You’ve gotta hand it to the US media. Once they get their teeth into a story of deep public interest, there’s just no mercy.
Brangelina. Lady Gaga’s dangly bit. The Canadian Housing Dream.
As mentioned here a few posts back, the myth is building fast that Canada embodies everything which could have saved the American middle class from the liquefaction it’s now going through. This was goosed along by the recent Toronto summit, which proved we have world class thugs, cops and real estate values. Bored with smoke and flames, inured by a lack of political news, US reporters fanned out to discover why houses cost 250% more than in, say, Nashville.
The result was a textbook in why journalism’s in a death spiral. Last week I parsed an Associated Press story which featured an interview with a typical Toronto homebuyer who stated, ‘we don’t like leverage’. So, he’s putting down 40% and will pay off his house with a mortgage amortized over 15 years. Turns out he’s a corporate mergers and acquisition lawyer, partner in a prestigious firm, and likely making 200 large.
Not exactly typical at a time when the average downpayment is just 6%, the average mortgage for 94% and the most popular home loan term is 35 years. But it did support the theory du jour that in Canada, it’s different – exactly what the industry would like to believe.
But that was just media foreplay. CNBC’s property babe, Diane Olick, has now delivered the definitive Canadian snow job, published and broadcast just hours ago.
This time the story hangs on the experience of one typical Toronto seller, who unloaded his property in one day – stunning to American homeowners whose houses now languish for months on the market. But, it turns out the average Torontonian is Lloyd Atkinson, former chief bank economist on Bay Street, whose North Toronto home is in a hugely sought-after area.
However, the ignored bit of info is irrelevant to the story’s three main points: While US lending standards were being flushed away with subprimes, “Canadian standards never swayed.” Second, three-quarters of all loans Canadian banks make remain on their books and are “not securitized”, so lenders are more cautious. Third, it’s a cultural thing – like people kissing with their noses – “in Canada buyers are more conservative.”
To support this thesis, Olick interviewed an economist from a big bank (which still makes loans without income verification), the country’s top house-flogger (LePage boss Phil Soper) and one of his glitziest agents (who sold Atkinson’s house).
Now, Canada is not America and Toronto is not Chicago, but greed and house lust are just as pervasive and destructive here as they were in pre-crash USA. They caused banks to lend to people without money at teaser rates destined to rise. They created a house mania, fueled by cheap money which indebted the middle class and encouraged by a government that spent tens of billions buying up dodgy mortgages from the banks. And as for the conservative culture in Canada, we have been merrily paying between 5 and 10 times income for houses when the US market collapsed at a more modest level.
The only real difference is that we’re apparently r-e-a-l-l-y slow learners. After watching the American real estate market implode in 2005-6, then suffer radiation sickness for the next five years, we seem destined to rinse and repeat. Now ever-cautious Canadian households match those to the south in terms of consumer debt, a flaccid savings rate and stagnant incomes. Tapped out and living in houses never worth more (or with larger mortgages), we’re as exposed as the cock-sure property bulls who snapped up houses in Phoenix or Miami circa 2004.
But whadda I know?
I’m still in shock over that dangly thing.
142 comments ↓
Is it any wonder readers and comments of your blog comment non-MSM sources and cite everything from slightly offcenter of midstream to the extreme?
Times for everyone are challenging. Getting accurate, timely and unbiased information is a tough go. Even on this blog people, like myself, who see a market stagnation & a long term commodities bull are poo-pooed for our bullish views on everything commodities.
David Rosenberg commented this week on Canada’s global shine. Where we were viewed as the weak, anemic younger brother to the U.S. 20 years ago, we’re now seen as a powerhouse & our currency strong – milk the suckers for all their worth I say!
Garth,
Mortgage rates in Canada apear to be falling again.
US mortgage rates falling and are now at their lowest since at least 1971.
Everyone ‘agrees’ that rates can only go up, but yet they keep going down. Everyone agrees that rising rates, when they happen, will hurt housing, but can you or anyone reliably predict when that will happen?
This low interest rate cycle could end tomorrow or it could be with us for another few years yet ….
It is now largely irrelevant. — Garth
That was GREAT! Garth you’re so toast!
Only thing better would have been to have a piece that followed on how oil prices have continued to languish despite strong signs of US recovery, while commodities like gold continuing to rise in price.
That video was priceless!
Fool me once shame on you, fool me twice shame on me. The American media should be ashamed in its reporting. No wonder Americans were fooled and paying the price. Like wise in Canada, just a matter of time.
Dislike the report as you will, but time will tell whether the real estate market in Canada comes in for a soft landing reflecting minor price declines, or a crash. I keep reading articles, even by the likes of the doomer Marc Faber, who state that Canada will always do better than the rest of the world because of the emergence of resource-hungry developing economies (e.g. Brazil & China) , and Canada is a resource-rich country. Real estate prices will drop, but the extent to which is yet to be seen, as Canada seems to be the darling of the international investment community right now. If the market really is crashing we will know it in 5 or 6 months time, and then we get can contact MSNBC to come and redo the report.
It’s not the crash that matters, but the melt. — Garth
Not Brazil. Brazil is an emerging economy but is also reosurce-rich. My mistake.
What happened to ethics and quality reporting? I would have expected more from the Associated Press and CNBC. My small, local paper publishes better content that this.
Those Info Bunnies. They’re everywhere and they’re just so pretty, especially with those costly coiffs and bling.
Like their Canadian news media “relatives” they’re walking-talking conflicts of interest, when it comes to talking up real estate.
They all guzzle the same bath water, and pretend all’s OK in House Land. That’s because they also own their own piece of paradise.
So who can blame them, in theory at least. In practice they’re supposed to be truth-tellers, not fiction-tellers.
The truth? Wander over right now and look at the Asian stock markets, the Dow Futures, the 10 year US T-Bond, and, while you’re at it, the 2 year. What a catastrophe. Hello?
Soon, a tragedy will unfold across our great land as too many Canadians will discover that the primary source of their future of everything, their home, will become their anchor, and will be underwater.
At least this blog keeps banging the drum, as do a lot of his loyal following, me included. I see it as a public service, and a good one, by the way. Happy Canada Day one and all. Let’s get with the debt reduction program. It’s kinda like losing weight. It feels good!
Geez…I used to respect Ms Olick as she was one of the few who was quick to explain the reality of the US RE market over the other CNBC hosts and guests!
After seeing this report, chalk another one up for the US MSM for not seeing or understanding what the hell is going on.
Diana, I used to like you, now I question your ability to research!
If you want me to retract this statement, then I propose you meet with Garth for a session!
Diane Olick!…. Call me please at….
604-775-9987 here in Hongcouver and I will gladly bring you up to date on Canada’s West Coast and it’s Western Provinces.
…Add new buyers from the U’S. now along with the Asians…and what do you get?
…50% Hongcouver R E price increase friends…
So sorry to people who sell for worthless fiat paper.
Nostradamus jr.
No crash, no melt, just a mild correction and a gradual decline that will take YEARS to unfold. Interest rates will remain low for years to come or the world economy will collapse. Stock markets are so volatile that bond investors are happy with three two and three percent. There is no safer place to put their money. Why would interest rates rise when they are happy to get a safe two percent?
Wow, now I see why I never watch that idiot channel. Biggest pile of BS I have ever heard.
So the real estate agent is in denial of the word “bubble”, Loydd thinks a one day sale is normal and the reporter keeps babbling thru her talking head that the banks scrutinize every single loan.
At least the one guy at the end talked some sense for all of 10 seconds til he was “suddenly” cut off for “breaking news”. Now we know why the US is toast.
I’m quite sick of hearing rosy reports about the housing market. This video confirms how desperate the Real Estate agencies truly are. They need to sell homes to stay in business… and they will say anything to lure suckers into buying a shack at the cost of mansion.
It seems that people are delusional all across the country. Edmonton is especially bad, but so is Kelowna. I know a guy who makes $17 per hour and has to commute to Penticton to work. His wife makes better money, but she only has a permanent part time position. Yet the banks and a realtor suckered them into buying a $400,000 house… and get this: the previous owner is renting the basement suite from them until the end of August. They’d been looking at houses for 2 weeks and bought…. go figure.
They want everything “now” and are going to pay a hefty price in five years… if not sooner. They were told it was a big mistake, but it’s “different” in Kelowna.
Downtown and False Creek Vancouver condo inventory at all time high, not just by a bit, and growing.
http://vancouvercondo.info/2010/06/downtown-condo-listings-hit-a-high.html/all-comments/
Canada? Where’s dat?
It’s so much easier to regurgitate some vested interest’s “spin” than to actually investigate and employ a critical spirit in uncovering the truth.
For some time, CNBC has been widely discredited as a source of hard financial and business news. They are now perceived as business cheerleaders interspersed with copious amounts of T and A. They are merely a source of “financial entertainment”.
Lets see… 3/4′s of the mortages banks hold are not securitized. Of the 3/4/s of the mortgages banks hold that aren’t securitized, those with less than 20% down payments are all insured by CMHC (i.e. government) for 90% loss against bankrupcy which is roughly 80% of them. How can any analyst in their right mind knowing that the riskiest mortgages are insured in this nation, declare such an environment to be one that “makes lender’s more cautious”? How many cups of stupid did they drink today? (and every other day)
And this conservatism thing. I don’t see it here in Canada. Oh, I see voters supporting governments who, spending like drunken sailors, in turn encourage voters to spend beyond their means and encourage all forms of debt, No Income debt, No Job debt, no Asset debt, we love NINJA debt and why? Because its insured! Canada never swayed… good God.
Someone really ought to flash CNBC some of its old coverage of braggart stories concerning how great the U.S. economy was doing in 2004 and 05. CNBC said the exact same fluff about the good ol’ U.S.A. as well. Naturally, it was a diseased economy hiding behind the “strong housing” and “better regulations” veil on its way to having its wheels come off in hindsight, soon to have a big long date with one of the biggest mortgage/financial/housing meltdowns in world history, it goes without saying that the same dummies can’t see a repeat of it here.
They couldn’t get it right then, it not hard to see why they can’t get it right now.
Something not talked about much is pre boom purchasers using lines of credit to fund lavish lifestyles.
I suspect many in Calgary have HELOC’S with tens of thousands of dollars on it funding RV’s, Cars, rental properties & USA investment properties.
I know of several Canadians that purchased in Arizona this way and now the properties are worth less than purchase price.
Another way people are maxed out.
the American crash included 700,000 layoffs per MONTH!
think about it. That’s not going happen in Canada.slow melt in some parts but no crash.
I tried not to watch the video but could’nt help myself. What? We ran out of shameless pumpers in Canada so we had to borrow Wall Streets cheerleader machine? And what better 3 experts to ask than a banker and 2 realtards? Excuse me while I go puke. Responsible lending my ass… I know several people that borrowed their downpayment from a family member and somehow got a 400-600K mortgage from a bank that never verified income. How the hell is that not sub-prime?
except Vancouver. can’t understand the market. Can’t predict the explosion.
At least the one guy on the video at the end wondered if Canadian government insured mortgages on the banks books would change our conservative banks into make risky loans. He must of watched Fannie and Freddie soak up his tax dollars. You know I don’t remember electing Phil Soper, but he may well end up spending more of our tax dollars then any MP ever did.
“Confident and Conservative”. Huh, guess that proves just how thorough and fact based their reporting skills really are.
Interesting how the clip ends when the truth about the Canadian govt backing the mortage loans was mentioned LOL.
Anyway happy Canada day Garth, Dorothy and everyone else who make this blog part of my coffee routine. I’m off tomrrow to celebrate our freedom and remember the fallen soldiers followed by a few Canadian beers and barbeque.
Fascinating brainwashing I could see in that CNBC video. I need to save it to see it again 5 years from now… I will have so much fun
When the guy wanted to bring the CMHC subject and how the gov is behind most of the mortgages, just like it was in US, they had to stop the show for… breaking news. I just love MSM, they are so good at what they are doing….
While watching the video I didn’t know whether to laugh or cry…so I did some of each.
I couldn’t take that news video seriously. Count how many times they “swooosh” in the American Dream logo.
… and when she asks the experts at CNBC why Canadian housing has had such great successes, he says “because credit is expanding in Canada, while it is contracting in the US”. No wait, that’s not what he said. Oh right, he says “its because of our culture, it’s tough for economists to measure”.
Are these guys stupid or do they think like I do, that CNBC is just a joke, so why prepare for the interview?
CNBC??? what a joke that POS was…. WHOOOSH something flashes on the screen… someone who has no clue yaps about how good we are here… whooosh another talking head speaks….
only difference here from there is we are 2 years behind… isn’t that enough of a no brainer????
as for joseph stating China is going to be our last hope of bright light…. dude, i place zero faith in China… people want to believe that crap, more power to them. It is like pumping up the “rich Chinese buyer” story… same sh!t different pile.
cheers
Vancouver’s Olympic Village Condo Dupes Want Out:
http://www.cbc.ca/canada/british-columbia/story/2010/06/24/bc-athletes-village-millennium-pre-sales.html
-Defective product, noise, over-crowded and shoddily-built, yet people are stupid enough to pay for over half a million for a place the size of the one bedroom I rent in a nice quite area for a grand a month! Maybe the dipshits at City Hall who colossally mis-managed this project should be forced to pay for any cancellations
Vancouver’s Bubble Trouble
http://www.businessweek.com/magazine/content/10_27/b4185064551500.htm
Better hope the rich mainland Chinese keep snapping up these boxes in the sky, yeah the ones with maintenance fees of almost half my monthly rent…
I think the last 15 seconds of that video says it all!
2010 is half way done today! Happy birthday Canada! So blessed to be born here. Cannot wait to see how the next 6 months turn out… What will a 5 year mortgage rate be, will we still be talking about Greece, what will the price of gold and oil be, how bad will the BP diasaster turn out to be, how bad is the US & world economy, what will our dollar be worth and of course what will happen to house values over the next 6 months. See you all at Xmas. Enjoy summer – it will go by quick.
Someone’s gotta tell them how wrong they are. This is getting rediculous- first the Washington Post, now CNBC?
@ Joseph (#5): Didn’t the U.S. crisis start in 2005 and fully hit home in 2007? I may not have a big enough monitor, but didn’t those graphs look almost identical, just 2-year delayed?
The last guy in the video got it right about the government guarantees eroding lending standards, but he got the timing all wrong. He spoke of the erosion of lending standards as being something “future tense”, when “past tense” would have been more accurate. You don’t get houses at 5 times income with good lending standards.
The recession saved housing. Our bubble was deflating in 2008 (how soon we forget) but the bailouts and stimulus pumped unprecedented amounts of new air in. However, the leak is still there. The only question is how long the air pumping can continue. It deflates the day the air pump stops for some reason.
One also has to understand the American philosophy on the economy to understand their view on Canadian housing. It’s been a long time since America saw a bubble it didn’t like. Bre-X, dotcom, housing, it’s one after another. (Bre-X may have been a Canadian company but American fortunes were won and lost over that thing. Doug Casey is a good example of one of the winners. At least he figured out that at some point it had to be fully valued, before the fraud was made public.
But even if you look further back, 1929, the rail road bubble, the telephone bubble, the auto bubble, America likes blowing bubbles. It looks like free money. So they aren’t looking north for a stable, affordable housing situation to replicate. They want to figure out how to get their housing back in a bubble.
High house prices are not a social good. Low house prices are. It’s an expense. We would all be better off if a livable house could be built at a reasonable profit for $40,000 than we are when it’s $400,000. Think about it for a minute. Would milk be better at $40 dollars a gallon rather than $4 like it is now? Would we rather pay $20 for a carton of eggs than $2? How about $100,000 for a Kia rather than $10,000. Wouldn’t it be nice if a plasma TV was $10,000 again like when they first came out or even better $20,000, rather than $2000?
Now I have no delusions that they will ever market decent new houses for $40,000 again, not ever. But the thought that “up in price” is better or serves a social good is just plain wrong. It serves the banks and the banks only, because it reduces costs in foreclosure.
-
#169 eddy on 06.30.10 at 9:13 pm — “As usual, the elite get the goldmine, we get the shaft.”
Which leads to — “. . . cheap money which indebted the middle class and encouraged by a government that spent tens of billions . . .”
All politics aside, what the elite want is a total dependence on a crude socialistic system, where a combination of the IMF / WHO / UN / NATO / banking cartels are at the top of the pecking order, with countries hopelessly indebted to the IMF and subsequently, their citizens (sheeples who can’t be bothered to think for themselves) even more indebted to banks for life.
The IMF is written of here as well. That is what the NWO want and would like to have happened yesterday (hence continuous talk of a one-world govt.).
However, what they want and eventually get may be quite different and unforeseen. Debt Slaves — links in.
m$m tell the truth? Hah! Try Brangelina’s Housing Dream with a Gaga dangly thingy thrown in for good good measure. If you can’t dazzle them with brilliance, baffle them with bullshit!
The BS is flying out of the m$m these days. Not since the days of Walter Cronkite, Bob Woodward, Carl Bernstein and a few others has journalism been held in such contempt, esp. since they kept spouting off lies about Iraq and Iran’s non-existent nukes.
Garbage in, garbage out. That’s why papers are closing ever-so quickly.
If in doubt, pass more laws!
Oil Mess and where are 40-50 mln. citizens going to go? Good question! Depopulation? Just a hunch.
Person brings up some good points. If the National Guard is not helping to clean the oil, whereabouts are they and who is doing the clean-up? Getting FEMA camps prepared for Alex and other hurricanes?
HAARP and space. Could be the sun has moved to another position.
Correct me if i am wrong. latest stats, Canadian household among the most indebted out of all OECD countries. http://www.thestar.com/business/article/807679–canadian-households-among-the-most-indebted-of-oecd
The thing that stands out to me about the CNBC story is that the ‘experts’ they have on panel to discuss the story just regurgitate the same misinformation that was just presented in the clip. No one has taken the time to investigate or research anything. They also dwell on the securitization issue and that the Cdn banks keep 3/4 of their mortgages on their books, but gloss over the CMHC insurance aspect, in which the banks get their money back in the event of a default. Very shoddy reporting, but not unexpected. Most people will take all this “news” at face value though, and when the day of reconing comes, they’ll wonder how it happened.
Garth,
Sales are stagnating in Calgary. That’s it. There’s no parade. Houses are still $200K over their real value.
What’s with the post of the woman in the flag? Is this supposed to be a turn on to buy houses? Wtf? Whenever I see a woman like this I automatically assume she wants something, not in my best interest. The only way Id get turned on is if that was my wife parading around too top heavy as usual but only with the flag(she’s canadian, Im american, she’s large, and im not in charge…) Women are built better and bigger in Canada, like a semi truck with plenty of torque for the long haul. Lets go space trucking…
Your post isnt really accurate. Things are stagnating, not crashing. Interest rates havent skyrocketed, in fact they have gone down a bit. People just arent buying. Ho hum.
You think that things will crash, maybe. Until I see houses priced appropriately in Calgary at $200K in the NW for a 2000 sq. ft house that is nice, Im not holding my breath.
You havent put any concrete evidence. Skyrocketing interest rates? Nada. Sales down? Yes. Housing costs down? Definitely not!!!
I expected more like Thor’s hammer flying across the sky and lightning bolts than a possibility of a crash for housing.
The MSM often has a twist on things that tell what had happened, not what’s really happening or likely going to happen.
I live in Edmonton, and I can tell you that from watching the real estate properties listed on MLS in my area the market seems to be very very slowly sliding into it’s own depression. The average price per foot and per condo for example have only gone done about 1.5% over the last month, but it is mostly just the high-end & granite & stainless remodelled condos that are selling. Lots of inventory piling up (inventory up 100% in the last 4 months). A comparible unit I sold in 2004 had been re-listed for just $70,000 more than I sold it for recently. It was selling for $150,000 more than I sold it for in 2007. That’s an $80,000 dip over the past 36 months -or an average loss of $2222.20 per month for 3 years-twice the price of renting! That’s what edmonton’s like now!
Rates is the price of money.
No one can guess price, otherwise he could become the richest guy in the world.
“elements of conservatisim in the Canadian housing industry.”
Hahahahahaha! That guy is on crack. Pretty soon that botox and silicone enhanced news slut will be saying
“Canadians, they really are just as stupid as we are.”
There seem to be more for sale signs on Calgary lawns than dandelions, I drive 20 blocks to work, at least 3 for sale signs on each block and they just keep popping up. Center Street North looks like a WalMart.
Dear Garth,
I’m a fan of yours, but I would like to respectfully disagree in that I think you’re too bearish on Canada’s real estate.
Please check this link, featuring David Rosenberg, a well respected and renowned bear:
http://www.theglobeandmail.com/globe-investor/investment-ideas/features/experts-podium/the-loonie-its-not-just-about-oil-any-more/article1622070/
The loonie: It’s not just about oil any more. This rally has a different feel to it; it’s much more than just a commodity story.
This was the most important comment in the Rosenberg Pronouncement on Canada:
“On a global scale, real estate in Toronto, Montreal and Vancouver is cheap as borscht (as my Bobba used to put it). This may be why property prices have been heating up. It may come as a surprise to many Torontonians that when American high-net worth investors visit the city, they can’t believe how inexpensive the Bridle Path is – especially considering its proximity to downtown (New Yorkers can’t get anything like that south of White Plains).
I had to read it several times. Please give me your interpretation. Did I read Rosenberg wrong that he’s actually calling Vancouver real estate “CHEAP”???
I like your efforts at educating people against risk and being too house-heavy. However, in relative terms, Vancouver does offer great value for money to alot of international folks.
Best,
Weng
Very good for Mister M&A lawyer, he has real skin in the game.
Shave one of the zeroes off his large, because there are some really smart people in Hong Kong who understand British common law. Not that hard to crank out M&A boilerplate these days.
Since it is Canada Day…I LOVE my country…I could almost love Miss Canada and I HATE the Harper government.
Have to love those lame stream media types from CNBC. A few months ago Canada’s health system was highly suspect and now come July 2010 our banking system is of world envy.
“…world class thugs, cops…”
Redundant.
After the video all I can think of is that the banks can’t and will not fail because if the mortgage holder defaults on payment, CHMC insurance kicks in to cover the payments.
The banks can’t and will not lose or show signs of losses on their books.
Hmmm, does CHMC cover just the mortgage payment in case of payment default and/or do they protect negative equity loss, Garth?
Once our pending federal election is over—– the steam will be let out of this artificial economy and recession will prevail
I can’t believe that they can say “3/4s of the mortgages are on the books” and then seconds later “80% are insured”. Whether they’re securitized or not, the risk has been pawned off the same…
What intrigues me is why they are creating these stories into existence. What purpose does it serve to their local audience? Rekindle the desire for housing in the US as to reinflate the bubble? If so, what a long shot, what a desperation in the face of people’s everyday reality. Not to mention that without the magic of ever expanding debt, people are broke.
RE and the stupid valuations have as much to do w. Canada being a resource based country as Snow White has as much to do w. Penthouse.
Good thing the markets are closed here tomorrow – Asia and Europe are getting taken out behind the woodshed. By the time you read this, they will both be deeply in the red. Of course, there is no doubt that the US, Britain & others will pour liquidity into the markets again and the reflation of stock markets Pt II will occur.
Make no mistake, we will NOT see a double dip recession – we never came out of one, we are still in the throes of a massive deleveraging. Gov’ts will try to put this off by mass liquidity (QE) and ultra low interest rates, but eventually that fuel poured on the fire will cause most to get burnt by inflation if not hyper inflation.
When Canada’s Real Estate market is featured on CNBC, that in itself should be enough to make anyone run for the hills.
Funny how this clip airs within 1 day of this CNBC article: Fannie-Freddie Bailout Could Cost Taxpayers $1 Trillion. I guess their writers don’t ever talk to each other (or, more likely, all of the content comes from other generic media sources).
Also – keep in mind that this is the same CNBC that was outed by Jon Stewart (and others) for their all-hype/no-substance reporting:
http://en.wikipedia.org/wiki/Jon_Stewart‘s_2009_criticism_of_CNBC
Well this week I got stuck in an hour long argument with a person who is part of the problem. I went through the bubble in the US from 2001-2005 and I swear, it’s the exact same reasoning and arguments.
They have a positive spin for every number:
They aren’t making anymore land
It’s different here
Assets are growing faster than debt
Affordability is still good because rates are low
2 income families are less risky than 1 income families
We went through a recession and real estate held up
Loans are recourse
Households will do anything to hold onto their house.
No speculators here
Real estate is local
Cdn banks are more conservative and taking on better risks
Canadians are more conservative so less excessive.
No matter how much I repeated that all ratios are now equal to the US ones, there was always a postive spin. It’s just mind boggling.
The best one was that because our banks are more conservative, our pool of households is less risky. I asked how he could say that when our home ownership rate went from 65% to 70%, just like in the US. Statistically, with millions of households, we could argue that the pools are quite identical. Of course his argument is that Canadians are different, more conservative, so that the Cdn 70% is “better” than the American 70%.
Everyone ‘agrees’ that rates can only go up, but yet they keep going down. Everyone agrees that rising rates, when they happen, will hurt housing, but can you or anyone reliably predict when that will happen?
This low interest rate cycle could end tomorrow or it could be with us for another few years yet ….
—————-
When rates go to 0, a logical person should wonder about the health of the economy and wonder whether they should be carrying that 200k+ mortgage.
When you take on a 35 year mortgage, you’re pretty sure the rates are going to come home and bite you in the ass sometime before the end of those 35 years, especially if you are not paying down your mortgage very quickly.
It is SO INCREDIBLY SIMPLE when you do the math. When portfolio returns are between 5-10%, a couple should be saving 10-20K per year for their retirement. When rates are at 0% and inflation at 0% and they believe this is going to last for a while, they should be saving 20-30K per year. When rates are at 0%, and inflation is at 2-4%, they should be saving 30-40K.
Now make a budget for a young, 2 kid, 2 car couple making 100K. If they want to be saving for retirement, they should not be carrying more than 200K in mortgage if they want to save. If they are carrying more than 200K, they are betting their house will fund their retirement. They better make sure the right person is there at the right time when the time comes. A fiasco millions of boomers are about to face.
You can argue until you are blue in the face, the numbers won’t lie. People have too much house, period.
OT – A day or 2 ago it was reported that about half Grade 12 kids were failing math. I loved Bruce Mackinnon’s cartoon in today’s Chronicle Herald showing the Finance Min and Premier.
http://thechronicleherald.ca/toon.php
Happy HST day.
Apparently NS Power will be asking the Utility and Review Board for a 12% increase starting Jan 1, 2011. We already pay the 2nd highest rates in the country.
Garth et al:
Happy Canada Day!
Drink a beer. Have some steak. Forget about your issues. Party like there is no tomorrow.
Mike
Well there you have it!
Canadians are more conservative and will pay 250% more for the same size box.
To a large degree, perception is reality in the housing market. Fundamentals be damned.
We now return you to our regularly scheduled commentary from gold nuts and doomers.
garth,
i agree real estate is overvalued (particularly toronto, vancouver, calgary etc.)
but, it seems you participate in fear-mongering and doomsday scenario thinking.
who’s to say this is the end result? you obviously believe that, but i think you are over-confident and remind me of the author of Dow 36000 or on the opposite, Dow 1000 thinkers, or better yet, Gold 5000.
I do enjoy your blog and strong opinions, it just seems your rant is just that – a prediction (maybe right, but maybe not) and unless interest rates shoot drastically higher, (8-10%?), i would think, if anything, a slow-down would be anything you are forecasting.
Rates are not going to 10%, and yet asset deflation is inevitable. This is hardly doomsday. Just a bad one for the deniers. — Garth
#12 Wetcoaster, it makes no difference what the clowns in the MSN say. The gig is up and as Garth says, even low interest rates are irrelevant now. There is only once place for real (unreal) estate prices to go and that is down. It already started months ago. A house my son bought in Calgary in 06 for 250m and which he sold almost exactly one year later for 340m is now selling in the range of 280m, a drop of 60m or 17.6% and has a long way to go yet. How do you justify a house originally selling for around $160m in 04/05 to be selling at even the current prices. Building costs certainly didn’t rise that much. It’s going to be a long slow slide down…..
http://www.youtube.com/watch?v=0h7V3Twb-Qk
#29KC, totally agree. Don’t count on China bailing us out, they have even greater problems than we have..check out the above video….
I see David Rosenberg is now talking some of the bloom off the Canadian rose. I laughed at his glowing reports but never took them too seriously considering his employer stood only to benefit from US or other foreign investors who found Dave’s “our shit doesn’t stink here” angle, appealing. I only hope those who bought into this mirage don’t end up feeling like most Bre-X “investors” did thirteen years ago.
#46 $fromA$ia, from what I understand, 60% of the banks business is mortgages and the other 40% are loans which are not CMHC insured. The concern for the banks would be that if mortgages go into default, the 40% that is uninsured would also default…a big problem for the banks IMO…with debt at 1.5 times earnings this debt bubble has to burst eventually and it may not be that far down the road….in this case, low rates are irrelevant…everyone’s maxed out on debt..same as all the countries around the world..this cannot end well….
Bank collapse won’t happen. — Garth
#30 #31 Tom
…Thanks for the old news…
Makes me wanna pack up my bags and relocate to Lousiana, Florida, California, Florida, Michigan…. even Cape Breton.
lol
Nostradamus jr.
One more thought… Everybody seems to think subprime and first time buyers will bring down the real estate market. I wouldn’t be surprised if they are the trigger but I am convinced rich boomers will inflict the most pain.
Example:
Newly retired couple in early 60s with a net worth of a couple of million, no debt, decides it wants to move to a rural setting. The wife already has her mind set on a house and it suddenly comes on the market. The wife knows that countryside houses have gone down by more than city dwellings. The economy has slowed and many households are forced to sell their second properties. Or some families are forced to move closer to the city to make ends meet.
They decide to list their city house (which they bought in the 70s for 40K) but the agent tells them nothing is moving. They could have fetched 1.2-1.5 million at the peak but the last sale was at 1 million.
She convinces her husband that they won’t be losing money in the deal and even if they did lose a little, who cares, it was paper money anyway and they are getting older so who knows how much longer they’ll be able to enjoy the good life. They should jump on the opportunity while they can.
So they decide to list their house at 900K for a quick sale and let it go for 800K. And now all houses in the neighborhood are priced at 800K.
David Rockefeller’s 1991 Bilderberg Meeting
Quote
The following is very powerful and telling if you know anything about the secret roundtable groups that comprise the shdow governments around the world. And the CNBC video is very understandable once you realise media is not there to inform, it is there to give us a good version of reality, and then there is the real reality never reported.
Quote:
“We are grateful to the Washington Post, the New York Times, Time Magazine and other great publications whose directors have attended our meetings and respected their promises of discretion for almost forty years.”
He went on to explain:
“It would have been impossible for us to develop our plan for the world if we had been subjected to the lights of publicity during those years. But, the world is more sophisticated and prepared to march towards a world government. The supranational sovereignty of an intellectual elite and world bankers is surely preferable to the national autodetermination practiced in past centuries.”
– David Rockefeller, Speaking at the June, 1991 Bilderberger meeting in Baden, Germany (a meeting also attended by then-Governor Bill Clinton and by Dan Quayle
RE: #39 Idiots everywhere in calgary
Housing will not crash here and drop out of thin air. A true housing correction takes time, so the fact that you are seeing prices stabilize is the first step.
When people understand that they can no longer make money on a house via price appreciation, buyers begin to stay away. More stabilization, then turns into a price depreciation, slow and steady.
Garth has never said that all of a sudden houses by July 1st are going to come crashing downwards! We will start to see stats showing that housing is dropping in both number of sales and price in due time.
Patience!
Indeed. This will take years, with every day of it a new fascination. — Garth
I noticed now on MLS that they now put a number on the red dots rather then a red dot for each listing in a specific area. There were so many red dots it was looking like the 60s on a party night.
#66 Tye,
You said, “Housing will not crash here and drop out of thin air. A true housing correction takes time, so the fact that you are seeing prices stabilize is the first step.”
Agreed. It amazes me that people don’t understand how long it takes for the housing market to re-position. The people who show up on this Blog every day and say, “see, no bubble”.
Yet the signs are all around us. April 2010 was the peak of the market, listings are rising, sales are slow, affordability erodes.
It will play out differently in Canada than in the US but overall the results will be similar. Prices will fall dramatically in many markets for many years. Many people will end up in negative equity. The housing sector will go from an economic driver to an economic drag on growth. Bottom is a long, long way off.
The only real thing about that piece of fluff was the startled look on the lady’s face when insurance for 80% of risky mortgages by the Canadian Government raised its ugly head.
The “breaking news” must have been terrible indeed, or maybe the producer was yelling in her ear to stay on message. Heck, no spin = dead air = no business for a business channel.
Anyway, Happy Canada Day to all. Remember the “peacable Kingdom” – let’s get it back!
apparently the Ottawa Citizen thinks the same:
http://www.ottawacitizen.com/opinion/State+nation/3222915/story.html?cid=megadrop_story
The Canadian tradition of moderation produces certain behaviours. The culture of recklessness that brought down the Americans is largely foreign to us. Our banks avoid lending to people who can’t pay back loans, and Canadians who can’t pay back loans generally avoid borrowing lots of money.
This isn’t about feeling superior to our neighbours and best friends, the Americans.
yes it is
Daystar: talking about mortgages held by Canadian banks those with less than 20% down payments are all insured by CMHC (i.e. government) for 90% loss against bankrupcy
90% do you mean that CMHC insures only 90% of the mortgage? In which case the banks do have some skin in the game?
I have said before that I am from the USA (Landed Immigrant). I tell people that Canada is only slightly different than the USA – nicer looking money, way less patriotism, crazy housing and a terrible health system. Personally I would rather have private healthcare
Circa 2004 when I moved here, there was talk about a housing bubble in the US. People were so smug about their house and the “value” of it. People were flying high with the economy – buying cars, vacation homes, renovating, etc. No one thought that banks would fail. Sub-prime lending was unheard of on the news. If one googles USA housing bubble they will see that many economists were saying that affordability was deteriorating (i.e, first time buyers are out, people stop buying vacation homes, no one upgrades). What does this sound like?
Speaking of sub-prime lending, I actually have a friend with an interest rate below prime right now, so it does happen in Canada.
I would also like to ask those that think that housing will continue to increase? To what? Do you foresee wages increasing as well? How does that impact our trade with the US with such a high dollar? Think about it.
I once had a friend say that here 600 sq ft Calgary condo would be worth 400K soon…She has not been able to sell in a year.
Canadian is R-E-A-L-L-Y SLLLLLOOOOOWWWWW Learner. Absolutely agree.
But there is one american here that even worse than most Canadian
For example
#39 Idiots everywhere in calgary
You really know how to call yourself “I….”
Read Garth’s past articles, read some blogdogs’ comments carefully, read Garth’s book and please learn to read numbers and charts that you can find everywhere here in this blog.
BEFORE you show who you are …
This is discussion forum. If you don’t follow this blog faithfully since 2006, then you should take your time before say anything…
I just can’t figure out the comment :
‘not concerned that I’m going to lose, maybe i will’
Yeah Lloyd, maybe you sold it to a flipper.
Of course he’s not concerned -he bought a primo location and sold at the absolute peak.
This is the year of our discount tent .
#64 Moneta – you’ve hit it on the nose. And I am one of those oldest boomers and that is the exact thinking that will drive the prices down over the longer term.
One great thing about the new H.S.T. in Ontario.
You can’t drive two blocks without seeing a gas station advertising the new H.S.T. included new price. It is not some nebulous line charge on a utility bill that is paid and quickly forgotten. It is right out there and constantly in your face 24/7.
The sheeple in Ontario didn’t even got up on their hind legs to protest, at least not the H.S.T. anyway. Too busy smashing Starbucks windows at the G20 I guess.
It certainly makes me want to vote Liberal in the next Ontario provincial election. I can’t wait to see how they piss away all that new taxpayer dough!
Happy,used to be,Canada day .
#10 Nostradamus jr
…50% Hongcouver R E price increase friends…
That is right. 50% more and all beside the export pipe in Port Moody that take oil from Alberta to China. The oil tankers pass right outside Nost house in Deep Cove.
#19 Comfortable in a coma on 06.30.10 at 10:30 pm
the American crash included 700,000 layoffs per MONTH!
think about it. That’s not going happen in Canada.slow melt in some parts but no crash.
——————————————————
you’re a complete i***t. I’m sorry folks, I had to say it. Can you maybe stop and think for just 20 seconds before you post? You posted the above comment with conviction and I, and probably 99% of other readers, thought of it as trash instantly. Want to know why? Here’s why: The U.S has over 300,000,000 people. Canada has just over 30,000,000. That means they have 10 times the population. We’ve known this for so long that the U.S has 10 times the population, but you don’t factor that in in your ridiculous calculation. Let me continue….a 700,000 person drop in employment in the U.S is equivalent to 70,000 in Canada. Hooray! The U.S isn’t dropping at that pace anymore. The two countries are relatively close when you actually factor an important statistic – population.
You’re suggesting that Canada has to drop 700,000 a month to be like the U.S. That means a little less than 3% increase in unemployment a month. We’ll be fair and call it 2.5%.
After 12 months, based on your measurement of equivalency between the U.S and Canada population, you’ve concluded that we would need 30% unemployment (just in that calendar year) to meet the same level of unemployment as the U.S. Not factoring in the 7% of unemployment the country already had.
So you’re analogy suggests that Canada needs to be at 37% unemployment for housing to be suffering the same as the U.S. Nice calculating!
Sorry, I’m sick of people not being able to think. Sometimes people have to be called out.
#39 Idiots everywhere in calgary
‘What’s with the post of the woman in the flag? Is this supposed to be a turn on to buy houses? Wtf?”
Lighten up buddy. Pretty nice looking flag. Thanks Garth.
This is the winter of our discount tent .
#79-the other thing is the USA didn’t have 700000 layoffs as long as they could keep the RE scheme going. RE is a gigantic employer-the TO area would have skyhigh unemployment with a 1993 type RE market.
CNBC: Clowns, Nothing But Clowns.
I stopped watching CNBC after the enormous spin machine – almost certainly directed by (then) parent General Electric -spun up in late 2008/early 2009. I switched to Bloomberg and even that channel became unbearable in 2009.
It’s now time to share a new anecdote.
I caught up with a colleague last week after not having seen him in over a year. His combined household income sits in the $250-$300k range (engineer + geologist). He and his wife bought a townhouse condo in Invermere (how “Calgary” of them!) in mid-2007. By all external accounts, they were in for about $550k with about $50k down. He admitted that the comps are now selling (when they are able to transact…) for about 30 to 35% less (That’s a nice $165-$185k valuation haircut for them…) than the summer of 07. “It’s clearly not the best transaction we could have done, but we love it.”
I shuddered at the rough math going through my head, trying to calculate what’s their cost-per-day-used (basically 4 days per month on average) for mortgage, strata, insurance, utilities, etc. All in, I figure it’s about $3k/mth. But, hey, it’s their money. Buying the comp right now would set them back about $1k/mth less.
What better way to admit to me that you really did make a bad economic decision with the vacation place than to tell me that your job with your junior oil-and-gas employer probably won’t last the year and that you’re off for a month’s holiday in Italy?
I need to go see a chiropractor to adjust my neck after all the side-to-side shaking it’s been doing!
#11 Debt Is Invisible
“Why would interest rates rise when they are happy to get a safe two percent?”
Don’t underestimate how quickly your happy/safe can become fear/alarm. If our monetary authorities don’t heed the lessons from recent European bond auctions, Canadian rates could triple in a fortnight.
Catch 22 for leveraged Canadian home owners:
Path A ‘austerity’ = stable rates & deflation
Path B ‘printing’ = rocketing rates & stagflation
I’ve been investing in stocks and RE for decades and have yet to see a grossly-inflated speculative bubble decline gradually.
#76-The “sheeple” didn’t smash any Starbucks windows-where are you getting your info from?
71 Calgarygirl – The term “subprime” did not originate from the interest rate on the loan. Rather it was the target market for the product – the next few percent of
the population on the credit scores that did not
have a “prime” rating, which of course resulted in the
wave of mortages that could not be repaid. Since then,
the term seems to have developed into any loan where
the ability to pay was not properly verified or calculated.
Saw this live and almost heaved… even for CNBS this was over the top!
I suppose this signals the end of “picking at the carcass” of the US middle class (do they exist any more)! “Off to the Great White North gang… a few more fat bellies left up there to feed on… yum, yum.”
To anyone buying a home in TO or Van… WAKE UP… and buy gold instead (come on Garth, we know you’re really a closet gold bug)!
HAPPY CANADA DAY TO ALL! Fly that flag!
Life goes on. Real estate goes up and down.
So what. Take a day off and go to the beach. Drink some fine Canadian beer or wine with family and friends. Cook a big BBQ. Get that boat in the water.
Tomorrow, the Great Recession rolls on. It will take the better part of this decade to resolve it. So you might as well not worry about it, it’s out of our hands.
Canada is still a great country. If you think our problems are big, you need to read more.
Special thanks to Garth our genial host.
#71 Calgary Girl, maybe our health care system doesn’t quite come up to the standards you are used to in the U.S. but here in Canada we don’t have to mortgage our homes or go bankrupt if a serious illness occurs in our family. You are obviously in a different category than most of your fellow americans are and are able to afford private healthcare. Most down there can’t. Same would be the case here in Canada if we didn’t have the medical system we do have. Thanks to
the efforts of Tommy Douglas or we sure as hell would be in a lot worse shape than we are today. In case you’ve never heard of Tommy Douglas here is a link:
http://en.wikipedia.org/wiki/Health_care_in_Canada
Anyway, if it’s that bad, you can always go back and pay for the healthcare. Us tax payers will need all the help we can get.
Re #65 The Big Lebowski
What Conspiracies? Business as usual.
1929: The Rothschilds crash the United States economy by contracting the money supply.
1963: On June 4th President John F. Kennedy (the 35th President of the United States 1961 – 1963) signs Executive Order 11110 which returned to the U.S. government the power to issue currency, without going through the Rosthchilds owned Federal Reserve.
Less than 6 months later on November 22nd , president Kennedy is assassinated by the Rothschilds for the same reason as they assassinated President Abraham Lincoln in
DELETED. And go away. — Garth
Hi Garth,
Compliments on a better choice of pictures for this posting. Very nice and patriotic too.
That said, the large lady, in the rain, in a thong hailing a cab was a touch of class. However, she didn’t have a flag.
Leave your sexual preferences at home, dude. (And it wasn’t a thong.) — Garth
#86 Taxpayer like everybody else
71 Calgarygirl – The term “subprime” did not originate from the interest rate on the loan. Rather it was the target market for the product – the next few percent of
the population on the credit scores that did not
have a “prime” rating, which of course resulted in the
wave of mortages that could not be repaid. Since then,
the term seems to have developed into any loan where
the ability to pay was not properly verified or calculated. – Great….
It wasnt even the fact that these mortgages couldnt be paid that collapsed the system. After all if house prices dont fall even a sub prime loan doesnt always mean a loss to the bank if house prices have risen.
It was all about falling house prices that started the negative feedback loop which is still the US house market.
“But whadda I know?” – Garth
Apparently not very much.
For all the real estate bears who are talking (ad naseum) about the inevitability of bond yields rising and taking mortgage rates up with them, apparently the opposite is happening as the 5 year yield has fallen to 2.3%.
http://www.canadianmortgagetrends.com/canadian_mortgage_trends/2010/06/yields-plunge-spreads-explode.html
So how is that real estate downturn coming along again?
Right on schedule?
Sure it is.
Actually so. And rates are now largely irrelevant, as I have already mentioned. Now it’s all about debt and jobs. — Garth
Garth, what about addressing the significant differences in Canada mentioned the video: subprime loans (lower credit-worthiness) comprising of only 5%, not securitizing and selling off mortgages near the rate in the US ( holding near 3/4 of the loans on the books ensuring the a better lending standard ), full recourse loans.
Yes, there will likely be a pullback/correction, but the factors above may prevent a meltdown anywhere near the one experienced in the US, hence the difference. Thoughts?
Already done. Pay attention. There will be a quiz. — Garth
#53 Moneta: “If they want to be saving for retirement, they should not be carrying more than 200K in mortgage if they want to save. If they are carrying more than 200K, they are betting their house will fund their retirement.”
Well stated — simply but clearly demonstrating why so very many over-leveraged Canadian homeowners are going to experience a hellish retirement.
Grossly inflated house prices have forced the middle class to spend beyond their means, generally achieved by foregoing retirement savings — because that’s an immediate-term sacrifice which presently feels painless to make. Unfortunately, the final outcome of this Canadian housing bubble will be an extent of old-age pauperism more commonly expected in the third world.
That video clip is an attempt at parody or satire? A six minute clip and there were no less than four references to “conservatism”. It was enlightening to learn that Canadians spend more time reading Edmund Burke than following their favourite hockey team. All of us blog dogs have now experienced illumination and edification by watching these hacks weigh in on how different things are in the Great White North.
Since these people are so enamoured with Canadian financial conservatism did they ever hear Benjamin Disraeli’s quip, “Debt is a prolific mother of folly and of crime”?
One can suppose that the banks offloading $125B of that potential financial offal onto the taxpayers makes us better than the rest of the world.
House prices don’t need to crash for people to lose money. They don’t even have to melt. If house prices remain flat for a long period of time, the thousands of $$$ that someone spends buying them at todays high prices do no work.
To retire comfortably, you have to attain (on yearly average) 6-7% gains over a period of decades. A lot of money tied up in 0% (or near 0%) gains asset class over the life of a mortgage is pretty disastrous enough.
Listen to Garth, avoid real estate and stay liquid.
Happy Canada everyone . Welcome B.C. to hst . The liar campell has gotten his way … shame on you gordo . We’ve been lied to by the federal gov. since before 1871 . Before joining with the confederation we were promised a fix link to vanisle at the tune of 21 million dollars , all lies . Why have gordo and his goof troop not sued the feds for 21 million plus interest .. This amount should easily pay for what was promised . I can almost hear some saying this way too long ago . Well it wasn’t too long ago to settle the head tax on chinese ( shameful) . It wasn’t to long ago for the japanese internment ( canada’s concentration camps). Why is there no society that one could contribute to so we could have our day in court . So we could force the fed gov. at the very least give us (b.c.) an apology for lying to us as the first nations got and resently the air india mess . If we have a horrific ferry sinking or fire with loss of life (happens all the time we’ve been lucky so far) . The fault will lie squarely on the door step at 24 sussex and at the feet of all the weak kneed B.C. MP’s sitting in Ottawa that are to stupid or scared to speak up for us . The money is owed us so is an apology.
Another positive sign for Hongcouver’s North Shore…Ellie Nordgren will relocate to West Vancouver with Tiger’s two kids plus $750 million of his money.
Her second choice was Cape Breton.
Nostradamus jr.
Rates are not going to 10%, and yet asset deflation is inevitable. This is hardly doomsday. Just a bad one for the deniers. — Garth
Garth, j neilson is bang on. Whether you mean to or not, you come accross very much as a doomer.
In my opinion there is no balance in your arguments, no concessions, no qualifying your statements etc. I have shown this blog to many people, and the vast majority after reading it put you in the same doomsday category.
I’m not saying you are, obviously I don’t know what’s in your mind but I am telling you how many many people are interpreting your message.
No counter argument ever has any merit, you never give credit to any counter points, there is no possibility that you are wrong, etc…
In my asessment you are now very much like the global warming advocates. They will never conced that they may be wrong about the link between CO2 and a warming planet, their reputation will be destroyed. It dosen’t matter if the science questions it they will simply ingore the date, or manipulate it if necessary.
This has turned into a religion. IF the Canadian housing market does not crash I belive your repuation is done. I konw you say you aren’t calling for a crash, rather a melt, but everyone now associates you with calling for a crash. If it dosen’t happen I’m sorry to say you are probably done.
IF housing in Canada stays flat or falls 5-10 percent over the next 5 years and incomes rise at the same rate they have for the past 10 then housing will barely be overpriced by YOUR OWN meausres. This is a very possible scenario.
For your sake it better not.
I’m touched. — Garth
#20 Veej
Someone higher up said they were expecting better from CBNC, after reading which I burst out laughing, and couldn’t stop for a couple of minutes. CNBC is nothing but a cheerleading channel, complete with blonde cheerleaders and mindless jocks bashing heads over trivialities.
But Veej, bankers and realtors are the experts, so anything they have to say on the subject is bible, not only that, but they are the only ones qualified to comment, anyone else simply doesn’t know what they are talking about.
Our love-in with experts has started with the white lab coated doctor and pocket-protected engineer. It’s been downhill ever since.
Just a couple of days ago a Fed economist went on a rant about bloggers, and how trustworthy economic research can only come from PhD state economists and ivory tower tenured professors.
Dissenting with the official line is already borderline non-patriotic, how can truth survive in such a hostile environment?
#92
((It was all about falling house prices that started the negative feedback loop which is still the US house market.))
not to mention the trillions of dollars of toxic derivatives that wreaked global havoc
Happy Canada Day, Garth, and thanks for the blog.
Meanwhile, the Mainland Chinese continue to feast on condo purchases in Vancouver:
http://www.youtube.com/watch?v=KNG5Ptrxweo
Debtfree: Why is there no society that one could contribute to so we could have our day in court ?
well there is I suppose. That would be a society which not only saw the head tax on Chinese as wrong but agreed that there existed a present-day entity that was responsible.
good luck with that
Is it possible that the steroid dosages we have our boys in blue on should be scaled back somewhat? http://www.thestar.com/news/gta/torontog20summit/article/830858–ttc-worker-caught-in-g20-police-sweep
#90 Bill ( Peterborough ) – I’d love to hear more of your thoughts, regardless of Garth’s scoffing at your conspiracy theories. True or not, they’re interesting to take a lok at. Hit me up!
thereluctantrealtor@gmail.com
THIS JUST IN FROM EDMONTON:
Just sold a client’s house just under list price (SP: $382,500, LP: $385,000) in cookie-cutter-suburbia. Took them forever to correct their wishful-thinking price of $400k+, this in large part due to directing them to Garth’s blog (Thank you Garth for your efforts!)
RIGHT ACROSS THE STREET – Identical house, just facing a different direction, JUST listed for $440k. RLP Realtor to boot (not knocking RLP, just ironic considering how everyone here loves the hype RLP’s mouthpiece spews off along with Klump @ CREA).
Home up the road (also RLP realtor) listed for $420k.
$40k – $60k MORE than what established sales prices (my former listing, plus hald dozen others) have indicated is TRUE market value.
FUNNY STORY #2
FSBO around the corner, after trying for MONTHS on ComFree, then on his own w/ “Lease-To-Own” sign on front lawn, issues a hand written “invitation” envelope to all homes in surrounding area (400+) via CanadaPost drop…inviting us all to “wine and cheese” party….where we could win an Apple iPad….if we bring a potential buyer to the table!
Neighbourhood Average Price – $300k – $345k
Asking Price for this would-be-flipper: $420,000
“Complete with rich dark laminate flooring, stainless steel appliances, and new paint and crown moldings…”
They forgot to mention it’s SITUATED ON BUSY 5-LANE COMMUTER ROUTE THAT CONNECTS TO THE FREEWAY.
I’ll be sure to bring my clients and personal contacts through your real estate sideshow just so I can win one of Steve Jobs’ newest consumer toys….NOT.
92 Aussie Roy – Happy Canada Day. I dont know that we can say it was the falling house prices that were the
cause. I think it is basically a chicken/egg debate.
Many of the subprimes had terms that never could have
realistically been expected to be met, regardless of price
trends, so the result was inevitable. One could even
argue that by allowing sub-prime loans, it actually drove
the market higher by increasing number of potential
buyers.
But yes, I agree with your “negative feedback loop”
analogy that now exists.
The popular “strategic mortgage default” plan in the US, where homeowners walk away from their underwater mortgages, will soon be a really bad idea for them.
Take a look at “The American Dream” website’s story of strategic defaults which are about to go illegal.
An imminent crack down is in the works, courtesy of Freddie Mac/Fannie Mae/Federal Housing Administration.
These bankrupt US government-backed entities supply Americans with 95 per cent of residential mortgages. “Fed” up with being stiffed, Freddie, etc., will shortly become bill collecting loan sharks.
In the works:
1) debt avoiders will be sued for the balance owing on their mortgages, even if they don’t live in the homes in question, any more;
2) scoflaws will not get new mortgages because they will also be black-listed for up to seven years!
But what’s the point if these folks are already broke? Sounds like “capital” punishment for large chunks of what’s left of the U.S. real estate industry and its victims.
Harsh for sure, but just another form of government-imposed financial pain, a plan that literally hits home hard (and could be used by other government entities?).
Is this a cautionary tale for Canadians, who’ve blown past their financial warning signposts by maxing their mortgages?
They will find no mimic-style relief from south of the line, here, as they beg for mercy from their friendly chartered banks. Never.
They will learn that they are responsible for their own financial bad behavior. Trouble is many more of us also will be hurt because the ramifications of bad debts will spread everywhere as the Great Contraction rumbles on here and beyond.
One of the best satirical articles I’ve ever read…
http://www.theonion.com/articles/recessionplagued-nation-demands-new-bubble-to-inve,2486/
America searches for the next bubble… Maybe that’s why CNBC came to Canada to pursure the next “real estate dream”…
http://www.cnbc.com/id/38038267
I can’t tell you how many calls we got here in the CNBC DC bureau from Realtors claiming there would be “rioting in the streets” (I’m not kidding—and that was a Connecticut Realtor) and PR reps for industry types offering endless “experts” to discuss the “vital” need for the extension.
MORE GIVEAWAYS PLEASE we believe in capitalism
For Garth and the rest of the blog doggies…
http://www.nakedcapitalism.com/2010/07/david-harvey-crises-of-capitalism.html
Useful interpretation of our global economic situation.
89—
I have had 6 doctors in five years because they retire or switch clinics and won’t take me because I do not have recurring health problems. very very odd to me…
Re USA health care – Living in the US, I can tell you I never went without employer sponsored health care. Maybe it is because I was a professional? I don’t know..
Secondly, if you don’t have insurance you don’t have to mortgage your house. You can set up a payment plan with them. I know many people who have done that
yes, millions don’t have health care in the USA yet millions do. The US health care system is far from perfect I agree. I just would like to see Canada move to a progressive system that has a mix of public/private health care.
Happy Canada Day to all…..oh and Happy 4th of July
How do these scumbags sleep at night?? I think I’ve over estimated the quality of degrees these days. As long as they are good looking, she could probably say anything and most people will believe them. Shame on us for being so shallow.
The US hates capitalism. Americans are the most facist people in the whole world and that is a fact.
Here is the proof
http://www.cnbc.com/id/38038267
Canadians will face a housing crash in Canada like no other. Realtors can talk and lie all they like but the housing crash is here and now and going to ruin hundreds of thousands as many will go bankrupt in the housing crash.
POP………….What was that?
-
Happy Canada Day and Fourth of July everyone! (wot’s left of them). If this is summer, someone should tell the weather.
19C, cloudy with spotty showers. Climate is changing, that’s fer sure. Bloody cool here. The m$m is doing well — NBCABCCBS lost one million viewers last quarter. Onward and upward!
Chaos — In keeping with the Chinese Zodiac which I mentioned earlier (12 x 5 = 60, and 60 years ago was when the Korean war began), on cue, give or take. “Crazy talk . . . The rhetoric is getting steamy, the weapons are moving into position, and it is beginning to feel like “The Guns of August” in the Middle East.”
Deliberate? Seems that way. Would the reason be that the US economy is lifeless and cannot be revived?
Guess who is quietly having Credit Default Swaps hoisted on them.
Not to be believed. “So spend, spend, spend, you sheep you, because if you don’t buy a lot of jewelry on credit, the terrorists will have won!!!” wrh.com, which is accurate. Don’t spend foolishly.
B-B-Q’d Sheeples “Bull biscuits! This is about a desperate clutching dying grasp for that one last tax dollar before the total collapse!” wrh.com.
Along with stock markets, this.
What JFK started in 1963 (which is why he was knocked off) fails again. The US Fed is still alive and kicking, much to the disappointment of many.
Duplicates Does history repeat or what? 1924!
Something doesn’t smell right. “The Russian spy case, in which 10 alleged Russian spies were arrested just days after President Obama and his Russian counterpart Dmitry Medvedev held one of the friendliest US-Russia meetings ever, looks like a carefully timed plot by disgruntled American hawks to reverse the warming relations.” Kissinger, Soros and Brzezinski (NWO)? And this.
US Housing two of (roughly) the same.
Every month US jobless claims ‘unexpectedly’ surge. What is so unexpected about it? Mfg. is done in India, Thailand and cheap places like that. Pays yer money, takes yer chances.
Toronto Police still lying.
Dan @ #115,
but they saved money by not extending unemployment benefits …
The real estate-construction-mortgage troika obviously has been declared too big to fail.
Summerland BC, 48 realtors, 363 listings and only 14 sales in June, this is a nice place, lakes, skiing and wineries everywhere..Everyone here thinks “we are in a special place” Apparently not.
Happy Canada Day!
Here in BC (bring cash) the HST kicks in, the price of fuel goes up some more because of carbon tax, I pay more for auto insurance; real estate transfer tax.
Higher real estate prices. Even the weather isn’t that great here.
What the hell am I doing here anyway? Time to move back to Alberta.
Garth;
Just intersted why you are deleting my blogs, and throwing me out again.
My blogs do state facts written by educated people ; some even Senators. They do pertain to the economic status of the world.
Nothing has been said which is slanderous, racist, although I am starting to believe that some key topics have been hit ,which are putting a thorn into some people above you.
First, you are using this blog to accuse people of murdering US presidents. Even if the rantings were true, this ain’t the place. Second, the only person above me is my wife. She thinks you’re eating too many carp out of the canal. — Garth
Vanncouver Real Estate – Units Sold in June
Detached Attached Apartment
June 10 – 1,141 – 31% June 10 – 575 – 28% June 10 – 1,258 – 29%
June 09 – 1,677 June 09 – 802 June 09 – 1,791
So, volume is slowing while inventories are WAY UP!
Uh oh.
Courtesy of “Yattermatters”
Spot The Speculator #3
“Their fortune is held up by the present real estate market. It is a thin thread on which to hang their financial lives.”
A couple of Westcoast speculators are up to their eye-balls in RE. Twelve properties. A relatively modest 147% of their net worth in RE.
http://wp.me/pcq1o-13V
The Tea-Baggers in the U.S. are already calling January 1st, 2011 (when the GW Bush “temporary” tax cuts expire) the “largest tax hike in the history of America”.
http://www.atr.org/six-months-untilbr-largest-tax-hikes-a5171
Just wait until Barack hits them with a Federal Sales Tax!
5 year rates have now dropped for a second time this week!
….Now 3.60%…..
Nostradamus jr.
#99 Nost Jr.
Who cares?
Now that June 2010 is in the history books, it will be interesting to see the stats… did the flood of listings outweigh the flurry of sales for HST-avoiding buyers?
This Toronto realtor is calling June 30th, 2010 “The Busiest Closing Day Ever”.
http://truecondos.com/june-30th-the-busiest-closing-day-ever
Garth’s writings remind me so much of Peter Schiff.
http://www.youtube.com/watch?v=ER2JU2UOevE
Does anybody know what the private residential investment as a percentage of GDP is in Canada right now?
#116 Nostradamus Le Mad Vlad on 07.01.10 at 5:46 pm
Toronto Police still lying.
I am betting that this is white washed and burried faster than you can say “Police brutality” or “to serve and protect”
#124 Nostradamus jr.:
even with lowest rates, people are so afraid of the coming depression/deflation/job losses that no one will be tempted to buy a house
#42 Jody on 07.01.10 at 12:59 am
Ottawa is not much different either. Some new houses can’t sell for 3 years and new development stall for approximately same period of time. Not to mention new firings.
((Just wait until Barack hits them with a Federal Sales Tax!))
Cracky’s going to be neutered in November.
((Fresh from Gallup:
PRINCETON, NJ — By an average 10 percentage-point margin since March, 45% to 35%, independent registered voters have consistently preferred the Republican to the Democrat when asked which congressional candidate they would vote for in their district. Independents’ preference for Republicans has been generally consistent over this time, with the gap in favor of Republicans increasing slightly since March, from 8 to 12 points.))
#119 Ralph
Property taxes are much higher in Alberta than they were for me in BC, and now I have given up my heat pump on Vancouver Island for higher gas and electric costs in Edmonton the tax savings don’t look that great.
#124 Nostradamus jr.
…5 year rates have now dropped for a second time this week!…Now 3.60%…
And this is positive news? This means that the economy is slipping back into a recession. Very bearish news.
#99 Nostradamus jr.
..Another positive sign for Hongcouver’s North Shore…Ellie..
You can both swim in the crude oil coming out of Port Moody.
Interesting . So we will just keep on going trying to get ahead in “lifes rigged game”. Keep working harder for less, but never question why?
Sounds like perfect formula for success. Thanks for putting that missing piece into the puzzle for me.
By the way tell your wife we don’t eat carp here. There bottom feeders , like most politicians.
journalism Is in a death spiral. To me, cnbc is not journalism it’s ‘television presenters’ And David Rosenberg is a classic. He’s a shill and a half. If a shill like that gives advice, I’ll do the opposite. Reading that article reminded me of why I stopped reading all main stream newspapers.
Re # 107 Al Reluctant Realtor; ( yesterday)
Try googling people like Andrew Hitchcock, Tex Marrs . This should provide you with alot of food for thought.
Bill (Peterborough)
Re: the JFK Executive Order 11110 Myth:
http://mcadams.posc.mu.edu/weberman/jfk.htm
P.S. I believe many conspiracies, but always look at both sides.
Oh Cah-rist, you just had to post nipples on Canada Day didn’t you. I demand a word with your wife.
You’ve been hit by the ►►►
.
|^^^^^^^^^^^^^^^^^^^^|
|www.unseatHarper.ca Truck | ‘|”””;.., ___.
|_…_…______________===|= _|__|…, ] |
“(@ )’(@ )””"”"”"”””"”””*|(@ )(@ )****(@ )
C.R.U.S.H. – Canadians Rallying to Unseat Stephen Harper
http://tiny.cc/CRUSH
♥
You’re losing it. — Garth
in this bit from Zeitgeist Movie .. JFK warns of a “repugnant” secret society that operates in “secrecy” .. spend 1 min 51 secs here:
http://www.youtube.com/watch?v=-kX0sLFXR0Q
Re #139 Critical Thinker
This Executive Order 11110, is rescinded by President Lyndon Baines Johnson (the 36th President of the United States 1963 to 1969) on Air Force One from Dallas to Washington, the same day as President Kennedy was assassinated.
I suppose this was a myth also.
Then after reading about the spin doctors version about the feds, never had such a good laugh , Thanks.