interest by adding it to a bank balance, without having the assets to back up the interest payments. (The American regulatory agencies have just said that American banks no longer have to have anywhere near the assets to cover the balances and obligations, in other words the books do not have to balance, and they can give all of their reserves away in stock buybacks and dividend payments. They are literally creating money out of the digital virtual reality vaporware when they pay interest on deposits. Really, they don’t care how high the interest rates go, when they are virtually paying interest out of thin air, but they really don’t have to actually PAY it, nor keep it on hand, until the money is withdrawn? So what the hell does the money supply really mean? What significance does it have? There is very little REAL money left. Most of it is just a number in a digital data base. If everyone tried to withdraw their money at once, they would learn very quickly how nebulous the concept of ‘their money’ really is. ‘Their money’ doesn’t exist in its entirety, just cents on the dollar, in reality. How do you graph THAT in a curve – the difference between the money that people THINK exists, and what ACTUALLY exists? Money in digital files, that can never really be spent, because it doesn’t exist?
I am saying that, now, today, we are all just along for the ride.
And please remember, as always, if you only tic, they have ways to make you toc.
No, he’s on to something. The economy has become a parody of itself.
The irony is, that in five years these guys will still be saying the same old same old, trying to understand why the economy is not doing what they say it is going to do, and the economy will still be doing what the economy is going to do anyway.
The poor fellow has really gone off the deep end, which illustrates the potentially catastrophic dangers of playing around with theories you don’t understand.
Hopefully this will put the nonsense to rest … it’s the conclusion at end of the very article he posted the link to above to bolster his ravings, by a renowned Cornell Prof. of Applied Math. He seems to read the first few sentences of an articles and figures he knows it all.
“In some of these cases (boiling water, optical patterns), the picture from catastrophe theory agrees rigorously with observations. But when applied to economics, sleep, ecology or sociology, it’s …… a stylized scenario that shouldn’t be taken for more than it is: a speculation, a hint of something deeper, a glimpse into the darkness.”
The poor fellow has really gone off the deep end.
Hopefully this will put the nonsense to rest … it’s the conclusion at end of the very article he posted the link to above to bolster his ravings, by a renowned Cornell Prof. of Applied Math. He seems to read the first few sentences of an articles and figures he knows it all.
“In some of these cases (boiling water, optical patterns), the picture from catastrophe theory agrees rigorously with observations. But when applied to economics, sleep, ecology or sociology, it’s …… a stylized scenario that shouldn’t be taken for more than it is: a speculation, a hint of something deeper, a glimpse into the darkness.”
Instead of clogging up a comment section with your rambling rants, why not start your own blog?
Note the term ‘catastrophic jump’. A discontinuity in the curve.
Most economic theories define metrics using a straight line, or perhaps an exponential line. But the lead economist at google says ‘not true’. these metrics curves can be s-shaped, meaning that there are perhaps two, three, or even more equilibrium points. When the curves shift subtly, changing shape, moving up or down, or changing slope, these equilibrium points shift and sometimes disappear. When an intersection, or equilibrium point, disappears, there is a radical sudden and dramatic shift in equilibrium. What WAS a stable point, as indicated by indicators, no longer exists. Catastrophe theory is being called upon to explain these multiple intersections of non-linear graphs.
An illustration of this principle is demonstrated here
https://opinionator.blogs.nytimes.com/2012/10/08/dangerous-intersection/?rref=world&module=ArrowsNav&contentCollection=Opinion&action=click®ion=FixedRight&pgtype=Blogs
An example of an economic metric changing shape is the introduction of compound interest,
See for example http://www.businessinsider.com/compound-interest-is-responsible-for-modern-civilization-2013-6
The simple interest curve, applied to bonds, for instance, is flat. The same interest period after period. Another straight line can intersect it at only one point. The compound interest curve is exponential. A strait line can potentially intersect it at two points, meaning there are two equilibrium points. There are those who say that compound interest (introduced on a wide scale in the 1500’s) is the foundation of our modern financial system. There are those who say that the exponential nature of it is the foundation of the inevitable collapse of our financial system. But there are also wise theorists who are attempting to describe what happens when the equilibrium point on an exponential graph becomes unstable, and disappears, only to instantaneously reappear somewhere much lower on the curve. That is, the exponential growth curve appears to reset, and growth begins all over again from a much lower point.
But whatever, it does serve to illustrate the point that economic metric curves are not always linear.
And non-linear curves lead to the potential for there to be multiple intersections, multiple equilibrium points, and for these equilibrium points to suddenly disappear when the curves move. Not just shift along the curve, but disappear altogether.
Sorry for the discontinuity of the post, but apparently there is a term that automatically sends a post to the never-never land of ‘your post is awaiting moderator approval’, so I had to edit it out.
Justin thyme
Wow.your soo smart.
Sarcasm. Just in case you didn’t get it.
One thing you mentioned Justin Thyme is correct which is the FOMO manipulation and it sure plays a big role in fuelling bubbles.
However even if my neighbour or you or I want the diamond which is in artificial shortage and willing to overpay for it as the price goes up we still need the financial ability to overpay so in other words if this ability which is the extra credit through different means didn’t exist we wouldn’t be able to overpay and create an unnecessary bubble regardless of the theories you’re talking about.
Yuuupppp….I guess JT is pooping gold so doesn’t have to worry about liquidity and credit restrictions unlike the rest of us.
What you missed, was that there are TWO equilibrium points. Diamonds are sold at TWO different values. It matters not to De Beers what point they use, they get their money. The difference is exuberance. And exuberance is what is driving all bubbles, as you said.
But what you have NOT said, is that in an exponential compound interest curve, the exuberance goes almost straight up after a certain point in time. It is limitless. Double Bill Gates $99 billion in 8 years, and what do you have? Double it again in 8 years, and how much is it? Now double it again. In just 24 years, how much is he worth? How much exuberance? How much real estate can he buy, no matter HOW expensive it is? Concentration of capital through compound interest. The bubble will NEVER burst.
That is where we are today on the compound interest curve.
But where does this money COME from?
In today’s economy, it is all fake money, because it will NEVER be spent. Ever. Bill Gates can not possibly spend all of his money, in ten lifetimes.
So how do you burst a bubble that is made of and driven by fake money? Of money that will never be spent?
And if the fake money keeps growing and growing, the demand line keeps getting steeper and steeper. And it intersects the supply curve at a higher and higher value. The curves are not static. They keep changing. Prices keep going higher and higher. It doesn’t matter that EVERYONE can not pay it, it matters only that SOMEONE can pay it, and these someones set the price that EVERYONE has to pay, even if they can not afford to. Because SOMEONE can afford to, and in an unregulated society, they WILL pay it just because they CAN. And 1% of the world population is now some 90 million people. The 10% that has 80% of the money, and can afford anything they want, is 900 million people. That is a lot of diamonds. No, the bubble will never burst. Not with compound interest driving it.
Up up and away! Your model of the universe is missing a couple of important variables — human nature and reality.