King cash

So, do you have an old guitar lying around? Left over from your Culture Club tribute band? Then give little Diane a call. She just placed this ad on Kijiji Toronto:

“After my parents bought our first house, they got really broke afterwords and I asked if I can (have) a guitar for my birthday but they couldnt buy it. I absolutely LOVE music! I cant live without it! I wish that I could have a guitar, any guitar would be perfect. So please, if you just so happen to have one laying around, I would gladly take it. My home phone number is 289-240-1664 and my cell is 289-356-1106 and my email address is mailto:[email protected] . So there is 3 ways to contact me. Ask for Diane if I dont pick up my home phone.”

While I’m thinking Diane’s new homeowning parents would be aghast to read of their poverty online (not to mention this blog), they’re sure not alone. This is one consequence of a society in which people without money buy houses. They get poorer.

This sucks for them. It’s also deflationary. Diane’s low-equity parents are likely so screwed over by big mortgage payments, insurance, utilities and property taxes that their consumer spending has tanked. And there’s a massive army of similar people – every single one of them at serious risk now of sinking into negative equity. So, not only will they be slaves to their houses, they won’t even feel good about it. The wealth effect will flee.

This is one of many examples of why you should expect a cascade of falling prices in the next few years. It will shock a lot of people expecting some hyper-inflation thingy. In fact dollars are about to get more valuable. In fact, they already are.

Wal-Mart just announced price reductions on thousands of items (including holiday toys), ranging from 10% to 40%. In the US, giant retailer Target stores has slashed prices on 1,000 toys. Best Buy and Future Shop have dropped prices. And, of course, real estate is just starting to go on sale.

Last month in Calgary, for example, sales crashed 38% from a year ago, while the average SFH dropped in price by 4%. Prices are down in Vancouver by about the same amount this year, and in Toronto the decline is just starting. If all goes as I believe, by this time next year anyone who was thinking of selling in 2010, and did not, will be a basket case.

This is what deflation does. It punishes sellers. Rewards buyers. Makes geniuses of people who wait.

Hell, even guys who work for house-pumper CMHC know that. Like Richard Chao, who told a reporter: “People are recognizing if there is a bubble then they’re holding on and waiting because prices might yet come down. It’s always the game.”

You bet. And it’s a game that turns real estate into a declining and illiquid asset, while putting people with cash into the driver’s seat. When values have clearly crested, and begin to soften, smart buyers hold off, knowing their dollars will only get more potent with the passage of time. It’s a lesson experience and insight brings, both of which are apparently still lacking among those young lemmings lining up at sales trailers in distant GTA burbs.

Of course, the growing clout of cash will be abundantly evident everywhere over the next two or three years. Computers, iPhones, after-market Harley pipes, cars – a whole host of things – will cost less. Interest rates will stay low. Bonds and preferreds will stay valuable. Companies will shed more jobs to stay efficient and maintain profits. Commodity prices will soften from current levels, without the economic activity to support them. Investors will scour for yield, especially income-starved Boomers.

So, unemployment will remain stubbornly high while wages and salaries stay put. Consumer durables and accommodation (including rent) will get cheaper. At the same time, personal and property taxes will probably rise, and families will not be happy. Unless they sold their houses in 2009 or 2010, harvested a tax-free capital gain, invested in financial assets which paid to own them, and bought again for tens of thousands (or hundreds) less in 2012.

One thing’s for sure. Their kids will have guitars.

Registration for Toronto event November 9th

As promised, we found a couple hundred more chairs at a deserted Leafs game, and dragged them to the DoubleTree Hilton on Toronto’s airport strip for my presentation there on Tuesday, November 9th. So, if you want to come (doors open at 6 pm, yakking at 7 pm), then just fill in the registration form below. You’ll receive a confirmation by email, entitling you to show up and get one free hug. Also bring a lighter for the more emotional parts of my speech. – Garth

[registration form removed - registration has ended]

211 comments ↓

#1 Mark on 10.31.10 at 5:15 pm

Computers will cost less? Lol. Not after China’s currency rises relative to ours.

#2 Alan on 10.31.10 at 5:31 pm

Even the big bad wolf can’t blow this house down.

#3 WINNIPEGER on 10.31.10 at 5:39 pm

Garth- any plans on coming to Winnipeg?

What is your opinion on the Winnipeg housing market and its future 1-5 years out?

#4 ATV on 10.31.10 at 6:09 pm

Garth, Dude! Put it back in your orange shorts.

“Of course, the growing clout of cash will be abundantly evident everywhere over the next two or three years. Computers, iPhones, after-market Harley pipes, cars – a whole host of things – will cost less. Interest rates will stay low. Bonds and preferreds will stay valuable.”

This is the exact opposite of whats gonna happen.

Rates are going up. Bonds going down. Inflation
going up big style along with the metals, oil, natgas, ags and commods.

Deflation first, inflation later. Hyper-inflation never. — Garth

#5 Hosehead on 10.31.10 at 6:17 pm

We’ll see what kind of halloween candy people can afford in vancouver tonight! Wonder if anyone will pull the old “microwave popcorn popped and put in ziplock bags” routine…

#6 Frank from Calgary on 10.31.10 at 6:20 pm

Most probable is a combination of deflation, inflation. Deflation on homes, as Garth has been stating, and other durables. Inflation on food, fuel, taxes, insuarnce. Interest rates will go up, but Mr. C knows that he can not prime the pump too much because so many people are over leveraged and would, if not default, stop speninding all together.

#7 OttawaMike on 10.31.10 at 6:20 pm

Hmm, funny thing I just noticed the same thing at Home Despot yesterday.
I was returning a couple 20 litre cans of Zinzer primer and the price dropped $40 from when I bought them in August. GFI breakers same thing, dropped from $269 to $199. Numerous other examples to. It can’t be the strong dollar because it has been near parity all summer.

This is not an endorsement of HD’s prices just an observation. In fact if you want a root canal like experience shop at Home Depot.

#8 Get Real on 10.31.10 at 6:36 pm

I am an avid reader of this blog and live in Vancouver.

While I agree with the likelihood that there will be a RE price correction in the greater Vancouver area, any idea about what which on is likely to drop more, SFM vs condos?

A friend on mine bought a condo in Yaletown (waterview) for 799K last year. 4K taxes, 650/month strata fee. Had to borrow more to buy furniture!!
(BTW, It does have granite, stainless steel and a great view. It seems to have lost its charm on him)

I think that in time it will be like getting a 200K haircut.

#9 Blacksheep on 10.31.10 at 6:37 pm

Garth, my post with link from yesterday, confirming MMT as fact, never made it through the filter.

I was actually afraid to post it and I guess you were too.

Thats OK, this journey is personal, not trying to save the world. I know the truth and that what matters.
take care,
BS

No idea what you refer to. — Garth

#10 Wealthy Renter on 10.31.10 at 6:46 pm

Wal-Mart just announced price reductions on thousands of items.

Besides higher energy prices and some food, I thought I was the only person noticing significant deflation. It is all around us. The flyer package that comes to our building is chock full of items with slashed prices. Most of the goods are crap, but it is cheap crap and getting cheaper.

I think Garth is right. House prices in many areas of Canada are well beyond the means of average earning families. It is almost crazily paradoxical that consumer prices are waning in such a low interest rate environment. Relatively recent homeowners must be really tapped out in terms of their ability to consume. Retailers know this and now we are stuck in this cat and mouse game of lowering prices to entice shoppers and maintain sales targets. How can this end well? Consumers can bite and take on ever increasing amounts of debt, or they save, and the economy could fall off a precipice….

And it is more than just cheap consumer goods. Despite all accounts to the contrary, the auto sector must still be hurting. A few weeks ago, I was stunned by the thickness of the 2 Wheels sections in the Toronto Star, and even stalwart companies like Toyota were advertising up to $3000 in discounts for cash payments. I think prices are much cheaper than a decade ago. If not, prices are close.

A few short years ago you would be laughed out of any Japanese dealership if you tried to negotiate any kind of deal. Now almost all of the car companies are tripping over one another offering 0% financing for up to 72 months. It might move a lot of cars, but I wonder how this sales model will sustain this very important industry?

We have a few years left before we are out of this mess!

#11 miketheengineer on 10.31.10 at 7:16 pm

Garth:

It is good you are in T.O.

I wish I could come.

Next time around…..

Mike

#12 pablo on 10.31.10 at 7:21 pm

The retailers of all merchandise will have to continue slashing prices to attract buyers as long as unemployment continues unabated. Real unemployment is at least 1.5x govt statistics and growing. With real income jobs being lost and replaced by min wage service industry jobs the situation will continue to exacerbate. With manufacturing jobs going out of the country and the trickle down of this job loss just who will be left with the ability to purchase anything but the necessities; if that.

#13 mid-Ontario on 10.31.10 at 7:34 pm

Listened to my investment show on AM640 today in Toronto. The usual “life is good…two neighbors sold in 4 days of sign going up and bidding is still happening” in the Big Smoke. That plus the odd sold sign here (100 km north) tells me that the Garth effect has not hit us yet.

All that Garth says about RE is reasonable and I believe that it will happen. I even understand his investment philosophy and do not disagree with him much. In gold and silver however, Garth shows signs of imperfections but alas, I will not hold it against him.

All the world is under stress with RE. All the heavy hitters in Canada have sounded the warning bells over debt aka RE for many. I figure that too many greater fools either do not listen to MSM or are too busy twittering to see the coming crisis.

Maybe the US elections will upset Canadian commerce and RE. A shakeup in RE is coming but the timing is very uncertain.

I expect that Canadian RE will follow the direction of the US dollar, a slow melt as it slides downwards.

#14 Rainbird on 10.31.10 at 7:39 pm

TO: Wealthy Renter : “We have a few years left before we are out of this mess!”

Question: Why would we ever get out of this mess. We got out of a real mess that occurred in 1982 but that’s when we still had manufacturing in North America. Now, because of GATT, all of the manufacturing is gone.

Without manufacturing, i.e. creating wealth, there is no prosperity – ever. I mean from what? From what are you going to create prosperity – selling stuff to each other?

1982 was the last recession that we could do something about. Now, it’s equalization. We have to get equal to the lowest common denominator in terms of economics i.e. China to go back to prosperity.

Because of GATT, each country will have a Starbucks economy.

For more details go to Google and look up Sir James Goldsmith interview with Charlie Rose – circa 1994 – brilliant.

#15 Suzukimum on 10.31.10 at 7:43 pm

Garth,

Will you ever come to Ottawa? I was talking to 2 friends this afternoon. One of them is hoping he will know where his company will finally post him for his job because he could buy a house instead of renting. Of course, I said he should wait for prices to come down. The other friend said that there is no point waiting because “Ottawa is government town” and prices will never come down significantly. So, what is your view? Is Ottawa different?

#16 yukon don on 10.31.10 at 7:45 pm

Like a million dollars or five hundred grand is affordable for a family home shake your head. The U.S. is resetting their economy with lower wages and lower prices , we have to compete with them. Prices are going down here as the bubble slowly starts to leak , no matter how hard the government tries to stop it. Can you say deflation is here? More and more people will be waiting to buy , it is here now and will only be building steam. Sales men like D.A. will have to be good at getting clients to lower prices , the days of easy lay down sales are gone.

#17 Moneta on 10.31.10 at 7:45 pm

One thing’s for sure. Their kids will have guitars.
———
I can’t wait. Music always gets better in hard times.

On another note, I just learned today that here in Ottawa, they fly construction workers from Manitoba on Sunday night and back home on Friday night due to a shortage of blue collar labor.

#18 DJ on 10.31.10 at 7:53 pm

I just put myself in a cash position / holding pattern, especially after the rapid jump in the markets (except Japan). Do you see a classic head & shoulders pattern occurring in the major indices? Of course these things are only apparent after the fact.

#19 john m on 10.31.10 at 8:10 pm

Real estate is booming in Pakistan and Afghanistan…hmmmmmmmmmmmmm>Construction of a new embassy in Pakistan has already cost more than $7 million just for the land and preliminary plans.

The largest single embassy project detailed in the public accounts for the past year was in Kabul, as Canada prepares to withdraw from its combat mission in Afghanistan and expand its civilian presence there.

Spending on the project in the past year topped $20 million, including $9 million for renovations, $11 million to buy property, and another $1.4 million to clear it of possible landmines…ever wonder why our country is heading for trouble?

#20 ArtVandelai on 10.31.10 at 8:19 pm

Yep…cheap crap just keeps getting cheaper. There’s inflation at the typical “consumer” level. Yet the “good stuff” that is in demand, quality goods made in Canada or Europe, or made of materials that have some rarity or craftsmanship to them, continues to become more and more expensive. Good service never declines in value.

#21 confused and a little crazed on 10.31.10 at 8:20 pm

Hi Garth,

I think East Van peaked around March 2008 then dropped to may 2009 ( because emergency rate drop in april 09) then jumped to jun- july 2010

because i was comparing houses w/ same size lots and age homes

therefore those who bought at the 2008 prices $700 k 40 yr home will have their mortgage renewed at 2012-2013 where interest rates will be about 3 % higher still low compared to historical but if you only put 3-6 % downpayment should be interesting.

at lowest % rates. The banks offered me $260K mortgage in 2004 they only offfered me $160k hmmmn interesting

#22 Devore on 10.31.10 at 8:21 pm

#15 Suzukimum

So, what is your view? Is Ottawa different?

Yes, Ottawa is different, just like Toronto is different, Vancouver is different, Calgary is different, Victoria is different, Edmonton is different, Montreal is different, and Kelowna is different.

The only thing different about all these places are the “fool-proof” reasons people come up with to justify their delusions.

Stop asking already. Nowhere is different.

#23 Get Real on 10.31.10 at 8:36 pm

Just read somewhere that there are around 10000 “grow-ops” in Vancouver and the lower mainland.

The real tipping point in Vancouver RE could be the legalization of marijuana in CA

#24 T.O. Bubble Boy on 10.31.10 at 8:42 pm

More proof that average price doesn’t mean much these days:

http://www.yattermatters.com/2010/10/vancouver-community-series-vancouver-east/

The Average Sold price in the Aug/Sept was $769,742. In Sept/Oct it increased to $836,726.

The Median Sold price in Aug/Sept was $757,000. In Sept/Oct the median dropped to $730,000.

So, the average price went up +8.7% in one month, but the median price went down -3.6% over the same period!!!

#25 Cowgary on 10.31.10 at 8:45 pm

Folks,

Feast your eyes on the folly that occurred in Calgary this weekend:

http://www.universitycity.ca/

#26 S.B. on 10.31.10 at 8:45 pm

The Fab 1 is coming to Toronto. Sales of yellow ties and press-on beards are skyrocketing amongst boomers who embody their new cultural icon. Garthmania is sweeping the nation.

When once asked by a reporter: Are you a bear, or a buyer, GT replied: No I’m a mocker (of real estate).

GT will wow the the crowd with his family friendly hit: “I wanna sold your land”

#27 Timing is Everything on 10.31.10 at 8:49 pm

People will be looking for greater ‘value for dollar’
And they will find it…Junk is junk. Quality is quality.
There will be a lot junk coming to market for a couple years….then the good stuff will come up….Patience and timing.

#28 Contrarian Canuck on 10.31.10 at 8:50 pm

Hi Garth

Spot on as always. In the passed you’ve discussed how to vulch a sale but heres a post on how to vulch a rental. Anything to ad to that?

http://financialinsights.wordpress.com/2010/10/31/vulching-a-rental-home/

#29 Old_is_Gold on 10.31.10 at 8:57 pm

In fact dollars are about to get more valuable. In fact, they already are.

Wal-Mart just announced price reductions on thousands of items (including holiday toys), ranging from 10% to 40%. In the US, giant retailer Target stores has slashed prices on 1,000 toys. Best Buy and Future Shop have dropped prices. And, of course, real estate is just starting to go on sale.

Computers, iPhones, after-market Harley pipes, cars – a whole host of things – will cost less. – Garth

True enough but deflation is not coming to

Energy
Food
Taxes
Utilities bills
Licensing fees
Passport Applications
Pretty much all things considered necessities

When hyperinflation came to Chile in the 70′s, there was massive deflation in certain sectors like real estate but hyper-inflation in that which people NEEDED, food for instance. I am sure that in 1920′s Germany there was massive deflation in luxuries but we know how much a loaf of bread cost. So Garth’s generalization that there will be deflation across the board is not quite correct, actually I think it is disingenuous because he has been beating the drums of deflation for so long, he is now clutching at straws to prove his point! Deflation in certain sectors does not mean that there is not already inflation in certain sectors that may indeed become hyper-inflation as happened in Chile.

Ain’t Chile, apocalyptic one. — Garth

#30 Marty on 10.31.10 at 9:05 pm

Commodity prices will not soften due to slowing economic activity. If we accept that premise it would be incompatible with the rising commodity prices of the last 2 years which account for the worst job losses and highest foreclosures on record.

Oil is just as precious as last year. But there are now 100 million more cars (400 million more tires) in China, creating a new demand strain. So something is going to have to give, you can’t just claim that low interest rates will keep energy and commodity prices under control with the same amount of factories and oil wells/refineries going into 2011.

Raw material prices will rise as there was less investments in new production (past 2 year because of uncertainty), and this will cause a squeeze in the pipeline among other things such as rising Asian purchasing power.

When times are good suppliers charge more. When times are bad, customers can’t afford much. But when the problem is not ‘price’ but ‘supply’ the sky is the limit Charlie Brown. Watch out, I said it here for Garth boy’s ego to reflect upon the notion that he might not be entirely right with his ‘crystal ball’ approach for forecasting.

Commodity prices rose on investor demand (equities substitute) and anticipation of recovery (most are set in the futures market). That demand has slacked, and current prices will not be maintained. If your points were strong, you’d be able to make them without personal comment. Evidently, you could not. — Garth

#31 McLovin on 10.31.10 at 9:13 pm

Devil’s Advocate you are a very strange passive aggressive person. You go from appearing to care what posters who engage you have to say to insulting them seemingly on how strong their arguments are. Strange indeed.

Further you pick and choose what points to address from people who engage you avoiding the hard ones and glossing over the rest. Why does one offering up valid points constitute a rant?

As I said before, you discredit your profession and continue to reinforce the stereotypes of Realtards by behaving the way you do with your head in the sand. If you are professional who has nothing to hide, why do you hide behind a name? Why not reveal your true identity? It might even drive in some business.

With this in mind I will go back to scrolling past your endless posts and not waste my time engaging you.

Once again, good luck with Kiami maybe I’ll see you in a few years when prices are down 60%.

#32 Alex on 10.31.10 at 9:16 pm

Seems to me that a lot of the people posting in this forum who say they haven’t personally seen any downward real estate price movement aren’t looking outside the big urban centers. But out here in BC, prices are down and listings and days-on-market are up (often waaay up) in spots like Abbotsford, Chilliwack, the Okanagan, Van Island, Squamish, etc. I’ve picked Abbotsford as a particular point of interest and have watched the MLS closely for the last half-year. It’s quite amazing what you can find there now vs even a few months ago. $500,000 homes now priced at $430,000 and having been on the market since early summer are not uncommon. Meanwhile, in Vancouver proper, Richmond, the North Shore, etc, the bidding wars and the pure insanity continues. Clearly, the speed/onset of the “correction” isn’t even a regional thing – it’s a localized event.

#33 cheri on 10.31.10 at 9:18 pm

Did anyone see the BC news about an “affordable condo building coming on market for the lower income folk. All you need to make is 30 grand a year and you get to buy a barebone unit for a mere 218,000. And not only that, if you have only saved 5% down, VanCity bank will loan you the extra money so you can now put 10% down. I guess these people don’t need to eat

#34 kevin on 10.31.10 at 9:20 pm

In order for a real estate market to say “it is different here” that market would need to prove without a reasonable doubt with numbers to back that up. Here is a take on saskatoon on why it isn’t different http://saskatoonhousingbubble.blogspot.com/

#35 Utopia on 10.31.10 at 9:22 pm

#10 Wealthy Renter on 10.31.10 at 6:46 pm

“Wal-Mart just announced price reductions on thousands of items”.

——————————————————-

I do not think you are yet seeing deflation. Walmart cutting prices in a significant way is just a sign that retailing is going to get ugly in the new age of lower consumption.

There are too many retailers in fact and the numbers have been telling us this for quite some time. Consumption in Canada accounts for some 65% of all economic activity.

With so many home-owners stretched on payments and unemployment still remaining sticky in the 8% range there is just not enough money to go around for everyone. Walmart knows this. They know their experience from the ongoing US recession and they can make reasonable projections of consumption numbers in Canada on that basis.

We are going to see a few notable retail failures by the time this Christmas season has drawn to a close. That is why what you are witnessing is not yet a deflation trend but rather strategic merchandise cost-cutting prior to the Christmas season. This is more about survival of the fittest and competition for scarce consumption dollars. It is about squeezing the bottom line of the weaker players and forcing them out of the game for good.

Some big retailers are going down alright. Wal Mart will not be one of them.

#36 This is Wonderland on 10.31.10 at 9:27 pm

#9 Blacksheep.

aka. randy quaid.

#37 DiGiacomo on 10.31.10 at 9:30 pm

#24 T.O. Bubble Boy on 10.31.10 at 8:42 pm

More proof that average price doesn’t mean much these days:

http://www.yattermatters.com/2010/10/vancouver-community-series-vancouver-east/

The Average Sold price in the Aug/Sept was $769,742. In Sept/Oct it increased to $836,726.

The Median Sold price in Aug/Sept was $757,000. In Sept/Oct the median dropped to $730,000.

So, the average price went up +8.7% in one month, but the median price went down -3.6% over the same period!!!

———————-

agreed! average price never really tells you the whole picture – it’s just another number that we humans love to track because it makes us somehow feel like we know what’s going on :)

sell 10 houses at $1,500,000 each and 10 at 300,000 in month 1, you have an “average” of 900,000

sell 9 houses at $1,300,000 each and 5 at 250,000 in month 2, you have an “average” of 925,000 (look! the market is going up!)

(I know, that sample set has a wild median price shift, however it’s still an indication of what’s wrong with focusing on “averages”)

what I’d love to see is data from different years on units in the same condo building – even though there’s still flaws in that data set, (ie building aging, competition from other buildings), that would give an interesting picture to contrast with the “average / median” data!

#38 A nine-bagger on 10.31.10 at 9:37 pm

well, my comment wasn’t posted.

Add me to the list of the censored and oppressed.

This is not a gold blog. Shove off. — Garth

#39 Small Steps on 10.31.10 at 9:37 pm

Hi Garth,
I cannot thank you enough for this blog. We are constantly bombarded with people saying we should own a house (especially since we have a young family) as opposed to renting. This blog makes us more confident in our plan, decreasing the influence of society. Keep up the great work!
…Our kid may not get stainless steel or the luxury of riding in a brand new SUV, but the RESP plan is fully funded and a guitar purchase would not break the budget.
However, I do think little Diane is learning some interesting life skills.

#40 McLovin on 10.31.10 at 9:38 pm

Devil’s Advocate # 239

“Now on the other matters of your little outburst Mr. McLovin… let’s address these links to those FSBOS you suggest are a good indication of what’s going on in the market shall we?

Both were condo apartments offered for sale in the $1,000,000 price range and both had price reductions of about $100,000 as I recall. That is a 10% ASKING PRICE drop. And that asking price is of a FSBO that has not sold… how can you possibly say that is any good indication of what the market is doing?”

Well DA here’s my next “outburst”:

Did you go to grade 4 Realtard? (Sorry I forgot high school graduation is not a requirement in your profession)

The first link I posted has been reposted below and it was originally $494K reduced down to $394K that is a drop of 20%.

http://kelowna.kijiji.ca/c-housing-housing-for-sale-SUNNY-NEW-KELOWNA-3-BDRM-CONDO-REDUCED-100-000-FOR-QUICK-SALE-W0QQAdIdZ238759271

The second when from $1.1 mil to $950K which is 14%

Why do you lie and distort the facts? (see above post) Did they teach you that in day 11 of Realtard training school. When someone shows you something on paper that damages your position simply ignore it and tell the person that they said something else.

This is truly my last post to you. I have better things to do than engage a blind man leading his clients off a cliff.

#41 Dan on 10.31.10 at 9:45 pm

Sales were bad in the GTA for October but the realtors will lie and pay the MSM to lie. People are stupid but the obvious signs that the housing market is crashing is the countless forsale signs with very few sold signs. Co-worker I know can not sell their house which they can not afford. They can not understand why no one wants to buy their over valued home. They have dropped the price twice and still nothing. I can imagine this story being played out all over Canada. My BIL is looking at a power of sale in Brampton(i don’t know why) and he tells me alot of homes are power of sale around there(Brampton). The housing crash is here and now and will only get worse.

POP……………………..

Greater fools………….we lost our house.

#42 Sargon on 10.31.10 at 9:49 pm

“On another note, I just learned today that here in Ottawa, they fly construction workers from Manitoba on Sunday night and back home on Friday night due to a shortage of blue collar labor.”
____________________________________________

I’m sorry, but I find this hard to believe. Jobs are so plentiful in Winnipeg that if your boss asks you to work late, you just quit. The next day, walk in to a random
office building at get hired on the spot. (Often at treble the wage.)

Or so one would think based on house prices.

#43 S.B. on 10.31.10 at 9:49 pm

“The pick of the litter for renters
Whistler’s rental market swings from brutal to bountiful
By Susan Hollis

The rental market is open – wide open.”

“”There are 250 rental units available in Whistler. That compares to last year at the same time to 68, and the year before 30, and the year before 83… so there is considerably higher availability of rental units right now.”

There is also an increase in the number of rental units, thanks to 55 new WHA rental units in an apartment building at Cheakamus Crossing. The WHA units are offered at competitive rental prices – a studio goes for $775 per month and a one-bedroom for $995, which may mean privately-owned units elsewhere in Whistler won’t get the rates as high as they’ve seen in previous years.”

http://www.piquenewsmagazine.com/pique/index.php?cat=C_Frontpage&content=Housing+availability+1743

So much for Plan B, Renting, as housing prices soften!!

#44 np on 10.31.10 at 9:53 pm

so, Garth, if you’re right, and we’re going to get deflation, why is the US dollar continuing to collapse? it’s at the lowest level in 100 years against the swiss franc, lowest level since WWII against the Yen, lowest level in history against gold…

USdollar collapsing, and Gold skyrocketing, certianly isn’t a sign of deflation.

The US is entering deflation now, of course. That has nothing to do with forex. — Garth

#45 Marty on 10.31.10 at 10:01 pm

Garth, you took it the wrong way. I was talking to your ego and not you, nothing personal, sorry if you feel targeted. Our ego is usually the accomplice that gets us in trouble.
I have an ego too, so you may smack it now because I need you to explain your reasoning.

1. Commodity prices rose on investor demand, you’re talk about futures right? Speculation of the MSNBC correction?

2. That demand has slacked current prices will not be maintained. So suppliers will make less and have to fire the people they thought of hiring when prices were starting to inch up this year. In either case, there will be a loser in the transaction and usually the supplier protects himself by putting up his price.

You’re saying here that they will be desperate to sell their goods and will discount closer to their cost of production? How low can they go until they just fold up?

How can anyone rebuild their balance sheet if they have no opportunity to increase their income to make up for the proverbial ‘economic crisis’ we have entered?

#46 DaBull on 10.31.10 at 10:02 pm

Computers, iPhones, after-market Harley pipes, cars – a whole host of things – will cost less.

Computers and iPhones have always cost less over time, that what advancements in technology and competition does to price. Harley pipes and cars only seem to cost less but really it’s just a currency thing. Food and other commodities will definitely cost more going forward. Wages will increase and even with 8% unemployment because of inflation and taxes/user fees will increase. Housing is in for a short term minor correction while the market re-balances. Housing has also had it’s run and, after the correction, will stay stagnate for a couple of years before increasing at the rate of inflation again. Gold is overvalued by at least $700. I’m just waiting for the signs to buy me a whole lotta HGD when it’s price re-balancing finally show.

Chicken bones say……. the future looks good for those who get it right. Hope I got it right.

#47 Ayn Rand on 10.31.10 at 10:03 pm

Oh, I understand the situation Garth refers to.

After reading this article last January

http://www.theglobeandmail.com/report-on-business/rob-magazine/how-much-do-your-neighbours-owe-on-their-mortgage/article1445137/

and having ongoing legal problems with the neighbours, I went the title search route and discovered alot more than I expected. Now I know why they are so bitter!

They bought at $500K; $240K mort; retired parents put $250K in to live in their basement (they were on the property title), $10K deposit. Interest rate 5 years ago was on a demand mortgage prime plus 7%.

This couple put numerous upgrades to their home (new build, large country acreage, unlimited possibilities) and last year parents wanted out so they had to come up with the $250K to pay the parents off. Now their mortgage is $550K which means they added another $60K over and above their previous liability. Not sure what the market will bear on this property, but unlikely more than $550K.

Their new mortgage is still a demand mortg at prime plus 7% (likely poor credit history, my banking friends advise) which means they spend about $5000 per month on mtg, $700 month taxes, etc.

Me and hubby see how costly it is to operate a house, costs for kids and their activities so not sure how this couple is doing it (other than the wife working for minimum wage and they not spending a dime on their kids, not even pizza slices for the kids special activities at school).

I expect they are in for a rude awaking, and we just need to bide our time before they cannot continue making payments, go bankrupt and move (and life will be blissful once again next summer).

And they just paved their 350 ft long driveway this September….talk about putting on airs.

I do believe they had previous financial difficulties, as who pays prime plus 7% and with a demand mtg as well? Those with poor credit history.

#48 Behavioral Finance on 10.31.10 at 10:03 pm

ATV

If rates go up, commodities would tank. The probability of hyperinflation is very slim, unless the gov’ts would start adding zeros to their currency.

#49 Behavioral Finance on 10.31.10 at 10:06 pm

US dollar is going down, because the forex market is anticipating of the Federal Reserve doing Quantative Easing much larger then other central banks.

#50 randman on 10.31.10 at 10:10 pm

“Without manufacturing, i.e. creating wealth, there is no prosperity – ever. I mean from what? From what are you going to create prosperity – selling stuff to each other?”

Rainbird…….Best comment of the night!

We don’t need anymore fitness trainers or iphone salespeople…we need to produce and manufacture
THINGS!

#51 nonplused on 10.31.10 at 10:20 pm

Deflation first, inflation later. Hyper-inflation never. — Garth
Probably true, but ANY rate of inflation above zero is bad for savers unless they can get guaranteed returns that are above inflation after taxes. 2% effectively reduces savings to nearly zero in 35 years. That’s one of the dichotomies of home ownership. Property taxes as low a 2% return the total value of the house to the municipality every 50 years. But since they keep raising the taxes commensurate with increases in “value”, the total purchase price is remitted to the municipality in less than 50 years; I use 35 as an approximation.

So you buy the real estate once from the current owner, buy it again ever 35 years from the municipality, and probably again over 35 years if you are being responsible in maintenance expenditures (these things aren’t built to last).

I haven’t got to utilities and liability, but let’s just say that it is unavoidable: The cost of owning a house long term is MUCH greater than the purchase price.

The cost of renting long term isn’t any better, but most landlords neglect maintenance so if you can ride a property out from the “OK” stage to the “ruined” stage you can save a bit of cash. Not much. The Leviathan needs to capture all of our productive capacity, much as a yellow jacket wasp nest needs 100% of the worker wasps’ productivity.

But as it happens, those species of wasps who do not nest still need to spend 100% of their time on their individual pursuits. So it isn’t necessarily better to be outside the system. There are economies of scale, insects and humans alike. The Leviathan has brought us granite, sewer, water, electricity, and Pay Per View. The lone operator gets a really rough cabin in the Yukon, and has to spend a lot of time chopping wood and hunting.

But back to the post:

My observation is that amongst the young ones and the wife who brought them forth, only the ultra-rich can actually afford to meet all perceived needs (wants). Therefore this post is not up to par with the general standard. My own daughters, now teenagers, think my boat is insufficient now, because it isn’t a $70,000 wake boat with ballast tanks and big projection speakers on an A-frame. They have a friend or an uncle who has one. There is no way to keep up with what the kids want. And often the wife neither. Even if she’s working. A boat that is better than they can ski is not good enough if they have a friend who likewise is learning to ski, but behind a better boat. You cannot win. Don’t buy a boat, or anything else for that matter.

I am sure they have classified adds looking for a better boat for free.

The parents may not be able to scrounge up a guitar, but more likely they are looking at how well piano lessons went and said “why bother?”.

#52 ottawa pete on 10.31.10 at 10:23 pm

Isn’t inflation (money supply expansion) impossible without credit/debt expansion (i.e. loans)? The trend is to save not spend – personal debt is declining – at least in the U.S. It will come to Canada soon enough. Taxes and other government fees will rise (even with cutbacks which are sure to come,) however incomes will fall in absolute terms which will only hasten price deflation in our shopping cart assuming people still want to produce – there is the option of simply not producing at some point. Except gasoline of course, which will likely rise in price even as demand slackens, but it looks like natural gas will take care of that in time. At some point in time it will make more sense to manufacture closer to the market at which point jobs and stability will return. How long will this take? Decades? Hopefully in our lifetime. If you are in debt, you are well and truly screwed in the relatively short term. There is no way out for indebted governments at this point save perhaps for a natural disaster or plague of biblical proportions – restricted to the “right” place of course. “Yes We Can!” – sorry – no, you can’t.

Check out washing machines and dryers. Korean steam models were upwards of $3K a pair just 2 years ago – now they are $2K. Just bought a laptop – top of the line with a 50% price drop.

House prices are still in fantasy land here in Ottawa, and sales continue albeit at a very restrained pace. Days on market increasing, number of listings increasing…lots of junk, lots of $600K+ stagnating.

Comments welcome.

#53 DaBull on 10.31.10 at 10:25 pm

#10 Wealthy Renter

A few short years ago you would be laughed out of any Japanese dealership if you tried to negotiate any kind of deal. Now almost all of the car companies are tripping over one another offering 0% financing for up to 72 months. It might move a lot of cars, but I wonder how this sales model will sustain this very important industry?

Say hello to competition. One reason for it is the big 3 have finally worked out their quality issues and are supplying vehicles that people want. Also the 0% over 72 months is not good deal for the purchaser. With these deals you pay the interest up front. This is very lucrative for the car companies. I guess the Asian’s have finally figured that out. Ever heard of the saying “There is no such thing as a free lunch”. That saying still holds true and especially with the 0% over 72 months deal (NOT so good after all).

#54 Basil Fawlty on 10.31.10 at 10:25 pm

Deflation would result from the popping of the largest credit bubble in history and many goods will decrease in price. However, at the same time, we have the holder of the world’s reserve currency on a quantitatve easing binge. This is causing a drop in the US dollar, which contributes to higher commodity prices, since the dollar is the worlds reserve currency.
Hyperinflation is a currency event and is caused by people getting rid of dollars due to the dollars anticipated fall in value. Printing dollars through QE has the potential to reduce the value of the dollar and hence push people to get rid of dollars in exchange for real assets.
I’m not saying that hyper-inflation will occur, however is seems to me that there will be consequences associated with the ongoing printing of US dollars. If there were no consequences, we could just print a million bucks for everyone on earth and live the good life on Rodeo Drive. I fail to understand how QE can be considered a non-event.

#55 Blacksheep on 10.31.10 at 10:29 pm

This is Wonderland post #36,
I assume you know what MMT is, in regards to economics?
What is your opinion?
BS

#56 ottawa pete on 10.31.10 at 10:29 pm

BTW – I bought and sold gold a long time ago. As Garth correctly points out – if there is a true economic/societal collapse you will have nothing to worry about. Your gold, if you manage to keep it without being murdered for it, will last a few weeks before you likely starve to death. Better off buying guns ‘n ammo.

#57 45north on 10.31.10 at 10:36 pm

mid-Ontario: 100 km north of Toronto.

Orillia?

Suzukimum: “Ottawa is a government town” and prices will never come down significantly.

well policies can change. expect to hear an announcement of a hiring freeze

Moneta: Music always gets better in hard times.

Poke Sally: http://mcaf.ee/e8150

Dan: My Brother-in-law is looking at a power of sale in Brampton and he tells me alot of homes are power of sale around there(Brampton).

Tony already heard. Best time to get out of Brampton was March 2010.

speaking of real estate in a more general sense, Manulife got out while the getting was good:

http://www.manulife.com/public/files/200/1/Investment_Fact_SheetQ12010.pdf

notice the chart “Limited RMBS Holdings”
RMBS stands for Residential Mortgage Backed Securities, notice that between 2004 and 2007, every year it reduced its investment to less than half the previous year. Smart.

#58 dd on 10.31.10 at 10:44 pm

…– a whole host of things – will cost less…

Things you really can live without will cost less. Things that you really need will cost more, namely food and energy.

#59 dd on 10.31.10 at 10:49 pm

“The US is entering deflation now, of course. That has nothing to do with forex. — Garth”

You are totally off the mark. US currency is getting devalued. Imports of commodities will increase. Inflation will be on the rise for a number of items.

#60 Tryingtobepatient on 10.31.10 at 11:04 pm

It’s very easy for eager buyers to want a definitive answer as to the timing of the “fall”, but the truth is, the best you can ask for is an educated guess based on historical cycles and current market conditions in other markets that affect ours.

Unfortunately, the tone of this blog sometimes wavers from anger to immaturity. There are some honourable realtors just like there are honourable lawyers, teachers, doctors, accountants and so on. The hate which fills some of these blogs is disturbing. “Boomers–let them rot” really stunned me. Does this person realize that Garth is a Boomer as are his parents? What is it that is bringing out the worst in some of these responses? Most people here are interested in intelligent commentary of the real estate scene as well as some thoughts on solid investing advice. Here’s another one: There is a place for gold in a balanced portfolio, now can we stop talking about gold and get back to some real info on real estate? Good for you if you made a windfall profit. Some people also did in Nortel. Doesn’t mean it will sustain.

So please, may we return to real estate. Initially, we heard that prices would recede in 2011, but now it seems the wait has been extended to 2012. Is it because interest rates did not climb as was expected?

Thanks for your response.

#61 Increasing that 1% on 10.31.10 at 11:10 pm

re: # 17. …”here in Ottawa, they fly construction workers from Manitoba on Sunday night and back home on Friday night due to a shortage of blue collar labor.”

lots of blue collar labor in Ontario- just as there are people in Manitoba available for positions where out of Province workers are being flown in there—how hard did they even try to find people closer— for the cost of flights, raise the salaries or benefits…if that’s government where’s the accountability, who’s in charge of these decisions? Why aren’t they fired?

and, #19., re: spending on embassy
There’s so much contradiction and lack of accountability in Government spending, it’s beyond a joke- then there’s no money for medications or epidemic diseases costing the individual- and little Diana’s start to risk their own safety–and their parent’s privacy– to find a way to pursue something they enjoy.

#40 McLovin, re: rant
LoL rant

#41. Dan, re: Brampton
Poor Brampton, gets beat down- but will pick itself up and surge ahead–one way -or another

Mr. T: Re: the one free hug, yeah, but who’s that going to be coming from? And, oh yeah, those lighters might be dangerous, with all the hot ‘air’ that may be blowing around

#62 Dave in Victoria on 10.31.10 at 11:14 pm

#44 Marty on 10.31.10 at 10:01 pm

Your ego is the perception and story that you portray as your self. The ego exists only because you do, or you exist via the story that you tell and hold onto which is manifest as ego. It’s not possible to separate the two, unless you’re dead, but then that gets tricky.

Are you dead?

#63 Tim on 10.31.10 at 11:17 pm

RE #23
When California legalizes bud-they’ll have to, as they have the worst economy since the depression, then that will take the wind out of BC’s sales. The narco province will see a big hit in construction, not as much money to launder, and not as many freeloaders will be able to make fortunes selling bud and buying pricey condos. The Vancouver Sun actually had an article to warn people about going downtown on the weekend due to anticipated gang activity. Is this Bogota or Vancouver? Things have gotten out of hand here. Corruption at the very top levels- i.e. Campbell and the BC Rail deal. Lucky we have an incompetent opposition, how else could he get away with it?

#64 BrianT on 10.31.10 at 11:20 pm

#43NP-the US economy is contracting and the currency is weak as would be expected given the large trade deficit and enormous public debt. Real unemployment exceeds 20% and is rising steadily-the population (at the median) has zero net worth and worsening income prospects-the currency is backed by the ability to levy taxation against the public but the citizenry is flat broke overall at this point.

#65 Tenant Locator, Property Management, Toronto Apartment Rental | Landlord Rescue on 10.31.10 at 11:28 pm

[...] any case I’ll be covering the event for everyone for this blog, if you can’t make it. If you can make it, snag your tickets here and wear a pink and green striped shirt, purple pants and a goalie mask, so I know who you [...]

#66 Jeff Smith on 10.31.10 at 11:35 pm

>#1 Mark on 10.31.10 at 5:15 pm
>Computers will cost less? Lol. Not after China’s
>currency rises relative to ours.

Oh come on, I know that salary has been going down. So Garth aint all that way off. I have to admit though gas, grocery, and pretty much everything you need to survive has gone up.

#67 Devil's Advocate on 10.31.10 at 11:36 pm

McLovin,

You must realize that my level of expertise is far beyond the average poster’s intelligence level. Sure I’m a bit arrogant at times, but there is a good reason for that. I’m an expert in real estate and a whack load of other important subjects which clearly you aren’t. Don’t bore me with the facts. We are not anything like Arizona or Vegas. We have grapes and a big lake. That’s industry! It’s also dry here…just like those other places. I also have a nice car, and an ipad. That makes me special.

#68 Sitting on a fence in Ottawa on 10.31.10 at 11:37 pm

#15 Suzukimum

Ottawa will begin to feel the pinch when the feds start tackling the deficit. At my work we received an internal letter outlining how we are over allocated in resources and there is to be no more external hirings. Essentially, everything is on hold until the next budget. Plus the unions are being asked to settle quickly. I anticipate the 2011 Budget to be very interesting. Wait until next spring to see how the Ottawa RE market responds.

#69 Patz on 10.31.10 at 11:45 pm

A rising tide lifts all boats. It’s a great little image isn’t it? In your mind’s eye you see a picturesque harbor at sunset. The boats gently rock while the incoming tide lifts them higher. It has resonances with nature, timeliness and timelessness. It is at once romantic and comforting. Although it was first proclaimed by JFK in defence of a government project its meaning has been transformed by the neoliberals to justify trickle down, free market economics with tax cuts benefitting mostly the rich and upper middle income earners. It is apparently Robert Rubin’s favorite aphorism, to which I say, ’nuff said!

In a little truth telling from the Clinton admin, economic advisor Gene Sperling said that “in the absence of appropriate policies the rising tide will lift some boats but others will run aground.” Well here’s a news flash: all the boats belonging to the middle and working class are on the rocks.

Any connection to RE? Funny you should ask—yes indeedy. It was during the time of Ronny Raygun that the tide really turned; policies shifted and offshoring of jobs was rewarded by government. From that time to the Bush tax cuts for the wealthy the tax rate for the richest Americans went from ~90% to ~35%. And of course that’s just income tax. The rich have many ways of keeping their dough out of government coffers. Net result, which has been shown in study after study, is/was the greatest transfer of wealth from the mass of the middle and working class to the richest. And it was accompanied by the MSM glorifying wealth and riched excess, think Robin Leach.

Now we’re coming to the good part. The middle class in their doldrums still looked like pretty good pickings. Cue Alan Greenspan. The desire to own a home both propagandized and innate coupled with extremely low interest rates gave the MC a chance to achieve a dream and make a surefire investment in one swell foop. (A ‘foop’ is a technical term for something that seems like a really good deal but is really a crock of sh*t.) Home ownership rates and prices escalated so much for so long that people mistook it as forever. Cue the banksters! Coincidentally, they found ways to make bags of money by securitizing the millions of mortgages written so giddily during the halcyon days of home buying. McDonalds employees went from flipping burgers to flipping condos. If you couldn’t make out in this market you must be a stupid bear in hibernation. The wealth effect went into full flood.

But then
I saw Satan laughing with delight
The day the music died… (Don McLean, American Pie)

And for sure the levee is dry. It’s been a long time coming, the really big boys got theirs* and Diane went online to beg for a guitar that her over indebted parents couldn’t manage to buy for her.

*In 2009 according to SS data in the US 74 Americans earned over $50 million and the average was a staggering $518 million! And speaking of 50 million—that’s the number of Americans who need some form of government assistance to get by.

Coming to a country near you!

#70 Harry Cho on 10.31.10 at 11:48 pm

Well Mr. Gartholomew, we will get the verdict on the inflation/deflation debate very soon. I wouldn’t bet against Uncle Benny with your money. LOL No point in writing about what Carney is saying or doing. The levers get pulled in Washington. Let’s not kid ourselves.

#71 Foggy on 11.01.10 at 12:00 am

So houses are selling as normal in Toronto? Been watching this one in the beaches for a while because a friend lives on the same street. Been on MLS for 93 days now and no action. Also the seller/agent has not reduced the price by one dollar. Smart marketing. I’m sure it’ll be even more saleable when the snow comes. There’s also another on the same street – a detached with many upgrades priced at $499M which is low for that area. Nothing…

http://www.mls.ca/PropertyDetails.aspx?PropertyID=9786400&PidKey=1553327031

#72 rory on 11.01.10 at 12:07 am

#22 Devore you said:
“The only thing different about all these places are the “fool-proof” reasons people come up with to justify their delusions.”

Two more fool-proof delusional reasons – a $50M lotto win in Van and a $21M win in TO…upwards and onwards.

#73 Kanata squirrel on 11.01.10 at 12:09 am

Garth – thanks – you motived me to sell my home Vancouver in 2008 and move to Ottawa and later sell in 2010.

Honestly, the 2010 is bitter sweat. I made lots in my 2008 sale but my Ottawa sales was basically paying rent – but I sold at market value and will be liquid on closing.

Living on boomer street I fully understand that eventually the boomers will get hit. The dude with the corvette, the other driving to work when work is 5 minute walk and folks with no kids living at home but having 3000 sqft homes.

Wow … I am so out of that and my wife is trusting my lead to be well diversified and not in RE and rent….

I know have 2-3 years to find a nice farm with good ground water and soil … and researching that now…

Squirrel

#74 Jeff Smith on 11.01.10 at 12:10 am

Watch out! “House prices in Canada have officially fallen —”

http://money.ca.msn.com/banking/homebuyersguide/article.aspx?cp-documentid=26127042

#75 Jeff Smith on 11.01.10 at 12:13 am

Garth do you think H-C-F will pull out of the hat an CMHC (part deux) ? Is it possible ? How about an intergenerational loan, so instead of 40/0 they can do a 100/0 or even (gasp) 200/0. Multi-multi-generational mortgage ?? House will paid off by great-great-great-grand children.

#76 dark sad person on 11.01.10 at 12:23 am

Here’s a sign “real” Deflation is happening in Canada-

**********************

Canadian banks suffered from lower trading revenues during the fiscal third quarter, but that retail strength somewhat offset this weakness, says Standard & Poor’s in a report released Monday. The rating agency sees a slowing economic recovery as the biggest risk facing the sector.

While trading slumped during the quarter, the demand for mortgages in particular bolstered the quarterly performance of Canadian banks, S&P says, benefiting the banks’ Canadian retail lending operations. However, it notes that “the strong growth in secured real estate lending started to abate over the summer months with the advent of the Harmonized Sales Tax on new homes in Ontario and British Columbia, rising rates, and slowing economic recovery — a trend we see continuing, and so, we believe that growth in consumer retail lending revenues is likely to slow and commercial lending remains tepid.”

Revenues from capital markets operations were halved from last year’s high levels, the rating agency notes. Although S&P believes those inflated levels were unsustainable anyway. It says market revenues were hurt by slumping debt and equity markets, which were feeling the fallout from the European sovereign debt crisis.

http://www.investmentexecutive.com/client/en/News/DetailNews.asp?Id=54906&IdSection=148&cat=148

********************
Contracting credit = contracting money supply = Deflation-

Falling prices always lag real Deflation-especially when Governments prop high prices-through subsidies and bailouts-
This is what makes Deflation painful-
We have to keep in mind that not all the World is in Deflation-yet-
China/Asia-Germany-France-SA are still in Inflation-
China especially-is an overheated wreck about to collapse on itself-which will have a negative price effect on Commodities-
Some of the Euro’s are in Deflation and others-the power houses-Germany etc. are still above water-but it can’t last as their export demand will slow-
China has gunned their Economy so hard with Credit-that it’s sitting on all sorts of over supply and export backlog-that’s going to come into play sooner or later-
When their export trade declines and unemployment climbs internal consumer demand will wane-as they fall into Deflation with the rest of the Globe-
Prices will have no choice but to fall as affordability drops out from underneath prices-
Oil and food can go up or down-in Deflation and Inflation-
Remember we had Oil at $12/bbl in 1989-when Inflation was hot-
Weather-Geopolitical and as always-speculation can send prices either way for those two-
I think once China’s economy cracks up and tips over-
world demand for Oil will drop and Oil prices will decline with it-
Supply problems after that-could drive prices higher-

High Cash holdings and (i wont say the forbidden word) for fear of sending the board into a tizzy for the whole day “again”- but “money” and patience has always been the best play in Deflation-
I don’t see why it wont be this time either-

#77 Debtisforever on 11.01.10 at 12:39 am

#33 cheri:

Exactly, 15 years ago you could buy a whole HOUSE in Vancouver for that price, and you can bet the banks weren’t selling to people making only $30k per year with 5% down. Sure, the numbers look ok NOW with rates so low, but push them to 7 or 8% and the mortgage payments look downright scary for someone making only $30k per year. Yikes! And that doesn’t include all the other expenses of homeownership, property taxes, strata fees etc.
Why is our society so obsessed with making sure absolutely EVERYONE has this noose of debt around their necks?
No thanks, I think I’ll sit this one out.

#78 Republic Of One on 11.01.10 at 12:48 am

“So, unemployment will remain stubbornly high while wages and salaries stay put.”

I’ll tell you where salaries WON’T stay put – big drug companies. I work for a huge drug company and I’ll tell you this – sales are going off the roof for anything to do with the brain and heart!

Sales employees are getting paid big salaries and cashing large commissions in their Range Rovers and BMWs.

I love Canada and the die hard “free healthcare” advocates! Oh, and thank God for our biggest customers – the Boomer generation! Here’s to more Rx for Christmas – our biggest selling season of the year!

Deflation? Maybe for everybody else!

#79 Wealthy Landlord on 11.01.10 at 12:51 am

I would like to thank the Wealthy Renter! Thank you! Thank you very much!

#80 For Sale: Canada on 11.01.10 at 1:00 am

The kid’s parents can afford a cell-phone plan for her, but not a used guitar? Fishy.

#81 The Original Dave on 11.01.10 at 1:02 am

so, Garth, if you’re right, and we’re going to get deflation, why is the US dollar continuing to collapse? it’s at the lowest level in 100 years against the swiss franc, lowest level since WWII against the Yen, lowest level in history against gold…

USdollar collapsing, and Gold skyrocketing, certianly isn’t a sign of deflation.

The US is entering deflation now, of course. That has nothing to do with forex. — Garth
—————————————————–

I think the decline in the U.S dollar in the last few months has to do with them pressuring the Chinese to increase the value of their currency. The Chinese in turn are getting out of U.S dollars and into resources as payback for now. At the G20 meeting Nov 20th, the currency issue will be one of the major issues and we should expect some sort of resolution.

I believe Nov 20th, at the latest, will be a mid-term bottom for the U.S dollar. Once that trend reverses, buying power of those holding U.S dollars increases and deflation becomes even more apparent. None the less, the U.S is nowhere near the high prices of 2007

#82 El Magnifico on 11.01.10 at 1:06 am

To Garth and all my fellow Blog Dawgs, I would like to share with you this amazing interview of Sir James Goldsmith in 1994. He predicted that with GATT (General Agreement on Tariffs and Trade), the Western economies would be devastated, the jobs would be shipped to China, we would face high unemployment, etc. This interview is really a gem.

The exchange with Laura D’Andrea Tyson (Chair. Concil of Economic Advisors) during the interview (video #2 & 3) is absolutely remarkable!

In video #6, he said “our financial system is very fragile” and “derivatives are extremely dangerous”. That was in 1994!

I can’t believe such a wise man wasn’t listened to.

Here is the link of the first video: http://www.youtube.com/watch?v=4PQrz8F0dBI&feature=related

#83 Buyright on 11.01.10 at 1:54 am

RE #38 well, my comment wasn’t posted.
Add me to the list of the censored and oppressed.

This is not a gold blog. Shove off. — Garth

Can someone please set up a “GoldFool blog”
So gold bugs can go and play there and stop waisting Garths time and ours.
They obviously dont appreciate the time and effort that goes into a blog such as this.
Quality information and advise at a GREAT price

#84 realpaul on 11.01.10 at 1:54 am

Lets not forget that retailers of all stripes got in on the greed game and raised their prices to the roof because of the cheap and easy credit. Car dealers are asking double and triple for a ‘luxury brand’ automobile today over five years ago because there is no talk of buying…just monthly payments….its the same with houses and condo’s…

Thats why I laugh at the idea that there is a ‘deflation scare ‘ in regards to reall estate ‘values’. These supposed values are supposed to remain astronomical? They were only increased because money was free….not because there was any value created by market fundamentals. The fact that real estate prices are falling is because the ‘value’ was all ‘paper profit’…..unrealised by the majority.

Look….of course the government wants to keep pimping the ‘value’ angle….they have a vested interest in keeping prices high…..all their tax increase and revenue projections are based entirely on this ponzi scheme. Has anyone a memory of a union strike being negotiated with more cash going into the wage and pension plans? The government is addicted to spending….their only idea is to raise taxes…in order to raise taxes they have to convince you that you can ‘afford it’ because the ‘value’ of your real estate has gone up……….its a classic con job…where you get zero benefit but feel like you’ve gotten something out of it….until you realize that you were conned……too late.

Wallmart and Target etc have played us for suckers…..the mark ups they have been making have been obscene all along……paying workers in China pennies an hour and selling the same units for dollars….and now theyäre telling you that they are ‘lowering the price’ Bwahahahahahahahahahahaha’ thats the oldest scam in retail.

Theres no deflation in the equation….just a lot of people who’s instinct for instant gratification has gained control of their power of reason.

Take the ‘emergency cash’ out of the system and prices will moderate towards the ‘market price’….thats not deflation….thats a pyramid scam toppling down and things getting back to normal. Our economy has been on a ten year bender and people are going to suffer through the hangover.

#85 Devil's Advocate on 11.01.10 at 3:43 am

#40 McLovin on 10.31.10 at 9:38 pm

I may well stand corrected McLovin… as I mentioned;

“Both were condo apartments offered for sale in the $1,000,000 price range and both had price reductions of about $100,000 as I recall. That is a 10% ASKING PRICE drop. And that asking price is of a FSBO that has not sold… how can you possibly say that is any good indication of what the market is doing?”

That you point out;

The first link I posted has been reposted below and it was originally $494K reduced down to $394K that is a drop of 20%.
http://kelowna.kijiji.ca/c-housing-housing-for-sale-SUNNY-NEW-KELOWNA-3-BDRM-CONDO-REDUCED-100-000-FOR-QUICK-SALE-W0QQAdIdZ238759271
The second when from $1.1 mil to $950K which is 14%

Is a mute point and in no way mitigates the primary contention of my rebuttal that they were both FSBOS which were overpriced in the first place and have still not sold so there is no way to validate their actual worth as any benchmark what-so-ever in support of your argument. You might as well be talking about flying pigs.

I am not “distorting the facts”. The commonly accepted definition of market value is that of the Appraisal Institute of Canada which is; “market value is determined by what a ready willing and able buyer is prepared to pay a ready willing and able seller, neither being under undue influence to buy or sell”. How possibly might these two unsold properties you hold out as example meet that definition in any way at this time McLovin? They don’t and won’t until they are sold and measured against what their proven value was at the peak of the market.

I don’t expect you to understand this but please do heed my caution McLovin you are one of those who need a REALTOR most.

#86 Behind the Numbers on 11.01.10 at 5:24 am

Just 4% confidence the US Dollar will go up? 99% of gold-diggers here believe Gold will go up? Well, that screams OPPORTUNITY TO BUY USD and Short Gold!

I purchased $18,000 of USD. And I shorted gold.

A Pure Contrarian investment.

#87 MetalHead on 11.01.10 at 5:32 am

Iran Announces It Has Converted 15% Of Its $100 Billion+ In FX Reserves Into Gold

http://www.zerohedge.com/article/iran-announces-it-has-converted-15-its-100-billion-fx-reserves-gold

#88 Behind the Numbers on 11.01.10 at 5:32 am

Garth is right. Deflation is upon us all. But that really, as Garth has been telling everyone, was a no-brainer to figure out. Just as Garth has been saying keep liquid.

For me, that means cash. For others that can mean stocks or short term investments like GICs or bonds.

It doesn’t really matter what your liquid investment is in or what you make on it, be liquid, that’s the point I believe Garth is getting at here.

#89 David B on 11.01.10 at 6:00 am

Not so with Real Estate here in East , things are booming…… I was out and about and saw not one but two “Open House Signs” now how cool is that?

Received a call yesterday and some poeple I know who were hot on some ocean front property mentioned they thought it best to wait. As they are far away it would appear this blog and word of mouth can travel over mountians and seas. Cool eh.

#90 timbo on 11.01.10 at 6:33 am

14 Rainbird,

fantastic video, thanks

http://video.google.com/videoplay?docid=5064665078176641728#

#91 Keith in Calgary on 11.01.10 at 6:43 am

I finally got off EI…
Just got my Realtors licence and now am a member of the CREB. My first open house this Sunday with squiddly’s new girlfriend – who sponsored me to the CREB.
This wasn’t my first choice for a career but after banking and car sales, what the heck!
This does not mean that I now love real estate, but it’s all about doing what I know best: selling.

#92 Moneta on 11.01.10 at 6:44 am

Seems to me that a lot of the people posting in this forum who say they haven’t personally seen any downward real estate price movement aren’t looking outside the big urban centers.
———–
In the US, the downturn started on the outskirts of the burbs. Gas prcies were making driving to work unaffordable. People with stables also started to suffer. I guess maintenance costs were kreeping up and less parents could afford equestrian lessons.

Interestingly, I just went to a Blue Rodeo concert which was sponsored by an equestrian competition. Their goal was to get more public interest in the sport. I wonder if this is a sign of the times…

#93 David B on 11.01.10 at 6:57 am

Garth, add this morning news, (local CBC) … payday loans across Canada are up … a way up! nuff said.

#94 pbrasseur on 11.01.10 at 7:00 am

I don’t believe in this deflation scenario (except in housing), not when the FED and other central banks are working so hard at creating inflation, something they do in their sleep at best of times…

They have so far failed. — Garth

#95 MetalHead on 11.01.10 at 7:34 am

@#87 Behind the numbers and behind the curve.

Your name suits your market call.

Look at all that deflation around you…..

your education, health, food, taxes, insurance, main fees, travel, energy, printing, the money supply ARE UP and RISING.

Also UP Cotton, pork, beef, wheat, oats, rice, natgas, oil, silver, gold, palladium, platinum, copper, tin, iron, moly, steel, uranuim, plastic, corn etc..etc…

The only thing going down is CASH.

#96 Apsalar on 11.01.10 at 7:44 am

And yet Re/Max is still so optimistic. This from today’s online Ottawa Citizen:

http://www.ottawacitizen.com/business/Condominium+market+heating/3757227/story.html

That’s a surprise. Not. — Garth

#97 Moneta on 11.01.10 at 8:01 am

I don’t believe in this deflation scenario (except in housing), not when the FED and other central banks are working so hard at creating inflation, something they do in their sleep at best of times…

They have so far failed. — Garth
———–
It’s like saying that an athlete is failing when it is practicing for 4 years in preparation for the next olympics.

Fail = fail. — Garth

#98 CTO on 11.01.10 at 8:12 am

#49 randman / Rainbird

Absolutly right!!!!!

“Without manufacturing, i.e. creating wealth, there is no prosperity – ever. I mean from what? From what are you going to create prosperity – selling stuff to each other?”

Enough said! No need to say anymore!!!Especially for Southern Ontaio!

That statement is reflected in Torontos downtown banking core where they built the tallest bank towers in Canada back in the 70s and 80s….Not much now though. Just look at T.Os skyline and pick out the tallest BANK building. (BMO, 1974).

Condo’s are just an example of people using leverage to access “residual”, money to sell to each other, they are not a result of REAL wealth but mostly debt leveraged by pre-1990s money tucked away in the bank to support the modern unrepayable loans.

#99 Paul on 11.01.10 at 8:38 am

http://www.timescolonist.com/business/Condominium+market+heating/3757227/story.html

#100 Devil's Advocate on 11.01.10 at 8:39 am

#66 Devil’s Advocate on 10.31.10 at 11:36 pm
McLovin,

You must realize that my level of expertise is far beyond the average poster’s intelligence level. Sure I’m a bit arrogant at times, but there is a good reason for that. I’m an expert in real estate and a whack load of other important subjects which clearly you aren’t. Don’t bore me with the facts. We are not anything like Arizona or Vegas. We have grapes and a big lake. That’s industry! It’s also dry here…just like those other places. I also have a nice car, and an ipad. That makes me special.

Whoever you are when trying to impersonate me at least put a little more effort into getting it right will ya… Don’t forget my boat, my McMansion, my portfolio of revenue properties, my exotic vacations, my Ivy League education, trophy wife, and above all remember to sign off in my name as “this has been the incredible DA coming to you from Beautiful British Columbia – The Best Place on Earth!” ;-)

Oh ya and the gold bars buried under the hot tub beside the swimming pool in the back yard on the shores of Lake Okanagan don’t forget them…

#101 Paul on 11.01.10 at 8:41 am

Oops. Didn’t see that last post.

#102 45north on 11.01.10 at 8:58 am

Moneta: It’s like saying that an athlete is failing when it is practicing for 4 years in preparation for the next olympics.

an athlete is failing when he is practicing

or an athlete is failing when she is practicing ( for the politically correct)

#103 john m on 11.01.10 at 9:11 am

I met a fairy today who said she would grant me one wish.

“I want to live forever,” I said.

“Sorry” said the fairy, “I’m not allowed to grant wishes like that!”

“Fine,” I said, “I want to die after the Conservatives get their heads out of their asses!”

“You crafty bastard,” said the fairy…:-)

#104 bigrider on 11.01.10 at 9:14 am

#70 Foggy.

I can tell you why there have been no price reductions on those homes in the beaches you linked too. Sinclair the listing agent is RE pumper numero uno ! extraodinaire !!

That guy is a shill if I ever saw one. On TV alot. RE has no where to go but up according to him ! Every area is a buy !!! Yadda Yadda Yadda

#105 Bobby on 11.01.10 at 9:19 am

Poor old Devil’s Advocate. Still trying to convince himself he is important.

Those of us that have the confidence and the assets to go with it, don’t have to brag about it.

You can always spot the guy not getting any, as he is always bragging about his sex life.

#106 pbrasseur on 11.01.10 at 9:44 am

They (the FED) have so far failed (to create inflation) — Garth

Then they’ll just try harder. Their intentions are quite clear

http://articles.moneycentral.msn.com/Investing/ContrarianChronicles/the-feds-clear-goal-inflation.aspx

You fight the FED you lose and that’s precicely what millions of foolish low yield bond buyers are doing right now…

#107 Soylent Green is People on 11.01.10 at 9:45 am

Diane posts weird ads that don’t make sense for a fourteen year old girl:

In Need Of A Job, Im Hardworking, Intelligent, and Dedicated
Diane El-Hachem 433 Leeds Ct Oshawa, ON, L1J8J2 Home (289) 240 1664 Email [email protected] Objective: To procure a responsible position as an assistant of any kind where my back round experie Toronto (GTA) 03-Oct-10

I want any Sewing Machine That you are throwing away
It doesnt matter if its old, broken, whatever, I just want your used/old sewing machine. Thankyou, My phone number is 289-240-1664 or email at mailto:diane__canada@hotmail to contact me :)

http://toronto.kijiji.ca/c-PostersOtherAds-W0QQUserIdZ41869567

#108 Dan on 11.01.10 at 9:59 am

Make no mistake about it the housing market is doing really bad and sales are once again down. You are starting to see more power of sales as people with NO MONEY who couldn’t sell have now lost their homes. The number is getting bigger and will grow by the day. If the MSM were to tell the turth and not take pay offs from vested interests you would see a housing crash like no other. Everyone in the Biz that is honest mortgage brokers/bankers/realtors will tell you this market would need to correct by almost 50% in some places (VAN) and 35-40% in others (Toronto). If you can believe it some realtors wish the CREA would stop blowing sunshine in the MSM and allow prices to come back to reality. The numbers coming out have been played with to give the illusion of a healthy market when the truth is the canadian housing market is terminally ill . Power of sales are up but the MSM would never report the realities. Buyers should only make 25% and lower offers. Sellers are starting to get worried and many will need to sell before they go bankrupt.

POP…………………………

Greater fools…………..I lost my house.

#109 Hiteclowtec on 11.01.10 at 9:59 am

Structural unemployment through automation is here now. The off-shoring of jobs just a prelude. The automated checkout and the doctor, lawyer, real estate agent in a box killer apps in the pipeline. No jobs will mean no money for granite and stainless. Deflation ! Civil unrest ?

http://www.thelightsinthetunnel.com/

#110 Mister Obvious on 11.01.10 at 10:00 am

Vancouver Sun Nov 1, 5:56 AM PST:

Condominium Market In Canada Heating Up

Re/Max said the “vast majority” of newly built condominiums in Toronto are purchased by long-term investors from Asia and the Middle East, who will rent them until they find the price they want for them.

Other factors driving the condo market include urban redevelopment that favours intensification over urban sprawl, empty nesters seeking low-maintenance retirement properties and investors hoping to sell when prices appreciate, the report said..

More crap…

http://www.vancouversun.com/business/Condominium+market+Canada+heating/3757559/story.html

Ho Hum….

#111 Moneta on 11.01.10 at 10:25 am

Moneta: It’s like saying that an athlete is failing when it is practicing for 4 years in preparation for the next olympics.

an athlete is failing when he is practicing

or an athlete is failing when she is practicing ( for the politically correct)
——–

Fosuc on eth from adn yll’ou mssi eth massege.

#112 Got A Watch on 11.01.10 at 10:27 am

Well, I expected some personal attacks from my last comment. Hardly surprising.

“#200 Got A Watch re “#190 “Daystar” – “The bottom line is the bottom line, which means how much % gain my trading accounts see by the end of the year.”

Got a Watch, get a clue buddy! Do you have to be such a jerk to people because you own gold? Seriously, if that’s what gold does to you, then you can have it!…”

Umnmm, you sure you read MY comment? I think it clearly states that I don’t own any gold right now there, and I have no plans to buy any. I might buy silver later, don’t have any right now, for now I am playing mining stocks. I am not bragging about my returns, I am simply stating a fact: no matter how you make it, the bottom line is the bottom line, a profit or a loss. I try to make it a profit, sorry if that irks you. Perhaps you prefer to lose money, but feel “right” about it. Go ahead, good luck with that.

Ever run a business? Did you carry on, year after year, doing the same things the same old way, and losing money at it? Or did you go with what made you money? Trading is a business, and businesses make money, or they go out of business. Except for those favored by Governments, but that is another story for another day.
———————————————–

I know goldbugs get their underwear in a knot if you suggest buying any other asset. That is part of their “linear thinking groupthink” that I mentioned. It’s always been like that, won’t change now.

If you look at the % gains in assets, there are many stocks or commodity plays that have gained far more than gold or silver prices vs the US $. I know most are garbage stocks, and the rally is based on QE and Government bullroar. Who cares,why ask why, take the profit. I rent the stock, I don’t buy and hold forever. If I am wrong, I get stopped out, and I don’t worry about it, losing trades are part of trading. I also said if you can’t be an active trader, just buy and hold some silver. I don’t see much controversial in those statements either.

This probably won’t be my best trading year, I have been stopped out of a lot of trades at minor losses, and have had some big winners too. Nobody’s perfect. I made the choice to do a lot more stock trading because I decided “no risk, no reward” or “no guts, no glory”. If you are not in, you can’t participate in the potential gains. I have learned from every trade, win or lose. I enjoy the mental challenge of trading, it’s a puzzle with so many moving parts.
————————————————-
“dark sad person” – I was unaware you were given your name by Garth. But I think someones online name does reflect their personality in some ways. You could choose the name “light happy person” just as well, couldn’t you? My online name has no meaning really, it’s a handle I used to use years ago for some online games, it was easy to just carry on using it, since I had linked e-mail addresses for online registrations. I also used to use the name “Maj_Fiasco”for some games, which was a joke name – you can try to plumb that one for deep meaning, good luck.

When you say you were being “ironic”, is that in an Alannis Morissette kind of way, or what? I don’t see much “irony” in a statement like:

“Wow- as the great Seer-Carlos Castaneda’s-Pontificates
Oooops i mean Daystar

btw-that name “Daystar” is typical of what some toked out hippy would have given their child-
“back in the day”
Ya know-like
Frank Zappa-named his daughter “Moon Unit”…”

But I guess your definition of ironic is different from mine. Besides, what have you got against Frank Zappa anyway.

If you think it is bragging to point out how there are other things that go up in price, sometimes more than gold or silver, you probably think the weather report is bragging too. It just is, whether you or I think it a good or bad idea. I didn’t trade NFLX, but why can’t I point out the fact that it’s % returns were rather amazing?

I am not trying to “control” the Blog. It is Garth’s Blog after all, and he runs it as he sees fit. I will respond to comments I find annoying, if that irks you, so be it. It’s obviously not going to stop you from posting comments.

#243 – daystar- thoughtful comment. I must say though that it has been my experience that the best way to trade is to expect anything, and be surprised by nothing. Mr Market will soar or crash or go sideways, and yours or my opinion of whether it will is irrelevant. It’s all on Zimbabwe Ben and how much he prints or not, and the ForEx markets reactions. It’s not the news that moves the tape, it’s the market reaction to it, and the perceptions of where it is going. Stock markets like to think they “discount the future” but the way they react in panic sometimes tends to disprove that theory. They “discount the conventional wisdom”, or adhere to a lot of groupthink, until they don’t.

Thus, making a lot of predictions in the short term is really a waste of time. It may, or may not happen. I have an idea of where I think things are going, but I may change it as events dictate. My generally Bearish macro-economic views are separated from my trades, as the overall trends of an economy, that takes years or decades to cycle from one extreme to another, are a lot easier to spot. If I waited for “the economy to improve” or some other “signal”, I’d be waiting a long time and doing nothing.

If I had to put all I have learned about trading and markets in one sentence, it would be something like a paraphrase of Jesse: “Trade the tape you are given, not the one you want to see”. Or how about “do not get emotionally involved in any trade”.

#113 MKUltra on 11.01.10 at 10:32 am

Today’s headline news for all you squirrel-munching whack-jobs…

“Re/Max said the “vast majority” of newly built condominiums in Toronto are purchased by long-term investors from Asia and the Middle East, who will rent them until they find the price they want for them.”

http://www.vancouversun.com/business/Condominium+market+Canada+heating/3757559/story.html

#114 Tom on 11.01.10 at 10:37 am

A REMAX planted article today.
http://www.vancouversun.com/business/Condominium+market+Canada+heating/3757559/story.html
I quote”The lifestyle has also gained a foothold with younger, hipper audiences as the definition of home ownership evolves with the changing demographic,” Polzler added. “Dreams of the small home with a white picket fence are being replaced by the funky loft apartment in proximity to shops, restaurants and entertainment.”
They forgot big time debt!
And this classic.
Re/Max said the “vast majority” of newly built condominiums in Toronto are purchased by long-term investors from Asia and the Middle East, who will rent them until they find the price they want for them.

Yup up to 70% in some buildings.I guess they have cash to burn.

#115 T.O. Bubble Boy on 11.01.10 at 10:51 am

Just to keep things interesting, Vancouver West saw the average price down (-2.4%) in Oct vs. Sept, but median price up (+0.5%)!

http://www.yattermatters.com/2010/10/vancouver-community-series-vancouver-west/

#116 Future Expatriate on 11.01.10 at 10:52 am

APPLE computers will NEVER cost less… although they should.

#117 refi now on 11.01.10 at 10:56 am

I dont think a 14 year old girl should be putting her address out via Kijiji, too many sickos in the world…

Parents need to teach daughter about what to put out on the internet…

Coming from the parent of a 15 year daughter.

#118 Future Expatriate on 11.01.10 at 10:58 am

So Garth, what’s your take on this?

Gold-Will-Outlive-Dollar-Once-Slaughter-Comes

Bloomberg… not exactly a “buy gold” “end is nigh” rag.

Bloomberg did not write it. John Hathaway did, whose company runs a gold fund. Duh. — Garth

#119 warptweet on 11.01.10 at 11:01 am

Moneys tight!
I noticed a marked drop in halloween participation this year. About 50% of the homes were blacked out in our neighborhood. The difference from last year was obvious.

#120 dark sad person on 11.01.10 at 11:09 am

#110 Got A Watch on 11.01.10 at 10:27 am

*********************
I “like” Frank Zappa-
I’ve read all of Castaneda’s books-
I like a lot of Daystars posts-

The name “Moon Unit” and “Daystar” and the fact that Daystar was “seeing” an end to the Gold bull-sorta made something inside go “click” regarding all 3 names-
Some i suppose might think i made a good connection and others-like yourself-think it was said in poor taste-
What can i do about that?
Try and throw in a bit of wit and take your chances i guess-
btw–i like a lot of your stuff as well-not all though-same for Daystar and actually-same for myself-
Come back in a year and re-read everything you wrote and like myself-you’ll probably say-
What was i thinking–

#121 throwstone on 11.01.10 at 11:14 am

Wednesday the 27th…

http://www.financialpost.com/news/Home+equity+loans+bolster/3736772/story.html

#122 The Original Dave on 11.01.10 at 11:25 am

When hyperinflation came to Chile in the 70′s, there was massive deflation in certain sectors like real estate but hyper-inflation in that which people NEEDED, food for instance. I am sure that in 1920′s Germany there was massive deflation in luxuries but we know how much a loaf of bread cost. So Garth’s generalization that there will be deflation across the board is not quite correct, actually I think it is disingenuous because he has been beating the drums of deflation for so long, he is now clutching at straws to prove his point! Deflation in certain sectors does not mean that there is not already inflation in certain sectors that may indeed become hyper-inflation as happened in Chile.

———————————

gotta love these examples, haha. These people don’t seem to read up on the consistencies of economies that went into hyperinflation. Did Chile have a credit market? Neither did Zimbabwe or the Weimer republic. Do you understand what that means? If a government decided to print money, their currency would inflate or hyperinflate depending on how much printing was done. Governments in Canada can print like mad because on the other end people are buying up bonds and as a result, no hyperinflation.

#123 David B on 11.01.10 at 11:34 am

Reports from South of Border are now stating at least a 7% drop in prices of homes next year, this report does not take into consideration further forcloseures that are now to be under estimated.

——————————–

But wait …. The Republicans will soon be in charge and y’all know who loves em to bits here up North.

#124 BrianT on 11.01.10 at 11:43 am

Apparently many are confused re Fed policy-Smith explains it here very clearly http://www.oftwominds.com/blog.html

#125 brett on 11.01.10 at 11:44 am

CASH is king, worst advice you could give Garth. the banksters are prepping the sheeple and their “cash/bonds is safety” play, for the blast furnace, where all currencies go up like rice paper.

The herd is moving to cash, see amercians increase their savings rate, and despite any hype you hear about gold, the public dont own it, not a single oz. the coming gold hype is to prepare the public for the central bank buying of gold at much higher prices, the public will accept Gov buying gold at $_ _ _ _ _ ?per oz to save their burning paper currencies. cash is trash

#126 jess on 11.01.10 at 11:46 am

80 El Magnifico
Thanks for that link …You may find this”hamilton Project” interesting ..
..”Since 2007, Dr. Tyson has served as a Senior Advisor to the McKinsey Global Institute and the Center for American Progress. She is a member of the Brookings Institution Hamilton Project Advisory Council and the Massachusetts Institute of Technology Corporation……….etc

http://www.brookings.edu/~/media/Files/Projects/hamilton/papersreleasedtodate.pdf

#127 El magnifico on 11.01.10 at 11:48 am

Happening in Vancouver now (developer’s website):

“Darren is a 29 year old home support worker in the Downtown Eastside. With an annual income of $36,500, and questions about his down-payment, Darren was unsure he could afford, or even qualify for, a mortgage. Vancity stepped in to help make home ownership at 60 W. Cordova a reality for Darren, and many others in the same situation, who have a steady income but don’t have 5 per cent available for a down-payment. Through Vancity’s Cash Back mortgage promotion for 60 W. Cordova, Darren will put down 2 per cent of the property value from his own funds and will receive 3 per cent in cash back toward his down payment.”

“Darren’s financial details

Purchase Price $219,900 + HST
2% down-payment $4,398
3% cash back from Vancity $6,597
Mortgage payment1 $948/month
Estimated strata maintenance fee $188/month
Estimated property taxes $70/month
Total monthly home ownership cost $1,206
Comparable monthly rent $1,500
Monthly Savings of owning at 60 W. Cordova vs Renting $294″

$1500 per month to rent a 550 sqft apartment in Gastown (near east hastings) with no parking is a LIE!
(http://vancouver.en.craigslist.ca/van/apa/2035667062.html)

If you can read the footnote, here is the assumption:
“MONTHLY MORTGAGE PAYMENTS ASSUME A 35 YEAR AMORTIZATION RATE AND AN INTEREST RATE OF 4.22 PER CENT FOR THE CASH BACK PROMOTION AND 4.12 PER CENT FOR NON PROMOTIONAL MORTGAGES.”

Interest rate of 4.12% over 35 years, really? And what happened if the rate increases?

These guys are criminals…

http://www.60wcordova.com/financing.php

#128 Behind the Numbers on 11.01.10 at 11:49 am

#93 MetalHead “The only thing going down is CASH.”

I told you, it’s a contrarian buy. Like you said, people are expecting hyper-inflation and cash to be worth less each day. So, I’m putting my money where my mouth is and buying USD and shorting gold.

$18k worth. But it’s just my 1st contratian buy, next month another large amount and so on. Hopefully that doesn’t bother you?

Words are worthless till you put your own money behind them.

Anyone that’s a true contrarian doesn’t buy into a bull bubble be it, RE or Gold.

#129 Apsalar on 11.01.10 at 11:57 am

@ #101 JohnM
‘“Fine,” I said, “I want to die after the Conservatives get their heads out of their asses!”

“You crafty bastard,” said the fairy…:-)’

You made my day with that one. Thanks :)

#130 Helen on 11.01.10 at 12:07 pm

RE prices already getting down. My husband had a talk with a pal who is searching for a house in Etobicoke. Listed in June for $ 616K detached home was recently reduced to $ 560K and last week the pal made an offer for the house $ 580K and his realtor said the house owner will be accepting this offer. He-he…

#131 JayJay on 11.01.10 at 12:07 pm

Devil’s Advocate:
The correct term is ” its a moot point”, not mute.

#132 Devil's Advocate on 11.01.10 at 12:09 pm

#103 Bobby on 11.01.10 at 9:19 am
Poor old Devil’s Advocate. Still trying to convince himself he is important.

Those of us that have the confidence and the assets to go with it, don’t have to brag about it.

You can always spot the guy not getting any, as he is always bragging about his sex life.

Bobby, I want to personally thank you for your last bulk order of Viagra… my Pfizer shares are paying great returns because of it.

#133 Coho on 11.01.10 at 12:11 pm

When the market cycles/economic booms and busts can be manipulated by certain elite, the common people are fighting a losing battle…

Thomas Jefferson on private (central) banks 200 years ago:

“I sincerely believe that banking establishments are more dangerous than standing armies, and that the principle of spending money to be paid by posterity under the name of funding is but swindling futurity on a large scale.”

“Everything predicted by the enemies of banks, in the beginning, is now coming to pass. We are to be ruined now by the deluge of bank paper. It is cruel that such revolutions in private fortunes should be at the mercy of avaricious adventurers, who, instead of employing their capital, if any they have, in manufactures, commerce, and other useful pursuits, make it an instrument to burden all the interchanges of property with their swindling profits, profits which are the price of no useful industry of theirs.”

#134 Devil's Advocate on 11.01.10 at 12:12 pm

BTW… some of those posts under the “Devil’s Advocate” handle were not mine but someone impersonating me. No worries… I can understand and appreciate how some less fortunate might want to adopt the persona of the great Devil’s Advocate. ;-)

and now a word from out sponsor…
http://www.youtube.com/watch?v=ChWs1d5kots

#135 enjc111 on 11.01.10 at 12:19 pm

I don’t know how you deal with all these gold pumpers. If they were so secure in their holdings they wouldn’t need to validate them by arguing with a stranger on the internet.

The ‘value’ of gold is measured in what it can be redeemed for – dollars. Saying it went up 40% or whatever is saying that your gold increased its dollar value.

If you’re buying to trade during the apocalypse great, don’t argue it’s dollar value or portfolio worth. If you’re impressed with it’s dollar value increase, then stop arguing against fiat money.

Good on you Garth for maintaining your cool most of the time. I shake my head reading some of these comments. It’s almost as if the same person writes them all. Look at the diction – it’s almost as if a singular hive-mind of gold buyers is at work here.

#136 Coho on 11.01.10 at 12:19 pm

As America goes, so will the rest of us…Lets hope She throws off Her bloodsuckers…the Federal Reserve and its offspring Gee-Sacks, Morgan Stanley, etc….

More Thomas Jefferson quotes on private banks:

“If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.”

“The art and mystery of banks… is established on the principle that ‘private debts are a public blessing.’ That the evidences of those private debts, called bank notes, become active capital, and aliment the whole commerce, manufactures, and agriculture of the United States. Here are a set of people, for instance, who have bestowed on us the great blessing of running in our debt about two hundred millions of dollars, without our knowing who they are, where they are, or what property they have to pay this debt when called on.”

More TJ quotes:

http://quotes.liberty-tree.ca/quotes_by/thomas+jefferson

#137 timbo on 11.01.10 at 12:37 pm

#121 Dave b,

8% is quoted from CNN money but what is 1% between friends.

http://finance.yahoo.com/news/US-home-prices-expected-to-cnnm-28872967.html?x=0&sec=topStories&pos=2&asset=&ccode=

if you think inflation is going to save the world then how are wages going to rise in developed countries to keep up demand? We are competing with cheap labor that forces our wages down.

Equity loans, speculation and credit cards have been the only fuel here at home and the last greater fools are being milked. This is the first time since I picked up Garth’s book” Greater Fool” that people are actually talking about how housing has become a liability.When food inflation kicks in early next year and wages do not follow, reality will set in.

#138 DeeWhy on 11.01.10 at 12:39 pm

The US Fed is considering [QE2] because QE1 failed to deliver the results that it expected. The depth of the failure is visible in the difference between the original amount of quantitative easing and the credit growth it was supposed to generate. From September 2008, when the quantitative easing actually started, to June 2010, a $2.46 trillion ($1.43 trillion in assets and $1.03 trillion in excess reserves) increase in the Fed’s balance sheet coincided with a decline of $296 billion in total U.S. credit market debt outstanding. Consider also that up until 2008, total credit market debt rose for 63 consecutive years. Deflation stopped that growth in its tracks and, despite all its efforts, the Fed cannot get credit to expand again.”

#139 emanon on 11.01.10 at 12:42 pm

Condo sales surge in Ontario cities
Condo sales are booming in major Ontario cities and increasing in seven of eight regional markets in the province, Re/Max Ontario-Atlantic Canada said Monday.
Ottawa saw an 11.9 per cent rise in condomium sales during the first nine months of 2010 compared with 2009, while sales in the Greater Toronto Area were up 10.4 per cent.
Meanwhile, the “vast majority” of units sold in Toronto’s downtown core were bought by Asian and Middle Eastern investors who plan to hold the condos for the long term.
http://www.cbc.ca/money/story/2010/11/01/condos-sales-ontario.html
I’m going to take a wild guess here and say that the average october transaction price for GTA/Toronto will be up $20,000.+

#140 Flase Facade on 11.01.10 at 12:43 pm

Here’s an interesting take on deflation – a $10 million pric drop!

http://www.signaturevacations.com/svec/static/landing/promo.jsp?page=10mil&langCode=1

Got cash, will travel!!

#141 Bobby on 11.01.10 at 12:46 pm

Thanks Deveil’s Advocate,

Thick as a post, and played right into my hand.

Like I said, if you have to talk about it……..

#142 Devil's Advocate on 11.01.10 at 12:55 pm

#129 JayJay on 11.01.10 at 12:07 pm
Devil’s Advocate:
The correct term is ” its a moot point”, not mute.

That would be true if I were not speaking of Mr. McLovin. Point taken, Freudian slip on my part.

#143 dark sad person on 11.01.10 at 12:57 pm

#133 enjc111 on 11.01.10 at 12:19 pm

I don’t know how you deal with all these gold pumpers. If they were so secure in their holdings they wouldn’t need to validate them by arguing with a stranger on the internet.

****************

Actually-if it weren’t for people like you posting about things-you do not know about-
There would likely be much less talk about Gold-

******************

The ‘value’ of gold is measured in what it can be redeemed for – dollars.

****************
Wrong–

Gold is measured against “any” basket of goods-
“Same” as the $-
Why can’t you have Gold “and” the $ in a bull market at the same time?
Because–that is exactly what’s happening–
The only difference is–
Gold is gaining better than dollars at this point-
Want me to prove it to you?

#144 Devil's Advocate on 11.01.10 at 1:16 pm

Here’s some interesting statistics if you can get your head around the true ramifications of them.

Real estate is a lot like fishin’

I am one hot lookin’ blonde babe. Ya I ain’t so smart but boy do I got a body on me. Legs all the way up to here.

That being said you clearly haven’t a clue about me.

I prefer to think of it as “shooting from the hip”… and I consider myself a rather good shot.

Glad to see you finally gave yourself the respect you deserve and capitalized that lead letter in your moniker.

Duly noted. My apologies, that was one of those rogue shots from the hip.

To those I have offended on this blog I extend my sincerest apologies.

If you want to be incrementally better: Be competitive. If you want to be exponentially better: Be cooperative.

You all appear thoroughly convinced you have it all figured out it would clearly be an exercise in futility to point out the flaws in your arguements. It’s obvious you will not stand to “listen” with an open objective mind to anyone who disagrees with you anyway. Too bad because, despite what you think, i agree with much of Garth’s fundamental warnings and generally provide proof sources to back them. Prejudgement be it of ones ethnicity or association is ignorance plain and simple.

#145 Debtfree on 11.01.10 at 1:34 pm

You must realize that my level of expertise is far beyond the average poster’s intelligence level. You crack me up DA. I think what you are trying to say is “Beyond the average poster’s intellectual level ” You should apply for Mensa membership I’m certain the they are full of real estate agents. Did you figure out the difference between making and taking profit yet ? Keep them coming DA .I need the laughs . You’re the Clown Prince of real estate.

#146 Larry on 11.01.10 at 1:51 pm

Well, while you say Cash is King, people in Vancouver are saying property is KING. A new high was reached at over 1.3m for an average sale and listings continued to decline. Sales to Listings were 95%!

So how’s your crash coming? Still no one took my offer to bet on the market. Well, at least you bears got something right because I would have taken that money, too.

Stats are from http://agentwill.com/weekly-stats/

I wouldn’t gloat quite yet. — Garth

#147 Fish Bait on 11.01.10 at 2:02 pm

BTW… some of those posts under the “Devil’s Advocate” handle were not mine but someone impersonating me. No worries… I can understand and appreciate how some less fortunate might want to adopt the persona of the great Devil’s Advocate.

Come on now – no one in their right mind would impersonate you, they would have to be crazy. That’s it! A crazy person is impersonating you, who else could follow your divergent paths from one subject to another to another to another to another.

Are you going to have another of your flip out sessions DA? You know – where you attack someone verbally and then talk about cooperation/peace/love and understanding.

#148 Right All The Time on 11.01.10 at 2:10 pm

Well, while you say Cash is King, people in Vancouver are saying property is KING. A new high was reached at over 1.3m for an average sale and listings continued to decline. Sales to Listings were 95%!

So how’s your crash coming? Still no one took my offer to bet on the market. Well, at least you bears got something right because I would have taken that money, too.

Stats are from http://agentwill.com/weekly-stats/

I wouldn’t gloat quite yet. — Garth

**********

Why not?

Post-Olympic crash? Nope…

Post HST crash? Didn’t make a dent in the market…

New April mortgage rules designed to target the bubble markets in TO and Vancouver? Zero effect in Vancouver…

Rising interest rates? Many banks have reduced their rates on mortgages while BOC rates up have inched up with no effect on the market….

Why not gloat? The bulls have been right for 5 years, as it was only in 2005 when people first started calling Vancouver’s market a bubble according to all the so called economic fundamentals…

The market is still on fire…good thing all those smart bears sold their homes in 2008! Given the revised predictions of a multi year decline, their gains will effectively be eaten up in 7 years of rent…

#149 Coho on 11.01.10 at 2:13 pm

#83 TheBigLebowski,

“loss of confidence in paper money and a flight if that money into tangible assets is what will drive commodity prices . Nothing to do with demand. Everything to do with QE2″

QE2 is like sex and a smoke. Goldman Sachs enjoys the sex while the people are left with the cigarette.

And to top it off, bailout #2 is named in honor of the Queen. Talk about rubbing it in peoples’ noses.

#150 David B on 11.01.10 at 2:22 pm

I would say it will be more of same (Canada now has it’s largest deficit in history) come Wednesday morning on both sides of the border.

http://www.fosters.com/apps/pbcs.dll/article?AID=/20101031/GJOPINION_0102/710319999/-1/FOSOPINION

Y’all should stop and think of just who we have in Ottawa there is a striking resemblence here.

#151 DDF on 11.01.10 at 2:32 pm

Hi Garth,

Earlier in the year, you had predicted on this blog that we would see a 15% drop in average sale prices. Can you still see that occuring, or have you revised your prediction?

Cheers

When a prediction is revised you will see a puff of white smoke. — Garth

#152 enjc on 11.01.10 at 2:44 pm

dark sad person,

Gold is preforming great, nowhere was I arguing it wasn’t.

My problem is with people who are against fiat but do not understand the ‘gain’ they’ve received is most readily redeemable in those fiat dollars. What percentage of goods today can you buy with gold? Does your grocery store take it? The gas station? The electricity company? Can you pay rent with it?

The fact that you capitalize the ‘g’ in gold shows me your bias friend. Gold is not a diety. Do people capitalize ‘b’ when talking about bread? Come on now.

#153 timbo on 11.01.10 at 2:50 pm

http://www.cnbc.com/id/39850796

“The largest companies in three of the most important leading sectors of the market have seen their executives classified as insiders sell more than 120 million shares of stock over the last six months. Top executives at these very same companies bought just 38,000 shares over that same time period, making for an eye-popping sell to buy ratio of 3,177 to one.”

That shows great confidence in the US economy and US dollar and this is with Christmas around the corner.

#154 Moneta on 11.01.10 at 2:53 pm

Come on now – no one in their right mind would impersonate you, they would have to be crazy.
——–
Why not if it’s having fun?

#155 enjc on 11.01.10 at 2:59 pm

Just to pre-empt any reply, my original post was to tell Garth he was doing a good job maintaining composure while being inundated with gold bug chatter. I don’t want to argue on the internet, it’s pointless. Have a good day dark sad person.

#156 sail1 on 11.01.10 at 3:01 pm

#77 Republic Of One

Are you a religious person? Keep you prosperity to yourself, and don’t flaunt it. One day your good fortune may revert to being your misfortune. I speak from experience.

#157 Devil's Advocate on 11.01.10 at 3:16 pm

#141 Devil’s Advocate on 11.01.10 at 1:16 pm
Here’s some interesting statistics if you can get your head around the true ramifications of them.

Real estate is a lot like fishin’

I am one hot lookin’ blonde babe. Ya I ain’t so smart but boy do I got a body on me. Legs all the way up to here.

That being said you clearly haven’t a clue about me.

I prefer to think of it as “shooting from the hip”… and I consider myself a rather good shot.

Glad to see you finally gave yourself the respect you deserve and capitalized that lead letter in your moniker.

Duly noted. My apologies, that was one of those rogue shots from the hip.

To those I have offended on this blog I extend my sincerest apologies.

If you want to be incrementally better: Be competitive. If you want to be exponentially better: Be cooperative.

You all appear thoroughly convinced you have it all figured out it would clearly be an exercise in futility to point out the flaws in your arguements. It’s obvious you will not stand to “listen” with an open objective mind to anyone who disagrees with you anyway. Too bad because, despite what you think, i agree with much of Garth’s fundamental warnings and generally provide proof sources to back them. Prejudgement be it of ones ethnicity or association is ignorance plain and simple.

Apparently I have a fan. And they have been keeping a log of my more memorable quotes ta boot. Imitation is the sincerest form of flattery.

#158 Blacksheep on 11.01.10 at 3:20 pm

Garth, since you played dumb, I have to try again.
If it does not get posted, I will consider it between us and drop it.

Pissed about paying tax?
Think governments are just printing dollars?
You have……….Noooooo………Idea!

Watch video #1,

Link:

http://www.netrootsmass.net/fiscal-sustainability-teach-in-and-counter-conference/stephanie-kelton-are-there-spending-constraints-on-governments-sovereign-in-their-currency/

Your post was caught in the spam filter. After watching the vid, I know why. — Garth

#159 Devil's Advocate on 11.01.10 at 3:20 pm

#138 Bobby on 11.01.10 at 12:46 pm
Thanks Deveil’s Advocate,

Thick as a post, and played right into my hand.

Like I said, if you have to talk about it……..

Not really that thick Bobby… and I don’t need Viagra to make it work ;-)… and please, keep your hands off it Dude I don’t go that way man.

Now please can we get back to some constructive real estate banter?

#160 CTO on 11.01.10 at 3:22 pm

Garth

Please explaine the surge in condo sales as reported by Remax.

Something seem amiss here where all the funamentals suggest against this.

what’s happening? or is Remax just skewing the numbers.

#161 ralph on 11.01.10 at 3:27 pm

While this article isn’t exactly about real estate it is I believe about what the outcome of tomorrow’s mid-term election in the USA might do for the economy in the future.

http://www.ericmargolis.com/political_commentaries/attn-all-flag-wavers-you-want-war-pay-for-it.aspx

#162 Joe on 11.01.10 at 3:34 pm

Prices continue to rise in Vancouver! http://tinyurl.com/368xc26

#163 DaBull on 11.01.10 at 3:45 pm

#128 Helen on 11.01.10 at 12:07 pm

So what happens if the house was really only worth $520k. I guess you friend paid way to much.. he..he..

#164 dark sad person on 11.01.10 at 3:47 pm

#152 enjc on 11.01.10 at 2:59 pm

Just to pre-empt any reply, my original post was to tell Garth he was doing a good job maintaining composure while being inundated with gold bug chatter.

*********************
Wow-how did you get such exclusive rights to post on a blog and keep the conversation between only you and big G?

********************
The fact that you capitalize the ‘g’ in gold shows me your bias friend. Gold is not a diety. Do people capitalize ‘b’ when talking about bread? Come on now.

*********************

Sounds to me like someone getting in too deep and frantically fishing through the gut pile for something smelly to throw-before you run from the front lines-

#165 toastmaster on 11.01.10 at 3:55 pm

agent swill will be just another real estate roadkill come spring time, he’ll wonder why he chose this profession when he has to disconnect his phone and change his identity as the boneheads he sucked in the past few years rebel like no other generation.

This is the “me generation”, spoilt to the frigging max and will not be able to handle bankruptcy very well, let alone divorce, child support, alimony etc. Agent swill’s time is coming, he best choose a new career path while there’s time.

#166 robert james on 11.01.10 at 4:07 pm

#143 Larry Yes Larry ,you are right,,Vancouver folks say that,,”property is King” hopefully they will not change their minds after the vote in California tomorrow to legalize pot.. If they vote to legalize pot ,,according to The Province,, there will be 20,000 jobs lost in BC when the price of pot drops by 80 %.. Apparently it is a 4 billion dollar industry here in BC,,much better paying than wiping geezer arses in nursing homes.. Friends of ours came down for a visit from Horsefly BC on the week-end and they told us how some “Chinese cowboys” got busted recently that had a huge multi-million grow-op a mile down the road.. Gotta love those Chinese “investors” that invest their hard earned money in Vancouver real estate..But of course Larry, are you a realtor by the way,, I am sure you have heard that old saying,,BC stands for Bring Cash,, dosn`t matter where you got it from,,drugs , prostution ,,slave labour, sweat shops etc.. who cares,, just get on that property ladder so that the guys at the top of the Ponzi scheme can take their money and run!! LOL

#167 thecomingdepression on 11.01.10 at 4:07 pm

Garth still doesn’t get what HYPERINFLATION means. Here is an example: I bought a pair of running shoes, they lasted 3 months, (they were cheaper than a few months ago ALDO Shoes.) I bought another (worn out), same thing, then another (worn out). Total Cost: $120. So I decide to buy another set of shoes from ANOTHER store, (Payless) it wore out.
The computer I bought, with a ONE YEAR WARRANTY, lasted ONE YEAR. It was cheap so I had to buy ANOTHER. My shirt I bought a few months ago was cheap but it ripped in a washing, so I had to buy another. That shirt was cheap too. So the new FLAT SCREEN TV I bought, really cheap , broke after the ONE YEAR warranty and I had to buy another. You get my drift Garth? It’s CALLED HYPERINFLATION when you have to buy MANY units, that completes the circle of HYPERINFLATION. NOTHING IS CHEAPER! Take the Chris MARTENSON CRASH COURSE!

How’s that depression working out for ya? — Garth

#168 sue on 11.01.10 at 4:15 pm

#77
Pharmaceutical Companies are worse than cigarette makers. They are disgusting, lying, greedy corporations who care nothing about people and actual health.

#169 John Melville on 11.01.10 at 4:32 pm

Ever heard of biflation, Garth? Deflation is useless tatt, inflation in food and energy. So cheap tatt at Walmart just got cheaper, meanwhile food and energy continue rising in cost. Geddit?

#170 Dan in Victoria on 11.01.10 at 4:35 pm

@145
Yawn.
In short it is an accurate assesment,
With conclusions that are accurately full of bull shyte.
(Ches)

#171 Debtfree on 11.01.10 at 4:52 pm

DA why would you like a stock (pfe) that has a regularly falling dividend yield . The viagra patent will end and so will the divvy . You should take some … it might help you straighten out your typing finger.

#172 Devil's Advocate on 11.01.10 at 4:54 pm

Almost 300 MLS listings in the Central Okanagan expired over the weekend. That’s almost 10% of the total number of listings. You do know what that means, right?

#173 Mickey the Realtor on 11.01.10 at 4:59 pm

Just stopping in to say hi, I’m a new realtor and looking to take advantage of this great RE market we got going on. Show of hands if you are looking for a realtor, I got a nice car to drive you around in and will work very hard to get you your dream house. Garth is a good man with good intensions but i think he is wrong about the market.

Due to the weather its a little slow, it will take a little getting used to the cold, once that has been accepted then we will be back in full swing, dont miss out.

#174 Blacksheep on 11.01.10 at 5:06 pm

Garth, Is the source not credible?

Stephanie Kelton, Associate Professor of Macroeconomics, Finance, and Money and Banking.
University of Missouri
take care,
BS

Beats me. But the speech isn’t. — Garth

#175 triplenet on 11.01.10 at 5:11 pm

Biflation? – you ask.

That’s when 2 average women with limited income buy an overpriced house together and DA gets to watch.

Rarely results in inflation – I think.

#176 Nostradamus Le Mad Vlad on 11.01.10 at 5:53 pm

“When a prediction is revised you will see a puff of white smoke. — Garth”

Yes, but I have the Rocket Popemobile!
*
Charles Ponzi, a.k.a. Ben Bernanke appears again, because this is what the US is doing to TROTW.

Benny’s da MAN!

Another poster noted what Iran has done re: its reserves — Bullion Bunnies This may give the markets a hiccup. Iran has moved 15% of its reserves into gold. Do they know what is coming?

Hmmm. Desperate times call for desperate measures.

BBC Bunker Somewhat like Garth’s.

#177 Prof ANON on 11.01.10 at 6:00 pm

@ 169 DA

Trick question? It’s just the end of the month.

#178 OttawaMike on 11.01.10 at 6:19 pm

Are you an American who’s unemployment has run out after the 99 weeks??
The govt. is stationing armed guards at the unemployment offices for “consistent security” so don’t try anything because we’re not extending benefits anymore:

http://www.theindychannel.com/news/25539273/detail.html

#179 Devil's Advocate on 11.01.10 at 6:25 pm

Do you know what impact this is going to have on real estate?
Total wheat and canola production in the Prairie provinces is expected to decline in 2010 compared with 2009. In contrast, farmers in Manitoba, Quebec and Ontario reported they expect to harvest a record soybean crop.

#180 randman on 11.01.10 at 6:26 pm

Brett and DSP

Good commentary on the state of things…

You are probably GIM’ers

Not sure the majority here will get it…

We are lone sentrys in the dark economic night

Au and Ag will have their day soon..

But it won’t feel good saying”I told you so”

Cheers

#181 Devore on 11.01.10 at 6:30 pm

#165 sue

Pharmaceutical Companies are worse than cigarette makers. They are disgusting, lying, greedy corporations who care nothing about people and actual health.

Because the customer doesn’t care either. Before you say anything, YOU are not the customer.

#182 Devil's Advocate on 11.01.10 at 6:31 pm

Did you know that Fergie from the Black Eyed Peas was named Billboard’s woman of the year. You know what she said about real estate values don’t you?

#183 john m on 11.01.10 at 6:31 pm

A full breakdown of Harper’s travel costs (click here) is sure to give fodder to any critics of the Conservative budget – his $6,904,790 spent on trips in 2009-10 on display for the whole country to see.

Of note in the PM’s agenda were an $850,000 trip to Beijing, Shanghai, Hong Kong and South Korea to meet with foreign leaders, a $770,000 voyage to Italy to attend the G8 Summit and visit Rome and, not least, $1.4 million on travel to Singapore and various Indian destinations for the most recent APEC Summit

Indeed, opponents to these findings criticize the PM further for his reputation, based on merit or not, of spending like anything but a Conservative.

“(Harper) wastes money as if he won it in a lottery,” writes one commenter on the Suns blog

In any case, Harper’s travel budget hit headlines on the same day it was revealed Canada’s 308 MPs chalked up nearly $143 million in spending last year, a figure that’s sure to raise one divisive, time-honoured debate:………guess its still a temporary recession “things are different in Canada”

#184 Devil's Advocate on 11.01.10 at 6:33 pm

I found this story that might be of interest. I’ve always supported what Garth says, and this proves it.

People use real estate agents because they can get you more money for your home right? Wrong. A recent study done in the US at Northwestern University shows that real estate agents do not get you more money in real estate transactions. Agents traditionally take three to six percent of the selling price of the home as a commission. Property owners who chose to sell their real estate with out the advice of a real estate agent are traditionally called For Sale By Owner(s) or FSBO. Many real estate industry professionals and pundits believed that using a real estate agent will get you a higher selling price on your home, but is the price six percent higher? The Northwestern University study suggests FSBO’s actually keep more money in their pockets at the end of the real estate transaction.

#185 DARLENE on 11.01.10 at 6:37 pm

thecomingdepression on 11.01.10 at 4:07 pm

That’s not hyper inflation. That’s bad shopping. Buy smart. Get the best quality at the best price. Aldo is style over substance. You could have bought a good leather walker for less then the $120 you spent and they would have lasted well over a year. If you can see light through the fabric of a shirt the weave isn’t good. If it’s thin it wont last. Also check the seams and make sure the stitching is tight and secure. Hopefully this helps next time you’re out shopping and hopefully keeps some of this shit out of the landfill.

#186 T.O. Bubble Boy on 11.01.10 at 6:39 pm

On Agent Will’s Vancouver stats… can someone please explain his “months of inventory” calculation?

He lists:

Attached — 6921 units // 304 sales // 5.24 months of inventory

Detached — 3740 units // 180 sales // 4.78 months of inventory

Yet, when I divide 304/6921, I get 23 months!!!
(and almost 21 months for detached)

I guess he is seasonally adjusting the stats or something?

#187 toastmaster on 11.01.10 at 6:57 pm

By the looks of agent swill’s website pic, he was still in diapers in the early 90′s and wasn’t even a genetic thought in the early 80′s so he has no clue what a market correction/crash really is. Look out junior, the big one’s comin down in Vantown and it won’t be pretty.

#188 Devil's Advocate on 11.01.10 at 7:05 pm

Here ya go pups… here’s a bone. Have at ‘er ;-)

http://www.financialpost.com/Renovated+real+estate/3751380/story.html#ixzz13sHNP2Ic

#189 dd on 11.01.10 at 7:08 pm

“They (the FED) have so far failed (to create inflation) — Garth”

Incorrect. The fed has created inflation by increasing the money supply. Where those $ land is the result. Presently the excees money is landing in the commodity space.

http://www.mrci.com/client/crb.php

#190 dd on 11.01.10 at 7:14 pm

…Commodity prices rose on investor demand … That demand has slacked, and current prices will not be maintained…. — Garth

And if they are maintained, that is thanks to the FED!

#191 Valyrian Steel on 11.01.10 at 7:14 pm

I’m a 38 year old construction worker with 210k in the bank (100k in a 3 year GIC yielding 5.25% in its final year, another 110k in plain ol’ “high interest savings”). I figure our net worth to be about 1.2 million (yes we own some Vancouver real estate, most of which is paid for). My wife and I are extremely debt adverse… We have acheived all this by LIVING BELOW OUR MEANS. Hanging around this site for as long as I have I’m starting to think that very few Canadians have chosen this lifestyle path. For us, a couple that likes to sleep well at night, this choice of lifestyle is a slam dunk no brainer…. I’m reading “Money Road” while I holiday in Mexico, and will employ some our our cash in appropriate ways (preferreds anyone?), wondering all the while how and why so many people have apparently overextended themselves disasterously…

#192 Dan in Victoria on 11.01.10 at 7:23 pm

Coming Depression @ 164.
I bought a pair of boots that are handmade here in Victoria, custom fit. Oh so comfy….
I’ve had them oh…. lets see 15 years? Couple sets of soles, a few tune ups etc.
Think I paid umm 350 bucks back then lets see… thats like 25 bucks a year. 50 cents a week….10 cents a day…
AND THEY GO TO WORK EVERY DAY STILL.
Listen to Darlene…..
http://www.workboot.com/

#193 Dan on 11.01.10 at 7:25 pm

Make no mistake about it the housing market is doing really bad and sales are once again down. You are starting to see more power of sales as people with NO MONEY who couldn’t sell have now lost their homes. The number is getting bigger and will grow by the day. If the MSM were to tell the turth and not take pay offs from vested interests you would see a housing crash like no other. Everyone in the Biz that is honest mortgage brokers/bankers/realtors will tell you this market would need to correct by almost 50% in some places (VAN) and 35-40% in others (Toronto). If you can believe it some realtors wish the CREA would stop blowing sunshine in the MSM and allow prices to come back to reality. The numbers coming out have been played with to give the illusion of a healthy market when the truth is the canadian housing market is terminally ill . Power of sales are up but the MSM would never report the realities. Buyers should only make 25% and lower offers. Sellers are starting to get worried and many will need to sell before they go bankrupt.

POP…………………………

Greater fools…………..I lost my house

Realtors………BUY BUY…….The market is on fire. We are so busy that we spend hours a day on greaterfool.ca to look for greaterfools since sales are down and power of sales are UP! MSM will never report the truth since we pay them off. MSMafia will tell the masses anything you want….for a price.

#194 Junius on 11.01.10 at 7:28 pm

#169 D.A.

You asked, “You do know what that means, right?”

Indeed. It means no one is buying houses.

#195 sue on 11.01.10 at 7:33 pm

@ Devore
No, I am a pharmacist and I know many drug reps who tell me exactly what goes on behind closed doors. LIES at the expense of people all for the sake of profit. I’ll say it again, DISGUSTING.

#196 DiGiacomo on 11.01.10 at 7:45 pm

57 CTO on 11.01.10 at 3:22 pm

Garth

Please explaine the surge in condo sales as reported by Remax.

Something seem amiss here where all the funamentals suggest against this.

what’s happening? or is Remax just skewing the numbers.

————————-

remax’s numbers are comparing the first 10 months of 2009 with the first 10 months of 2010.

think about what was happening in the world in those two periods, and you’ll likely have your answer.

welcome to the world of press-release driven journalism.

Wonder why we haven’t seen a news outlet blow the lid on anything interesting in the last decade? they’re too busy managing interns sorting through press releases.

Good thing those investigative journalists are hard at working tracking down those Asian and Middle Eastern investors….. you know, the ones “who will often rent them out until they find their desired sales price”….

#197 DA is an ass clown on 11.01.10 at 7:49 pm

good lord DA, do you filter anything that’s running around in your brain before your fingers hit “submit”?

It was bad enough before you spawned your imitator.

Can you please go wakeboarding or mountain biking or something? It’s pretty noisy in here. thx, we can figure it out on our own pal.

#198 Another Albertan on 11.01.10 at 8:03 pm

164/Depression:

“The bitterness of poor quality lingers long after the sweetness of low price is forgotten.”

Everyone else’s mileage may vary.

#199 Utopia on 11.01.10 at 8:30 pm

To El Magnifico @ # 80

Thanks for posting up that amazing interview with Sir James Goldsmith. His comments were indeed prophetic and his conclusions incredibly accurate.

I recall when the debate was raging and there were, as usual, a thousand opinions and positions on the subject of GATT.

For anyone who does not understand the real implications though, we here in North America and our friends in Europe are in for a very rough ride as the years roll on. Wages will fall over an extended period of time, cherished social programs will be diluted and eroded.

We can expect health care and education to be just a shadow of what we now enjoy twenty years down the road as a result. Taxes will rise, a major political shift may occur leading us towards a system revolving around socialism and even more centralized governing.

We will all feel the poorer for it.

This is all the more reason to take advantage of the fat capital gains being presented today in housing and reinvest them in income earning investments.

Particularly those investments that participate in Asian, Indian and South American growth economies.

But that is just too obvious. And almost nobody will listen nor understand that what is now taking place and the events shaking our economies are closer to an earthquake than a gentle wake-up call.

Most home sellers in this country have already lost their best opportunity and do not even yet know it. Few will squeak through in time to maximize the gains and fewer still will make the jump into the next big opportunity.

Time is not on their side. And it is shorter every day.

#200 BrianT on 11.01.10 at 8:34 pm

The USA is now 49th in life expectancy http://www.rawstory.com/rs/2010/10/slips-49th-life-expectancy-study/
Meanwhile: the Fed lets Goldman and other primary dealers openly determine how taxpayer funds should be spent http://stocksthatpay.com/?p=12568

#201 Mickey the Realtor on 11.01.10 at 9:00 pm

I forgot to mention that DA is my idol. He is the reason I took up being a realtor, DA wreaks of class and I want some. I just wish that some of you dawgs and pups hold back your growl towards the man, he is just trying to educate.

#202 Utopia on 11.01.10 at 9:02 pm

#87 Behind the Numbers said….:

Garth is right. Deflation is upon us all. It doesn’t really matter what your liquid investment is in or what you make on it, be liquid, that’s the point I believe Garth is getting at here.
———————————————————

I have to disagree with you “Behind the numbers”. It matters a great deal what your liquid investments are. We are swimming in threats right now. Everything from the risk that the Fed will drive inflation thus harming bond investments to the more pressing risk that deflation will set in and scuttle stocks.

Nobody can tell you what is the best course of action but there will be some big losers no matter what happens and you do not want to be one of them.

Think twice before concluding all liquid investments are safe investments.

#203 Utopia on 11.01.10 at 9:23 pm

#94 Apsalar said….:

And yet Re/Max is still so optimistic.

That’s a surprise. Not. — Garth.
———————————————————

I read that article that you posted up Apslar. I found it interesting from several perspectives. The comments presented by Re/Max amount to capitulation in a market that is in decline in my opinion.

They have by default finally acknowledged that housing sales and prices are falling. So what are they doing?

They have targetted what they now see as the last-best R/E growth opportunity and that is Condos.

Why condos?

They are still seen by many to be affordable, especially when compared to houses. They can be moved in other words and sales is what counts.

I would not be all that surprised to read from prospective buyers that Realturds are actively shepherding the flock into the condo market to keep the fantasy party going just a little longer than it’s “best-before” date.

Of course,….this is a losing gambit for buyers but it is almost totally pointless trying to warn them of the hazards. Have you ever noticed how first-time buyers are always smarter than those who are experienced and actually understand the economy?

It’s just like blowing smoke at a wall. A waste of breath.

#204 Devore on 11.01.10 at 9:35 pm

#191 sue

No, I am a pharmacist and I know many drug reps who tell me exactly what goes on behind closed doors. LIES at the expense of people all for the sake of profit. I’ll say it again, DISGUSTING.

Again, “people” are not the pharma’s customers. They listen to their customers. Just like radio and TV stations customers are not the viewers, so they hardly care about the product they put in front of you. Their customers are the advertisers. Guess whose concerns pull more weight?

As for the cheap replaceable crap someone’s complaining about here… that’s what happens when you choose style over substance. This has always been the case, with everything, clothing, houses, cars, food, electronics, etc. I’ve paid about $100 (and that’s retail) for my comfy pair of black leather dress shoes, and they’re still going just fine over 5 years later. Never had a shirt come apart in the wash.

Shop smart, do your research. It’s your hard earned money you are parting with. We often say people put more time into choosing a pair of jeans than buying a house, but apparently they are not spending much time on the jeans to begin with, and if this is reflective of the housing purchase, then they are all in big trouble.

If more consumers paid more attention to how they are spending their money, we would all be far better off today. Money talks. He who has the money has the power. You have the money. Companies want it. How you spend your money has much more influence over our society than any government policy could ever dream of.

#205 farmer on 11.01.10 at 9:35 pm

#188 Dan in Vic
My apologies; a diversion.
Hi Dan: I arrived in PG from the UK in early 1960 and bought a pair of Paris caulks before heading out into the bush. They lasted not quite one season so I bought a pair of boots from an old guy who hand made them up along Hwy 97. They were Vibergs and lasted considerably longer, before being ruined from drying beside camp fires. Living back in the bush, in a tent, summer and winter in the north was no picnic but it was reasonably normal to do so. It may come as some surprise that we were government employees!! on salary, at about $220/month. A whole different world.

#206 Utopia on 11.01.10 at 9:46 pm

#110 Got A Watch on 11.01.10 at 10:27 am
Well, I expected some personal attacks from my last comment. Hardly surprising.

Don’t sweat it too much Got-a-Watch. I for one have always enjoyed reading your posts and observations, many of which I discovered were thoughtful and interesting.

#207 Devil's Advocate on 11.02.10 at 12:14 am

#195 Junius on 11.01.10 at 7:28 pm
#169 D.A.

You asked, “You do know what that means, right?”

Indeed. It means no one is buying houses.

No Junius, houses are still being sold. In fact while the October’s final numbers are down from last year they are up significantly from the previous year. But as has been discussed on these forums time after time there is a huge excess inventory. It is those unrealistically highly priced homes which are expiring without a successful sale.

My point here is those, such as Mr. McLovin, who seem to relish in the overpriced but never sold FSBO market as example of what is happening will soon discover that whole argument has slipped from beneath their feet like quicksand. They are a non-issue. They do not matter and have no influence on the market as they amount to nothing more than white noise in the background. The only true test of “market value is what a ready willing and able buyer is prepared to pay a ready willing and able seller neither being under undue influence to buy or sell”. Overpriced crap that never sells never impacts the market beyond that the layperson believes the market is turning upside down due to the proliferation of For Sale signs throughout neighbourhoods. Eventually these overpriced sellers give up and pull their listings and then the layperson makes yet another mistake believing the depleating inventory meaning something other than what it is.

#208 Future Expatriate on 11.02.10 at 5:28 am

#119 – Ah, thanks Garth. Can always depend on you for the straight info.

Thanks for being merciful! LOL

#209 Behind the Numbers on 11.02.10 at 5:54 am

#203 Utopia on “I have to disagree with you “Behind the numbers”. It matters a great deal what your liquid investments are.”

I do agree with you. All I was saying is it is better to be in liquid investments at this time vs illiquid investments.

#210 Apsalar on 11.02.10 at 7:06 am

@ #204 – Utopia

*****************************
I read that article that you posted up Apsalar. I found it interesting from several perspectives. The comments presented by Re/Max amount to capitulation in a market that is in decline in my opinion.
*****************************
I tend to agree with you, Utopia.

*****************************
They have by default finally acknowledged that housing sales and prices are falling. So what are they doing?

They have targetted what they now see as the last-best R/E growth opportunity and that is Condos.

Why condos?

They are still seen by many to be affordable, especially when compared to houses. They can be moved in other words and sales is what counts.
*****************************
Can’t fault your reasoning or your logic. As I said in a post on today’s article, I just don’t get the whole condo-buying mentality. I own a house — one that I live in, not something I hold as an “investment” — and I don’t understand why someone would pay additional monthly maintenance/condo fees on top of potentially a mortgage payment, plus utilities, property taxes, insurance, etc.

*****************************
I would not be all that surprised to read from prospective buyers that Realturds are actively shepherding the flock into the condo market to keep the fantasy party going just a little longer than it’s “best-before” date.
*****************************
Until I started reading this blog, I had no idea that real estate was such an emotional subject for a lot of people. I mean, I enjoy my house, but if my circumstances changed (job loss, health issue, etc.), I would unload it in a New York second. “Home” is something different than “house” in my opinion. But yeah, I think you’re probably right in your reasoning.

*****************************
Of course,….this is a losing gambit for buyers but it is almost totally pointless trying to warn them of the hazards. Have you ever noticed how first-time buyers are always smarter than those who are experienced and actually understand the economy?
*****************************
I dunno. I’m on my third house and I feel like I am still learning things; this blog has been a huge source of education for me. All I remember about buying my first house is how scared I was at the responsibility of coming up with the down payment, making the mortgage payments, etc. And that was when mortgage rates were in the 10-12% range!

Of course, the house cost less than 80K, too, so… :)

#211 Devil's Advocate on 11.02.10 at 8:59 am

“The only problem until this month was that CREA had built a wall around the MLS system, restricting how real estate could be bought and sold. In March, the group, which represents about 100 boards across the country, reversed course and changed its bylaws to allow all types of buying and selling models through the MLS.” – Garry Marr, Financial Post

read more
http://tinyurl.com/2fkyhew

http://www.financialpost.com/Real+estate+renovated/3749307/story.html