Pump & dump

There is news, and then there’s sort-of news. Real news might be that the government is about to fall, new home sales in Toronto last month plunged or that twenty million Americans have mortgages which exceed their home values. Oh yeah, and Mumbai. Real news these days tends to be real depressing.

That may be why there`s so much sort-of news, especially online, where anybody can turn out a spiffy blog with passable gfx and look credible. That’s ok. It’s a free country. But if you were to start a blog and claim Stephen Harper is in control or that the west coast of India is lovely this time of year, few people would believe you, and the consequences would be thin.

However, when it comes to real estate news, it’s a different story. Legions of potential homebuyers and misty-eyed young couples use the web to search out a home and to research current conditions. Often they turn to ‘real estate professionals’ who position themselves as authorities, or the purveyors of credible market information. Big mistake, kids. Almost every realtor out there masquerading as an analyst seems unable to resist the temptation to pump and dump.

And I’m sad to say this. It drags down the entire professional. Maybe there should be something radical – like regulation.

Anyway, here’s a taste of what I mean.

In Vancouver, condo flogger Ken Stef says “Housing prices will not stay low for long!” Hmmm. Based on what? Oh yeah, a story in the Homes Section of the Vancouver Sun by developer Peter Simpson. “Six months ago, people were dancing on the ‘don’t-worry-be-happy’ bandwagon. A couple of those same guys now believe the world is nearing its end,” Stef says, “and have assumed the fetal position in some dark, clammy corner…  The return to a balanced market offers many opportunities to buyers.”

Vancouver. Average home price down $75,359 in six months. Annualized decline, 21.7%. Welcome to a balanced market. Next stop, the Taj Hotel for a quick drink.

(Speaking of Van madness, please see chart, and my note, below.)

In Toronto, condo pumpers Laurin and Natalie Jeffrey boldly headline, “Buyers not deterred by doom and gloom reports.” They point to a fluff piece in the Star which reports 2,100 new homes and condos were sold in the GTA (population 6,000,000) in October. If there is a lesson in all of this, it’s not to get caught up in all the exaggerated doom and gloom,” the Jeffreys exude. “If the circumstances have finally come together and you are in the right position to buy that new home or condo, don’t let it slip away to someone else because you’re psyched out by all the negative headlines or thinking you might get it for less down the road.”

“Unlike the US or Western Canada where prices spiked dramatically, driven by subprime mortgage lending in the US and commodity wealth out west, GTA new home prices have risen gradually, and according to Canada Mortgage and Housing Corp., will rise a further 1.8% in 2009.”

Sure they will. Say, is that the same CMHC which forecast a 6% increase for prices in the GTA in 2008? Amazing how those pointy-headed guys missed the $45,713 average price drop in the last six months, a 25.9% annual decline. And as for new home sales last month, they were down 44% in Toronto. Hey, condo babes, where do I sign? Pant, pant.

Now, I understand fully real estate practitioners are sales people. I also understand most are honest, decent and ethical. And I know this is a bitch of a time in which to make a living on commission. But real estate is a commodity which moves higher and lower in response to a myriad of factors and after more than eight years of up, it’s going to have at least three or four years of down. That doesn’t mean the world stops or that people will cease buying and selling houses.

But it does mean purchasers will be more wary, value-conscious and discerning, while sellers must be realistic, pragmatic and pliant.

It also means realtors who hope to weather this storm must be seen as credible and trustworthy. If they set themselves up with blogs and snazzy web sites full of opinion, at least what they have to say should be believable. This is not a market anybody with a sales license can wish better. Shame on those who lure in buyers with false prophecies or prey on the uninformed with misinformation.

When the buyers return, you won’t.

Further to the post above, I was contacted by Vancouver realtor Paul Boenisch, who had this to say: “I wanted to offer some Vancouver numbers for your blog (which I read daily). $745,778 for Nov v. $825,206 for Oct. That’s -9.63% I guess we would round that up to a 10% monthly drop. Wow. The average sfh price in Vancouver is now down 19% since its peak at the end of Feb 08. From a high of 920k to 745k.” And (above) you can see from Paul’s web site a nice little summary of why Van prices have a long ways yet to fall, as supply overwhelms demand in a way unseen for many years.

Now, I don’t know Paul, but I did stroll around for a while on his site and was impressed. He’s taken the time to understand what consumers think about the market, and give them objective information. Nice change from realtors treating protential homebuyers as marks and idiots. Note to his competitors: This is the future of real estate, guys. – Garth

126 comments ↓

#1 GenXer on 11.30.08 at 10:12 pm

Hi all – thought you would enjoy this link if you haven’t seen it already. A good overview of the international plunge in housing prices across the OECD – note that Canada is one of the few countries that hasn’t seen a slide back to pre-2007 housing price levels. According to what other countries have experienced, a further drop is in the cards.

http://www.yourhome.ca/homes/article/546050

FYI – the automatic earth is all doom and gloom – are you all selling still, or is it past that point?

I see the Star worked me and this blog into a story on European real estate. Typically in-depth. — Garth

#2 wealthy renter on 11.30.08 at 10:56 pm

“And I know this is a bitch of a time in which to make a living on commission.”

As a group, do realtors generally live high off the hog, or do they actually live within their means? I would imagine the smarter and experienced ones have socked away their windfall gains of the past half decade. The idiots probably bought spec condos in Milton.

Then again, I am not sure if Milton has condos. I have read that x-urbanites suffer from vertigo with anything greater than two floors! :)

Don’t live in Milton, dude. Can’t eat squirrels there. — Garth

#3 dotava on 11.30.08 at 11:13 pm

2 Garth from weird 1,

I was dead serious when I said that I am not part of Liberal party but I will vote for U and that I experience most of the thing that are in front of us.
Anyway waiting for “new investment” in second week in January – if government presses are not to much used to print fiat money.

Good Help Us

#4 Cassandra on 11.30.08 at 11:16 pm

Hi GenXer:

The Automatic Earth has always been doom and gloom since its inception (a spinoff from the Oil Drum, a rather long and convoluted story). Today’s entries and those of yesterday kind of “summarize” events for the past few Months, as Stoneleigh and Illargi are trying to put together a FAQ on the financial meltdown. Real Estate is a side issue to them, but they agree prices will drop, and fast…they are actually living communally in Eastern Ontario, and preparing for the Mother of all Depressions. I see the recent issues of the Toronto Star are full of “desperate” real estate ads, as builders try to dump unsold inventory…I expect people will watch and wait, it will be a lot cheaper later on. Efforts to halt our slide into Recession/Depression have thus far been futile…the politicians in Ottawa may debate stimulus packages, but they only have to look down south to see how utterly counterproductive and futile they have been. Since the unwinding of the hedge funds and the Bear Stearn crackup, the USA has invested over 2 trillion in bailouts…but things just get worse and worse. I suppose Ottawa can try the same thing (albeit on a smaller scale), just to be able to say it did something…but the effect will be much the same.
Here’s a lovely chart of the bailout moneys squandered so far (and this is just the USA):

http://www.sfgate.com/cgi-bin/object/article?f=/c/a/2008/11/26/MNVN14C8QR.DTL&o=0

Wow! What to do? Follow Stoneleigh/Illargis advice: get out of debt, keep cash, and try to become as self sufficient as you can. I’m doing my own small part out here in the boondocks. I wonder how the New Year will play out down there in the GTA?

Cassandra

#5 Seeking Knowledge on 11.30.08 at 11:17 pm

Garth,

Fort McMurray was booming so much that the city decided to built houses for 40,000 more people. Now that all the billion dollar projects are temporarily put on hold, they have canceled the parcels for Saline Creek and Parsons Creek. That’s the rumors I heard anyway.

One of the big builders told me that they haven’t sold a house in 8 weeks in town.

My real estate agent told me that “EVERYTHING IS DEAD” and nothing is selling!

Florence* Fort Mac girl

#6 Derrin on 11.30.08 at 11:29 pm

Where to park your cash?

Gold crazied doom and gloomers.
Here is a link that seems to paint a different picture:

http://www.businessweek.com/magazine/content/08_49/b4111038872885.htm?chan=top+news_top+news+index+-+temp_global+business

The American dollar debt machine lives on.
I would rather use it than an ounce of your gold to pay for my ecommerce transactions.
It seems most of the world see’s it that way too.

Hey Garth
Have you heard of Bob Rennie?
He thinks Vancouver is still good. “Just take the property of the market until Feb 2009″ then things will be back to normal.
Good luck to all Vancouverites that are listening to this guy. He likes to get his bread buttered on the way up and the way down.
If you pull your property of the market it creates a tighter supply and it’s easier to sell the crap he is sitting on for all his developer clients. He’s a jerk.

#7 Darryl on 11.30.08 at 11:34 pm

If the Automatic Earth is correct , Ontarians are toast.There are no Canadian companies that supply emergency food supplies such as freeze dried MRE’s or bulk grains or beans. We can’t arm ourselves for self defence. The cities don’t allow simple livestock like chickens or goats. Winter is a bitch. At least our banks are ok ?

#8 g on 11.30.08 at 11:37 pm

garth, i’ve lurked on this site for months and, being up to my eyes in real estate, i lurk with great interest. i bought 6 properties (to rent) between 2001 and 2005. i may try to sell a few, i may not. whatever happens to me and my houses is not my point.

i just wanted to say that i’m grateful to you and your blog. i’m not entirely sure how right or wrong your opinions are, i am just happy that you have the balls to HAVE an opinion.

you’ve pissed me off. you’ve opened my eyes. you’ve wasted my time. you’ve made me think. thank you. g

#9 john on 12.01.08 at 12:12 am

HOT NEWS!!!

McDonalds announce new sandwich to be added to their menu: McSquirrel

Stocks expected to rise tomorrow.

#10 Mitchell Cardno on 12.01.08 at 12:16 am

Anyone know what the tax implications are for (accidental) landlords? For example, person A purchased 2 bedroom condo, but now decides to rent out the second bedroom to person B. Since person A is collecting income (towards his personal wealth), how much of that rental income is taxed?

I don’t believe many people actually report that income to revenue canada, but just curious of the risks associated with that as well

#11 vultur on 12.01.08 at 12:24 am

>>Amazing how those pointy-headed guys missed the $45,713 average price drop in the last six months, a 25.9% annual decline. <<

I think median prices are down about 10%-15% from their all-time highs seen in the earlier part of 2008 in the City of Toronto Mr. Turner. Why do you need to embellish an already alarming statistic? Are you trying to extrapolate the recent monthly declines on a yearly basis? That’s misleading Mr. Turner. You are doing yourself a disservice to mislead. Perhaps that’s why you didn’t get re-elected.

It appears that you’re trying to use negative emotions like bitterness, anger, and a mocking tone to get your point across Mr. Turner. Consider that perhaps your message may resonate more clearly without the vitriolic diatribes. The realtors quoted above are merely doing their job. How many sellers would hire them if they encouraged people to hold off buying because prices are still falling?

Consider that you might have been re-elected without the vitriolic diatribes.

Good day Sir.

Price source is here. As for your bitter comments, they say more about you than me. Get over it. You were wrong. — Garth

#12 exx on 12.01.08 at 12:30 am

Garth, small (or huge?) correction to your post.

Vancouver. Average home price down $75,359 in six months. Annualized decline, 21.7%.

That’s the benchmark. Our average is down ~$175,000 from a $920K peak to $745K for November. The REBGV hasn’t released the official number yet though, so $745K is taken from PaulB’s latest update.

#13 Curious in Calgary on 12.01.08 at 12:31 am

Hi Garth,

I find your blog and the discussions a wonderful resource to learn about real-estate. Thanks Garth and all who contribute here.

I’ve been following the discussions for a while but I really wonder about when the economic storm will hit Calgary. So far it seems to me more like the calm before the storm. Some lay-offs, some sales figures down, some cost cutting but nothing serious and all in slow motion. Lots of confident people seemingly who think the downturn will not last and rising oil prices will save Alberta from economic turmoil.

Garth, I’d love to read your take what 2009 will bring for the West, especially for a boom town like Calgary. Care to give some pointers how it would show that the troubles are accelerating and how it could take down the whole economy? What does it take to save us from a similiar fate like the US is suffering through?

I look forward to your new book!

Curious

#14 wealthy renter on 12.01.08 at 12:45 am

“Don’t live in Milton, dude. Can’t eat squirrels there.”

Thanks for the warning. I am not suprized to hear that Miltonites (Miltontonians?) have either a) adopted higher standards of food consumption, or b) hunted the local squirrel population to extinction. The conclusive studies of causality are still being done.

Speaking of survival meat, I almost had me some road kill venison. My wife works in a very urban part of Toronto, near the Humber River, and she had to stop in today. As we entered the driveway, we came to a screeching halt to avoid a dozen deer sprinting in front of our car.

I can’t help but be thankful I was born in this country. Canada might well be facing a crashing housing market and an impending economic catastrophe, but it sure is a damn great place to live. Beyond snarling traffic and overpriced housing, our cities are so….livable.

#15 Rob#1 on 12.01.08 at 12:57 am

I really believe that the real estate profession should be a salaried position to deter the piecemeal continuous reinforcement commission strategy. The current setup clearly encourages realtors to see potential clients as potential dollar bills rather than as humans with dreams that can be indefinitely postponed if misled . We are simply not that far removed from animals to be able to resist this temptation. I also believe that realtors should have a strong grounding in ethics. I dont want a large part of my Canada’s economy, and hence, my financial security, resting on the shoulders of money crazed housemongers as it is right now.

#16 kitchener1 on 12.01.08 at 1:29 am

Don’t live in Milton, dude. Can’t eat squirrels there. — Garth

10-12 years before the main water pipe went in, Milton was very much a quaint small town. Bet there were a ton of squirels there then.

#17 dotava on 12.01.08 at 1:29 am

Not to sound dramatically as Garth :-) but guys in hyper inflation – your bread, milk and fresh meat is out of the reach and most likely people like me (big enough) will take the praise – $Bill is out. Try to find other way – I live it and I don’t recommend it.

#18 Keith in Calgary on 12.01.08 at 1:43 am

One of the most common complaints about the real estate industry is developers, and the selling of pre-development, or newly completed propeties, at preferential prices to their realtor friends and associates, in a fast rising speculative market, in order that these people can quickly flip them for profit, while benefitting the developer and allowing them to show the bank their project is sold out….when in fact it is not.

http://en.wikipedia.org/wiki/Front_running

“Front running” as this is known, is illegal in the securities industry………but why does this criminal practice thrive and dominate the real estate industry ?

Been thru many a condo sales office in the last 2-3 years to see guys waving cheque books around buying 3-4 condos at once in the backroom…….only to find out later that a development is “sold out” but one or two units may become available shortly, albeit at much higher prices……and would I like to leave my number so someone can call me back…….heh.

The RE industry needs regulation alright, independant outside regulation with teeth…….let’s start with lots of jail time for the con-artists.

#19 Keith in Calgary on 12.01.08 at 1:44 am

One of the most common complaints about the real estate industry is developers, and the selling of pre-development, or newly completed propeties, at preferential prices to their realtor friends and associates, in a fast rising speculative market, in order that these people can quickly flip them for profit, while benefitting the developer and allowing them to show the bank their project is sold out….when in fact it is not.

“Front running” as this is known, is illegal in the securities industry………but why does this criminal practice thrive and dominate the real estate industry ?

Been thru many a condo sales office in the last 2-3 years to see guys waving cheque books around buying 3-4 condos at once in the backroom…….only to find out later that a development is “sold out” but one or two units may become available shortly, albeit at much higher prices……and would I like to leave my number so someone can call me back…….heh.

The RE industry needs regulation alright, independant outside regulation with teeth…….let’s start with lots of jail time for the con-artists.

#20 Jon on 12.01.08 at 2:02 am

Hi Garth. I read your blogs all the time and I appreciate all the insight and knowledge I have gained from reading them. I am a 27 year old male who rents (thanks to your advice) and I’m sitting on some money in the bank for a future down payment when things “hit bottom.” My question to you is, What is so wrong with people being misinformed? Everyone is responsible for their own actions, and if you get duped, then your the greater fool. I know it seems like a nasty tact for realtors, but for the most part it is not their fault they have trouble finding work. Isn’t it a good idea to keep consumer confidence up while the looming (or current) economic storm runs its course? This way things don’t die completely and maybe there is hope after all. I know it sounds heartless to think this way, but as a young person who is in no way an expert, and has no experience or wisdom to draw on I feel fundamentally this makes sense? I’ve never commented on any of your posts before, I’m just looking for a piece of the puzzle. Thanks!

#21 Bobby in Victoria on 12.01.08 at 2:08 am

Sadly many people are naive and tend to take what sales people say at face value. They forget that the sellers role is to sell a product and will say whatever is needed to make the sale.

Most good realtors who deal with sophisticated and credible clients will offer a realistic evaluation of the market. They know their clients know what is happening in the marketplace and will not accept unrealistic hype. Rather they would just go somewhere else and tell their ten friends.

There is a wealth of info out there to allow the new buyer to make an informed decision. The last person to offer credible advice is a realtor who is on commission. Ask a lot of questions and walk away if you get less than credible answers. Talk to the neighbours of the prospective property as they will offer a wealth of info about why a proprty is for sale. And no, there is no rush to buy. In fact it is the first signal when the realtor wants you to cut corners in haste. You wouldn’t get in a bidding war for a shirt at the Bay, so why would you do so for an expensive piece of property.

Probably the most important note. A property is only worth what a buyer will pay, not what the seller says it is worth.

#22 Happy Renter in North Van on 12.01.08 at 2:35 am

Garth, as usual, you’re bang on with this type of analysis of “real estate professionals”. Many real estate agents started believing their own press releases about their sales prowess in the past 7-8 years. Real estate agents who thought they were great “hunters” turned out to be no more skilled than clubbing baby seals on the Grand Banks of Newfoundland. In a profoundly different market, they are left bleating the same inane statements which passed for wisdom four years ago… The problem is main stream media is so scared of offending the Real Estate Industry (and their advertising dollars), they continue currying their favour by repeating these lies. The only real estate agents I would ever deal with (the small, small minority) are the ones who don’t try to BS me….

#23 Larry Yatkowsky on 12.01.08 at 3:25 am

Garth,

*Slapping myself* – you seem kinder to the RE trade these days. :>)

#24 islander on 12.01.08 at 4:19 am

“Shame on those who lure in buyers with false prophecies or prey on the uninformed with misinformation.”

It is shameful, I agree. It’s also incumbent on people to think things through. There is no shortage of information in this day and age. Regulation will no more “cure” lying realtors than it will cure polio.

Call me a Friedmanite, but regulation, everywhere and always enacted to protect the feeble-minded, ends up stifling competition and harming consumers. Always.

The most dangerous thing about this meltdown is that losers will expect government to bail them out. Some will get their wish with the Commie Coup currently underway in Ottawa. Otherwise might have to wait for their handout/welfare.

Whatever happened to the concept of free will? Of due diligence? Of buyer beware?

#25 Zoronqueen on 12.01.08 at 4:21 am

About realtors lowering their commision. Here’s my stituation:
Realtor A helps us find a home so is our buying agent. Realtor A agrees to not take any comission on his end but we pay only his listing company and other realtor should we have a buyer. That was August. In Sept we moved into our new home. After finding this blog I really decide to sell, so we lower the price twice. From 369 to 349 to 334. No buyers except one low ball verbal offer, 300K which we don’t even know if it’s genuine. So in Nov, the contract ends.

Agent B offers to sell our place but agrees on giving us 320K net and says they have potential buyers so we agree to have it it exclusive for 2 weeks then list it on mls. The problem is that after 1 weeks, they listing it on mls for 348K which would be above what other people are listing in the area. Other have it listed from 312 to 335. My husband says let them do their thing but I think it is unethical to list it higher and expect a buyer.

Agent A came back to us and said we should maybe rent it out for a while 4-6 months then sell, he would only take 3K for comission.

It is all so confusing and bottom line is I want to sell. any feedback would be great.

#26 van-zee on 12.01.08 at 4:43 am

A another good example is a video I watched that was linked from vancouvercondoinfo blog.

A Vancouver real estate practitioners motivational monologue to renters.

http://www.youtube.com/watch?v=3KvQR-h_ct0

#27 David on 12.01.08 at 4:48 am

These days the realtor crowd is suffering from a great deal of missing limb syndrome. The bubble is deflating and these folks are trying to wiggle some non existent toes. The use of words like “a more balanced market” reminds me of people who throw the term spirituality about with reckless abandon. It only means what people want it to mean at any given time and is not subject to any rigourous examination.
Negative equity might not be an issue for families that have no plans on selling for the next 15 years or manage to hang onto a job by their fingertips for the next few years. Otherwise the folks who bought into the bubble will trundle off to work every morning with the cold comfort of knowing they will be paying for the rest of their natural lives for some wildly over priced and obsolete home.
It is amazing that any young couple would actually even consider the Hallmark card optimism of realtors as a representation of the objective reality of the housing industry. What is so appalling is people like Ken Stef are calling bubble prices low. The man has not heard about affordability relative to family incomes and sustainable debt levels, if that conclusion can be derived from his comments. Actually letting those bubble era condos turn into unoccupied ossified husks might be the best possible outcome for correcting a rotten market.

#28 The Tallyman on 12.01.08 at 5:06 am

And then Pump & Dump asked God if he would sweep away the Real Estate business along with the wicked Bankers.

They asked the Lord if there were 50 righteous, would the Lord spare it; God said yes.

They asked the Lord if there were 40 righteous, would the Lord spare it; God said yes.

They asked the Lord if there were 30 righteous, would the Lord spare it; God said yes.

They asked the Lord if there were 20 righteous, would the Lord spare it; God said yes.

They asked the Lord if there were 10 righteous, would the Lord spare it; God said yes.

Pump & Dump have since moved on.
Rumor has it they are selling flood insurance
in the twin towns of Sodom and Gommorah.

#29 Joshua on 12.01.08 at 9:26 am

In future could you source your sales stats in your posts? In no way whatsoever am I agreeing with the above poster; you may have faults, but if so, a lack of honesty is not one of them :). I just like being able to dig a bit deeper into the numbers.
I know this is a real-estate blog and not a politics blog, but if you have some comments about the current situation with the potential coalition government, could you link to them? I’m curious about what your views on it are.

Thanks.

My suicidal political blog is at http://www.garth.ca. — Garth

#30 Bruce @mortgagehelp on 12.01.08 at 10:53 am

Garth

You can forget about squirrels, with the loss of the acorn across a large part of north america, those squirrels are too skinny to eat. back to eating skunks I guess
http://www.washingtonpost.com/wp-dyn/content/article/2008/11/29/AR2008112902045.html

#31 Stuff on 12.01.08 at 11:07 am

I’m not sure if you guys read this one:

http://www.thestar.com/article/546051

It’s nice to see the star posting a little more realistic articles then “everything is ok – canada is different” articles that are usually posted.

#32 Gord In Vancouver on 12.01.08 at 11:27 am

#25 van-zee

When experienced realtors like Mr. Watt start exhibiting their sense of desperation on-line, things must be REALLY slow in Vancouver.

#33 Calgary_rip_off on 12.01.08 at 11:32 am

Vulture: “I think median prices are down about 10%-15% from their all-time highs seen in the earlier part of 2008 in the City of Toronto Mr. Turner. Why do you need to embellish an already alarming statistic?”

How DUMB. 10-15% is an alarming statistic. Vulture you are an IDIOT. 50% isnt even alarming given that those prices are so far from reality of what the junk is actually worth.

Real estate is disgustingly overpriced. Bring on the collapse and implosion of the whole f*cking industry.

#34 Bottoms_Up on 12.01.08 at 11:36 am

Jon (#19 Jon on 12.01.08 at 2:02 am):

“What is so wrong with people being misinformed? Everyone is responsible for their own actions, and if you get duped, then your the greater fool.”
———————————————-
People go to realtors because they believe they are professionals looking out for their best interests. Imagine going to the doctor with a nasty viral illness (antibiotics ineffective), but the doctor recommends antibiotics (because they are able to write a prescription and make more money off you than just telling you to go home and get some rest). Well, this doctor would be benefitting from your lack of knowledge and the trust that you put in them, and then you’re stuck taking useless medication that could make you sicker. Similar situation as realtors, but you end up stuck with an overpriced McMansion making your poorer.

But I agree with the posts above, many realtors are great people that do indeed care about their clients (but I tend to try to look at things as half full rather than half empty).

#35 Bottoms_Up on 12.01.08 at 11:39 am

#24 Zoronqueen on 12.01.08 at 4:21 am
————————————-
If the 320k is still on the table, take the money and run!!!

#36 Dave on 12.01.08 at 12:09 pm

#11 Vulture,

I thought the rapid ramp up in house prices a few years ago was an alarming statistic. What you see now, and it is just starting, is a correction back to a normal value for realestate.

Why would some people think high housing prices are “good” for the economy?

Are high fuel prices good?

Are high food prices good?

#37 Jonathan on 12.01.08 at 12:38 pm

Agreed. I am a first-time buyer, anxious to get in there. But at 28, like many in my generation, I have a university degree and working towards a CMA designation. I find it amazing that some Joe Blow real estate agent thinks he is smarter than I am. I know the market has a way to go before I need to buy. There must be a lot of suckers out there for these guys to believe that they, these used-car like salesman, are smart enough to pull one over on my head. It doesn’t make me angry. But I pity that person. He or she has no respect for me, their customers or themselves.

#38 The First Rick on 12.01.08 at 1:01 pm

#23 islander on 12.01.08 at 4:19 am “Shame on those who lure in buyers with false prophecies or prey on the uninformed with misinformation.”

It is shameful, I agree. It’s also incumbent on people to think things through. There is no shortage of information in this day and age. Regulation will no more “cure” lying realtors than it will cure polio.

Call me a Friedmanite, but regulation, everywhere and always enacted to protect the feeble-minded, ends up stifling competition and harming consumers. Always.

The most dangerous thing about this meltdown is that losers will expect government to bail them out. Some will get their wish with the Commie Coup currently underway in Ottawa. Otherwise might have to wait for their handout/welfare.

Whatever happened to the concept of free will? Of due diligence? Of buyer beware?
===========
What a pantload. You work in a self regulated cartel and speak of free enterprise and free will. Do you actually believe what you are saying?? Try working in an environment were the consumer actually has a choice. I work in a service industry were the customer has a real choice to pay for my services or not, no cartels maintaining proprietary information, fixed rates, so on. Islander, you work in an industry that trys to dupe people and seperate them from their money using lies, misinformation and mistruths. That isn’t the service industry, it is the disservice industry. Your industry advertises the value of having a realtors guidance and you continually spew caveat emptore. Get a grip on your hypocrisy.

#39 squidly77 on 12.01.08 at 1:15 pm

hello vultur..how are you enjoying your crow pie ?

#40 Expat in NC on 12.01.08 at 2:03 pm

#30 Stuff: I read that article over the weekend and I thought the same as you. Finally a piece that doesn’t use quotes fom a realtor to spin the current conditions as a market stabilizing.

#41 smwhite on 12.01.08 at 2:18 pm

#38 squidly77

LOL, I’d welcome you back myself vulture but it looks like Calgary Ripoff has already rolled out the red carpet.

#42 dd on 12.01.08 at 2:37 pm

Too Funny,

Caglary H had a write up like that on Saturday. The CHMC guy gave some story about prices firming up in q2 of 2009. Of course this guy is taking the most optomistic view possible.. short shallow recession.

Facts really don’t seem to matter with the real estate industry.

#43 David on 12.01.08 at 2:37 pm

Islander, your comments are hilarious. The “losers” you speak about are happen to be banks, insurance companies, mortgage brokers and hedge funds. And yes, they are begging for bailouts. People who worked hard and actually had savings for a down payment were losers as well, were they not? Regulation protects the feeble minded huh? Your hypothesis has been put to the test and is found to be wanting. The “losers” you write about might just stop buying real estate and start renting altogether for the next few years creating a new subset of losers called realtors.

#44 aloha e on 12.01.08 at 2:50 pm

Garth, you should champion new regulations on the real estate industry. Nothing heavy handed, just what is already required in the investment industry. After all, these realtors are now touting housing as an “investment”.

Here’s a good sampling of OSC regulation from a recent Star article:
“Marketing materials for wealthy individuals, charities and pension plans sometimes make selective, unsubstantiated or baseless claims”
“We have seen a number of instances where (marketing) materials were prepared in a way that highlights or exaggerates favourable points while omitting or failing to disclose facts that may be less favourable”
“Almost all that relied on hypothetical performance data, by testing a strategy against historical data or presenting returns of a model portfolio no client had held, did so in a way that was misleading. More than half did not compare performance with a relevant or recognizable benchmark.”
Two-thirds used terms like “superior performance” and “leading expert” without evidence.
One-third did not have written policies or procedures for reviewing marketing materials.
More than one-third quoted performance data that were no longer current.

http://www.thestar.com/comment/columnists/article/275251

#45 brazer on 12.01.08 at 3:12 pm

Aston Martin laying off 600 employees
http://business.theglobeandmail.com/servlet/story/RTGAM.20081201.wastonmartin1201/BNStory/Business/home

“Like other premium car brands, Aston Martin has been forced to take action to respond to the unprecedented downturn in the global economy. These are regrettable but necessary measures in the extraordinary market conditions we all now face,” said chief executive officer Ulrich Bez.

#46 Rent vs. Buy on 12.01.08 at 3:40 pm

Here’s an interesting Rent vs. Buy scenario:

Exact Same House:
– Rent it for $2100/mo (MLS® # C1518602)
– Buy it for $499,000. (MLS® # C1510838)

Just based on a “hunch”, I’d say it’s cheaper to rent. But it’s just that: a hunch.

How do you calculate it out, and how do you calculate the fair market sale value based on the rent?

#47 Chincy on 12.01.08 at 4:01 pm

Garth,

Comments on this piece of work out of Vancouver…lol

http://www.youtube.com/user/VancouverPenthouse

Chincy

It’s the Realtor Car Cam! — Garth

#48 Marcus Aurelius on 12.01.08 at 4:07 pm

Jonathan – #36 – hits on a key ‘soft values’ issue in this discussion of real estate trends: the total lack of ‘respect’ very bad salespeople (agents are sales people, not professionals, after all) have for their client.

Analogy: I was in a Futureshop this week and the salesperson blew a (lower margin, but guaranteed) TV sale by trying out all of the scams (including: “you need $100 HDMI Monster Cable”; “our installers insist you buy at least 2 metres of it”; “we don’t do deposits but we can’t deliver for a month”; “we have to sell you ‘conditioning’ for your cable (the ‘rustproofing’ equivalent)”, and let’s not forget about the “buy a warranty for an obsolescent technology purchase that we’ll never have to incur cost to honour, so it’s straight profit” racket).

The clarity of the fact that the Internet brings knowledge to everyone hasn’t yet dawned on bad salesmanship and/or quasi-criminal business plans (like Futureshop/BestBuy’s) that need to rely on ignorance to succeed. That’s why it’s tougher to be an electronics, car or house salesman these days.

This month, a home in C14 Toronto (not the best of areas, so its exposed) re-listed. In Q4/07 (the absolute high re LTT frenzy and bubble ) the builder/vendor had Broker A list the property at $1.385 Million, despite having designed a master bedroom fit only for a very small Chihuahua. The Broker was greedy, but not inordinately criminal (they have a ‘relatively’ good reputation). The property sat for months for good reason, then went off list. Broker B relisted at $1.688Million+ – way,way abov what the area would support in 2007, let alone as we enter the big crash. Normally, those with IQs higher than a house plant would see this as counter-intuitive and contrary to all these bleeding heart posts about how agents like ‘realistic’ listing prices (as they drive commissions). But one cannot help but think that craven fraudulent intent – the builder/vendor’s and the agent’s (often related in new construction cases) is really behind this grab for the golden rings. How easy it would be to suggest to the market that a sale price of $1.3M is a full 25% off the List! The property – 106 Harlandale, near Sheppard and Yonge – will sit forever because even stupid people with a High-Speed connection now have some unfiltered historical data to connect the dots on these sad attempts. What used to be dangerous, is now merely pathetic, as a result of the great good of information technology.

Decades ago, a seminal study was undertaken in Chicago. The results of the study found that when Agents list their own properties, they list for, on average, 10% more than when they list client properties, suggesting that there is no randomness to this issue: Agents f**k their clients for quicker sales, but have a reasonable expectation that they can get [10%] more for themselves when they are vendors. Best rule of thumb if you really want to sell into this market is to have a few prostitute-agents over to appraise, throw out the low-ball (greedy) and highest (liar, suckering you) suggested list prices, and add 10% to the median. That should be as close to ‘market’ as you could estimate, point in time.

#49 905er & Spouse on 12.01.08 at 4:11 pm

I would like to do a word count and see how many times the word “squirrel” appears in this real estate blog!

You really have to interview your agent carefully to figure out what they are about. All the agents in our area told us “find an agent who works in this area”. We believe that is because they want to collude and keep the prices high with their buddies. We purposely picked an agent NOT from the area who works part time who could go in with confidence, make low ball offers and not piss off their buddies.

Check out their websites, some of them say such things as “We’ll ensure you receive top dollar for your property”. As a buyer, they will not be working for you in their coveted area!

We had one agent for a while. In the fall, he said “buy now, prices will be 10-15% higher in the spring”. We laughed to ourselves.
We asked him to do low-ball offers and he said something about “well, we have to see the history of what the other homes have gone for in the neighbourhood”.
The final straw was when we asked to see what other homes in the area had just recently gone for and he put up barriers, citing the importance of privacy.
Then, we found a new agent who has no problem with any of these, what a difference! You really have to shop around for an agent and buyer beware.

I am wondering about the truth of the “privacy issues” stated by this agent. Is that true you are not supposed to be able to find out what other homes went for? I thought I had read somewhere that more transparency was supposed to be brought into this area.

#50 dekethegeek on 12.01.08 at 4:45 pm

#11 Vultur
Welcome Back ! havent seen any of your Realturd endless Optimism ( a la Ozzie Jurock ” Its alveys a goot time to buy”) in a while.
Even this ever toilet spiralling market seems to have taken the smirk out of your rebuttals. Now all you can do is critisize the nay sayers. The truth shall set you free bub. ( or at least finally make you earn your Realturd fee)

#51 squidly77 on 12.01.08 at 5:26 pm

its a good time to buy or sell. defend that..

#52 David on 12.01.08 at 5:35 pm

Rent vs. Buy, only a suggestion, but look through the numerous threads on this blog before asking a question.
The average 25 year mortgage in Canada runs at about 7.20 % based on current rates. Before property taxes and utilities and assuming 5% down payment, the monthly payment would be $3418 a month based on those assumptions. Your total monthly equity contribution will be about 20% of your total mortgage monthly payment for the first few years at the very least.
If you can do simple arithmetic there is no need for making hunches.

#53 Kestral on 12.01.08 at 5:46 pm

To #46 Rent vs. Buy

From what I understand about the Price to Rent ratio (if I’m wrong, please correct), you take the total house amount, divide by the monthly rent and divide by 12 (for each month) to get a ratio. Ideally the ratio should be around 16.

For more info on the price to rent ratio:
http://www.greaterfool.ca/2008/11/16/global-price-to-rent-ratio/
Taking ~$500K and dividing by $2100 and 12 months you get a ratio of ~20:1

If you take $500K and divde by 12 months and then 16 you get $2600.

$2100 rent vs. $2600 at a 16:1 ratio means that it’s a better deal to rent it at $2100.

#54 Mike B formerly just Mike on 12.01.08 at 5:50 pm

While we are on the topic of Realtors … has anyone tried to surf the “new” MLS.ca website. Must have been created by a grade six class on weekends. Very difficult to navigate… Hard to find things and clunky at best.
Must be there to keep us pesky buyers from looking by ourselves and having to rely on a realtor to find stuff for us. Either it is grossly under powered or there are just way too many listings for anyone to get anywhere. It constantly freezes and tells you that there are over 500 potential listings. Just go to any Toronto area and see all the red dots. It even indicates that many of the listings are not even on the map…
You wonder why people hate the process of buying a house.

#55 Chincy on 12.01.08 at 5:52 pm

Garth,

Check this out…

This bit of news courtesy of local North Van Realtor Paul Boenisch who shares market statistics on his website. November 2008 just saw a very sharp drop in the average sales price of single family homes:

Prices are falling sharply. Believe it or not the average SFH price fell 10% this month. Yes in 1 month. $745,778 for November v. $825,206 for October. The average has dipped 19% since March. It will be interesting to see if the benchmarks also make a dramatic drop.

As a good friend of mine would say…Gigety!

#56 Mike on 12.01.08 at 6:02 pm

#49 RE: “I am wondering about the truth of the “privacy issues” stated by this agent. Is that true you are not supposed to be able to find out what other homes went for?”

No, it’s not true. The entire basis of completing a CMA or writing up an offer is dependant on knowing what other homes have sold for. (You wouldn’t offer more than a similar property sold for a month ago in a declining maket)

#57 Tevan on 12.01.08 at 6:07 pm

Respectfully, when and why did new and used house sales people change to “realtors”?
And, why haven’t new and used vehicle sales people changed to “vehicletors”?
Hey, just wonderin’ out in hinterland.

PS. A most excellent blog.

#58 David on 12.01.08 at 6:41 pm

Just to add to the argument here about properties being overvalued. A property yielding $2100 a month in rent before taxes would have a maximum fair market value of $292K. Factor in an acceptable cap rate of 7% and that same property should not be purchased for less than $195K. That represents a fairly large rent premium from $499K that will be financed by the owner. It would require a substantial amount of rapid capital appreciation to justify this disparity and the associated costs of home ownership to justify this discrepancy between rent vs. own.
The experts from MLS might have an answer for would be buyers, but that is doubtful.

#59 dingus on 12.01.08 at 6:45 pm

Glad to see the kind words for Paul B. I am Vancouver renter and now a total numbers junkie, thanks to his site (and vancouvercondo.info). The way I see it Paul and vancondo have saved me tens of thousands of dollars.

Totally agree that this is the future of the profession. Market intelligence that doesn’t understimate the client, openness about where the market is at, rather than pump and dump cheerleading, and leading you through an open house saying “this is the kitchen, what do you think?”. I’ve worked with realtors a few times now, and have been deeply dissatisfied, as I realized I had a better handle not only on the market, but on the transaction itself. The value offered was on the order of a few hundred bucks (someone to actually present my position to the other side, rather than myself).

Anyway — look for an epic crash in Van. 20% decline from peak already, 21 months inventory, 5 years of condos still in the pipeline, rapidly tanking economy, negligble pop growth. It don’t look good.

#60 CTA on 12.01.08 at 6:51 pm

Looks like the thousands of California ex-real estate salepersons are not making any money selling homes. So what do they do? Upgrade their skills and do some real heard work for a change. Many have choosen to sign up into nursing courses because of guaranteed employment and as a result have created 3-4 year waiting lists at California nursing schools.

#61 brazer on 12.01.08 at 7:43 pm

864 points down, TSX has worst one-day loss since ’87
http://www.thestar.com/business/article/546359

The Canadian Press

A broad selloff on the Toronto stock market led by the energy and financial sectors today sent the index to its worst one-day percentage loss since the crash of October 1987.

The S&P/TSX composite index plunged 864.41 points or 9.3 per cent to 8,406.21 after gaining just over 1,100 points last week. The 1987 fall erased 11.3 per cent from the Toronto market.

==============

hate to be ‘doom and gloom’…but the sky is falling.

#62 lgre on 12.01.08 at 8:02 pm

“While we are on the topic of Realtors … has anyone tried to surf the “new” MLS.ca website. Must have been created by a grade six class on weekends. Very difficult to navigate… Hard to find things and clunky at best”

I use to browse the old site a couple of times a week, now that the new site is up I might browse it once every 2-3 weeks at best. The new site is more of an annoyance then anything.

#63 squidly77 on 12.01.08 at 8:37 pm

Home sales in Calgary dropped 39 percent in November when compared to the same month one year ago.
670 homes changed handed in Calgary last month, down from 1,100 in November 2007.

http://www.qr77.com/Channels/Reg/NewsLocal/Story.aspx?ID=1043286

its all unwinding now exactly the same as it wound up
only backwards..spiralling out of control and the centre can not hold..
http://www.oftwominds.com/blog-photos/dominoes2.gif

#64 squidly77 on 12.01.08 at 8:54 pm

meanwhile this guy says..its not fair
http://www.youtube.com/watch?v=10WoQZKZkNs

any readers here pull a HELOC on your home so that you could invest in the stock market..dolt

#65 GarthforPM on 12.01.08 at 9:06 pm

Garth..when the election is called…I think you better run.

#66 paul on 12.01.08 at 9:11 pm

Very interesting –

i spend considerable time looking carefully at the Toronto market, and especially unique properties within that market. We haven’t seen the type of fall-off that Vancouver has experienced, but clearly things have “slowed”

Early days, Paul. Wait. BTW, fancy-pants web site! Wish we could afford music… — Garth
http://pauljohnston.com/

you might find it interesting

#67 905er on 12.01.08 at 9:26 pm

In response to #30

Bruce @mortgagehelp,

Forget skunks I’m gonna be huntin’ ‘coons!

Them there GTA ‘coons are plump enough to feed the family for a week….and the skin doubles as a great hat!

#68 The First Rick on 12.01.08 at 9:52 pm

#62 lgre on 12.01.08 at 8:02 pm “While we are on the topic of Realtors … has anyone tried to surf the “new” MLS.ca website. Must have been created by a grade six class on weekends. Very difficult to navigate… Hard to find things and clunky at best”

I use to browse the old site a couple of times a week, now that the new site is up I might browse it once every 2-3 weeks at best. The new site is more of an annoyance then anything.
===========
Rebranding. An old tried and proven way to revive a dying product.
I agree, the new site is not worth the time. Is it possible that this was the plan? To discourage those of us who actually pay attention? I wouldn’t put it past the scumsuckers.

#69 Kestral on 12.01.08 at 9:57 pm

To #67 @Garth 2

Traditionally house prices are 3x the average income.

Average income in GTA is about $65K.

So 3x $65K = just under $200K

If it goes to $200K, it will not be “disaster” as you call it, this will be when house prices are finally (as the realturds call it) “balanced”.

When things revert to the mean, they usually overshoot, so my guess is that average prices will go below $200K.

#70 T.O. Girl on 12.01.08 at 10:02 pm

Anyone stupid enough to buy right now be very careful be a VULTURE at its best. The speculators are still out there they still think buyers are reallly stuppidd!!!! Some houses are be relisted higher then they were in 07
A good example would be Leaside a bungalow was listed in mid Sept 08 for 619 000$ within 3 days it was sold for 608 000 to by surprise!!! I thought what idiot would pay so much after the economic mess we are in, well two weeks ago the same house nothing done to it was re listed by new owner for 689 000$!!! Come on people who stupid do they think we are, he’s selling the house as is I wonder if he’s even been in it and trying to make a 81 000 profit in two months??????? I hope he gets stuck with the house no offers and forced to walk away!!!Some people deserve to be forclosed for thinking they’re too smart!!

#71 Dan on 12.01.08 at 11:01 pm

Agreed about the new MLS site. It’s terrible. I wrote to the web admin and all they did was whine about how I wasn’t using the awful search tool. I responded by saying that if a web site isn’t user friendly, it’s a poor web site. Whoever the contractor was that put the site together, he sure pulled one on MLS.

#72 LOL on 12.01.08 at 11:22 pm

#66 paul

LOL. I’m with Garth on this one. there has NEVER been a better time right? I don’t know if you’re in Toronto, California but Toronto, Canada is pretty damm slow.

#73 run4dahills on 12.01.08 at 11:34 pm

I know this belongs on Garth.org

But holy sh** man, what the hell is happening to our government? This coalition thing has not happened since 1926 and then the depression followed.

The state of the economy has been hijacked by all political parties. This is just great, terrific, friggin fantastic. Instead of the economy and putting $$ in our pockets, same sh** . Maybe after a billion dollars we will have a Prime Salami.

#74 Dave on 12.01.08 at 11:46 pm

#61 Brazer,

The sky actually is falling. Didn’t you hear about the 10 ton meteor that broke up over the skies of Alberta and Saskatchewan last week. Must be a sign of things to come!

#75 Bottoms_Up on 12.02.08 at 12:03 am

“What is a realistic bottom in terms of percentage off-peak?”
————————————————–
I’m not a real estate bottom picker, but here is Jim Cramer’s advice regarding spotting a bottom in the stock market (probably not too different than the housing market, I’d like to see those graphs overlaid!).

a paraphrase: ‘the bottom occurs when it feels like the absolutely worst time to buy (not here yet), and when it makes the front page of all the major newspapers (not here yet)’

Definitely keep these in mind. Bottom yet to come.

#76 The Other David on 12.02.08 at 12:04 am

I have found the MLS website to be sluggish and search buggy, this is from a couple of different computers.

#77 Kilt on 12.02.08 at 12:13 am

Since you mentioned Paul B., I thought I would throw a few stats compiled from info on his website. RE sales for Greater Van totaled about $21 billion in 2007. If you assume a ~3% commission, you get $649 million in sales commissions. Assuming 9000 Realtors, that indicates an average income of $72,100.
Now look at 2008 numbers. Assuming Novembers and December numbers are as good as Octobers (we know they won’t be), then 2008 sales come out to be ~ $15 Billion, and commissions of $449 million. Or a average income of $49,990. Not enough to afford a 2 bedroom condo in Surrey.
2009 could be real bad for realtors if we assume 2006 pricing and sales around 60% of 2007 levels, then average incomes become $38,900.
We should really be feeling sympathy for these poor souls.

Kilt.

#78 midas on 12.02.08 at 12:51 am

I’d venture to say that by this time next year there will be no squirrel jokes on this site or any other site for that matter. Looks like the world is getting ready to jump out of the financial frying pan into the proverbial fire. But Canada being the centre of the universe will be immune to the financial tsunami that will inundate the rest of the world! So I sleep easy at night knowing that the Canadian banks are the best in the world and have been standing on guard for Canada. Bravo!

#79 Jelly on 12.02.08 at 1:31 am

That REALTOR website blows,

they deserve to crash and burn as they

sabotage the market even more.

I agree, I can’t even be bothered to use

the impractical piece of crap.

What a shame, I used to enjoy using MLS…

#80 Derrin on 12.02.08 at 2:29 am

Here is one for you:
I think they have smoked too much B.C. bud.

Kelowna, B.C. realtor Alexandra Rebagliati (wife of Olympic snowboarder Ross) takes the opposing viewpoint. She says that people with spare cash should snap up those cheap houses. And she’s seeing houses slashed by as much as 30 per cent.

“If you have the money, you should hire an expert in the area you are looking in, and wait for the bargains,” she advises. And don’t sell, she instructs.

She is not old enough to remember the early 80’s in Kelowna. It got hammered. You could buy stuff at 50%.

Good luck to all her clients.

#81 CalgaryRocks on 12.02.08 at 2:34 am

Agreed about the new MLS site. It’s terrible.
===============================

Can’t even use my IPhone to access the stupid thing. You’d think they would build something that is mobile friendly.

#82 pbrasseur on 12.02.08 at 8:37 am

Garth, I hope you are thankfull you have lost your seat are are not part of this mascarade coalition on Ottawa!

I did not lose my seat. I returned it to the people. — Garth

#83 Stu on 12.02.08 at 9:24 am

#72 and others on the MLS website. I also found the new MLS website design terrible and unfriendly. A search-based site that’s hard to search – good work! I found a solution though….

I persisted with setting up my ideal search parameters until I returned actual listings rather than the “More than 500 listings returned” message and then bookmarked the results page in my browser. Then you just click on your saved bookmark and you get updated search results instantly.

#84 FP on 12.02.08 at 9:31 am

Re: Crappy REALTOR.ca website

I wrote to the CREA on October 2, 2008. Had a condescending email sent back by Bob Linney, Communications Director of the CREA ([email protected]), telling me how he could provide “suggestions” as to how I could use the interactive features “properly”.

I emailed him back and informed him that having worked in technology for more than 10 years, I was fully aware on how to surf websites if they were intuitive enough and gave him an itemized list why running searches on his site were pulling up nonsensical results that had little relevance to the neighbourhoods you were looking in. I never heard back from him but I am sure he would love to get more feedback on the crappy new website.

#85 Dave on 12.02.08 at 9:59 am

MLS Website,

Actually I quite like it. It took me a while to figure out the added features but they are great.

The mapping feature in particular, allows me to visually see how many properties are available in a particular area. Whereas before, I was endlessly looking up address on GoogleMap.

#86 Calgary_rip_off on 12.02.08 at 10:26 am

The Calgary Herald brings great news today:

1)Housing in Calgary is on the brink of collapse. Houses are just not selling. Could be due to the fact that the majority of selling prices are more than $200,000 above 2004, ya think?

2)Oil is below $50. This is really GREAT news. Now the economy can return to normal in Alberta and housing costs will drop. Gas prices as well are now reasonable.

3)Coalition government formed to represent the MAJORITY of Canadians instead of the minority that turned out to vote and “elected” Harper and is pseudo-American party policies. Hopefully by next Monday Harper and the other goons are thrown out on their as*es in Ottawa.

4)The TSX plunged on monday. More good news, things can return to more normal rather than this rampant spending and bill later policy so common in the land of Mcmansions and phoniness(Calgary).

Garth I hope you push your party to make this thing go through. I didnt leave the USA and become Canadian to watch George Bushish(Harper) policies go into action here. Make sure the coalition crushes those conservatives. They’re useless and a waste of taxpayers monies.

#87 LOL on 12.02.08 at 10:43 am

Speaking of pump and dump:

“…All of the bad press and the financial meltdown in the states have only added fuel to the fire. Our real estate market is in a far better state then that of our neighbors to the south.

I firmly believe that right now is a great time to buy, if it’s the right property, at the right price of course.”

#88 The Other David on 12.02.08 at 12:16 pm

China Property Slump Threatens Global Economy as Growth Slows

By Kevin Hamlin

Dec. 2 (Bloomberg) — House prices in Shanghai, Shenzhen and Guangzhou are plunging, and the global economy may grind almost to a halt next year because of it.

Canada is isolated though

#89 squidly77 on 12.02.08 at 1:15 pm

LOL #88 said
I firmly believe that right now is a great time to buy, if it’s the right property, at the right price of course.”

here are 3 reasons why you should not buy
1..inventories are growing rapidly which means competition will increase which means lower prices

2..sales are not only down they have fallen off of a cliff

3..thousands of new homes remain vacant meaning the builders will have to lower prices

can you please supply 3 reasons why its a good time to buy

1..
2..
3..

#90 The Tallyman on 12.02.08 at 1:42 pm

Get your squirrels early
Realtors are starting to horde them!

#91 kc on 12.02.08 at 2:06 pm

I wonder if this statement rings true for properties also?

“If you don’t find customers knocking at your door for what you already have for sale, there’s no point loading up the shelves even more,” commented Avery Shenfeld, economist at CIBC World Markets.

full story on G&M about sluggish spending in Canada and further economic Doom & Gloom

Wary shoppers point to sharp drop in outlook

http://business.theglobeandmail.com/servlet/story/RTGAM.20081201.weconomy1201/BNStory/Business/home

#92 Ron S on 12.02.08 at 2:09 pm

#90 squidly77 ..

It’s good time to buy:

1. My REALTOR told me
2. My bank told me
3. My screwed friends who bought last year told me and they want to see me in same foreclosure boat

#93 TheComingDepression on 12.02.08 at 2:13 pm

If anyone knows where the Vancouver Real Estate market currently is..is me. I hang out doing my blog in the Yaletown coffee shops all day discussing the outlook of housing, the economy etc. These people I talk to aren’t dumb. EVERYONE, I mean, 100% of the hundreds of people I talk to, admit, Real Estate here is in for a mighty fall. They talk about the Realtors desperately holding on. Many are on the brink of bankruptcy. Restaurants are declining as patrons are reluctant to eat out. I just went to a VIP function in North Vancouver and ALL the talk was of doom and gloom. Donations for this event were startling LOW! Some are optimistic that things will turn around soon but MOST admit we are in a serious downturn that will affect our lives for YEARS to come.

#94 Larry on 12.02.08 at 2:16 pm

The perfect storm, Increasing inventory, dropping prices, recession and political turmoil.
Here in Oilberta people are scared shitless with the turmoil in Ottawa. They blamed the Liberals for the last bust, guess history may repeat itself next week.

#95 homeless and happy on 12.02.08 at 2:21 pm

Hi Garth, I just finished reading Peter Schiff’s The Little Book of Bull Moves in Bear Markets. He’s predicted the real estate collapse in the states much like you predicted the RE collapse about to happen here in Canada. He also is predicting the collapse of the USD, and that people should invest in gold to preserve their wealth.

I’ve been following your website since reading The Greater Fool, and have noticed that you aren’t too keen on precious metals, and feel that cash is king. If so why? If our top trading partner is swimming in debt and headed for a financial meltdown, wouldn’t our economy and loonie be headed down the same path? Or is it different up here :)?

Your thoughts on Peter’s book and advice in regards to Canadian investors would be greatly appreciated, thanks.

I address these issues (and gold) in “After the Crash.” It will be available in 5 weeks. — Garth

#96 Bulls eye on 12.02.08 at 3:01 pm

#93

3. My screwed friends who bought last year told me and they want to see me in same foreclosure boat

That’s awsome!!

#97 smwhite on 12.02.08 at 3:07 pm

#90 squidly77, I’ve got #88 LOL’s talking points right here…

This realtor from the US was spewing for verbatim what in January 2008 the RE industry talking points, “Great time to buy” & “Don’t worry about numbers”.

Some of you may have seen this before from previous posts…

http://www.youtube.com/watch?v=A2_Hmt-MKLA

RE industry + credibility + self interest = -69

#98 smwhite on 12.02.08 at 3:22 pm

#74 run4dahills,

How about a Prime Bologna?

Stevie Dion as prime bologna, man I’ve had my issues with some of the moves the conservatives make but how the heck does a guy that was to be banished from his political party the very next morning, end up as the potential leader of Canada?

I know a lot aren’t very happy with this, but maybe the upside is that we’ll bailout all those over leveraged RE buyers, which are predominately in BC, Alberta and Ontario with our own wanna be Team America bail out bonanza, I mean banana…

Its like watching a bunch of spider monkeys in the house, any thoughts on just how low we can drive the Canadian dollar down because of all this bull sh@t?

#99 dd on 12.02.08 at 3:29 pm

The House on the Hill,

We are entering one of the greatest downturns in a century and all the clowns on the hill are playing politics.

Same old same old. Makes me sick.

#100 CinToronto on 12.02.08 at 3:33 pm

Just wanted people to know that there is a great article about CMHC and potential mortgage problems in Macleans:

http://tinyurl.com/6ynefc

Finally, some acknowledgement of bad lending practices in Canada.

#101 Keith in Calgary on 12.02.08 at 4:21 pm

In May 2007 ……there were 1,995 single family homes sold here……in November 2008 there were 670 sold…..a 66% drop !!!

Where have all the buyers gone ?? Heh.

#102 Seeking Knowledge on 12.02.08 at 4:31 pm

Mr. Tallyman,

I wanted to come and check out Elkford, however I don’t want to live in a condo due to all the fees you have to pay. I’d rather live in a small bungalow outskirt of town.

Plus I need a backyard to plant some veggies and farm some squirrels, more like gopher I’d say:)

As oil is dropping, my knees are shaking. Hopefully, we’ll be able to hold on to our jobs until the good times come.

Florence* Fort Mac girl

#103 Kash is King on 12.02.08 at 4:33 pm

#101 CinToronto “Finally, some acknowledgement of bad lending practices in Canada”

Maybe time for heads to roll at CMHC?

#104 Monty on 12.02.08 at 4:50 pm

So many charlatans in RE industry who cannot accept the fact that the boom is over, and the easy profit is over. Maybe they know, but they are still trying with cheap and infantile comments to squeeze out what they can.
On the political front, Canadian politicians seize to amaze me with their demagogical charade. Well, suddenly some of them came to ingenuius idea to throw billions of tax money to dying auto industry. Interestingly, nobody has thought of it before!
They call it a rescue program.
In some countries a panel of experts make a study and present a solution. Here, trouble of economy is a perfect opportunity for the political score.
Well, it’s only tax money, and there are a lot of them to waste.

#105 905er & Spouse on 12.02.08 at 5:14 pm

Bye, bye GTA McMansions…..
From the Star:
Bay St. survival: Half the pay for 100-hour weeks

http://www.thestar.com/news/gta/article/546877

#106 905er & Spouse on 12.02.08 at 5:19 pm

Bye, bye Ontario manufacturing jobs….
From the star: End of a dream, and era

http://www.thestar.com/News/GTA/article/545574#Comments

#107 squidly77 on 12.02.08 at 5:22 pm

sea horses..
http://img66.imageshack.us/img66/9497/rebgvnov08tx4.jpg

#108 Calgary_rip_off on 12.02.08 at 5:31 pm

Monty:

The Conservative party is a waste of space. THAT is waste of money. They dont do anything.

It’s about time the opposing parties came together and threw them out. The majority doesnt want a minority conservative government.

And that’s a good thing in overpriced Alberta.

#109 smwhite on 12.02.08 at 5:42 pm

#101 CinTO

Great article, thanks, I really liked this para:

Moshe Milevsky, a professor of finance at York University. says a 5 to 10 per cent price decline over 12 to 24 months could wipe out the equity of hundreds of thousands of Canadians who rushed to buy homes in the last few years.

He says “Bottom line is, there are many Canadians today who own homes they should have rented instead”.

Wow, 5 to 10 percent, haven’t we already hit that mark in the last year? Now all the common sense comes to light…

#110 Rob5 on 12.02.08 at 5:54 pm

The new MLS site is a major improvement if you know how to use the web properly or have a real connection [that is one that your temporary pet squirrel is powering] — the old site looked like AOL did it and it tooks eons to find anything.

You can quickly cover the ground in whatever neighbourhood you’re [not] looking in [yet] and laugh quietly to yourself as the prices drop in line with fundamentals [or over-correct].

Apologies for the editorializing.

#111 the watcher on 12.02.08 at 6:10 pm

Hi all, who can please post the link to the UBC center for economics stats on real estate page. I cant seem to locate it, but it has been posted in the past. THANK YOU!

#112 Shifty on 12.02.08 at 6:42 pm

West coast article.

http://finance.sympatico.msn.ca/SavingsDebt/KerryGold/Article.aspx?cp-documentid=14887354

#113 Finanzkrise on 12.02.08 at 6:51 pm

The latest Vancouver stats for November confirm the freefall:

Benchmark prices for Greater Vancouver are down 13% from the peak in May 2008, even uglier for Vancouver Westside.

http://www.vancouversun.com/Homes/Real+estate+sales+near+standstill+November/1022108/story.html

The full stats on this new ‘window of opportunity’ are on the local real estate board website:

http://www.rebgv.org/sites/default/files/200811-REBGV-Stats%20Release.pdf

And average prices, as reported by Paul Boenisch (posted by Garth a few days ago), paint an even gloomier picture on the month-month prices in Vancouver, which are declining at a quicker rate than even the bubbliest cities in the US have experienced.

#114 David on 12.02.08 at 7:06 pm

Here is the article people are referring to regarding the collapsing bubble.

http://blog.macleans.ca/2008/11/27/could-it-happen-here/

#115 Jimmy on 12.02.08 at 7:35 pm

#89 Conflicting reports??

Shenzhen property deals pick up

Source: CCTV.com | 12-02-2008

The recently announced massive economic stimulus package and new policies to encourage property investment have boosted the housing market in Shenzhen. Deals reached a two-year high in the southern city this month. After nearly half a year of chilliness, the property market in Shenzhen is warming up again.

http://www.cctv.com/english/20081202/101799.shtml

#116 nonplused on 12.02.08 at 7:42 pm

#54 Mike B formerly just Mike

Personally I find the new Realtor.ca to be pretty good. You are correct about the speed though, it downloads a ton of stuff for the map. My old pentium 4 couldn’t handle it but my new dual core machine seems to be able to run it.

For me, where a house is located is the first thing I want to know, so the map is great. Just zoom in, limit your search critera, and get a big ol honking computer.

#117 nonplused on 12.02.08 at 7:46 pm

Garth,

You going to throw up anything about the coup currently underway in Ottawa? I know this is a Real Estate blog but I can’t think this sort of third world political instability could lead to anything but total doom for the Canadian economy.

A country run by sepratists. What more do we need before we admit we’re doomed!

#118 The Tallyman on 12.02.08 at 8:06 pm

#103 Seeking Knowledge

And there are much better veggie growing areas than
Elkford.

All the best in your search!

#119 CinToronto on 12.02.08 at 8:15 pm

Re article in Macleans: For about 2 years now, the Canadian real estate industry (brokers, agents and bankers) have been telling us how tight our lending practices are. I’ve posted on a few blogs that this is not always the case; that’s why I was so happy to see the Macleans piece.

It looks to me like many people used brokers to squeeze through dodgy deals. My sister is a lawyer and she was threatened by one sleazy broker to OK a deal. While this was extreme, she suspected that the banks signed off on many questionable mortgages pushed through by brokers. My own partner’s barely sentient brother got a mortgage even though his only income is Social Security. The broker gave it the OK for an extra $500. I feel compelled to say that not all brokers are like this, but I’ve always suspected that the increase in their ranks in the past few years was a consequence of the gold rush mentality in the housing market. Lots of shady people jumped on board, just like the dot com bubble before.

Nice to now see evidence that the CMHC is on the hook for some stupid California folks who didn’t see the writing on the wall when their own market was already showing cracks.

#120 CinToronto on 12.02.08 at 8:17 pm

Yikes, I wish Garth’s blog had a preview function. That should be “the Canadian real estate industry . . . HAS been telling us.”

#121 Roger in Victoria on 12.02.08 at 8:38 pm

Out here in Lotusland (Victoria) house sales dropped like a stone in November. Sales are down 57% year-over-year (YOY) and listings are up by 40%. The median house price of 500K is down 2% YOY but the average price plummeted by 41K last month and is now down 12% from November 2007. This is due to lots of high-end inventory not moving (i.e. sellers left holding the bag – no fools left).

Prices peaked here in April 2008 and we are about 10% down from the peak with prices falling every month but one.

If you want to see the detailed Victoria stats just click my name and you will see a stats gallery (graphs and charts) which is updated every month.

#122 lgre on 12.02.08 at 9:29 pm

Source: CCTV.com | 12-02-2008

The recently announced massive economic stimulus package and new policies to encourage property investment have boosted the housing market in Shenzhen. Deals reached a two-year high in the southern city this month. After nearly half a year of chilliness, the property market in Shenzhen is warming up again.

http://www.cctv.com/english/20081202/101799.shtml
———————————————-

what’s a stimulus package going to do? fighting debt with debt does not work..we are witnessing this in the U.S..they have thrown in how many trillions of dollars so far and the economy with housing just keeps plunging.

Maureen O’neil must of wrote that article.

#123 poorguy on 12.02.08 at 10:03 pm

#125 lgre

“Maureen O’neil must of wrote that article.”

I liked that!

#124 Keith in Calgary on 12.02.08 at 11:27 pm

It is the Red Chinese propoaganda organs writing that article……..oh wait……..could have been lifted from CREA though.

#125 Bottoms_Up on 12.03.08 at 1:20 am

Thanks for the link David (#117).

This line says it all:

“CMHC was never supposed to be in the business of insuring speculators.”

Good to know our taxes have been used to help bailout speculators.

#126 Monty on 12.03.08 at 5:25 pm

Calgary_rip_off, great insight on the parties in Canada.
I did not say that any of them is great, and most likely it is not. Just saying that they need a bigger reason than obvious grabbing of power. Saving economy will NOT happen as not much can be done ! Teh recovery will not depend so much on Canada.
Those masters of wasting tax money as always will achive nothing in terms of improving economy or stagnating living standard.
Well if you like paying more and more taxes while waiting more and more for a medical service etc, sure support them.