Pucker

pig1

Headlines you couldn’t have imagined six months ago:

GM hits bankruptcy!

Canada lays $50 billion egg!

Bidding wars in Toronto!

.

My last post covered the salient points of why the real estate decline is not, as you are being told, kaput. Yeah, I know this runs counter to public opinion and observed facts. I know realtors and realtors disguised as not-realtors have made comments here that a crush of newbie buyers in recent weeks is proof housing’s on a roll again. That would mean, in their world, homes will continue to rise in value without end.

This is scaring the crap out of people who lust for houses. Like Rick.

Garth what is going on in this housing market? Been holding off buying a home for the past three years in the GTA as average home prices do not match average incomes. Been fighting with the wife as she wanted to buy in years ago and now it seems we will never get that chance. People are losing their jobs, companies are shutting down and/or going bankrupt (Chrysler,GM) . Working hours/days have been cut for many and even wages have been cut. I’ve seen people who really have no business buying into this market are jumping head first. Is the economy in a bust or a boom? I’m losing my mind here and I need some understanding on what is happening. Don’t know what to tell my wife now as this madness doesn’t want to end. Feel lost and really down.

Okay, Rick, pour her a drink and come over here and talk to me. Mano-a-mano, dude.

You are absolutely right on both counts – all around us are signs the economy is in tough shape, job loss is mounting, corporate profits have evaporated and people’s finances suck. But at the same time, cheap interest rates and media hype have convinced lots of folks it’s the time to buy. Why? Because, like you, they fear if they don’t do it now, they’ll never own a home since prices are going sonic.

You ask if the economy’s in boom or bust. Are you serious? We’ve lost over 200,000 jobs this year and more than 640,000 people are on the dole. The car business is moribund and our manufacturing sector is on life support. The country’s finances are disintegrating faster than anyone could imagined, while personal debt has ballooned. Nobody’s hiring and salaries are going down. How can that be a boom?

The only “evidence” you or anyone else has seen of a rebounding economy is in the real estate market, where the lowest rates ever have increased affordability, started a minor stampede of buyers, and created a group delusion. Those cheap loans have done exactly what politicians hoped they would – slap lipstick on a pig, and make you horny.

Face it, Ricardo, the only reason you’d ever want to buy a house in the middle of a recession (which is where we are), is because it’s so cheap you cannot resist. That’s what’s happening in California, Nevada and Florida, where homes are 50% to 70% less costly than they were in 2005. In fact, the average house price across all of the US is now at 2002 levels. So, some smart vultures are doing what you’d expect.

But in Canada, prices are little changed yet from their bubblicious levels of late 2007. Sellers are still greedy. Realtors still cocky. And now they’re being supported by the media (desperate for a recovery to save its own butt ) and government (terrified of a deflationary spiral). So, guys like you have trouble seeing through the makeup to the porker underneath.

Hey, do what you want, dude. But be aware there are major dangers to a home buy in 2009.

These interest rates have only one direction in which to go, while most incomes continue to fall. Not a good combo. Runaway government deficits mean higher taxes in the years to come. The recovery, when it does come, will probably be called a ‘jobless’ one –since it will take years for corporate profits and expansion plans to return. And nobody, as far as I can see, has done anything about reducing the debt which got us into this mess. In fact, this little housing orgy is just padding it.

Add it all up, and I’d say houses should be significantly cheaper in two years than they are now. So, if you listen to your wife and buy, you could be blessed with rising mortgage payments and falling equity.

But at least you’ll stop fighting. Forever.

____________________________________________________________

In the news

flaherty-evil Fat deficit equals years of tax hikes, austerity

US mortgage default rate hits a record

133 comments ↓

#1 Tom Jeffries on 05.27.09 at 10:25 pm

If I could grab everyone by the scruff of the neck and tell them to pay attention to one message – it has just been delivered by Garth Turner.
In Hockey parlance, Mr. Turner has just roofed the puck, up there where Mom keeps the peanut butter.

For the sake of your fiscal sanity, read today’s missive carefully, and then get the house on the market, before a ton of desperate folks try to ‘get out’.

Read My Lips: THIS is NOT a DRILL.
All hands on deck.

Cash. Reduce debt.
Sell your toys and realize what is really important: your family and their welfare.

Garth is like the guy in the crowsnest of the Titanic, yelling ICEBERG.

Head to the boats NOW, please.

#2 travevlite on 05.27.09 at 10:45 pm

Nice Jeff.

Keep up the good work on Howe Street with Phil. It’s how I found Garth and Bob Hoye.

Those interviews you do have changed my outlook completely

#3 john on 05.27.09 at 10:55 pm

Now Garth…that was black and white. Thanks and remember I feel you will be right in the end just not yet.

I remain a big fan of yours but please be clear as I believe many are anticipating houses for pennies on the dollar. You prediction is 15-30% nationally.

#4 Realtor Live on 05.27.09 at 11:02 pm

Say what you will, But nobody is arm wrestling buyers into buying these homes. Despite the overwhelming odds against them people still visit the casino. That’s all that’s going on here. It will self correct as it always does. If you look closely below the surface you can already see big changes are underway. Inventories are falling as are the volume of sales. Fewer homes are coming to market. Only one or two price categories are getting any real action. At the end of the day sales in 2009 will be lower than 2008 and way below peek 2007.
Even if you decide to rent instead owning somebody has to own the property your going to rent. So a sales will still take place. Homeownership is still the ultimate security. Timing is everything, for some it just may not be now.

#5 Bottoms_Up on 05.27.09 at 11:04 pm

Just ask yourself this:

In a few years time would you rather have to beg friends/families/banks for a thousand bucks a month to cover your ever rising mortgage, or be the one able to lend out that thousand per month?

#6 hal smith on 05.27.09 at 11:05 pm

IF mortgage rates ever return to their historical norms of say 6 ,7 , or 8 % real estate is screwed. The only way to keep this ship afloat is low low interest rates. Is it possible that they can keep interest rates low for the next 10 years Garth? Because if they don’t keep rates super low people that are buying now are screwed and boomers who want to cash in and retire are screwed too. Can interest rates stay this low for the next 5 to 10 years?

#7 Shawn on 05.27.09 at 11:20 pm

By the way for those who rail against the finance minister, prime minister, U.S. Fed, big corporations and on and on…

Yeah those are problems…

But for those who are not getting ahead financially…

Guess what?…

Those people and institutions are not your problem.

You are your problem.

The first step to solvng a problem is to recognise the problem…

…just sayin’ and you know it’s true.

And even if you aren’t the problem and you have a hardship story the truth is only YOU can solve your problem.

#8 Arun Pillai on 05.27.09 at 11:27 pm

Thank you for the article…

Some more links for you here:

http://www.canada.com/Housing+prices+post+seventh+straight+monthly+decline/1636018/story.html

http://www.yourhome.ca/homes/article/640875

#9 Jake on 05.27.09 at 11:29 pm

#105 and 151 Patrice from yesterday,

I know you were probably just bitter about the GG chowing down on that seal heart the other day, but your rants yesterday were priceless. You called out a few of the regular posters for not using their brains and proceeded to call them retards etc. You glorified your own education and independent thought while dismissing anything they had to say as mindless dribble. One thing that really made me chuckle was the math you used to prove your point on the benefits of globalization.

“Globalism brought 700 millions chineses from living in pitiful poverty, to middle class who have a tv, and the freedom to choose. 700 millions. that is 10 times more than the entire population of the usa, and canada put together.”…?…

Once again, thanks again for the comic relief…..”700 millions chineses.” My 3 year old would have corrected me if I said that. Anyway, go back to stroking your diploma or whatever it is that qualifies you to ridicule the uneducated red necks that post here.

ps I don’t know if you can correlate having a TV with the freedom to choose. You don’t get that many alternative views from the tube.

#10 john m on 05.27.09 at 11:48 pm

Great post Garth..you have a way with words LMAO!

#11 Jeff Riverdale on 05.28.09 at 12:00 am

I won’t worry too much about the prices coming down in Vancouver. They will be dropping. I think we are on a 2 year lag from the US. We would have keeled over at the same time as them had we not brought in those stupid 0 down 40 year mortgages, just as things started to correct. Had we not done that we would have had a mild housing correction but now we are going to have lots of pain as many people piled on debt during the bubble.

Just look at the Case Shiller Index and compare it to the Vancouver Real Estate Board’s typical Vancouver home price. If you leap the Case Shiller Numbers 2 years forward it follows the US very closely. It is as close to a crystal ball as you are going to get. And of course it would because we had just as unsustainably high prices as they had.

Also, with Governments at all levels issuing loads of debt it is pushing interest rates up. Panic is starting to set in the US Bond market now and this will cause mortgage rates to rise higher and faster than most believe. And when that happens you’ll start to see the real pain.

#12 rationalnational on 05.28.09 at 12:08 am

Folks, interest rates are a function of the bond market.

Changes in bond prices have an inverse effect on interest rates. Bonds down, rates higher. Bonds up, rates lower.

Bond prices are subject to supply and demand. Demand goes up, supply goes down, prices go up, interest rates go down. Or, inversely, Demand goes down, supply goes up, prices go down, rates go up.

Supply lately has been quite large in the US. Of course, our little deficit problem is large too, and the governments are all selling bonds to raise money for their deficit spending.

Now, this is a global crisis, so other countries are doing this too. Like, the UK for example – who recently experienced some difficulty in a bond (gilt) auction.

Now, since everyone is trying to sell debt, and NOBODY wants interest rates to go up because we need all these serfs to keep paying their mortgages, something must give.

Another incentive is to keep asset prices high enough to motivate the serfs to continue paying their mortgages. Gee, with so much wealth being destroyed, and with the percentages of folks close to, or already under water, not to mention all the other sectors to oft mentioned, what to do?

To keep interest rates low, you have to create demand for bonds. Central banks are doing this now by printing money and buying bonds all along the curve (7-10-20 year bonds). This is AKA quantitative easing and the prime purpose of “QE” is to reduce interest rates. But something must give.

As China has been saying, they don’t like the US going down the QE path because it devalues currency. It is the government version of taking on debt, and because currencies are fiat, they are basically a promise that the government stands behind the currency. Because the balance sheet of the country takes on debt, it dilutes the common shares (dollars!) of that country.

Devaluing currency devalues all debt denominated in that currency.

This is a debt crisis. It is systemic. There is not enough money anywhere to pay for the obligations these governments are taking on. Deflation is the devil, and it will be defeated.

By purchasing bonds with printed money, the central banks are creating a false market. Investors don’t like false markets. This will reduce foreign demand from creditor nations and cause more QE to be applied. This is inevitable, and it may not proceed in an “orderly” fashion.

This may lead to a currency crisis. And that’s exactly what the end game will be. Devaluing debt by reducing the real value of money is a systemic solution to a systemic problem. Interest rates will not rise – they will be kept down in order to force currency values down, decreasing the real value of debt, and increasing GDP across all sectors.

Garth, if the powers that be played by a traditional rule book, deflation – in nominal terms – would win. These are not normal times, and the rules are out the window. Deflation does not have a chance against the power of the printing press if those who control it are willing to do whatever they must to defeat the “d”.

Best of luck to all.

#13 Bottoms_Up on 05.28.09 at 12:12 am

I thought we should revisit Canada’s debt clock:
http://www.ndir.com/SI/education/debt.shtml

Also, I wonder if the following was predicted nearly 500 years ago (“British Columbians are running up debt to pay for their lifestyle faster than other Canadians”):

http://www.cbc.ca/canada/british-columbia/story/2009/05/26/bc-rising-household-debt.html

#14 . . . fried eggs and spam . . . on 05.28.09 at 12:57 am

“. . . people . . . are jumping head first. . . . and media hype have convinced lots of folks . . . created a group delusion. . . . the porker underneath.”

The Porker Underneath. One premise is that the porker lies in the combination of sheeple chomping on cud while deluding themselves about the reality of life, small increases set by the BoC, further job losses across the board (wait until Jan. / Feb. 2010 on) and the possibility of some world conflict.

Could be on to something, Garth. This will not end well, but it will be interesting to see what happens to folk who have (like us) paid all debts off, have two modest incomes but have to live with ever-increasing property tax bills, higher utility costs, etc.

I would have preferred to rent a condo, but I guess that plan has gone the way of the dodo bird. Shit happens!
——
Yo! Guess what? Everything’s still on course for a partial wipeout of humanity! — http://tinyurl.com/ra32zo

“. . . that included “David Rockefeller Jr, the patriarch of America’s wealthiest dynasty, Warren Buffett and George Soros, the financiers, Michael Bloomberg, the mayor of New York, and the media moguls Ted Turner and Oprah Winfrey.” Harlow notes that the general agreement that population control was a major priority . . .”
——
And now . . . http://tinyurl.com/qb6rzc . . . another step for the NWO.

“On April 20, I wrote an article, Big Bro’s Cybersecurity ACT: A means to shut down the Internet. Lo and behold, yesterday, this article Obama Set to Create A Cybersecurity Czar With Broad Mandate appeared in the Washington Post.”
——
Come Spring 2010, office and sublet space should be dirt cheap. Manhattan has plenty now. — http://tinyurl.com/ombpku
——
This was seen a couple of times yesterday. Kinda shows how paranoid / schizophrenic western govts. have become, and step up with all the BS they are using the m$m for, supposedly scaring us into believing them.

Also may / may not go with the pre-planned cull of humanity (see above). Apparently, this has moved to a new level. From Wikipedia:

“DEFCON 2: This refers to a further increase in force readiness just below maximum readiness. The most notable time it was declared was during the Cuban Missile Crisis, although the declaration was limited to Strategic Air Command. It is not certain how many times this level of readiness has been reached.”

#15 dd on 05.28.09 at 12:57 am

Yes it is hard to watch stocks and houses take off when U are on the side.

Fundamentals … fundamentals … for the long term …

Interest rates up … assets go down.

#16 Mark on 05.28.09 at 1:01 am

My local news ran a story on the recession today. Ended with the anchorman saying (And i kid you not):

“Well as we all know, the candian ecconomy wouldve been fine if america hadnt gotten us into this mess”

And people BELIEVE this garbage to the point that they’re rushing out and buying homes still because – “well we’ll rebound okay, our economy is stable unlike the americans – so once america has sorted itself out we’ll be fine”.

Thus (in my opinion) the current state of the housing market with people STILL buying.

I keep hearing time and time again from people who (i thought) were intelligent that “canada is fine”, “this province is safe, we’re different”, and the doozy for those in bc “it makes sense to buy now, after the olympics the prices will SKY ROCKET!”

There ALSO seems to be an issue with the under 35’s who think if you DONT own a home then you’re completely worthless as home ownership is the BEST investment ever!

Now either these kids need to be educated about home ownership – or they’re going to find out the hard way..

#17 Munch on 05.28.09 at 1:14 am

Fantastic Garth – you keep outdoing yourself!

And great comment from #1 there.

I wish everyone could read today’s message, really I do!

Rgds

Munch

#18 David on 05.28.09 at 1:16 am

The wealth through home ownership chimera apparently still rings true in the mind of Rick’s wife. A home is first and foremost a shelter and not an investment. Invest too much in that home, and Rick will not have very much left over to invest in anything else that might be worthwhile, be it a business, an equity or mutual fund.
Tough to say adios to a failed dream and long term debt that can only escalate in cost. There are not enough innumerate dunces with good credit scores to keep this housing Ponzi scheme going. By not losing out Rick will win.
The best way for a performing mortgage to turn toxic is for the mortgagee to either experience job loss or interest rate resets. The former is happening right now and the latter is sure to come in the near future.
Otherwise Rick, go talk to the real estate agent and sign your life away.

#19 Republic_of_Western_Canada on 05.28.09 at 1:28 am

Pucker – Priceless.

That looks SO much like the suburban wife.

#20 vantown on 05.28.09 at 1:36 am

the only reason you’d ever want to buy a house in the middle of a recession (which is where we are), is because it’s so cheap you cannot resist

The problem with this argument is that it is decidedly not cheap, at least here in Vancouver. It is, marginally, cheaper than it was a year and a bit ago. Maybe 10%. But compare median incomes to median home prices, and we’re more expensive than New York City. I am not making this up. Do the research.

I’d say houses should be significantly cheaper in two years than they are now

This is what we heard two years ago. Two years from now, will it be “safe” to buy?

It’s all starting to remind me of a cartoon I saw in (coincidentally) the New Yorker a few years back. A businessman is standing at his desk, talking on the phone. He says, “No, Tuesday won’t work for me. How about never? Does never work for you?”

I’m starting to get the feeling that, according to this blog, the right time to buy will always be two years in the future. “Just wait: in two years all the fools will be in trouble!” But of course, after each two-year period the “fools” are enjoying their homes, building equity, and completely ignoring blogs like this.

(And no, I’m not one of the “realtors disguised as not-realtors.” I’m playing devil’s advocate to some extent. But find me a decent place in a decent neighbourhood that isn’t half way to Alberta, minimum 1300 square feet, $400-500 per square foot, and I’ll buy it.)

#21 Barb the proof reader on 05.28.09 at 1:59 am

Six months ago and a day:
http://www.garth.ca/weblog/2008/11/27/piece-of-work/

Great posts Garth.

(Canadians will never forget how Harpoon has gutted Canada.)

#22 Mike (Authentic) on 05.28.09 at 2:13 am

Great topic again Garth and ironicly, right on time too! My wife’s work pal’s wife has the “wannabe a RE landlord itch and buy multiple Calgary homes” and he can’t find data/stats to back up what is happening out there so today I’ll be sending them that data, along with your blog link.

When you are “outside the RE circle” and don’t read/cruise the RE blogs daily the average person has an idea of what is happening in the economy but is quite unsure of what to do and what is happening now and coming down the road.

Hopefully this data will save a lamb getting too close to the wonderful smells of the RE BBQ.

Mike

#23 Too Old Bob$ on 05.28.09 at 2:15 am

Phone call the other day. Wife picks it up and realtor is on the other end. She asks if we are interested in selling, buying a house or maybe some real estate investment. Wife tells her no thanks. I wished I would have picked up the phone. I would have asked her if she would still be interested if we were renting, had no jobs and were on welfare.

I found this kind of interesting. The last time anyone ever phone me about real estate was like 1982-83.
Go figure.:/

#24 Da HK Kid on 05.28.09 at 2:20 am

Another winning response for the books Garth!

Seems like every letter you are receiving now has a wife element to it!

Let your wives know the flip side of making absolutely stupid and unneeded risky decision right now and how it will take both of you and your children out down the road.

While your at it, let your family and friends know where you stand and it’s not a topic for discussion anymore ranked right up there politics and religion and go on with your life!

There will only be a handful of us anyhow who do the right thing or more importantly not the wrong thing!

I’m just happy my wife and I are on the same page!
SHEEPLE WE WILL NEVER BE!

#25 Mike (Authentic) on 05.28.09 at 2:30 am

Pay attention to what is happening to the 10 and 30 year US T-Bill. They are going up and mortgage rates along with it by .25-.50%

From what I understand, Canadian mortgage rates are linked to the same bond.

Mike

#26 Garth Vader on 05.28.09 at 2:46 am

Who is more foolish? The fool, or the fool who follows him? -Obi Wan Kenobi

Listen to Garth, the force is strong in him!

#27 Republic_of_Western_Canada on 05.28.09 at 3:05 am

One more thing – Irving Fisher was an idiot.

He slams together a string of observations into some cockamamie ‘debt-deflation theory’ without orthogonally clarifying the dependent nature of each step with the previous or next.

“there is a reallocation of real wealth from debtors to creditors and thus the aggregate marginal propensity to consume declines.”
http://homepage.newschool.edu/het//essays/keynes/counterattack.htm

Gimmee a break.

Nowhere has it yet been explained how net effective, committed debt is magically erased just because somebody defaults on it. Furthermore, forced selling at lower prices does NOT enable somebody to pay off the full price of an impossible loan. So, the residual debt after partial payoff still remains, for some party.

Finally however, reduction of overall existing debt doesn’t even seem to be happening, regardless of potential partial reduction in consumer debt from short sales and slightly increased saving rates.

So deflation or stagdefaltion cannot seem to be caused by debt default – unless someone could precisely clarify by what mechanism.

Any takers?

#28 David Bakody on 05.28.09 at 6:17 am

Few things on my mind but the sun is hiding and the world is slowing down (even the Wars are old hat now) the only people who appear to running around are those who jumped into the Real Estate game hopping for what? …. a housing boom? or making a fortune over night or just spending good money looking for happiness. From what I see a lot of people …. hello a lot, are starting to get it….. pay down debt and save wisely …. it is fast becoming the #1 topic on Oprah and Larry King and other talk shows. RE is bad news and these type of networks have shelved it. Why? because is too much sadness from all who have lost everything and they want no part of the next round.

#29 Mike B on 05.28.09 at 6:31 am

Problem is that those of us who have waited 2 years will now need to wait 2 more years. Not so practical with children… Agreed rates will rise… agreed reatlors and some sellers are A-holes…however with the HST coming next year I see no reprieve in the moron mania… A stock market correction may offer some relief but keep in mind there are some 30,000 realtors in Toronto alone and they are now selling everything on sight. Alot of it is junk , stuff they tried to sell for eons…Now idiots with fists full of cheap cash are bidding(sometimes) like drunk soldiers.

Good advice if you can wait it out.

#30 john m on 05.28.09 at 7:11 am

Sheeple
From Wikipedia, the free encyclopedia

Sheeple is a term of disparagement, a portmanteau created by combining the words “sheep” and “people.”

It is often used to denote persons who voluntarily acquiesce to a perceived authority, or suggestion without sufficient research to understand fully the scope of the ramifications involved in that decision, and thus undermine their own human individuality or in other cases give up certain rights. The implication of sheeple is that as a collective, people believe whatever they are told, especially if told so by a perceived authority figure believed to be trustworthy, without processing it or doing adequate research to be sure that it is an accurate representation of the real world around them. The term is generally used in a political and sometimes in a religious sense…………….. Im sure Wilkipedia’s definition of sheeple will be revised in more profound terms considering the habits of present day sheeple …..and sadly enough many of them walk amongst us :-)

#31 kc on 05.28.09 at 7:21 am

Hi Garth, I haven’t dropped off the planet, just read your page everyday and comments of others; just can’t find time to post as much as before. (garden is growing, setting the squirrel traps and such)

I was wondering if I may ask for a mailing address for you for I have a couple articles that were written in a free advertising RE mag that I feel you may find entertaining. The RE wheels of GREATER FOOLS are strong as ever here on the west coast. The spin is growing as fast as the fed’s deficit, first time buyers gobbling up 250K starter condos… funny how years ago it was an apartment building… today give it a fancy name like Shangri La and the flood gates open wide for buying the name is as posh as driving a Escalade…. (with or without bullet holes)

Cheers, if you can email me a post box number I will send you the funny of the week.

Done, thanks. — Garth

#32 lgre on 05.28.09 at 7:39 am

I come to one conclusion with these people wanting get into the orgy, they have already made up their mind to buy, but need one more person to convince them to do so..now, if someone asks me if they should buy or not..I tell them buy, I quit trying to explain to people on why they shouldn’t buy..when I get the same come back all the time..’low rates’..

Afterall, rates were just a 1.5% higher a few months back and RE was losing steam clearly. If that’s not enough to convince someone..then I feel no pitty for them..let them buy, in a few years some bankruptcy lawyer will be quite happy.

#33 Herb on 05.28.09 at 7:50 am

Barb @ #21,

thanks for the trip down memory lane. Glad to see a baker’s dozen of the old crowd (some with new handles) here on Greater Fool, although I do miss C.B.I. and – wait for it – Li’l Leasa.

#34 Da HK Kid on 05.28.09 at 8:06 am

#12 Rationalnational, that’s a very good take on how it works and potentially plays out.

As you know, I am 100% convinced of the manipulation occurring right now. Let’s face it, whether its the Treasury, Fed or Media printing money Bernanke Style was the same of loose policy and stimulus Greenspan Style.

Deflation will occur but it will not be called that, hell they could barely commit to saying Recession in public.

There will come a time where the line will have to be drawn and the printing will have to slow or not a one foreign government will take on any more US debt.

This I believe will smack down the US once and for all and while they will never admit to a plan of the free markets working and a bottom to be found, they will have too.

#35 David on 05.28.09 at 8:33 am

RealtorLive, makes an interesting point. Casino capitalism and buying a house are now linked. Exactly the stuff that ruined our economy. Since markets are self correcting, why ask taxpayers for bailout funds for the reckless behavior of gamblers? Interesting that putting a roof over one’s head is now relegated to a financial gamble akin to a Vegas trip.
RealtorLive is also correct about the timing issue. I am buying my third dream home in 2016 for cash and low imputed rent. Hope realtors like you can make a living between now and then. No arm wrestling involved. Try not to starve during the next seven Biblical lean years. Your advice is priceless.

#36 Nostradamus jr. on 05.28.09 at 8:36 am

Location, Location, Location

…Garth, you will end up Prime Minister of the new “Eastern Canada”.

Be careful what you wish for Garth because….

Western Canada will secede from the rest of Canada.

…Western Canada will refuse to continue w/ $$$ supporting the “overpopulated/manufacturing dead” Province of Ontario.

and…

HOMES IN TORONTO ARE NOW MORE EXPENSIVE THAN IN VANCOUVER. ($$$ per square foot)

#37 mattbg on 05.28.09 at 8:42 am

lgre #32, I agree with you in general… most people only want to hear opinions that support what they already believe and just stop talking to people that disagree. But, I know at least one person who changed her mind about buying a house after I sent her the link to Garth’s site.

#38 lgre on 05.28.09 at 9:39 am

Mike B – buying in Toronto is always going to be expensive, even in New York, prices are only down 20% while Arizona is down 50%. So, yeah I can see a price reduction..but I still wouldnt call it cheap at anytime. Places like Brampton, miss, milton..prices are coming down..There are houses on the market for over a year now.

#39 lgre on 05.28.09 at 9:48 am

mattbg – that is the way of the human, unfortunately I dont have the patience to preach so I quit caring…oh well

Looking at your blog I noticed that you are from Georgetown..that’s where I’m trying to locate some RE, but find prices too high still.

#40 Calgary_rip_off on 05.28.09 at 9:53 am

Garth,

Bob trueman was defacing your name on his blog yesterday(in Calgary).

Some realtor above said”Homeownership is still the ultimate security” which is a lie.

1)In Calgary, prices are still dropping, slowly, but houses are still priced $200K in excess of actual value(bubble conditions) If you buy now you will lose money.

2)Unemployment in Alberta is up. If you lose your job how will you pay on your mortgage? Better to rent.

3)As a renter you can get out of Alberta asap when a better opportunity presents itself.

4)What Alberta “advantage”? There are limited water resources to extract the valuable oil up north. Water is the limiting resource, not oil. Once it is gone, Alberta will be a great desert. When, not if.

It’s always funny when I read about retirees and home owners looking for security. They obviously havent learned. In my mid 30’s I suspect I know more than they do about the facts of life(im sure some out of shape old people will argue and criticize this statement). Everything could change in an instant. The other day my wife was up at Royal Oaks, some lady in her 20’s on her cell phone blindly crossed the road obviously without looking, and my wife’s comment when she saw the body flipping thru the air, was that a rag doll? Luckily this young lady is conscious now, talking, and without apparent serious injury, hopefully.

No security ever, anywhere. People should stop seeking it. Unless a pill or operation is invented to establish immortality with zero chances of physical entropy, it’s best to plan for tomorrow but focus on what is in front of you, and assume that you’ll be dead at the end of the day, and live accordingly.

That being said, there are more than a few desperate realtors in Calgary who realize the hellhole this bubble boom has created. Perhaps they can retrain at SAIT to be a sterile processing person or something, an actual legit profession rather than an overglamorized salesperson who helps speculators think of houses as “investments” only rather than a place to live in and a partial investment.

Let the drama continue…..

#41 R on 05.28.09 at 9:55 am

The bottom line here is people don’t like paying rent. These people need to change their mindset. You are not throwing your money away you are paying for a service. In this case accommodation. Temporary accommodation at that. If you were on a vacation would you expect to stay at a hotel for free? Times are different now.IMO what Garth says here is 99.9% accurate. If you think you are throwing money away by paying rent then go get a mortgage. Now that would be throwing your money away. Remember that the interest rates might be low for another year ( the latest spin) but after that …. Well I don’t even want to go there.

#42 Toronto C9 Renter on 05.28.09 at 9:56 am

to #36…

No issues with the West Seceding, just please, can you do it before the Olympics bill comes due, not after?!

Thanks in advance

#43 My_View on 05.28.09 at 9:59 am

Garth,

Why did you buy a property in 2009? Are you a GREATER FOOL? It’s like an author who writes the pitfalls at eating fast food and you know what I’m getting at. I remember that day you posted POS and the loyal disciples were all scratching their heads, how can this be? 3 words, power of sale! So what, was it purchased for a Detroit dollar? Could you not wait to purchase? Or was it the prime location for the Turnerbunker? Or maybe you just wanted to take advantage of all the tax credits/rebates.

What did I say in the posting above? Oh yeah… it only makes sense to buy a property in a recession if it comnes at a 50%-70% discount to recent bubble valuation? Rest assured, I take my own advice. — Garth

#44 Investor on 05.28.09 at 10:04 am

Looks like Rick needs a lesson in behavioral finance.

#45 Signal Loss on 05.28.09 at 10:26 am

Wives seem to be taking a big hit on this site. (disclosure: mine wanted to buy, too, in 2005/06). Companies who provide micro-loans do so to women because they find that women are far more responsible with money and are far more likely to generate a return. Turning to housing in Canada, is it that these women, if provided with the information found here, are so hell-bent to buy a status house that they wouldn’t care and would still buy, or is it that they are so immersed in HGTV when they get home from the office that they are not exposed to information like this?

#46 VOODOO on 05.28.09 at 10:26 am

My back of the envelope calculation:

Rent paid to stay at my current place: $13620/yr (this has $2400 taken out, which goes towards property taxes)

To buy my place and make mortgage payments on $250,000, 5 year fixed at 3.45%: $14,892/yr (this also has the $2400 property tax taken out)

However, in the first year of mortgage payments, I would pay $8,463 in interest.

Therefore, the ‘actual cost’ (i.e. ‘additional cost’) of renting is 13620 – 8463 = 5157/yr (this works out to $430/month). (note this amount increases every year due to less interest that would be paid on the mortgage, and the automatic rent increases that occur)

So, for $430/mo, I do not have to worry about and fix and pay for appliance and house repairs/upgrades/maintenance, lawn care, furnance, roof, basement leaks, paving the driveway etc.

I also don’t have to worry about falling real estate values.

I also don’t have to incurr additional expenses involved with buying a house (around $4-5000). I also don’t have to worry about the costs associated with selling the house when I want to move (~$12,000).

I also have freedom to move at anytime by giving 60 days notice.

I also don’t have to worry about my mortgage renewal in 5 years.

I’m hard pressed to find a reason to buy given the current uncertainty of the future….

#47 Future Expatriate on 05.28.09 at 10:35 am

Why GM went bankrupt:

Our family had a Chevy station wagon. Yeah, that ’57 chevy. My Dad spent thousands of hours in the garage keeping that thing going. Of course it gave him an excuse to get away from the wife and kids.

Of course, my first van was ’72 Chevy when they were popular. I went through a deep puddle once. The damn van died. For about an hour.

Chevy had the design genius to put the distributor on the bottom of the engine. Where it would get soaked.

I’ve bought Ford since then and never looked back.

GM? Good riddance. I could have predicted that back in ’72.

#48 CalgaryRocks on 05.28.09 at 10:51 am

Barbie, here’s a long term, fair solution for GM pensions.

Adjust the benefits in function of the available funds. If the new benefits are lower than 1k/ month, the provincial government makes up the difference.

Based on one article, that would involve a 60% reduction in benefits, steep, yes, yet everyone would get something.

#49 Bajwa on 05.28.09 at 10:52 am

“slap lipstick on a pig, and make you horny.”
“So, guys like you have trouble seeing through the makeup to the porker underneath.”

HAHAHAHAHAHAHAHAHAHAHA……

#50 $fromA$ia on 05.28.09 at 10:58 am

I’d like to see Canadian lay a Conservative Fat -turdy in a re-election.

Love all those anti Ignatia commercials on BNN.

This is all Bull$hit, we need a change in Government and we need accountability implemented.

#51 Canadian Army guy on 05.28.09 at 10:59 am

“What did I say in the posting above? Oh yeah… it only makes sense to buy a property in a recession if it comnes at a 50%-70% discount to recent bubble valuation? Rest assured, I take my own advice. — Garth”

LOL!

Not a chance that you snapped up a home for “50%-70% discount”… unless it’s gutted and condemned… or it’s in Detroit.

Then you don’t know where to look. — Garth

#52 Nostradamus jr. on 05.28.09 at 11:03 am

#42 Toronto C9 Renter

…Nothing personal…have lived in TO for many many years…it is no longer “centre of the earth of Canada”.

Ontario is an overpopulated w/ a dying manufacturing economy.

Quebec is a single industry, snow removal.
“Quebecois” has never been a culture.
Its European big brother “Parisian French” is no longer a culture either.

Europe and the North American Eastern Seaboard are dying economies.

…The Pacific Northwest will become the safest place on earth.

Garth has the need to “lead”.

As Prime Minister of the future “Eastern Canada”, he should be careful what he wishes for.

Leading a Civil War to keep Western Canada in the Canadian Union will not succeed.

Chalk and cheese don’t mix.

…Sorry Garth, you are no Abraham Lincoln.

#53 Kelly McMae on 05.28.09 at 11:16 am

Thanks to whomever posted that Hoye speech. Quite interesting when things are viewed from an historical perspective. I haven’t fully looked into Hoye’s bias but his reasoning and analysis seem to be somewhat objective. Anyone have greater insights on Hoye?

Someone sent this one along putting the bank “profits” in perspective.

http://market-ticker.org/

Nice to see a void of personal attack ads on the blog so far today.

#54 Kris on 05.28.09 at 11:18 am

Man, that picture makes me hungry for bacon.

Garth, a few posts ago you mentioned your firm and masculine backside. Can you attribute that accomplishment to a healthy diet or are you more of a bacon sandwich sort of guy?

#55 rory on 05.28.09 at 11:27 am

#42 Toronto C9 Renter you said:

“No issues with the West Seceding, just please, can you do it before the Olympics bill comes due, not after?!”

We will gladly take on the ‘O’ debt in exchange for you taking all of the ‘GM’ debt …west wins.

#56 Toronto C9 Renter on 05.28.09 at 11:32 am

to #52..

The status of Toronto, or any other spot for that matter, is of no importance to me. Presently Toronto is where I earn a living, so here I remain.

Were I lucky enough to live anywhere in North America, it would be Southern California, Laguna Beach Oceanfront to be precise. (as both the USD and SOCAL RE continue their declines, this dream is looking more feasible every day)

In any event, re: your comment – “… TO is overpopulated – no longer centre of the earth of Canada..” You must be thinking of Yogi Berra who once said — “nobody goes there anymore — Its too crowded!”

#57 Chincy on 05.28.09 at 11:38 am

#16 they are going to find out the hard way…

#58 nota bene on 05.28.09 at 11:49 am

Interesting how average home prices in Canada are almost double what they are in the US.

Canada: $306K (and climbing)
http://www.crea.ca/public/news_stats/statistics.htm

US: $170K (and falling)
http://www.latimes.com/business/la-fi-homes13-2009may13,0,5916491.story?track=rss

#59 dave99 on 05.28.09 at 11:54 am

#52 Nostradamus jr.

Jeez. What is it that you keep babbling about? The blog isn’t about the west coast. No-one is bashing the west coast. What is this hyperdefensive insecurity about living on the west coast? Sure, it’s lovely place. Most of Canada is as well.

Besides which, can’t you at least write in complete sentences?

#60 Wealthy Renter on 05.28.09 at 12:08 pm

Where are the green shoots?

My wife has to hire a tech for an entry level position in her department. The job was posted briefly on the company website, and had a limited run on a major job website.

There is a two week window for applications, and so far, after two days, she has 1000 applications.

Real estate is only going to go up, up and up!

#61 CM on 05.28.09 at 12:09 pm

Some people I know decided to put their house on the market last fall (kids have grown up and mostly moved out) and move to a smaller place. They bought a new place before they sold the old one. Now they live in the smaller place with the larger standing vacant.

Of course when they bought last fall, the new house was more expensive, as were the mortgage rates. Now they’re paying a high rate on a large loan, which they can’t reduce because the first house isn’t sold.

A disaster all around.

A small place around here finally sold after almost a year on the market at a considerable drop from the asking price. It needs a lot of work.

You still get the feeling that everyone is holding their breath, teetering on the brink, unsure.
—–
#5 – Bottoms_Up – I’ve bookmarked your debt clock. It’s something to check up on the next time some pol talks about “green shoots” and impending recovery.
—–
“Those cheap loans have done exactly what politicians hoped they would – slap lipstick on a pig, and make you horny.”

Now there’s a picture to fuel nightmares, Garth.
—–
In case you need another way to predict financial forecasts, guys can always use the Underwear Index.

“If you’re put off buying replacements — and your significant other hasn’t done it for you — then guess what? The recession probably ain’t over yet.”

http://finance.sympatico.msn.ca/investing/michaelbrush/article.aspx?cp-documentid=20040810

Oy.

#62 AM on 05.28.09 at 12:09 pm

“No-one is bashing the west coast. What is this hyperdefensive insecurity about living on the west coast?”

I call it the ‘west coast inferiority complex’. It’s been that way for many years and the most vocal ones tend to be those who haven’t seen life beyond their provincial border.

#63 $fromA$ia on 05.28.09 at 12:10 pm

Dave99,

Bet Nostadamus lives in his parents basement and raises goats/sheep.

#64 confused and a little crazed on 05.28.09 at 12:25 pm

Dave 99,

that’s funny man….If I read nostradmus.. i ‘m not sure what he is really expressing either other than subtle racial undertones with splitting Canada up and it’s east vs West.

I don’t think anyone is saying the wesst is bad…overpriced sure but bad no

#65 CM on 05.28.09 at 12:28 pm

Defence minister breaks arm in rugby match

“Defence Minister Peter MacKay is nursing a broken arm after a mishap in a charity rugby match.”

http://www.thestar.com/news/canada/article/641855
—–
Nice to know he has time to play games.

Just think what $28B could do for those military families.

#66 MikeB on 05.28.09 at 12:41 pm

Those who are wondering why RE in Toronto is going up in sales volume and some pricing need look no further than guava.ca….. Fully mapped for all to see every year the sales volume and prices rise from Jan to June/July then recede again. Add to that pent up demand, morons with free money from banks and you get the kind of market that really seems unsustainable….because it is…. However waiting two years I feel is a bit far fetched… Mid August if you have the dough should net some decent ones although with the level of greed out there it may not happen this year.
Gotta pick em one by one… If you have a bad seller and crazy listing agent best to move on rather than engage in their assinine ways

#67 encanto on 05.28.09 at 12:44 pm

Can someone please comment on the second home market. I have sold my home in vancouver but still own a rental home in a touristy location in mexico. Should I be trying to get rid of it too? I have no mortgage or personal debt.

#68 encanto on 05.28.09 at 12:45 pm

http://www.vancouversun.com/business/real-estate/Vancouver+house+prices+show+ninth+consecutive+month+decline/1635850/story.h

#69 CM on 05.28.09 at 12:48 pm

Sorry, but I’m commenting on my own comment.

RE MacKay breaking arm in charity rugby match – why do military families have to rely on charity?

#70 MikeB on 05.28.09 at 12:58 pm

My View 43…. based on Garth’s response he would only suggest buying at a minimum 50% reduction from peak. In Toronto that seems highly improbable, unfortunately.
Furthermore previous predictions for Toronto made by G and others estimates a modest 10-20% haircut. So if those numbers are correct… you will essentially never buy in Toronto… if I understand this correctly

Most today, and I am not one of them, feel it is better to jump in while prices are slightly lower than risk in two years it being higher AND rates being higher too.

Hey but I also believe that this recent rally is bogus and will be soon to correct at least 10-20% of what has gone up. Most financial guys feel this too but we have all be proven wrong for many weeks so all bets are off. If I were a betting man I would say the stock market is more likely to go down than go up as second and third quarter earnings are still well below last years numbers BUT are higher than estimates which are artificially low.

#71 OttawaMike on 05.28.09 at 1:11 pm

52 Nostradamus jr. on 05.28.09 at 11:03 am

I have no idea what you are talking about but I present you this for your amusement:

http://mozi.netbungalow.com/Sahiba.htm

That will, hopefully, keep you occupied and away from here for a day or two.

#72 Barb the proof reader on 05.28.09 at 1:11 pm

#48 CalgaryRocks,

Thanks, yes I’ve read all that, and I think it will take guts all around for solutions. I suspect however that many, the 2/3s without and even those with, pension protection, miss the point that Ontario is obligated and trying to protect every citizen they are obligated to.

Aside.. I think there’s also public lack of understanding about pension payouts. Anyway, the pension scene is looking bad all around, and getting worse, and will grow bigger on the public radar I suppose.

#73 Nostradamus jr. on 05.28.09 at 1:16 pm

rory…your response to #42 Toronto C9 Renter…

>We will gladly take on the ‘O’ debt in exchange for you taking all of the ‘GM’ debt …west wins.<

…Here here, Ontarian’s can’t see the forest from the trees.

Western Canada just absorbed half of the + $3 Billion bail out to Southern Ontario and the CAW there.

…And what does Western Canada get in return?

#74 Eduardo on 05.28.09 at 1:29 pm

Why is everybody complaining about accountability? IT’S A MINORITY GOVERNMENT.

#75 Eduardo on 05.28.09 at 1:38 pm

AM in #62

I’ve lived in Ottawa and I have relatives in Quebec and you people disgust me with your culture of “give me give me, we rule the country, what’s best in Ontario is good for everywhere else, tax & spend, we deserve more government jobs, bail us out, we don’t need to listen to maritimes or west because we have more votes and an unreformed senate”.

#76 Barb the proof reader on 05.28.09 at 1:39 pm

#33 Herb

Hi Herb! I was just thinking that the other day. I still really enjoy your posts.
Sometimes for a moment I think, oh I’ll ask so-and-so for an opinion on…
I especially miss C.B.I. and many others. But I only recognize one of the changed handles. I figure why change handles, we’re anonymous as it is, although Garth knows who everyone is no matter how many name changes they try.

#77 Investor on 05.28.09 at 2:36 pm

Gov’t will try to keep the interest rates low, but ultimately the market will decide what the rates will be. At this point it will appear there is only one direction and that is up.

Here are risks that bond investor faces:

• Interest rate risk
• Call and prepayment risk
• Yield curve risk
• Reinvestment risk
• Credit risk
• Liquidity risk
• Exchange rate risk
• Volatility risk

It’s a new game today so many of these risks are much higher than ever before.

#78 jess on 05.28.09 at 2:36 pm

Open houses on Sunday? And some of these houses were on the market last year and failed to sell . i also noticed the agents had pen and paper give -aways advertizing themselves…

sheeple could be replaced with monkey + people =monkles ? sheep are passive and vegetarian and monkeys well we know what their about…

hal smith
http://www.bankofcanada.ca/pdf/annual_page1_page2_page3.pdf rates were low from 39 onward and into the forties they had price freezes. etc…

jake
china needs 10% growth as 6 is considered a hard landing not good for the (millions)people who have the right to choose

#79 D from London, ON on 05.28.09 at 2:45 pm

I think it is fair to say the majority of people who post on this blog are RE Bears and fiscally conservative (me included). That’s what brings us to this online community. I am sure there are a lot of lurkers who consult the site for contra-m$m opinions while they mull over a decision to buy (both first-timers and move ups), sell, rent, move to Malaysia or whatever.

[WARNING: Ugly self-disclosure below…]

I empathize with the posters and lurkers with this agenda because our family is in a similar situation. 5 years ago we downsized considerably when we moved to London Ontario because we felt that prices were nuts in the part of the GTA we lived in, and that we were lucky to unload our 3,000+ sq. ft. chipboard doghouse for $100K more than we paid only a few years before. We thought prices were overheated at that time and we didn’t want to be caught in a correction. This turned out to be bad timing in hindsight, because our old house sold again for at least $100k more than that last fall while sales in our current neighbourhood indicate that our current smaller chipboard doghouse likely has the same valuation as when we bought it in 2004. Yes, this shows signs of our greed, both in our smug feeling that we “left the casino table with winnings” in 2004 (which proved to be, at best, premature) and in our hindsight calculations envying those who pocketed another $100K on the old chipboard doghouse.

While we are far more comfortable with the mortgage size, payments, amortization, etc. that goes along with our current house, now we are growing restless and feel the need to fill our irrational ego needs with another McMansion. My wife and I are at the point in our life where in the past it would have been natural to make a final move-up buy (natural due to expectations of increasing incomes, growing family, retirement some years off, a good chunk of equity in our current house, etc.). To be honest, if the economy now was like 2006 we would likely give in to all of the emotional (non-rational) arguments and have already bought something clad in granite that would satisfy our egos. Especially if we had the current artificially-low interest rates available. Now the current economic clusterfuck has caused us to examine the rational arguments for and against, and most days the answer comes up “against”. But some sunny Sundays…sigh…

I wanted to out myself on this for a few reasons: 1) From the emails Garth posts it would appear that there are quite a few others who might be like me; 2) there is a lot of talk about first-time buyers but not a lot of talk about move-up buyers – those that have to consider the risk of timing sales as well as purchases; 3) for move-up buyers the mortgage payment risk is really the delta between current mortgage and the bigger/longer/higher payment new mortgage, as well as the risk that the new, bigger home will be less able to sell in the future (how much less than the current home?); 4) quite a few people mention the opinions of their spouse, and we should recognize that decisions on buying and selling are rarely made by one partner alone – both partners need to agree before any transaction is done. While we hear about the spouses who are gung-ho to buy, I think we should talk more about the fact that both partners often cycle between buying/not buying, finding themselves arguing one side or the other depending on the day. Reality is rarely “I am conservative and rational and my spouse is wild and irrational”; 5) I am like most of you – we all pretend that we are rational creatures, looking at houses as functional “places to live”, with rental accommodation as a near-perfect substitute, etc. We scoff at the irrational, emotion-driven buyers and feel superior with our conservative, rational positions – but emotion is a very deeply embedded part of house buying and selling in our culture, and is far more complex than we pretend it is when we point our fingers at the Greater Fools who are driving the current mini-bubble (note that I am not disagreeing that it is a bubble); 6) forecasts of future economic events are imperfect – we do not have full information on what is going to happen in the next 5 years – hell, we can’t even agree if it’s going to be deflation or inflation, a rise in the USD or a collapse. By their very nature we also fail to consider what Black Swan events might come about to change the picture entirely. No matter how righteous you feel about your own economic view of the future, someone else feels equally righteous about the opposite, and we must always remember that we are all _predicting_.

Any and all comments on this post are welcome (except for ad hominem attacks). I would especially like to hear from any posters or lurkers who feel pulled in both directions, whatever the reason.

#80 Nostradamus jr. on 05.28.09 at 2:46 pm

#75 Eduardo
>I’ve lived in Ottawa and I have relatives in Quebec and you people disgust me with your culture of “give me give me, we rule the country, what’s best in Ontario is good for everywhere else, tax & spend, we deserve more government jobs, bail us out, we don’t need to listen to maritimes or west because we have more votes and an unreformed senate”.<

…Great post Eduardo

North Korea is heading to the nuclear brink.

Iran had its first major Mosque bombed.

Canada is heading for breakup.

…I predicted the above nearly 500 years ago…

#81 dave99 on 05.28.09 at 3:29 pm

#73 Nostradamus wrote
“…And what does Western Canada get in return?”

We have to listen to your inane babbling. I think we get the short end of the stick.

#82 john on 05.28.09 at 3:31 pm

Garth,

One of your upcoming posts should be totally about the POS you bought, why you think it was a good value factoring in cost of adjustments and expected future value and approximate timeline, location etc. A simple laymans terms blog would suffice. This would remove alot of us who were surprised you would make such a purchase…perhaps you will even be vindicated but I think we all need more detail so that we can get a better grasp of this real estate purchase.

‘Perhaps you will be vindicated…’? You are not my mother. Bug off. — Garth

#83 john on 05.28.09 at 3:33 pm

For those of you wondering how long they can keep interest rates low I can offer this:

5 year fixed in 2000 = 6.25%
Today = not much different

This is a 9 year window

A meaningless and uninformed comment. — Garth

#84 David Bakody on 05.28.09 at 3:45 pm

#73 Nostradamus jr. on 05.28.09 at 1:16 pm

…And what does Western Canada get in return?

The West is in and you have Harper & Co plus his Reform back room boys looking after your best interests Sir/Madame.

#85 Investor on 05.28.09 at 3:47 pm

nota bene.

nice try, but average price (306K) and median price (170K) are not the same thing. Looks like its time to revisit some math courses. I still don’t get why Canadian Real Estate Board uses average price. It works nicely to the upside, you get much bigger spikes, especially will small inventory.

#86 Bill-Muskoka (NAM) on 05.28.09 at 3:48 pm

Oops! Should read ‘They do not want to make…’

(P)
Forgetting all the ‘economic’ stuff, perhaps we should consider the real human aspects of what is happening?

1. People are either scared, insecure, and anxious or playing ostrich with their minds?

2. When the RE market is so volailte as it currently is people start considering things they otherwise would not including the stability of their primary abode.

3. The rental market is a highly volatile one at present because so many over-extended themselves and now must liquidate their holdings to pay off the mortgages, second, third, mortgages, LOC’s,credit cards, etc. This makes renting a very iffy thing because as the property changes ownership so does the agreement between the tenant and the landlord.

4. Owning a home (hopefully a reasonable and modest one) is quite attractive for those who can escape the rental market. We did and are glad we did so last fall.

5. People are, again, starting to realize that a home is just that, your place to LIVE and continue life. It has to be somewhere, and it had better be stable or you are on the sidewalk.

Now, having said all that, perhaps we should also acknowledge the facts that there are those who know the above and are playing the Flim-Flam Man with the buyers? They will do everything they can to protect their own industry and rationalize violations of ethics unless it means losing their license or otherwise being harmed.

This ‘adjustment’ has been decades in coming. It will continue for several years regardless of what the media and government wanks say) because just like a tsunami there is a ground swell of energy (intertia now topped with billions in national and corproate debt) that comes after the intial quake has ceased. Somewhat akin to getting the flu. It may take a lot longer to recover than the actual disease is present.

The Fat Lady has not even cleared her throat to sing YET! Watch what happens in the next month after tomorrow when GM files bankruptcy. Want an investment? I suggest pink paper production. This tsunami will hit EVERYONE! Be emotionally (psychologically) prepared for a new paradigm

There are my two cents (adjusted for deflation) on the whole matter.

#87 Bill-Muskoka (NAM) on 05.28.09 at 3:51 pm

#67 encanto

Make sure an pay your taxes on the Mexico property or the government may abscound with it. Know WHEN the taxes are normally due and make sure you get the Bill and pay it.

#88 Sphinx on 05.28.09 at 3:55 pm

This spring buying spree shows we’re still in the Euphoria stage here in Canada, specially in the GTA. This graph known as the ‘Sentiment Cycle’ tells that Canada has way to go

http://www.thedividendguyblog.com/wp-content/themes/tiga-06/images/2006/08/sentiment_cycles_1.jpg

The recent low mortgage rates has put a floor under the RE market in Canada, and I believe it’s the unemployment that will trigger the crash…remember, affordability is a function of income and available credit. As Garth indicated, rate has one way to go, that’s UP. and I see employment also has one way to go, DOWN. It’ll be a wild ride.

#89 Bill-Muskoka (NAM) on 05.28.09 at 4:03 pm

Now, speaking of a Pucker Factor, here is Canada’s Attack Ad against Europeans torturers of innocent wildlife! (Good GRIEF! They have gone totally LOONEY!)

Barbaric European food practices, Part I: The snail

Only the National Compost could muster the cajones to write such article. Oh well, it is good for a laugh, unless you happen to be escargot on the run! Bon appetite!

#90 wjp on 05.28.09 at 4:06 pm

I see the East vs. West comments are back here again…unfortunate for Canada so many children posting here but Canadians who embrace west and east have already discounted such babble…

#91 Got A Watch on 05.28.09 at 5:07 pm

The tone of the comments here has degenerated lately, though today they are much better.

If you can’t make a point about the economy or real estate without some gratuitous vicious personal attack on those who dare to disagree with you, your argument is not worth reading at all.

I would suggest Garth appoint some long time readers as moderators, and give them power to delete offensive posts and ban trouble makers. I used to be a Forum moderator years ago, things have not changed – a ban by IP address and MAC address is the only way to get rid of some idiots who will not behave.

There are decent people who may want to make a comment or ask a question that is on topic and relevant, but they probably get dissuaded by reading some of the unwarranted personal attacks that pass for a comment here. I know I do.

If you disagree with something, how about posting some facts with links to support your position, and stating it without schoolyard name calling.

The majority here are good people, with something to contribute. Too bad it gets ruined by the few idiots.

#92 squidly77 on 05.28.09 at 5:33 pm

sounds to me like someone is not amused with the west coast

caution reading this may ruin your summer..
http://www.calgaryherald.com/cannon+balls+rain+neighbourhood/1640089/story.html

#93 Bill-Muskoka (NAM) on 05.28.09 at 5:40 pm

Well, this certainly gives me, and I suspect most Canadians, a Pucker Factor!

CPP bosses to receive millions in bonuses

Where are OUR MP’s top stop this atrocity of GREED? Hmmmmmmmmm?

#94 Bill-Muskoka (NAM) on 05.28.09 at 5:43 pm

#91 Got A Watch

There will always be idiots. I have gotten used to the fact. They serve to remind us that we still need to be vigilant and aware that ‘They walk amongst us, vote, and breed!’

For proof look at Oddawahaha!

#95 john m on 05.28.09 at 5:46 pm

75 Eduardo on 05.28.09 at 1:38 pm

I’ve lived in Ottawa and I have relatives in Quebec and you people disgust me with your culture of “give me give me, we rule the country, what’s best in Ontario is good for everywhere else, tax & spend, we deserve more government jobs, bail us out, we don’t need to listen to maritimes or west because we have more votes and an unreformed senate”.————-hmmm speaking of sheeple……The implication of sheeple is that as a collective, people believe whatever they are told, especially if told so by a perceived authority figure believed to be trustworthy, without processing it or doing adequate research to be sure that it is an accurate representation of the real world around them. :-)

#96 Eduardo on 05.28.09 at 5:55 pm

It’s funny that the East/West issue isn’t a problem to anyone in Ontario and they don’t want to see senate reform.

You know why that is? ONTARIO ALWAYS GETS THEIR WAY! No wonder they don’t have a problem with it. They are generally the only population represented in the senate and parliament that can impact anything. And they’ve done it again. They cried for bailouts and then they got it and now they are crying about deficits.

The conservatives were the only ones to run on a truly national platform that appealed to the masses and they STILL didn’t get a majority. I guarantee a majority would not be bailing out the country the way it is. That was a 100% function of the threats from the other 3 parties.

Liberals wanted to spend MORE
NDPs wanted to spend MORE
Bloc wanted to extort MORE

#97 eddy on 05.28.09 at 6:02 pm

rick is a classic loser. coulda’ shoulda’ didn’t. eventually he’ll buy a house, when Garth tells him, via the internet.
Ha ha Ha!

Rick, listen to your wife, not Garth. Men buy the cars, women but the houses.

#98 Eduardo on 05.28.09 at 6:26 pm

No no John in 95,

I don’t need people to tell me that. I can see it for myself and form my own opinions. It’s not hard.

#99 . . . fried eggs and spam . . . on 05.28.09 at 6:37 pm

Re: the quote I posted last night on the US Army moving to Defcon 2 (more booga-booga!), this addition is kinda funny (courtesy wrh.com) . . .

“Sources close to MiNa claim the US Army has moved their alert level to Defcon 2. This was initiated by the alarming situation in North Korea. The US Army has over 35,000 troops stationed in South Korea, well within reach of North Korean conventional weapons.”

Webmaster’s Commentary: “We stand ready to deal with, ummm … who are we attacking today? Not that it matters, I guess. Any war will do to kick this thing off. We got out of one depression with WW1 and another depression with WW2, and we’ll get out of this depression with WW3. Is that microphone on? REALLY!! Shit!” — Official White Horse Souse
——
Recently I made reference to June ’09 when pretty much everything slides downward (witness North Korea getting it’s knickers in a twist, and GM / Chrysler going under).

With all this happening rapidly plus the unseen super-natural stuff occurring at the same time, it is plain to see that someone, somewhere is emptying the bathwater (we’re in the bathwater), and we’re all hearing a very loud gurgling sound!

So what the heaven — a brief lead-in with a few links, which all focus on the same thing. See the heads only, it’s easier on the brain!

http://tinyurl.com/qw8hjz /\ http://tinyurl.com/neef7b /\ http://tinyurl.com/owfbwz /\ http://tinyurl.com/o5qq7s /\ http://tinyurl.com/lk5zkx /\ http://www.agorafinancial.com/5min/

#100 cowgirl kiss on 05.28.09 at 6:43 pm

OK. So I’m a girl, too. Listen up sisters.

You want to keep your love for your partner intact, your hard earned money safe and financial stress to a minimum? Do what your grandmothers did – rent for just a little longer before you invest in a house.

Lean in closer … It truly isn’t a good time to buy, ladies. Just ask the people who are desperate to sell you a house if they would trade places with you. Your partner will be really really happy that you didn’t force a financial burden on the two of you at the wrong time. All he probably wants to do is to make you happy – he really loves you and it sounds like he’s even willing to subject himself to years of indenture to do so.

Holy Hannah. You have the chance to do the right thing and wait until houses are really really cheap. Soon all your friends will be stressing about their houses devaluing. You, on the other hand, will be looking fresh as a daisy in your lulus, giving your honey a high five and a kiss on your moving day. In the meantime, treat yourself to some new sheets and towels at Winners. Seriously.

#101 Da HK Kid on 05.28.09 at 7:11 pm

#100 Cowgirl Kiss

You’re a Star! Garth, have that post in the right margin of your main page for easy reference.

#102 Dan in Victoria on 05.28.09 at 7:35 pm

Rick my boy you’re screwed.If wifey can’t figure out whats going on,there is little hope.If you buy now and things tank she’ll say see we should have bought when I said.We could have sold for a profit.If things keep rising,she’ll say see we should have bought when I said.Now we aren’t going to be rich,we have to pay more.She’s been poisioned by a steady stream of msm ,co workers,HGTV,Flip this house,etc.The only antidote is a large dose of common sense mixed with some blog kool aid.Garths blog here should start a road to recovery,alsohttp://theautomaticearth.blogspot.com/Read some of the sites that they link to especially Patrick Killena also http://housing-analysis.blogspot.com/Read the post about How i love my heloc line of credit,Think why he posted the Dr.Strangelove bit.

#103 TheFirstRick on 05.28.09 at 7:44 pm

#91 Got A Watch on 05.28.09 at 5:07 pm

———————————–

What’s more offensive than offensive comments? May I suggest, complete and sanctioned ‘group think.’ Find one of those blogs that will let YOU be the boss and stay there.

If you don’t mind me asking, what site allowed you to play the control freak? CanWest Global by chance?

#104 Canned Goods and Buckshot on 05.28.09 at 8:35 pm

D from London,

That’s a great post. I’m sure you touched on a lot of commonalities with many fellow blog readers. I’m certainly pulled in both directions. Garth has aptly labelled some of his readers as vultures, and while I don’t really want to benefit from someone else’s loss, I fit into this category. My significant other and I shun McMansions but want a little more space, a house suitable for solar, etc , a sizeable garden plot and we want to time the move well. Rational brain is saying to wait for prices to decline. Emotional brain is whining why haven’t prices fallen so I can lustfully buy better house. Throw into that the post carbon stress disorder and its harder not to take the plunge. I acknowledge that we can’t be fully accurate with the future, however, I also have raised the internal questions of why Garth bought recently and that Garth has been wrong before.

In the 90s Garth wrote a financial column picked up by many community newspapers. He advocated borrowing against household equity and investing in the stock market (right before the crashes of 2000-2002) while at the same time shunning the 4 bedroom suburban homes as they would become white elephants due to demographics. Garth’s reasoning was sound but he was wrong, I believe, due to the events of 9/11. My point is that its hard to predict the unknown unknowns. So even though it may not look like a good time to buy the 1st home (or move up) and the rational person will wait, we will see more of the unknown unknowns, and they may prove us wrong.

Get it right. I did not advocate “borrowing against household equity and investing in the stock market.” I suggested tax-deductible equity loans for diversified mutual funds (stocks, bonds, commodities), only invested with the advice of a financial advisor who had earned your trust, and not in dot-com or profitless companies. I also did this in 1995, giving investors who complied a chance to augment their wealth very substantially. BTW, Nine Eleven had nothing to do with the NASDAQ- induced market correction, and everything to do with the creation of the greatest asset bubble in human history – the one that ate America. — Garth

#105 Gord In Vancouver on 05.28.09 at 8:45 pm

#20 vantown

You’ve already asked that question, which is why no one here has replied to you. I did but you had nothing to say.

http://www.greaterfool.ca/2009/05/23/common-wisdom/#comment-29745

In your opinion, WHEN should a home be purchased?

#106 john m on 05.28.09 at 9:02 pm

#98 Eduardo on 05.28.09 at 6:26 pm…………Baaaaaaaaaaaaaaaaaa :-)

#107 Devil's Advocate on 05.28.09 at 9:06 pm

Quickly, and I repeat “quickly” scanning the responses here-in I just gotta say;

Garth I would be proud to have you lead this country provided you did not succumb to the pressures of the “fourteen families”.

The West is quickly becoming the East. We once were a playful bunch of otters but that has changed and we are becoming as messed up as the rest but with more of a “crack cocaine” mentality.

Garth makes sense to me. I think he feels in his gut as do I that, along with the cold hard economic facts, we are pushing this fictitious fiat economy to the brink superficially with little heed to the fundamentals and eventually that has to catch up to us. We all want it now and don’t want to pay for it. Speculation has become the primary industry of the Free World. Speculation not work. We don’t produce anything. There was a time we did up until the early sixties. We prospered to then and after that we thought we had “arrived” and began to become “fat cats” sitting on our fat asses speculating. That is/has proven our undoing but now we are too fat and lazy to get back to work.

Everybody is looking to the markets, whether it be the stock markets or real estate, trying to find a way to create wealth without working for it but for relying upon that wealth we earned in the past to multiply through speculation – short term quick returns. It’s over, done, finished, caput.

Get with the program.

Hey I’m over 50. I’m a Boomer. I’m part of what screwed it up although a passive rather than agressive participant. None the less I will gladly share in the cost, which surely will be passed on to us, to pay for the screw ups we have done. I DO NOT WANT TO SEE OUR CHILDREN PAY FOR IT! THAT would be a disgraceful legacy for us to burden them with.

#108 4321... Earth below us on 05.28.09 at 9:08 pm

Garth… I’m in the same boat as Rick… My wife wants to move up to a bigger house and I’ve been saying it is not a good idea since 2006 and now her friend is buying a house and she’s hearing about bidding wars… I’m not sure if I can hold out any longer…

Maybe I can get here a nice diamond necklace to keep her quiet… That will be a lot less than the hit of buying a $1 million home now

#109 Gord In Vancouver on 05.28.09 at 9:08 pm

#20 vantown

In your opinion, WHEN should a home be purchased?

#110 john m on 05.28.09 at 9:12 pm

#96 Eduardo on 05.28.09 at 5:55 pm

It’s funny that the East/West issue isn’t a problem to anyone in Ontario and they don’t want to see senate reform…………….. christ who cares at this stage of the economy,this post is about that…..gee whiz you sheeple sure aren’t with it hmmmmmmmm where do you get your ideas?..from dim jim and slippery steve? ……..methinks a new breed of sheeple has emerged even more docile. :-)

#111 Bottoms_Up on 05.28.09 at 9:12 pm

78 Jess–thanks for the link
80 D from London–thanks for insight into those looking to trade up (ever thought about trading down (again)instead?) Why increase your debt load when you can lower it?

#112 Investor on 05.28.09 at 9:19 pm

Things are getting tough.

http://finance.yahoo.com/news/Borrowers-with-good-credit-apf-15376981.html?sec=topStories&pos=main&asset=&ccode=

#113 Jonathan on 05.28.09 at 9:30 pm

Garth, Readers.. calm down!

Everyone is tripping over the spring home market. Need I remind everyone what happened in San Diego in Spring of 2007? San Diego was the poster child for the US housing boom. With 10% price appreciations per year between 1999 to 2006, home prices felt like they would rise forever. After the US housing bubbled popped in 2006, San Diego prices nose dived throughout fall and winter 2006/7, falling about 8% by spring.

The 2007 spring market brought out Californian buyers and people thought the worst was behind them and that prices were low. Once spring finished, the market collapsed. Home prices are now down 30-40%?

Maybe this graph will provide some relief to everyone here:

http://www.voiceofsandiego.org/storyart/smiarograph.jpg

#114 Anxious on 05.28.09 at 9:35 pm

Hi Garth:

Wondered if you had access to or know of a chart that shows the crash of the 80’s housing market into the 90’s? It showed that the peak was followed by an echo blip up and then a steady line sloping down to 1996(?). Wondered if we were following the same trend under different circumstances? Thanx.

#115 Boombust on 05.28.09 at 9:46 pm

“I’ve lived in Ottawa and I have relatives in Quebec and you people disgust me with your culture of “give me give me, we rule the country, what’s best in Ontario is good for everywhere…”

Goose. I live in B.C.

Think anyone gives a damn about what we think?

Hey, I do. Now cut this out. — Garth

#116 Barb the proof reader on 05.28.09 at 9:48 pm

#103 TheFirstRick wrote to #91 Got A Watch:
“Find one of those blogs that will let YOU be the boss and stay there. If you don’t mind me asking, what site allowed you to play the control freak?”

The FirstRick,
The Watch’s reference is toward personal attacks, such as the one you just did on Got a Watch. Got a Watch’s comment @ #91 is correct. You, however, appear to be out of order in this instance. Perhaps you misunderstood Got A Watch.

Simple disagreement and well explained sides are a wonderful way to learn. But when, as yesterday, someone starts calling people “retards” (actually they called me a retard), or as above when you tell Watch to go elsewhere… do you just not understand what Got A Watch was talking about, that real opinions and evidence are valuable, but hurtful and lame insults are just trash? Insults are a lazy man’s way out.

And I’ll add one more comment. Someone yesterday disparaged the military. Where does that kind of sick comment come from.

#117 Barb the proof reader on 05.28.09 at 10:08 pm

#108 Earth below us wrote: “Garth… I’m in the same boat as Rick… My wife wants to move up to a bigger house… not sure if I can hold out any longer… Maybe I can get here a diamond necklace to keep her quiet… That will be a lot less than the hit of buying a $1 million home now”

#108 Earth below us, here’s something to think over:

The $40,000 funeral

George died.   

His will provided $40,000 for an elaborate funeral.

As the last guests departed the affair, his wife Sharon turned to her oldest and dearest friend. ‘Well, I’m sure George would be pleased,’ she said.

‘I’m sure you’re right,’ replied Brenda, who lowered her voice and leaned in close..

‘How much did this really cost?’

‘All of it,’ said Sharon.   ‘Forty thousand.’

‘No!’  Brenda exclaimed.  ‘I mean, it was very nice, but $40,000?’

Sharon answered,  ‘The funeral was $6,500.  I donated $500 to church.  The whiskey, wine and snacks were another $500.   The rest went for the Memorial Stone.’

Brenda computed quickly….  

‘$32,500 for a Memorial Stone?   How big is it?’

“Just look !!!”

#118 nota bene on 05.28.09 at 10:18 pm

#85 Investor on 05.28.09 at 3:47 pm

nota bene.

nice try, but average price (306K) and median price (170K) are not the same thing. Looks like its time to revisit some math courses. I still don’t get why Canadian Real Estate Board uses average price. It works nicely to the upside, you get much bigger spikes, especially will small inventory.
—————————————————

Good catch. I was a little too quick to post … thought I saw ‘mean’ not ‘median’. Looks like the average US home price is more like $217K (http://www.wsjprimerate.us/preowned_used-home_sales_price_history.htm). Still considerably lower, granted a different market.

#119 Nostradamus jr. on 05.28.09 at 10:23 pm

#107 Devil’s Advocate wrote…

>Garth I would be proud to have you lead this country provided you did not succumb to the pressures of the “fourteen families”.<

Don’t be naive…Garth is a good enough guy, an excellent journalist, but definately an Eastern Canadian in sheep’s clothing.

#120 taxpayer like you on 05.28.09 at 10:44 pm

27 republic.

Well I didnt see anyone respond to your post, and Ive only read that one paragraph in the link, so I must apply the KISS principle.

My impression is you and Irving are not talking apples to
apples. You mention debt defaults, yet the article does
not specify this. Nor do I see the implication that debt
default causes deflation. Maybe it should be the other
way around.

But lets review the debt default. Does the debt
disappear? I dont see that it is an issue, as Irving talks in
terms of real wealth.

Lets say you lend $200K on a $300K house. This mortgage represents a potential 2/3 interest in the
house. If all hell breaks loose the next day, house value
drops to $150K, owner walks without repaying a dime,
and you repo the house. Your real wealth has increased
from 2/3 to full interest in the same house.

Do I get a prize for trying?? Maybe a “republic of western canada” t-shirt?? That would be cool.

Oh and just WTF does “orthogonally clarifying” mean?

#121 D from London, ON on 05.28.09 at 10:45 pm

# 111 – Bottoms_Up

I have thought about moving down – quite a lot actually. But my wife will absolutely not contemplate another downsizing – that would be too much of an emotional shock for her. We have discussed this several times and, as I mentioned in my post, it takes the agreement of 2 to make any move. I guess that means up OR down…

Ditto with rental. We may be able to move into a rental of similar size and neighbourhood (I say “may” because I have looked and not seen many comparables here in London), but the psychic shock of renting again would be too much for my wife – she refuses to even talk about that option.

Being part of a team means that you are subject to the forces of “central tendency”. Whereas some posters are desperately trying to keep their spouses from forcing a big purchase, I am sure many readers also find themselves being prevented from selling at this time too. That just goes with the territory of a partnership, I suppose.

Thanks for your comment. And thanks too to #104 Canned Goods and Buckshot for your post.

#122 nota bene on 05.28.09 at 11:04 pm

http://www.wsjprimerate.us/preowned_used-home_sales_price_history.htm

Merrill Lynch’s David Wolf noted that Canadian home prices appeared to be following US prices with a two year lag. The above link shows how after dropping around 10% from their June 2006 peak, used prices rebounded back in June 2007, before plummeting for the past 2 years. Looks eerily familiar.

#123 TheFirstRick on 05.28.09 at 11:17 pm

#116 Barb the proof reader on 05.28.09 at 9:48 pm

Whether you realize it or not, your typically longwinded and irrelevant quasi-rants are offensive to anyone who has followed this blog for its purpose. When you find someone who agrees with you, you then try to ‘bond’ with them by firing off a stack of complimentary posts, even less relevant. Thus the reason I skip your posts entirely. Maybe you and Timex can do the same, rather than suggest censorship? Did you and the watchman ever think that you are simply too sensitive for the internet?

#124 timbo on 05.28.09 at 11:30 pm

#107 – Devils A. – Absolutely perfect, we sold our economy down the river and are relying on ponzi finance to make money now.

#114 Anxious – this what your looking for?
http://calgaryrealestatemarketblog.files.wordpress.com/2008/01/carrying_costs_for_calgary_house_prices_large.png

note: just got to laugh at the mud slinging and dribble over the last post. Must make you feel your back in politics, eh Garth?

#125 timbo on 05.28.09 at 11:43 pm

http://www.cnbc.com/id/30963214

one conclusion that makes me think that inflation and hyperinflation are dead in the water until enough debt has been paid down or wiped off the books. If oil goes to $100 and commodities go up to last years levels no one will buy anything. people are broke and they need breathing space to fix their books.

Sort of interesting how the stock market is going all over the place and acting like a drunken sailor when governements socialize the banks. Anyone else see this or do you see a real trend?

#126 Gary the engineer on 05.29.09 at 4:01 am

There was a poster looking to compare some notes on “to buy or not to buy” dilemma

-I made some offers (8% below listing) on homes early 1st quarter of 2009 because I knew home prices dropping
-i believed 8% was generous due to huge implications in coming job losses
-not looking to beat the market since I’m planning on living there 10+ years
-reason for buying at that time period: lower price, decent interest rate, home prices are not a direct function of economy so even if economy takes a dive wont’ necessarily drop the same %
-further I conjectured that economy/house prices would stabilize and recover; due to people reacting to the bad economic news by saving first and then spending rather than take on more debt
-sure employment rate may go down but I am confident about my job security and also my spouse’s

Fast forward to 2 weeks ago
-EI claims up
-Imports down
-Exports down
-National Personal debt UP
-Housing prices FLATTEN and then RISE (this is also due to low housing supply, medium demand)
-Popular thought is now that it is the best time to buy, which would have been true for the small percentage of people who have the savings/job security to handle it
-My inclination is that all the people flocking to buy homes are NOT financially sound, they are making an EMOTIONAL decision based on the media’s clamoring
-once gas prices hit 1.20 again the economy will take another dive and interest rates start rising again (bonds inversely related to interest rates) there will be multitudes more houses on the market than there is now. (conditions will be very high supply, medium demand; demand will lower as gas goes higher)
-there is a lot of pent up selling emotions right now. people are still holding off “waiting for the right time” till economy recovers (this causes low supply). Once people realize it’s not going back anytime soon there will be a mad dash to sell. Especially when Boomers are pretty much due to downgrade and cash out which should be in the next couple of years.
-however for now, prices will stay relatively wavy/flat. It will be cyclical with a bit of variance, once the sellers get news that housing is looking good again they’ll jump into the market and bumping up supply to medium/high. demand will still be medium/low. Supply will jump back down to low when people hear news that RE is still a buyers market. It’s just going to continue like this until the economy takes that second dive. But if you do plan on buying do not feel like you are in any hurry. Housing prices will stay steady for a long long time. As long as the economy is bad there will be a backlog of sellers trickling into the market to keep that supply at a higher level than demand.
-Housing is supposed to track average wage, but due to low interest rates, 40 year amorts people can still technically afford houses out of their wage range because they are not following conventional rules in house buying. They are only looking at two things which is monthly payments(compared to monthly income/expenses) and how much they can borrow. So until those rates go up or mortgage amorts go down or cost of essential goods go UP. Don’t expect prices to go DOWN.

Conclusion: Once gas starts going past 1.00 I’m going to start looking for a house.

#127 Glenn on 05.29.09 at 7:27 am

I bet “my wife wants” will be carved into the grave marker of Western Civ.

Anyhow, looks like I did the right thing by choosing the Hyundai Accent over the Chevy Aveo back in November 2008. GM goes tires up, now God only knows what will become of all the factory or extended warranty, let alone engine parts and quarter panels.

#128 Soylent Green is People on 05.29.09 at 11:12 am

#123 TheFirstRick on 05.28.09 at 11:17 pm #116 Barb the proof reader on 05.28.09 at 9:48 pm

~~~

Amen brother.

#129 Soylent Green is People on 05.29.09 at 11:16 am

My ex the contractor’s flipper house closed today in Toronto at Avenue Rd, north of Lawrence. That was the house that sold for about 1,2 million, thus setting a new record for the street exactly one month ago. A record!

This week he was running around scouting a new dump to buy and fix up, found such in Forest Hill. Gave it up as there were too many offers on it.

This is so crazy!

Crazy.

I’ts like there’s all these people out there with all their family members on disability due to mental vacuum.

#130 Got A Watch on 05.29.09 at 11:36 am

TheFirstRick – you just proved my point. Not only do you have no point to make, but you have to post pointless personal insults.

Amazing what internet anonymity will do – give a license to people to spew garbage that they would never say to somebody in person.

Sad and pathetic.

#131 Bill-Muskoka (NAM) on 05.29.09 at 5:53 pm

#129 Soylent Green is People

You know, reading the mindset of Citiots makes me now believe that we should make the GTA a Province and separate it from Ontario. Is it the air, the water, or just a bunch of egomaniacs devoid of any fiscal reality?

I cannot imagine paying that kind of money for a place in that neighborhood, or any neighborhood.

#132 Barb the proof reader on 05.30.09 at 5:02 pm

#123 “Thus the reason I skip your posts entirely”
–TheFirstRick

Sure wish you’d been true to your word, about that.

And posting fabrications like you did, simply displays your disrespect for Mr. Turner’s blog.

#133 josh alexander on 06.10.09 at 9:34 am

The real estate trends are predictable as they develop over a long period & the risk factor is considerably low when compared with the stock market, which is rather volatile. It takes lot of time & practice to understand the efficiency of a real estate investment but over a period of time you will enjoy the security & hefty returns a real estate investment provides. Purchasing a house is a major investment. With judicious planning, this valuable asset will appreciate with each year.