Fearmonger

It’s often useful to read the comments of people who loathe you. Happily, I have no trouble finding them.

Just this weekend a little Garthy hate-on took place here,  which seems to be the hang-out of real estate lenders, theocons and a couple of people who were booted from this blog for being serial jerks. Here are some of my favs:

Garth Turner is fading into anonymity, running a bizarre blog resorting to extreme statements, posting animal porn pictures, basically doing whatever it takes to capture some attention.

(Do the animals know when it’s porn?)

He and most of the blog dogs HOPE for a financial disaster to hit all and every homeowner, which in turn they believe will allow them to become homeowners themselves or become RE magnates by scooping cheap houses and flipping them 2 years down the road for %500 gains.

(And I thought we hoped for houses people could afford.)

Garth is trying to make a buck by selling fear. If a real estate publisher offered him a job to pump real estate instead, he will gladly switch to doing just that. He has absolutely no credibility.

(But I have enough money to do what I want. And you’re reading it.)

Garth thought that was going to be an easy call and the time for him to shine (for once), just to be caught with his pants down once again, showing his lack of understanding of how macroeconomics works. As always he’s blaming others for own failure, in this case Mr. Carney, Mr. Flaherty, Mr. Harper …

(Yes, for everything you need to know about macroeconomics, ask F.)

Turner will keep predicting a crash and eventually he might be right but that doesn’t make him any smarter than my dog at timing home prices.

(Your dog is always welcome here.)

Well, you get the drift. Such character trashing certainly underscores the fact I irritate some people, namely those who have a stake in convincing Sally and Joe the economy’s mending, housing is a boffo investment, debt is good, and the government has everything figured out. The technique of choice is not to criticize the arguments advanced for our economic and financial future, but rather to shred the guy making them. Trust me, I’ve lived this before. Water. Duck’s back.

The interesting part is 2011 has considerable potential to really suck. I figure the real estate and political establishments know this. If they’ve been listening to smart people like Stephen Jarislowsky, Robert Shiller, David Rosenberg or even Mark Carney, there’s no doubt. All are warning that Canadians have wandered into the same debt orgy that skunked Americans, while our lending standards have slipped and house prices inflated. This year seems certain to bring higher interest rates, more taxes, less manufacturing, less exporting (dollar at parity) along with high unemployment and seven provinces that can’t balance their budgets. How is this a ‘recovery’?

My message is not that Toronto will become Detroit or Vancouver turn into Phoenix. But there will be a correction, followed by an unknown number of years of slow melt. That means three groups of people are at serious risk:

  • Young couples who have purchased in the last two years with 5/35 Canadian subprimes. It will take only a market sneeze to submerge them.
  • Anyone with the bulk of their net worth – over 60% – in residential real estate. Diversify. Now.
  • Boomers or near-retirees who are house-rich and investment-poor. Soon you could be just poor.

As argued here, any surge in listings – and it looks like a mother of one is coming – will only exacerbate the  supply-demand imbalance behind six consecutive months of year-over-year sales declines, and a price plop already shaping markets like Calgary and Edmonton. That this would happen when long-term mortgages are still in the 3% range – bizarrely cheap – should make it clear there’s no real estate rebound on the distant horizon.

So, am I the poster boy for a Canadian real estate crash? Hardly. I’m just hot.

And I’m wondering why the neocons and the realtors in this country need to continuously hump housing and cheer rising prices. I mean, wouldn’t it be cool if we had a politician like Grant Shapps?

The British housing minister calls the runup in real estate values there over the last decade “horrendous” and actually applauds falling prices. “We believe that property should be primarily thought of as a place to be your home. The main thing everyone requires for their subsistence is a roof over their head and when that basic human need becomes too expensive for average citizens to afford, something is out of kilter.”

Exactly.

Hey, I wonder if he gets accused of fearmongering? Extremism? Animal porn?

Let’s hope attempts to quell a contrarian voice are no harbinger of what awaits us.

219 comments ↓

#1 Danforth on 01.02.11 at 10:44 pm

In terms of home affordability….

I was doing some renovations in my basement over the holidays, and found some 1959 newspapers stuffed between the joists as insulation. Fantastic history lesson!

Comparable houses cost 20K at the time, so an increase of a multiple of 20x.

A new fridge cost $250 at the time, so an increase of a multiple of ~4x.

#2 TheBigLebowski on 01.02.11 at 10:54 pm

Housing, in the western world , like any other engineered crisis, seeks a beneficiary . Out of all financial, political, social or economic crisis the one benefactor never changes. The government always gains more control and oversight and he average citizen looses a chunk of their personal freedom and sovereignty. It is psychology 101. Problem, reaction, solution. The Bankers manipulate interest rates creating a national debt problem. The western world experiences a financial crash. Then the same bankers who engineered the problem pose as our saviours with their pre-planned solutions. The IMF is positioned as the global book keep, handing out loans to countries that they can never pay back. The end result will be a usury society which means a middle class indebted to the bankers in perpetuity . Welcome to the world of Austerity aka we suffer and the banks have their debts paid off with printed bailout money.

Who let the dogs out? — Garth

#3 Dodged-A-Bullit-in Alberta on 01.02.11 at 10:55 pm

Greetings: Just bought a new fridge today, 500 bucks plus GST. Far more energy effecient, wouldn’t say 4X 1959 prices.

#4 Dodged-A-Bullit-in Alberta on 01.02.11 at 11:01 pm

Greetings: Coming to the US-Canadian border:

http://www.washingtonpost.com/wp-dyn/content/article/2011/01/01/AR2011010102690.html

#5 westcoastguy on 01.02.11 at 11:06 pm

For the life of me, like Garth as well as the British fellow, cannot figure out why high home prices are good. Good for what? By the way. I live in Victoria and own a house.

When house prices were an honest reflection of peoples incomes rather than of their ability to borrow we were all much better off.

We were all much better off when we had factories makign shoes and clothing and appliances. But thats another story.

This housing bubble and the emigration of our manufacturing is a story without a happy ending.

Happy New Year.

#6 Peter on 01.02.11 at 11:09 pm

Realtor here again. You know your message is landing when people fear what you say, and attacking someone is the only way to defend your view. As for real estate sellers, here in BC if a realtor places their home on the MLS itust be disclosed in the listing. Only other realtors see this of course. Established agents and many, many others are all looking for buyers for there “piece of paradise with SS and granite and of course a peek a boo view”. It might be because of slow sales ( no money ) or because they see what is coming but either way it is happening.

#7 petey paublo on 01.02.11 at 11:10 pm

Hello Garth:

I enjoy reading your blog. Very interesting.

What I would like to know is why Toronto can’t become Detroit?

The Detroit area for all its problems (which are many) still has things that Toronto area will never have.

For instance a working freeway system, an incredile art gallery and American style malls like Sommerset.

Please tell me how Ontario will be sustained without the Auto Pact and with an at par dollar.

Do we really have enough stuff to rip out of the ground to sustain this?

Thank you

#8 Bill Grable on 01.02.11 at 11:13 pm

Building standards in Toronto must have been swell in 1959.

I owned a home just off South Kingsway, and Bloor – back in the day.

I remember when I got the first oil Bill – $150 bucks and this was 1976.

I can’t imagine what the drafty wee dump is selling for now.

2011 – the great stampede = here it comes.

#9 Jake on 01.02.11 at 11:19 pm

I always smile when I see a husband and wife RE specialist team. It’s nice to know that they didn’t ruin two couples.

#10 Jaymus (RealizedReturns) on 01.02.11 at 11:21 pm

Embrace your place. You are the poster child of the crash. :)

People are passionate about their RE market prognostications, especially when their livelihood is involved. Like anything, the louder people criticize your position, the more likely it is they actually fear that you are right.

I’ve always liked the images you’ve used for your posts. Animal porn? Now I feel dirty..

#11 Sam on 01.02.11 at 11:24 pm

That means three groups of people are at serious risk:

Young couples who have purchased in the last two years with 5/35 Canadian subprimes. It will take only a market sneeze to submerge them.
Anyone with the bulk of their net worth – over 60% – in residential real estate. Diversify. Now.
Boomers or near-retirees who are house-rich and investment-poor. Soon you could be just poor.

I believe the young people are ok, no one has margin calls Garth, great thing about housing leverage, banks are so stupid to sell loans that they have to put margin against, but can never ask the home owner.

I believe your thesis is fair – 15%, etc. But I don’t believe until you see a breakdown in jobs. Until then, the game will continue well into 2011 and beyond. The jobs market seems to be “ok” and going strong (maybe a result of housing some say) but Canada still has a very highly dense population of university grads (school is almost free, compared to rest of world)..so let’s hope the engine continues and these people stay employed. Canada could easily create some new sectors. Don’t you agree the housing debt has grown so we should focus on getting people to increase the revenue side? Go Canada Happy New Year

#12 pessimisticprof on 01.02.11 at 11:34 pm

From previous thread #175 Mike Turner: “Pessimisticprof – I did call you Xenophobic it’s late here in Italy so I might be sound asleep when you mount your comeback. I just want to make myself clear. KKK? sorry couldn’t resist… I’m assuming you’re white? I know I got that much right…”

Garth – you are slipping up on the moderating duty. I do not object to being called an a**hole or a SOB in the course of a heated argument, but I do take great offense to being called a white supremacist and a KKK member. I thought you had strict rules against the sort of ad hominem attacks launched by this guy – given Mike’s fondness for Dante, perhaps banishment to blog purgatory would constitute poetic justice.

#13 canali on 01.02.11 at 11:38 pm

Danforth: your price comparisons….what city are you looking at offering a 20x increase to $400k?…must be the burbs of the burbs…or some smaller city….wonder what a home in east vancouver, say, cost in ’59?….now you’re looking at some ‘vancouver special’ sized average at $750ish, give or take $75k….have a look:
http://jaybanks.ca/vancouver-real-estate/vancouver-east-homes.php?maxprice=800000&minprice=500000&bedrooms=any&search=Set+Criteria!
…NUTS NUTS NUTS….I don’t care if ‘it’s the best meth on earth’, ‘limited land supply’ or ‘asian immigrants love us and are always arriving in droves’ the prices are NUTS.

#14 Ayn Rand on 01.02.11 at 11:44 pm

Thanks again for the excellent post.

Garth, now that it is January, any hints on your new book release, title and topic? I am hoping imminently soon!!

I got and read the new Gail Vos Oxlade book – Never Too Late and what a disappointment – I did not learn a single thing. I know I will get more than my monies worth with your next book.

Please, please, just a small hint of what is to come?

#15 Devil's Advocate on 01.02.11 at 11:45 pm

”And I’m wondering why the neocons and the realtors in this country need to continuously hump housing and cheer rising prices. I mean, wouldn’t it be cool if we had a politician like Grant Shapps?
The British housing minister calls the runup in real estate values there over the last decade “horrendous” and actually applauds falling prices. “We believe that property should be primarily thought of as a place to be your home. The main thing everyone requires for their subsistence is a roof over their head and when that basic human need becomes too expensive for average citizens to afford, something is out of kilter.”
Exactly.
. – Garth

Very well said Garth with but one minor exception: from my acquaintance, REALTORS want nothing more or less than a stable market. Who doesn’t want a stable market? But aside from that glad to see you are coming around. ;-)

As I posted late in the last thread;

“You all give far more credit to the real estate community than it deserves. The real estate community is little more than a rag tag band of 100,000 individuals with but one common bond – we are in co-operative competition with one another. To get a consensus of opinion among a group of more than two of the lot is a rarity indeed, let alone the capacity of the lot to influence interest rates, lending criteria and real estate prices.”

#16 Mark on 01.02.11 at 11:46 pm

#1, good point, a house is basically a consumer good, which, like a refrigerator, should have only grown in price roughly at the pace of inflation. Or even less, because, like a fridge, technology and mass production has made it less expensive to produce.

#17 dark sad person on 01.02.11 at 11:47 pm

It’s often useful to read the comments of people who loathe you. Happily, I have no trouble finding them.

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Yeah G–isn’t it strange all the different ways they have of crawling up through the sewer –

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#171 bright happy person on 01.02.11 at 7:44 pm

Warren Buffett employs 60,000 and has repeatedly questioned why the media publishes double dip articles when every business he owns is showing top line revenue growth and increased profitability.

Buffett has also debunked talk about deflation. Where is it? No where. So not only is it pointless to be pessimisstic, but it can cost you a lot of money too!

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

The Ostrich of Omaha–

2005

. Warren Buffett called the plan “voodoo economics” that uses “Enron-style accounting” and puts a burden on low-income families. I defy anyone to show me that this bill has created any jobs.

http://money.cnn.com/2003/05/20/news/buffett_tax/

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2007

The rapidly growing trade in derivatives poses a “mega-catastrophic risk” for the economy legendary investor Warren Buffett has warned.

In his letter Mr Buffett compares the derivatives business to “hell… easy to enter and almost impossible to exit”.

Some derivatives contracts, Mr Buffett says, appear to have been devised by “madmen”.

http://news.bbc.co.uk/2/hi/business/2817995.stm

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

2009

Bloomberg is reporting Berkshire Profit Plunges 96% on Stock Market Bets.

Warren Buffett’s Berkshire Hathaway Inc. posted a fifth-straight profit drop, the longest streak of quarterly declines in at least 17 years, on losses from derivative bets tied to stock markets.

Major Mistake’

Coca-Cola Co., Berkshire’s top holding, dropped 26 percent. American Express Co. plunged 64 percent. Oil producer ConocoPhillips fell 41 percent, and Buffett said in his shareholder letter that he made a “major mistake” in buying shares when oil and gas prices were near their peak.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aOYOfTNCuQIQ

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For Buffett, It Was a Very Bad Year
Buffett’s exposure on those derivatives now stands at $10 billion up from $6.7 billion at the end of the third quarter.

http://online.wsj.com/article/SB123575572935295811.html?mod=rss_whats_news_us_business

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Note that Berkshire Hathaway owns a big chunk of Wells Fargo, which bought Wachovia, which in turn bought Golden West, the very seat of a lot of fraudulent lending.

Of course, we bailed out Wells Fargo and relaxed accounting rules, so no one knows the true size of the hole in that balance sheet. ”

****************************
Ohhhhh my
Uncle Warren lost big-

His shareholders expierenced a loss of net worth (personal money supply)

Uncle Warren expierenced a loss of net worth (company money supply)

And that’s not deflation?

If it looks like a duck and quacks like duck–

He stood in the relief line up-when TARP was handed out-through a crooked backroom GS/Wells Fargo/Wachovia Swaparama –

Uncle Warren was double layered in Depends-was the word on the street-

Derivatives were financial weapons of mass destruction he said in 2005-07-but-
We now know–he was in them up to his eyeballs

In 2009 when the tide went out–$10 Billion + floated out to sea-but again-Uncle Warren sees no deflation

Too funny-

When Uncle Warren points–run the other way?

#18 Phil on 01.02.11 at 11:49 pm

I have been reading your blog for some time, and agree with your prognosis, but am not able to convince anyone I know that what you say will come to pass…especially the significant other and some equally involved folks. In fact, your opinions are rather conservative compared to a lot of other forecasters. Why don’t more people see the landscape like you do? Am I blind and stupid enough not to be able to see the issue clearly. I am chomping at the bit to put in motion a strategy to protect the financial future of the family, but am stonewalled at the very mention of selling and investing the proceeds of the sale. It seems the general population has a different opinion, and if I choose to go ahead with the sale, I may seal my future to one of living alone. (not kidding) Just today I was mentioning that I feared housing prices will fall, at my work place, and a cohort, who still has the first dollar he ever made, and owns a gaggle of rental houses, said “you must read Garth Turner”. I said “yes, as a matter of fact I do, don’t you”? He said “of course, but I don’t believe anything he says”. So, hearing that, I am torn between doing nothing, and selling the farm, going for broke…and hoping not to “go broke”, while living in a rental. This may not be a big deal for high rollers like yourself, but a mistake of selling, and then being left with the prospect of not being able to buy another place to retire in after “the melt”, is in a word, paralyzing. This stuff is tearing me and my family apart, as if we needed any more dysfunction. I guess I’m just looking for a little proof, that predictions like yours are gospel. You might reply “no risk, no gain”. Believe me, I have risked much and lost more on the advice of “professionals”, and this time I must be certain about which path is golden. Any words of wisdom are greatly apperciated. Give me a sign.

Dude, have a drink. Bed your wife. It’s only a house. And never admit you come here. — Garth

#19 Nonplused on 01.02.11 at 11:51 pm

Wow, bang on today Garth, nice post.

How people can at this point even care what happens to house prices isa beyond me. Although the personal impacts of a house price decline could be severe for individuals, the bigger fish to fry is now in gavernment finance, and it’s going to get us all no matter whether you own a house or not.

#20 BC Bring Cash on 01.02.11 at 11:56 pm

Flaherty is hardly incompetent. He knows exactly what he is doing. He is fleecing the average working stiff for what its worth. He is a puppet of the private sector and does not give a rats ass about the well bring of people he pretends to represent. Garth you are former insider and you had a peak behind the curtain. Tell us more about what you have seen that is hidden from the rest of us.

#21 S on 01.02.11 at 11:58 pm

I looked at probably my 40th house today in my four month house hunting flirtation in Ottawa. 40 houses means meeting 40 listing agents. All of them tried to get my business by offering to become my buyer’s agent, but only ONE of them I’d consider. Only one was honest about the state of the market right now. Anyhow, the point is that I still believe real estate agents are scum, sorry. I’ve heard the shittiest sales tactics possible over the past four months – way worse than any used car salesman I have ever encountered. Absolute scum with the most blatant lies trying to trick me into buying their listed garbage and treating us like absolute idiots that don’t know anything about the market or about construction, so thinking they can get away with their lies. Who thought I could dislike a profession more than lawyers or civil servants. I learned a valuable lesson these past four months. I should have blogged about it.

Are there no good, honest, real estate agents out there? And honestly at this point, I don’t give a sh*t if I offend any readers out there that are realtors. You can thank your 40 Ottawa colleagues for that.

#22 Derek on 01.03.11 at 12:08 am

#13, Mark wrote:
a house is basically a consumer good, which, like a refrigerator, should have only grown in price roughly at the pace of inflation.
In fact the house itself has only grown in price at roughly the pace of inflation. But of course you don’t just buy the house, you also buy the land on which it stands. And that is the bit that has grown in price at an enormous rate.

#23 obert on 01.03.11 at 12:10 am

It is feared that GT will cause housing prices to collapse in 2011. LOL, he is almost optimistic: just 15% drop in a year, and then 5%/year. Three years ago it would be reasonable, but since prices were unfortunately allowed to increase by more than 50% since 3-years ago a steeper drop would not be a surprise.

If the drop in prices is the GT predicts, the CMHC and taxpayers may actually stabilize the economy. Let’s 5% drop a year is just only about 2% higher than inflation… the way it’s now. With higher inflation the houses may be almost as good as gold.

Some material though may be offensive to some people, and the movie is rated R…, personally, I think it’s better to stay on topic and not to give ammunition to the critics. I come to this blog for analysis and opinions – not for “funny pictures.”

Anyway, Garth, thanks for this blog and for standing in the fire – that’s why you are “hot.”

#24 Min in Mission on 01.03.11 at 12:21 am

Checked out some of the articles first mentioned.

They sure have your number Garth. Obviously you are just a sh** disturber. I read this blog, and even most of the comment, everyday. Seems OK to me.

#25 Basil Fawlty on 01.03.11 at 12:23 am

Salesperson rule #1; it is always a good time to buy.
You are advising selling and not repurchasing, which is contrary to rule #1.

#26 obert on 01.03.11 at 12:35 am

That man in the picture, better listens to the warnings.
Don’t trust the beast, you can lose your head. It happened once in the South, USA, in a LV casino.
The same with our current “safe” Real Estate market in Canada.
Another Greater Fool to put his head into the lion’s mouth?

#27 Stevermt on 01.03.11 at 12:36 am

can’t wait for the sea of signs popping up in the spring..
should bring a splash of needed colour to the fading winter landscape along with the crocus’.

#28 Outlier on 01.03.11 at 12:51 am

In reference to the “surge in listings” to come and market in general. I live on Vancouver Island, pretty quiet at the moment. Spring is known as a huge time around here, people I know have pulled their houses off the market in the hopes of a big spring time. Some places have been for sale for well over 6 months, not normal around here in the last 5 or so years.

Used to spend a lot of time 3 – 4 years ago looking at investment houses, dealing with realtors, etc. Anyone else noticed a “surge in realtors” in their towns? Crazy, I don’t recognize half of the names anymore. Feel bad for these people, coming to the party pretty late. Seems like half of this city has their photo up on a bus bench thinking they are holding a licence to print money.

To #21 I don’t think they are all scum, lots are just starting out and are getting taken to the cleaners by their realty companies, they need to make a living. Don’t blame you though, dealing with 40 salesmen in anything would drive me nuts too. I used a really good one here in town that saved us a pile of money when we sold and she still sends us Christmas gifts 4 years later.

#29 Angela on 01.03.11 at 12:52 am

“…smart people like Stephen Jarislowsky, Robert Shiller, David Rosenberg or even Mark Carney, there’s no doubt.”

Heh heh…so Mark Carney’s smart now, Garth? Less than a year ago he was one of the stupidest people alive according to you.

In a way I see how people can think that Garth’s prognosis for the economy at large and real estate specifically are half cocked, these people that say “a stopped clock is wrong twice a day” sort of thing. I’ve been reading this blog for over a year and so far nothing that Garth has predicted has come true. Okay, maybe not nothing, but we’re only just seeing sales drop in the last few months, prices still have to follow. Since we’ve been waiting for that to happen for so long I’m not surprised that there’s doubt that that will happen soon, if ever. Hasn’t this been Garth’s message since 2004? I mean, I’m in total agreement that this inflationary house stuff has gone on for a decade, has seen its day and it’s time it’s put to bed, but there’s been nothing to really turn the public at large against real estate yet. Oh, well, except that little housing correction in the U.S., but apart from that nothing to turn people against it.

#30 OttawaLuke on 01.03.11 at 12:58 am

#21 S on 01.02.11 at 11:58 pm
I looked at probably my 40th house today in my four month house hunting flirtation in Ottawa. 40 houses means meeting 40 listing agents. All of them tried to get my business by offering to become my buyer’s agent, but only ONE of them I’d consider. Only one was honest about the state of the market right now. Anyhow, the point is that I still believe real estate agents are scum, sorry. I’ve heard the shittiest sales tactics possible over the past four months – way worse than any used car salesman I have ever encountered. Absolute scum with the most blatant lies trying to trick me into buying their listed garbage and treating us like absolute idiots that don’t know anything about the market or about construction, so thinking they can get away with their lies. Who thought I could dislike a profession more than lawyers or civil servants. I learned a valuable lesson these past four months. I should have blogged about it.

Are there no good, honest, real estate agents out there? And honestly at this point, I don’t give a sh*t if I offend any readers out there that are realtors. You can thank your 40 Ottawa colleagues for that.

——————————————————————–

So who would you recommend, for future reference?

#31 T.O. Bubble Boy on 01.03.11 at 1:04 am

I’m still amazed at how “extreme” Garth’s views are made out to be…

Is it really that crazy to suggest diversifying your assets and not having 100% of your net worth in housing?

And – haven’t most of the Big 5 Banks called for some level of housing market correction?

You would think that all of these realtors and mortgage brokers (who are presented with the data every day) would have gotten past the “house prices only go up” crap by now, and should have at least starting trying to come up with new sales pitches?

#32 GregW, Oakville on 01.03.11 at 1:08 am

Hi #20 BC Bring Cash, re: Tell us more about what you have seen that is hidden from the rest of us.

I was at a couple public town halls Mr Turner held after he was told to stop his open public blogging and then was kicked out of PM H gang.

The tail was as bad as I could have imagined, no it was worse!

#33 canali on 01.03.11 at 1:11 am

BC RE sales guy/analyst Ozzie Jurock still thinks the market in BC is entering not a bubble or crash but instead merely balancing itself out after a heady period in “A return to normality?”.(written a few mo ago)
http://www2.jurock.com/articles/columnist.asp?id=9172
…that sure we’ve temporarily run out of gas but not to worry: and ”…I have in my life often regretted selling a property, but never keeping one.”
…he discusses what he thinks will happen in and around Vancouver and other parts of BC going forward:
…would love to get feedback to this.

#34 Aussie Roy on 01.03.11 at 1:14 am

If there is no bubble then there wont be a crash, so why are realtors and spruikers worrried about someone having a different view to them. House bulls are like those looking at a single leaf on a tree, take a step back and look at the forrest, its a global credit bubble. Many parts of the forrest have been and still are on fire, some of us can smell the smoke. Speculative debt is the kindling, there is plenty in both our countries.

Aussie Update.

Debt markets may face new credit crisis

http://www.theage.com.au/business/debt-markets-may-face-new-credit-crisis-20110102-19d0d.html

World on high alert as China inflation soars

http://www.theage.com.au/business/world-on-high-alert-as-china-inflation-soars-20110102-19d0l.html

#35 TD69 on 01.03.11 at 1:20 am

Hi S #21. Feel good. Lawyers and civil servants actually have to work to some degree. Realtors just show up at the seller’s lawyer’s office on closing day for the check. How is that what is advertised as a person’s largest investment is brokered by a person who takes a $600 course via corespondence and calls themselves a professional? Professional? Professional what. And used car salemen hustle to get paid. Realtors just meet you at the house. Now the jigs up. MLS is de regulated and there are services all over the country that will list your property for as low as $100.
I stopped using realtors at 30. Sued my first one for patent defects at 32-and won-the Real estate board even chased him. I never allow anyone that asks for help to use a realtor to buy-do you know what a realtor will for a double dip commiss? Anything you the buyer wants-the seller is paying. What a scam. Most people carry mortgages so the fees usually land at 10% of what is left to the seller.
Helped a friend sell their house for $1.7mill -the commiss. normally would have been $50k-the agent received—-$3k. And this from the never negotiate down on comission high and mighty Remax. How? Simple-list it yourself. It was either $3k or nothing. What choice did he have? When you the consumer now have direct exposure access with MLS you call the shots. Agents now do what you tell them since buyers are calling sellers direct.
Technology has taken over open houses. Realtors are relics. And almost as up to speed.
There are still some smart and deal making ones that add value but the odds you stated are correct-1 in 40.
And you think you don’t respect realtors?

#36 Jane on 01.03.11 at 1:20 am

#18 Phil:
Hang in there. We were in your place last spring. The decision was agonizing. We’ve since then sold, invested, and are making money, plus we have the cash out of our home. When you sell, put a rent back clause in, then you can stay in the same place, not have to move, and you can offset the cost of renting using the interest of the invested sales proceeds. On or possession date, I stood in our home and realized the only difference was that we now owned cash, not debt. The walls were the same, furniture the same, kids and spouse the same, job the same. Take the money now. If it is the wrong decision, buy back in a few years. Take Garth’s advice. Send your wife to him…maybe he can help her see things in a different light.
Good luck!

#37 Tim on 01.03.11 at 1:20 am

I don’t know what indicators you used to predict that the mother of all listings is coming on the market, especially in the west coast, though we can only hope so. As for the correction, if it is only 25%, then wont prices be roughly where they were when you started this blog warning people that the market would tank?

#38 GregW, Oakville on 01.03.11 at 1:21 am

Hi Garth, re: water

This might be appropriate. Someone I’ve meet uses this, I respect them and hope they don’t mind me repeating it here. I’m not exactly sure about the ‘then you win’ is quit right in this instance. But here it is.

“Our lives begin to end the day we become silent about the things that matter.”Martin Luther King Jr.

“First they ignore you. Then they laugh at you. Then they fight you. Then you win.” – Mahatma Gandhi

#39 Tim on 01.03.11 at 1:22 am

Re 21,
I agree, what other profession can you get a license in a matter of several months- a parking attendant? But come on, comparing them to lawyers? Let’s give realtors a bit more credit.

#40 Roy Stacey on 01.03.11 at 1:23 am

2010′s over. My 14 yr old paid-off house is just a place to live. Tax assessor says its worth 143K built it for 109K. Not a HUGE gain, there.

My investments did better. I use Mutual Funds, both stock & Bond funds, Index and managed funds mostly through Vanguard in the US. Either 401K type which is tax deferred (you owe tax on contribution AND gain upon withdrawl at the correct age)…an OK Deal…..OR…. the ROTH type which is funded with after-tax money, and when held until the correct age your principal AND earnings are exempt from all future TAX. (Best Bet)

I try to fund both types to the best of my ability, and contribution limits set up by the Government. So, how did we do? From 6.95% on my GNMA Bond Fund to 28.30% on my REIT Index Fund Inv. Sure beats GICS, Treasuries, money funds.
2011 marks my entry into a land called “Critical Mass” where I doubt there should EVER be a worry about money. For that I am exceptionally grateful. We earn just over 110K but live within our means.

Starting with Zero in 1987 to a paid for net worth of over 750K now it CAN be Done….Listen to Garth, he’s NOBODY’S FOOL

#41 Milhous Plumbers on 01.03.11 at 1:24 am

Kitchen debate.

Fridge: I know of someone in a rental with the original kit. The Fridge is 36 plus years old, energy inefficient but still works fine. Here’s the kicker it was made in Canada. What’s made in Canada now?

#42 kitchener1 on 01.03.11 at 1:30 am

Happy New Year to the blog dogs!!

LOL at a bunch of mortgage brokers who are “worried” about price declines.

I meet up with a lot of friends over the holidays and will forward what they there thoughts are about the market in general in a post later on but the mortgage guys I know are telling me things are SLOW, trending is way way down, even for this time of year. Refi is whats keeping a lot of these guys going.

If listings explode like you predict, things will go down very fast, price drops by June. Simply there are just no more perspective buyers in the pool.

#43 HouseBuster on 01.03.11 at 1:39 am

Let’s make this clear for all the visitors. You think housing can keep going up when debt levels are at record highs? Housing is going to take a massive fall like it did in the US. 2003 prices will be here before you know it.

2011 will just be the start. Get the F. out while you still can.

#44 UrbanCowboy on 01.03.11 at 1:40 am

Love this Peter Schiff compilation, he was right on everything not only the mortgage mess:

http://www.youtube.com/watch?v=2I0QN-FYkpw

#45 Dan in Victoria on 01.03.11 at 1:45 am

Phil@ 18 Geez man calm down. NO ONE knows exactly where this is headed.
Tommrow morning when I walk outside and get into my old rusty chev to head off too work it’ll be decade number 6 for me in the construction racket.
I still can’t figure this one out.

All we can do is take educated guesses at it.
Sit down have a beer and think it through.
Ask yourself some questions.
What caused it to go up?
Why did the government start 40 year mortgages?
At what time did they do it?
Why did the government drop interest rates to near zero?
At what time did they do that?
Why was there lowwwww downpayments offered?
Why has there been a 13 year or so run up?
Why has there been no ” Correction”
Why do people pump real estate?
Who are they?
Etc, Etc.
Why has Mark Carney started talking about Canadian finances?
Why has he warned about higher interest rates?
Why did the government take 75 billion of mortgages from the banks?

Critical thinking Phil, you need to step up and do it.

Now I wanted to sell more than a year ago and go drink umbrella drinks on the beach for a while.
I got out voted by the big boss , presidential veto apparently. I sat down and did a spread sheet on varying percentages of decline on the house.
I then worked out how much to sell, how much to move, how much to rent.
How many of my treasures I would have to part with
( You know, the half empty paint tins, the old energy guzzler beer fridge in the shop)
Etc.
Came up with a cost over 5 years or so.

So I know where i’m at all the way along.
I can live with it. Happy wife Happy life.
Keep in mind one thing though Phil, its human nature you HAVE to understand, People are predictable, The other thing is MATH. (Credit, debt, affordability etc.)

You talk about investing……first morning your investments went down would you be screaming to sell, sell ,sell?
Are you in danger of losing your house? (math)
Or are you hoping to sell now and buy back for half?(Human nature)
You’ll have to fill in the blanks about your own particular circumstances.
Good Luck.

#46 Carmen on 01.03.11 at 1:47 am

Garth seems to be a MSM puppet in most of his posts. He doesn’t address the root cause of our currency and pricing problems at all. Namely national debt, fiat currency and the historical problems with it, and other issues. Max Keiser and Nicole Foss have addressed these issues in the following youtube video but many of you have mocked the opinion stated in it. It seems you all worship Garth but you should be getting a more balanced opinion of the situation around the world which intimately affects Canadians. Peter Schiff is a good example. Yes I know you all will say he is a doom and gloomer, but read his books to contrary that opinion.

#47 smartalox on 01.03.11 at 1:49 am

@#22 “Derek” actually, since the house is a consumer good, it has actually depreciated in value since 1959 (due to wear and tear, age, outdaed electrical, etc.) The value of the property (location of the land) has risen to camouflage this loss, and still appear to be a gain.

#48 Ukee surfer on 01.03.11 at 1:53 am

Mark “#1, good point, a house is basically a consumer good, which, like a refrigerator, should have only grown in price roughly at the pace of inflation. Or even less, because, like a fridge, technology and mass production has made it less expensive to produce.”

Technology has only made houses more expensive. Building codes have been updated to reflect current building technology. Hurricane clips, joist hangers, seismic engineering (coming this year to BC building code) low-e argon gas double pane windows, You can not insulate with newspaper anymore it is illegal. Energy costs have risen demanding 2×6 framing minimum whereas my 60′s bungalow was 2×4. speaking of which lumber prices have skyrocketed since the good ol days. This does not justify the dramatic house prices of today but a well built house today is totally different than a well built house yesterday. I am building a house right now for myself and it is over $100 /sq.ft. for basic materials alone after land costs. That is without any labour costs and searching daily for sales at the depot, using locally milled lumber, and used building materials and tools on Kijiji. All in I am looking at just over 400k for lot and house and a case of A5-35 and band-aids.

#49 Devore on 01.03.11 at 1:56 am

#10 Jaymus (RealizedReturns)

People are passionate about their RE market prognostications, especially when their livelihood is involved. Like anything, the louder people criticize your position, the more likely it is they actually fear that you are right.

Nothing to do with livelihood.

It is often said humans are a rationalizing species, not a rational one. When someone questions, even slightly, your long/deeply held beliefs, it is only natural (even if not rational) that they will be instinctively and viciously defended. To admit being wrong is to admit you have been a sucker for years, and have probably suckered in other people too. Reasoning, facts, these are meaningless to this person. They will cover up their ears until they go down with the ship, rather than face reality.

#50 Toromierda on 01.03.11 at 1:57 am

Hi Garth,
Long time listener, first time caller here.

Early on in 2010 you made a rough time line of how the crash would play out and I have now seen some proof that it was accurate. If I recall correctly, you said the first thing to happen would be a significant drop in sales volume but with prices remaining sticky. The next thing to happen prior to a price drop would be developers and sellers offering sales incentives.

Here in Edmonton I work in a medium sized company and there are quite a few 20-something women who have bought very expensive homes in the last year (I’m convinced the house lust gene is on the X chromosome).

One day last month they were all gathered around a monitor looking at MLS porn and going on about granite and stainless and hardwood and I realized they had convinced yet another young woman to drink the kool-aid. Then one of them pipes up and says, “There are some condos near my place that aren’t selling well and they’re offering free trips to Hawaii! wouldn’t that be nice?”. Then another says, “That’s nothing, a developer near my place is offering a free car if you buy a condo!”.

I couldn’t take it anymore and I had to ask them “Doesn’t it worry you at all that they have to resort to such things to get you to buy?”. I was met with 4 pairs of eyes with totally blank stares. I had to add:”It means that if you buy now and the price goes down in a year or two you will be paying more for your mortgage than your house is worth just like what’s happening in the US”.

The response was: “Yes, but in the meantime I’ll have my new house”.

This is the same girl who recently had to get a loan for $2000 for an operation on her cat because she couldn’t afford it otherwise and now she’s getting a $300K duplex! So there you have it, that’s the mentality of a generation who are willing to go into any amount of debt as long as it means you get the shiny new stainless kitchen.

The last six months here in Edmonton saw a pile of expired listings that did not come back on the market. If my guess is right, we will see them all pile on at once this spring.

Here’s hoping.

Cheers.

#51 Michael on 01.03.11 at 1:57 am

My message is not that Toronto will become Detroit or Vancouver turn into Phoenix. But there will be a correction, followed by an unknown number of years of slow melt.

Why? You keep telling everybody it’s NOT differnt here only to then turn around and say, well, no it isn’t but it is.

So what is it? Why will the correction not be as bad here as it was and is in Japan, Ireland, Spain, the US….?

Afraid of the demons you are calling upon?

#52 Nostradamus Le Mad Vlad on 01.03.11 at 1:58 am

-
Looking for Mr. Goodbar . . .

“Hardly. I’m just hot. He has absolutely no credibility. As always he’s blaming others for own failure, in this case Mr. Carney, Mr. Flaherty, Mr. Harper …”

Oooohhh, hurt me Massa Garth! Hurt me good and whip me, whip me with a thousand hot, wet noodles, you Vagrant Hussy!
*
#2 TheBigLebowski — Right on the money. It was very clear why the previous Polish govt. was taken out in a mysterious ‘plane crash’ in Russia last year.

Poland had paid its loans off to the IMF, was basically free and clear and was talking to other countries about bailing them out, and bypassing the IMF altogether. There’s a fairly new Polish govt. in town!

#11 Sam — “But I don’t believe until you see a breakdown in jobs. Until then, the game will continue well into 2011 and beyond. The jobs market seems to be “ok” and going strong . . .”

Somewhat disagree. Govt. unemployment figures are always on the low side (to hide their own incompetence; now roughly 9 – 10%), but don’t take into account hidden unemployment here and here, e.g., people who have given up looking for work altogether.

A lot of mfg. / industrial / hi-tech jobs have already headed overseas and down to Mexico, most of which are never coming back. Check out the auto industry, which has brand new plants in Brazil, India, China and Russia and see what Detroit and southern Ontario look like. Companies leave, unions are broken and most are left in the poorhouse.

#18 Phil — I don’t mind owning a home, but what I don’t care for are the ever-increasing utility costs needed to run it, and with only the two of us living here, it really has become a pointless exercise in futility.
*
10 min. clip Police state in US — Walmart towers.

Oz Kash Krunch and US Credit Spreads Drop.

Apocalyptic Cyborgs and Infinite Money kills real wealth.

Empires on the Edge Lotsa links in.

Investing in the 80s and / or 90s.

Copper JPM cornered 80% of copper in London a few weeks back. Now look at its price. Inside info.?

#53 45north on 01.03.11 at 2:03 am

attempts to quell a contrarian voice are a harbinger of what awaits us.

here’s Mark Carney again: Cheap money is not a long-term growth strategy,” Carney said. “Low rates today do not necessarily mean low rates tomorrow. Risk reversals when they happen can be fierce: the greater the complacency, the more brutal the reckoning.”

Read more: http://www.ottawacitizen.com/Debts+high+Canadians+warned/3973187/story.html#ixzz19wl1Sfp2

“fierce, brutal and reckoning” this from the Governor of the Bank of Canada. Boys and girls that is as tough as it gets.

Phil: if I go ahead with the sale, I may end up living alone.

I am thinking that you are going through hell right this very minute. The darkest hour is just before the dawn. You have consulted her and now you have a decision. God bless.

#54 Michael on 01.03.11 at 2:06 am

#22

In fact the house itself has only grown in price at roughly the pace of inflation. But of course you don’t just buy the house, you also buy the land on which it stands. And that is the bit that has grown in price at an enormous rate.

And even THAT does not defy the law of gravity.

A lot of the places that these houses were build on was fertile farm land that we have plowed under for no other reason but the short term gain for some developers.

Take Vancouver. What exactly of value (outside of realestate) is actually being produced here?

Sure, we got the harbor, but that does not make millionaires.

Yeah, some headoffice for resource companies but they pay their employees peanuts.

Land only has an increasing value if we can increasingly extract value from the land (either directly or indirectly). Selling the same thing back and forth all the time does not make it more valuable (in a real sense).

#55 Patz on 01.03.11 at 2:09 am

There is so much one could say but ahhhh… well Garth as you suspect the more they knock you the closer it gets. And that charge that because we’re predicting something means we’re cheering it on is just duck/shit.

But cheering on house prices dropping—you bet! Because I don’t want to have my economy screwed up by a housing bubble—too late it already has.

Here’s a simple thought for you: You think escalating prices are good for you if you’re a homeowner because you’re making all that money just by living in your house or crack shack, whatever. But you’ve made nothing until you sell. Then just because you’re you, you will buy again at another inflated price. Meanwhile the amount that everyone’s spending on housing is taking a greater percentage of their income every month.

Bad idea. It means there’s less to spend on other things and the economy gets all crinkly (sorry for the technical jargon). I don’t know if ’11′s the year we go off a cliff but it will at least be the year we lose our footing.

#56 ted23 on 01.03.11 at 2:10 am

Sorry “S”
Taking 4 months and looking at 40 properties says more about you than the Realtors. Its clear you have no idea what it is you want and piss people off by wasting their time. Give it up already. Take the time to interview agents first, then when you have found an agent you can can work with use him/her to give you access to all the properties. None of the listing agents you met will serve you because they already represent the seller. There is no extra deal because you use them. Presumably you don’t pull your own teeth or do self surgery. Go get yourself some representation stop farting around. Service and time wasters like you make this business a pain in the ass. Sign a buyer agreement and make sure your agent gets paid for the service they provide you. Its commission sales. Don’t waste their time. How many Weekends and evenings do you give up without pay. None I bet.

#57 nonplused on 01.03.11 at 2:23 am

3 Dodged-A-Bullit-in Alberta

While I take your point that fridges have risen in cost even less than houses as #1 Danforth suggests, my experience with the appliances around here: Every 2 years something needs a new control card for $200 and I’d have been better off with the old dishwasher that had a crank control knob or a fridge with no microprocessors, even if they use a little more energy.

If the supply chain ever breaks down, I figure we have 3 years until half of our modern appliances are using no energy at all, as opposed to saving us energy now.

Reminds me of compact fluorescents. I don’t know how the rest of you are doing, but mine are burning out just as fast as the old incandescents unless I leave them on all the time (outdoor lights, those are lasting on all the time), and when I need the light in the winter is when the waste heat is welcome anyway.

The only electronics I have been impressed with so far is CDI ignition in cars and maybe fuel injection also in cars, as they get significantly better mileage and require less maintenance than the carburetor/point system they superseded. But I ain’t replacing the onboard computer that used to tell me I was going the wrong way and getting crappy mileage. I don’t need a chip to tell me that.

Good luck with your $500 4-year fridge.

#5 westcoastguy

Home prices, like all prices, should be a reflection of cost combined with the going rate of capital combined with temporary supply and demand factors that will eventually normalize (increased demand raises prices which brings new supply lowering prices). If you are paying more than $200/sqft for outstanding brand new digs you are being ripped off, some adjustment for land value allowed. Builders can still turn a handsome profit at $200/sqft, including granite, tile, hardwood, and a finished basement and garage. Find out what new lots or tear downs are selling for in the area you wish to by. Then add $200/sqft for something really nice straight line depreciated using 50 (conservative) or 80 (optimistic) years for something old, and if you are bidding more than that you are an idiot and should buy from a new home builder. He’s still going to rip you off, but not by as much.

As I have commented here before, the old rotten houses may be in a good location driving up the price of the land, but the wreck of a house needs to be depreciated. Only CMHC prevents this.

Garth: About the animal porn picture/comments: My first thought was it brought new meaning to the term “dinner date”. But anyway I appreciate the humour even if the squeamish amongst us don’t like being faced with the fact that animals often act a lot like people.

#58 Coho on 01.03.11 at 2:25 am

The days of disposable income are gone. A reset is in process. There is or will soon be no more breathing room for the average person when the last of available credit dries up. It will be subsistence living with no light at the end of the tunnel for the foreseeable future unless the train speeding towards the NOW is derailed.

Real purchasing power has diminished. The main driver of our consumption is credit and inflated real estate. Jobs are continuing to go oversees. We are cutting our own throats by employing those in emerging economies. First is was the big corporations and now it is small business and entrepreneurs tapping into these labour markets. Try going on one of these job contracting/networking websites where you are competing with people from Asia, Indonesia, etc charging five to ten dollars an hour doing anything from accounting to technical services including engineering and design.

There are Americans and Canadians offering peanuts ($100 to $200) for one to three weeks worth of work in some cases. Maybe it is what they need to do to compete , but with a decimated middle class, fewer and fewer people here will be able to afford their products even though they are designed and manufactured for cheap overseas — and they’ll be crying. Again, we are cutting our own throats. I’m sure many people engaged in this practice know this. Their situation may be that it is dog eat dog to survive, or that anything goes to get their shot at getting ahead as the sun sets on the western economy, or that they are just plain greedy in their quest to maximize profits even though they can be profitable keeping the jobs here.

#59 confused and a little crazed on 01.03.11 at 2:26 am

18# phil

Dude…just chill don’t sell . it’s just a house. you’re not going broke obviously there is a lot going on other than the house and relax . just tell people you think there will be a correction….and leave it at that no emotion should be tied to the comment or their response

peace bro

Man… both bears/ bulls are tearing each other up over what…?
rich or poor we die eventually…just try to pass thru with minimal hassle to our loved ones

i bought stocks and made some money but i don’t hoard over others who missed the boat because there is another boat coming…just be ready to jump on :)

#60 confused and a little crazed on 01.03.11 at 2:31 am

#18 phil,

pS. I don’t tell people I read Garth’s stuff or about a crash or correction…I just tell people I doing fine …I make money from stocks and oh welll i missed the real estate boat…no biggee

#61 Dan in Victoria on 01.03.11 at 2:33 am

And for the few that want it to all come tumbling down,
Why ? Why would you wish for that?
Think about it.
This link is for a house for 27K in the states.
27K so lets see,
2K for machine time
7K for concrete
7K to frame
8K to plumb
7K to wire
Oh so sorry your’re all over budget come back when you can get by on 6 bucks an hour, off you go home.

Oh I know now…. you’ll be wealthy off the despair of others…….
http://www.niowarealty.com/home2.cfm? QProperty_ID=2-126-44

#62 the commenter formerly known as... on 01.03.11 at 2:35 am

I’m just waiting for the correction so I can say “I told you so.” Because I will never admit I’m wrong :-)

#63 Brandon on 01.03.11 at 2:37 am

1. Denial
2. Anger
3. Bargaining
4. Depression
5. Acceptance

Sounds like the garth haters are on stage 2. Let us know if they start bargaining with you!

#64 Dan in Victoria on 01.03.11 at 2:38 am

Try this link, theres a bunch listed
http://www.jaspersenltd.com/prop_view.php?action=search

#65 Aussie on 01.03.11 at 2:40 am

I live in Melbourne, Australia, and found this website about a week ago, and you could easily substitute any Australian city for the ones you talk about in Canada, except for one thing. Canadian house prices are cheap compared to Melbourne prices and very cheap compared to Sydney prices. Our dollar is roughly the same as yours, as is the average wage.

We have been overdue for a housing crash for years now, but thanks to government intervention, especially during the GFC, Australians hold their heads up high, proudly announcing that we are different, our economy is great, we have huge immigration, most Aussies live in a few state capitals near the coast so there is a shortage of land, we are close to China, and of course China relies on our iron ore mining.

The average Aussie believes high prices are here to stay, and can only go up for the reasons listed above, and for the past 20 years they have been correct. Meanwhile, I’m waiting for the bubble to burst, or at least deflate somewhat….

#66 Devil's Advocate on 01.03.11 at 2:53 am

#22 Derek on 01.03.11 at 12:08 am

#13, Mark wrote:
a house is basically a consumer good, which, like a refrigerator, should have only grown in price roughly at the pace of inflation.

In fact the house itself has only grown in price at roughly the pace of inflation. But of course you don’t just buy the house, you also buy the land on which it stands. And that is the bit that has grown in price at an enormous rate.

Ahhhhh, I see Derek that you have found the hidden immunity idol.

#67 pablo on 01.03.11 at 2:54 am

Dude, have a drink. Bed your wife. It’s only a house. And never admit you come here. — Garth
Sound advise to Phil, but just forgot one thing; “take a couple of cialis”

When your critics start badmouthing and calling you names……you gotta know that you’re being taken for more than a joke/jerk and you’re getting under their skins. Keep up the good work and time will tell whose right or wrong; just ask a Jehovah’s Witness, they’ve got the end of the world date wrong more than a couple times.

#68 realpaul on 01.03.11 at 3:21 am

If they weren’t crapping their pants, they wouldn’t be attacking you. The rationale for the concerted effort at denying the obvious, shifting the blame and flinging disparaging defamation is to deflect the publics attention from the rather stoic comments of the Bank of Canada governor and others recently.

These people only exist because of the bloated ponzi scam of real estate ‘investment’. Confronted with the reality of the unafforddable nature of the product and the fallacy of future surety the pimps and pumpers are lashing out at any voice not supporting the bubble.

Garth sir…you are a needle to those encased in a fragile bubble. More simply……they want you to shut up because you’re frightening the children.

#69 Pr on 01.03.11 at 3:22 am

All truth passes through three stages, First it is ridiculed, second it is violently opposed, and third, it is accepted as self-evident.

#70 The Original Dave on 01.03.11 at 3:58 am

Phil, you need to relax. Just go opposite of the pack. I agree with almost everything Garth says, although Garth would definitely disagree with me! When everyone was saying to avoid stocks in early 2009 (not Garth) I went all in. I did very well and bought into a lot of aggressive sectors. At the same time, everyone was saying “buy real estate”. That I didn’t do. In fact, people have been saying “buy real estate” for years. I will not take up that advice.

Right now, I”m going to lighten up on my stock holdings as the run-up has been great. Those that were saying to stay out of stocks and get into real estate, are now asking what stocks to buy. That is my caution signal. They aren’t screaming “get out of real estate” yet.

The party in real estate is over. The real estate market moves like a turtle and the stock market moves like a gazelle. Don’t let the slow move in real estate sway your opinion. Sales declines is a sign of what is coming in any market. The real estate market is less liquid and has everyone in the party, so it’s taking longer for the fall. The trend is in motion.

#71 Judy on 01.03.11 at 4:18 am

Can anyone comment on housing prices in Charlottetown? Is housing overpriced as elsewhere and due for a correction?

Thanks.

#72 TheBestPlaceOnEarth on 01.03.11 at 4:22 am

Not happening here and never will. THERE WILL NEVER BE A SURGE IN LISTINGS IN VANCOUVER. Repeat this everyday when you wake up Weak bids being mopped up by foreign investors. Anyone selling in this wonderful Vancouver market is truly the greater fool. No one can stop this as it is beyond our control. If you do not live in the Lower Mainland then by all means sell and put it all into gold. Just you watch. How many people do you need at Open Houses bidding up from 800k listing to 1.1 million before you admit defeat. 300 people? 500 people at the Open House. An Open house in Vancouver gets mistaken with a party as the place is packed and rockin with excitement. How many 300k!!!! over Asks have to happen before people on this blog jsut say well gosh darn it was different this time and we we wrong. Folks this is the Best Place on Earth not Calgary or bygone cities like Toronto. Only City in Canada right now not shovelling
()()()()
As argued here, any surge in listings – and it looks like a mother of one is coming – will only exacerbate the supply-demand imbalance behind six consecutive months of year-over-year sales declines, and a price plop already shaping markets like Calgary and Edmonton

#73 Sargon on 01.03.11 at 4:58 am

Ruh roh…looks like a few more bees have flown into the RE pumpers’ bonnets.

Bulls and bears aside, why should wanting home prices to return to affordable levels be akin to treason?

All RE Bears, prepare yourselves for the onslaught of ‘ad hominem’ attacks. “I know you are, but what am I?” and “Takes one to know one.” are usually a good first line of defense.

#74 SquareNinja on 01.03.11 at 5:49 am

Contrary to what most people write in these pages of comments… most relatives/friends/colleagues I talk to (all in the GTA) believe that there is indeed going to be a correction in residential housing prices.

Disclosure: I work for a big builder in the GTA.

All of my colleagues (licensed and non-licensed) are scratching their heads and wondering how the market has held on for so long. They’re also wondering why, after a 2010 summer of no sales, the fall and winter picked up so much. But, they still believe that things are going to go downhill. And no, they don’t read this blog like I do.

And yes, one of my licensed colleagues did sell her primary residence Q3 2010, and is now looking to sell her investment place in Stouffville (before the crash).

But… about 65% of the people who walk in our door ask us why we’re not giving discounts… the market is weak! The other 35% just don’t ask any questions. Both groups end up buying in comparable proportions, however.

#75 Nostradamus jr. on 01.03.11 at 5:57 am

“”This year seems certain to bring higher interest rates,”"

…With a dollar at par?…Not a chance Garth

“” more taxes, less manufacturing, less exporting (dollar at parity) along with high unemployment and seven provinces that can’t balance their budgets. How is this a ‘recovery’?”"

…Agreed… There should be a law passed. Every level of Govt should not be allowed to run a deficit Budget.

“”My message is not that Toronto will become Detroit or Vancouver turn into Phoenix. But there will be a correction,”"

…Nostradamus jr has been on record that all of Canada is prone to RE price correction….including BC….Lone exception is Vancouver Proper. I’ve covered Vancouver in previous posts.

Nostradamus jr.

#76 jjpetes on 01.03.11 at 6:14 am

Garth,
It seems rather interesting that when the market in Canada appears to begin a turning point to a broader correction the pundits for RE pumping as you put it try to roar louder.

Have you noticed this? It is actually a signal to me that when the most avid of believers in the RE only goes up forever crowd, point and ridicule the offset opinions like yours that the the market has turned.

I noticed the same thing in 2007, for example, when Peter Schiff was warning about the oncoming RE fall in the US market on CNBC, and a couple of the other guests by the now completely discredited names to the likes of Art Laffer, Ben Stein and others had actually the gall to laugh at him. Without doubt those moments damaged the credibility of the mockers and those who ridiculed.

Take this as a good signal, not a bad one sir, as the sub conscience releases fear in its own insidious mock standard. However, I am afraid that you still mock concerned people such as myself about their holdings in gold. Those like myself whom have educated themselves about what constitutes a stable monetary system.

Do not misunderstand me. If the quantity and/or the supply of money was strictly controlled and fractional reserve lending was abolished paper/digital money would clearly suffice as a valid monetary exchange mechanism. However, the insistence that we trust our governments to act prudently with that medium has been seriously undermined when the amount of money, and I am talking about the actual money supply not inflation, is being quite literally debased right out from under us. With nearly two trillion in more deficit within the US as well with our own horrendous deficit spending here from a one two combination of irresponsible fiscal and monetary policies and you are asking us to have faith in our monetary system in its current form?

Do not wonder why people, very concerned people like myself viewing this complete irresponsibility by our governments treating money like it was free as air with great discontent and concern. I ask you. As you do not care to be mocked, I say that is a sign that fundamentally there is a turning point in the market for Canadian RE, you can literally feel it in their distasteful words to you Garth.

On that same note, please do not discredit us whom are responsible with our actions in protecting our wealth by tendering an allocation of some of our paper assets into hard assets like gold and silver, diamonds or art for that matter.

jjpetes

#77 Calgary REality on 01.03.11 at 6:33 am

We watch Calgary MLS regularly and see that prices are down from the past few years, for sure! Don’t believe the Average & Median price graphs because they don’t tell the whole story.

This one listing says it all:

“$680,000 – $574,900 = $105,100 Yes it is true!! Your saving $105,000 !!! Seller has paid $680,000 in 2007.”

http://www.realtor.ca/propertyDetails.aspx?propertyId=10211263&PidKey=1456593671

Other examples:
-suburban 2000 sq ft detached w/ front garage (Bridlewood, Copperfield, Harvest Hills, etc.) was $550k, now sub $400k
-1950′s bungalows (Kingsland, Haysboro, Acadia, Fairview, Glendale, Glenbrook, etc.) was $500k, now $350-400k average

The prices ARE falling… there is no exception! See for yourself by looking at the listings, don’t just believe the Average & Median price graphs.

#78 Canuck Abroad on 01.03.11 at 6:34 am

Hi Garth (or anyone who feels qualified to answer) – I am seeing repeatedly the claim that if people don’t like the price offered for their house they will just not sell.
For example, in the comments to this article of a few days ago: http://www.guardian.co.uk/business/2010/dec/31/nationwide-house-price-rise-december?showallcomments=true#start-of-comments

One chap (whatever999 at 5:00 pm UK time) unwittingly declared “you want my place you gotta pay the going rate”, not realising that the going rate is what the market will bear at that point in time. I’m sure he meant something else, like what he paid for it, or what he owed on it…

Anyway, this seems to be an argument I see over and over. However, isn’t this dependent on (1) mortgage rates staying low so you can continue to afford the payments (2) no job changes requiring a relocation (3) no additional children requiring greater space (4) no job losses (5) I could go on and on but you get the picture.

So maybe there are individuals out there whose lives are so unchanging they can simply sit things out for years on end until they get what they think there place in worth, but surely on a macro level this argument fails. So why is it repeated used?

And as an aside, I think one of the things that is creating a problem in the US employment situation is lack of mobility. People are prisoners in their home because they can’t/won’t sell and so are stuck.

#79 Canuck Abroad on 01.03.11 at 6:57 am

Another problem I am seeing in the UK market is lack of available financing. I personally know of three people whose sales have fallen through in the last six months because their buyers were not able to get mortgages (not sure why they didn’t sort this detail out before making an offer…). Something to ponder maybe for all those who are planning to list this spring.

#80 somecatchphrase on 01.03.11 at 8:20 am

People in Canada have been indoctrinated to believe that everyone has “right” to “free” (LOL) medical care.

By extension, do people not have a “right” to “free” (LOL) housing?

Given the extreme Canadian climate, surely housing qualifies as a basic human need, just like medical care?

IMHO, this is a hypocritical double standard. If health care is a basic, inalienable “right,” then so is housing.

Mr. Shapps is correct. Falling prices are something to celebrate and applaud. Falling prices are a necessary enema for a country that has such a huge malinvestment in real estate. The cleansing process will take years.

If real estate prices come back down to earth, folks will have more money to spend at the mall, auto dealerships, restaurants, etc. More importantly, folks would have more money to invest in great Canadian companies using vehicles such as XEG and ZJO. Long term, a real estate crash/melt would be great news for the broader economy.

#81 SaraBeth on 01.03.11 at 8:40 am

“First they ignore you, then they ridicule you, then they fight you, then you win.”
— Mahatma Gandhi

#82 Danforth on 01.03.11 at 8:42 am

@ #13 canali

In april 1959, houses which now list in downtown Toronto for 400K+ were listed in the Daily Star at 20K.

Large executive homes in Leaside with ravine lots were listed at 40K. Depending on the house, that’s now listed at 1M – 1.5M.

To blindly compare a $20K house to the $250 fridge from Eaton’s may not tell the whole story.
Would be good to compare to average household income.

The fridge, now produced in Asia, represents a smaller portion of a month’s salary.

The house is now multiples of a year’s salary higher – and now typically takes a double income to support.

#83 Moneta on 01.03.11 at 8:59 am

Garth Turner is fading into anonymity, running a bizarre blog resorting to extreme statements, posting animal porn pictures, basically doing whatever it takes to capture some attention.
——-
You can never win with these people. They will find anything to undermine anyone who threatens their ideals and it’s never too low. Ad hominem works because our subconscious is stronger than our conscious mind.

In 2005-2006, when I was arguing with the “boys” on American blogs, they would tell me to go see my husband because I was obvioulsy not getting enough instead of debating my points. When keeping my identity secret, I never got those sexist comments but they would start telling me I was stupid. They ALWAYS go for the weakest link and unfortunately, unless you are plain vanilla and unthreatening, there always is one.

That’s why I am convinced we are preaching to the converted. The others will only listen when it is too late. And even then, may will be convinced they saw it coming too.

#84 bigrider on 01.03.11 at 9:03 am

Garth whats your net worth ? Over 8 figures ? Does it start with a two?

Curious thats all.

I bet. — Garth

#85 randman on 01.03.11 at 9:10 am

This just in from Mish!

“The property bubble in the US, Ireland, and Spain took its toll. Yet, “It’s Different Here” thinking runs deep in Australia, Canada, and China.

It’s not different anywhere.

Once home prices exceed people’s ability to pay for them and/or home prices exceed the cost of renting, crashes are all but inevitable. I do not care what commodity prices are or how many people allegedly want to move someplace (think Miami, Phoenix, Las Vegas, Vancouver, Sydney, Shanghai), home prices exceeding rental prices or wage growth by multiple standard deviations is a sign of a bubble that will pop.

Miami, Phoenix, and Las Vegas have seen crashes. So will Vancouver, Sydney, and Shanghai. Indeed, the longer the delay, the bigger the crash.

The warning signs of over-consumption in Australia, Canada, the UK, and China are flashing red. However, it’s far to late to do anything about them. The interest rate match has been lit in Australia and China, but it is irrelevant.”

#86 Moneta on 01.03.11 at 9:15 am

And I’m wondering why the neocons and the realtors in this country need to continuously hump housing and cheer rising prices
———-
Because we are a societty fixated on material goods.

To move forward economically , we need to focus less on materialism and more on services that increase quality of life but we don’t value them.

Americans are running back to their founding fathers’ words and ideals when the world has changed. Our system was built on ideals that science has disproved. It needs a shakeout but we don’t want to spend any money on social sciences because it is considered a waste.

But we value scarcity and with 7 billion people on this planet hard goods are bound to get more scarce, thus more valuable. And unless we change our ideals, things will get worse. Sigh.

#87 Willa on 01.03.11 at 9:19 am

I’m glad to see that there are attackers. You can’t even buy advertising like that. It shows the industry’s fear. Congratulations.

Your blog doesn’t say anything that my mom and dad didn’t say to me and my whiny snotter siblings back in the 1970s.

- Never take on debt that you can’t pay off right away. Credit cards are just for convenience, not for credit. Dad’s favourite song/chorus: “We save a lot of money spending money we don’t got.”

- Never follow the crowd. Mom’s favourite saying: “If everyone jumped off a cliff, would you jump too?”

- Never put all your eggs in one basket.

- Never enter a bidding war for a house. If there’s a bidding war, then run.

Thanks, M&D.

However, my parents are now theocons (“The world’s going to hell in a handbasket, and only the cons can save us”), and the past 6 years has gotten to them. They echo F’s blab about how morally pure the Canadian banking system is, and how steady and righteous the economy.

Sigh. They’ve joined the dark side.

And they bought a house two years ago.

With money they don’t got.

#88 Moneta on 01.03.11 at 9:30 am

Garth – you are slipping up on the moderating duty. I do not object to being called an a**hole or a SOB in the course of a heated argument, but I do take great offense to being called a white supremacist and a KKK member
————
Why the shades of gray? Ad hominen is ad hominem. We want arguments and you’ve got to learn how to shut them up.

That’s what’s great about blogs. It can replace Dale Carnegie.

#89 Moneta on 01.03.11 at 9:33 am

That means three groups of people are at serious risk:

Young couples who have purchased in the last two years with 5/35 Canadian subprimes. It will take only a market sneeze to submerge them.
————
The taxpayer is more at risk than the young couple. They’ll file for bankruptcy and start over.

Doubtful. A young couple doing so condemns themselves to credit purgatory. — Garth

#90 Brian1 on 01.03.11 at 9:43 am

2011: the year the numbers should come together. We shall see.

#91 Moneta on 01.03.11 at 9:44 am

I don’t know what indicators you used to predict that the mother of all listings is coming on the market, especially in the west coast, though we can only hope
————–
In MLS I type my postal code to check the listings. In October the lisitngs went from 200 to 500 in 1 or 2 weeks. Suddenly, the listings disappeared. They are now at 240.

Me thinks they will come back on soon.

#92 Nemesis on 01.03.11 at 9:45 am

“… there will be a correction, followed by an unknown number of years of slow melt.” – Garth

Many an avalanche has begun with a ‘slow melt’. ;)

#93 Moneta on 01.03.11 at 9:54 am

Hi Garth (or anyone who feels qualified to answer) – I am seeing repeatedly the claim that if people don’t like the price offered for their house they will just not sell.
——-
Ya well.. life happens. Obviously, they have not lived it and are getting closer to that normalizing event.

#94 Moneta on 01.03.11 at 9:57 am

Doubtful. A young couple doing so condemns themselves to credit purgatory. — Garth
—–
Maybe maybe not. With millions foreclosing in the US, we’ll see in a few years how the young ones pick up the slack. I think the stigma and rules around bankruptcy will change in the name of future growth

Time will tell.

#95 David B on 01.03.11 at 10:23 am

It would appear Mr. Turner is not alone in is predictions of doomed Real Estate market in Canada.
———————–

Global Progression of “Being Consumed By Consumption”

Philosophical pontifications aside, it is fascinating to watch the global progression of “Being Consumed By Consumption”.

The property bubble in the US, Ireland, and Spain took its toll. Yet, “It’s Different Here” thinking runs deep in Australia, Canada, and China.

It’s not different anywhere.

Once home prices exceed people’s ability to pay for them and/or home prices exceed the cost of renting, crashes are all but inevitable. I do not care what commodity prices are or how many people allegedly want to move someplace (think Miami, Phoenix, Las Vegas, Vancouver, Sydney, Shanghai), home prices exceeding rental prices or wage growth by multiple standard deviations is a sign of a bubble that will pop.

Miami, Phoenix, and Las Vegas have seen crashes. So will Vancouver, Sydney, and Shanghai. Indeed, the longer the delay, the bigger the crash.

The warning signs of over-consumption in Australia, Canada, the UK, and China are flashing red. However, it’s far to late to do anything about them. The interest rate match has been lit in Australia and China, but it is irrelevant.

Interest rates hikes or not, global property bubbles and consumerism in general are going up in flames just as the trash of reader Sally Odland did at the stroke of midnight on new year’s eve.

Happy New Year

http://globaleconomicanalysis.blogspot.com/
—————

The Austrialian floods are going to be very costly, and will where/how will the government get the money to rebuilt?

#96 Utopia on 01.03.11 at 10:31 am

“It’s often useful to read the comments of people who loathe you. Happily, I have no trouble finding them”.
—–Garth

I wouldn’t worry too much Garth. The arrow slinging always gets worse as the conclusion draws to a close.

Actually, let me put that another way.

Imagine a steamer drifting lazily down a river. Everyone on board is sipping their holiday drinks and enjoying the scenery as it drifts by. It is a perfect sunny day, not a care in the world. Even the captain has decided to join the passengers on deck for a toast to a great outing on the water. Too bad he left the helm just as the ship went over the rapids and a few sharp rocks cut through the hull.

See that’s when all the screaming, shouting, recriminations and accusations really start kicking into gear.

It is just at that moment you are about to go over the falls that the loudest shrieks are heard. Up until then nobody really could have cared less.

#97 Moneta on 01.03.11 at 10:34 am

jjpetes
——-
Gold could rise to the stratosphere, like high tech and real estate but the thing is it could be based on wrong assumptions just like high-tech and real estate.

Many gold bugs are dreaming of a currency backed by gold 100%. Maybe it will be, but nothing says it will be 100%.

Just like loans had to be backed by 10% deposits, then 4% deposits and now close to 0% because capital ratios are now based on risk weighted assets, currency could be backed by a very small % of gold so our bankers don’t have to buy everybody’s gold.

To restabilize markets in Weimar Germany, they used real estate, not gold.

So going 100% gold in a portfolio is going out on a limb. I prefer a full pantry.

There will never again be a gold standard. — Garth

#98 Dodged-A-Bullit-in Alberta on 01.03.11 at 10:37 am

Greetings: # 58, #83:

The fridge was built in Mexico. There was a time where the cost of a product was equated to quality. This is no longer true, and todays new construction is a prime example. Same thing for the modern automobile. Total crap!! If I spent 1200 bucks on a fridge and two years later a 300 dollar circuit board craters, I am committed to the repair. If my 500 fridge craters,, haul er out the door. Someone has to keep the economy going and what the hell, our most important responsibility is to “consume”, right!! I had a problem with the door warning lights on my 97 pickup, wouldn’t turn off and the “key in ignition” buzzer wouldn’t shut up unless engine was running. Discovered that Ford had removed the little push button on the door pillar and installed a sensor inside the door near the outside handle, almost impossible to get at, and expensive. Same sensor controls interior dome light. After much hair pulling, I finally removed the door panel, and cut the wire to the sensor. No more buzzer, but no more dome light either. The wifes’ newer Ford has so much crap in it just waiting to fail, whistles and bells, messages on the instrument cluster etc. Garbage!!! We replaced the original furnace in the house and the new unit has so much electronic shit on it you have to have a degree just to do basic troubleshooting, todays home owner is “hooped”. But hey! Canadian economy {China, Mexico} etc. won’t be strong if stuff is built to last, who cares about resources depleting, certainly not manufactures. There is so much Non-recyclable stuff in the modern car, that even the scrap dealers don’t want them.Only thing worth having is engine, tranny, and catalytic converter. Many people here have commented that homes built today will be junk in 20 years, I agree. Our house was built in 1963, and the structure is still sound. The “glass bottle” stucco is indestructable, and “ship lap” will dry out without seperating unlike OSB, fir rafters and floor joists will resist burning far better than I beam joists. Just think today MDF is standard material and real wood is “premiumn”, something terribly wrong in a country with massive forests.

#99 Nuke on 01.03.11 at 10:39 am

Garth, all your points are valid and the personal attacks confirm the other side has lost their cheats sheets for the debate. As long as one greater fool’s house is sold above asking then all is well. I was there a few years back when I pushed for a policy decision to move out of income trusts due to the illogic of the models being used. It was heresy until Big F jumped on board. Personal real estate is even in bigger trouble. It produces no income and costs more each year to maintain. The only saving grace is the belief that you will always get your money back. But the boomer’s bell has tolled and unfortunately for those with Real Estate as their primary and over leveraged asset there will be a big hurt.

#100 TS on 01.03.11 at 10:45 am

#87 Moneta on 01.03.11 at 9:15 am
Because we are a society fixated on material goods.
Sadly Canadians have lost sight of what is important.
Owning a home with stainless and granite does not improve one’s own character.
Using material things to make a person feel better about themselves is wrong living.
Material things wear out and I am once again searching for happiness.

#101 David B on 01.03.11 at 10:46 am

Now get a load of this …. those Tea Partyer’s are going to take over and cut spending and waste … sound familiar ? “Reform” …. aka “Conservative” !!!!!

The Republican majority that takes over the House this week plans an ambitious drive to slash government spending by tens of billions of dollars in the next few months, a strategy that ensures that the capital soon will be consumed by intense debate over how and where to reduce the size of government.
—————-
10′s of millions on a 3 Trillion dollar budget?
——————————-
Hang on it’s going to be one hell of a interesting year!

#102 Oasis on 01.03.11 at 11:03 am

more signs of deflation…

oil $92+
gold $1400+
silver $31
copper $4.40+
wheat $8+
corn $6+
soy $14
cotton $1.45+
coffee $2.40+
sugar $0.32+
live cattle $1.10
feeder cattle $1.20+

stocks?? how are those deflating?

Dow 11,700
SP 500 1260
TSE 60 850

look at all those signs of deflation. lol
hilarious.

Assets, not commodities, affecting consumer behaviour – which accounts for two-thirds of the economy. I guess your friends must own a lot of feeder cattle and cotton. — Garth

#103 BDG-YYC - on 01.03.11 at 11:03 am

#79 Canuck Abroad on 01.03.11 at 6:34 am

Ummm … see #11 … I think your best answer is already posted. If you have the patience to wade through it … you’ll eventually come across this purest of “nygets” and the absdolute bottom line … or I can just paste it in for you – here …

#11 Sam on 01.02.11 at 11:24 pm
“Canada still has a very highly dense population”

I think Sam is “qualified” to answer your question … don’t you?

#104 Smoking Man on 01.03.11 at 11:11 am

Went to you show in Toronto, listened to what you said, agreed with your logic but,
Garth there are two things that you are not factoring in that should be weighted very heavily.

1) By in large People are stupid and will listen to what ever the media says, critical thinking skills are squeezed out people via the education industrial complex we call schools.

2) If it looks like your crystal ball of reality is getting clearer, expect a massive media blitz to shore things up, yes they will lie, people will believe thus making them right.

Tough to be a bubble head and basement dweller when the cards are stacked against you.

Conclusion: we have a culture of celebrity worshippers, kind of like a magicians trick to keep your eye of the ball that counts. Toss in stupid people and a profit driven media whose lively hood depends on a strong real estate market.

Only thing that will bring down the market in Toronto is a massive shock to interest rates, but with a dollar at parity, might be a long wait.
Or massive job losses. Again nothing on the horizon to suggest that.

Remember Garth, When we had the Armageddon meltdown in late 2008, only a few people panicked and dropped prices, the rest pulled listings and created a massive supply shortage.

It is what it is, and see I did not insult anyone, new years resolution.

#105 Kaganovich on 01.03.11 at 11:28 am

Provocative:

http://www.therealnews.com/t2/index.php?option=com_content&task=view&id=31&Itemid=74&jumival=6000

#106 Ret on 01.03.11 at 11:30 am

Toronto may never be Canada’s Detroit. The lower city in Hamilton is working hard to win that prize. In another 5-10 years we will be there. A reported 59,000 adults and children live on social assistance in the attached Nov.6, 2010 link and no end in sight.

RE investment in Hamilton? Forgetaboutit. Many of Hamilton’s government, university and health care workers live in Burlington. The Main St. exits from the #403 are jammed every morning with commuters from Burlington who would never dream of shopping or living here and certainly not in 95% of the lower city.

The Hamilton-Burlington (?) RE Board lumps Hamilton’s and Burlington’s statistics together. This gives the statistical illusion that all is well with RE in Hamilton. They are two totally different worlds. Homes in Hamilton a rarely if ever advertised in Burlington real estate ads and visa versa. Apparently Milton and Oakville have the same real estate board too. They are the same markets? I don’t think so.

http://25in5hamilton.ca/index.php?post_id=275

#107 David B on 01.03.11 at 11:35 am

Hold on a moment, did not Canada’s Business Man of Year (Flaherty) not just state Canada is dong great?

http://www.thestar.com/business/recession/article/914737–canada-s-economy-is-struggling-to-keep-up-with-resurgent-g7?bn=1

What gives?

#108 Nadine Lumley on 01.03.11 at 11:40 am

Jim Flaherty and AIG

When Jim Flaherty threw the doors open to high-risk mortgages in Canada, with his first budget in 2006, he allowed the American high-risk industry to get a foot hold.

“In the U.S., they are still responding to the fallout of the subprime mortgage mess. In Canada, we acted early over the past year,” Mr. Harper said in a speech to the Empire Club in Toronto. He didn’t say that, not only did his own government open the sheltered Canadian mortgage market to U.S. insurers, but it also doubled to $200-billion the pool of federal money it would commit to guarantee their business. The foreigners unleashed what one U.S. insurance executive described as a fierce “dogfight for market share” that prompted rivals, including the giant federal agency Canada Mortgage and Housing Corporation, to aggressively push such risky U.S.-style lending. (3)
And one of those companies that Flaherty and Harper aggressively wooed, was AIG.
On May 2, 2006, in his first budget, Mr. Flaherty announced that not only would Ottawa guarantee the business of U.S. insurers, it was doubling the guarantee to $200-billion. Twenty-four hours before Mr. Flaherty’s announcement, AIG’s mortgage subsidiary first registered with Canada’s lobbyist commissioner, according to a federal registry. At the time, companies who spent more than 20 per cent of their time lobbying the government for changes in policy were required, by law, to register. It is not known how much time AIG spent promoting its cause to the government.

… Banking and insurance officials were so concerned about the alarming rush to 40-year mortgages at the beginning of 2008 that one bank executive warned the Bank of Canada’s chief financial stability officer, Mark Zelmer, in a meeting that “the government has got to put an end to this.” (3).

And just so we’re clear. AIG and other American firms, can insure questionable mortgages in Canada with absolutely NO risk to themselves. The only ones assuming the risks are the Canadian taxpayers.

And when news of the crisis first hit, Flaherty simply transferred all of the high-risk mortgages from the banks’ books, to ours. We now own them and if they default, guess who’s left holding the bag? The Canadian taxpayer. Now comrades of the American taxpayers, who have transferred enormous amounts of money to AIG, but got only a bunch of rotten paper in exchange.

And make no mistake. Forclosures in this country, while harder to track, are on the rise. And there are vultures circling hoping to cash in.

http://pushedleft.blogspot.com/2011/01/story-of-aig-and-canadian-government.html
.
.
.
.
.

#109 David on 01.03.11 at 11:40 am

#15- Devil’s Adjective

Most realtors are lazy (among other qualities)..they do NOT want a stable market, they prefer a rapidly rising, if not frenzied market that results in quicker sales that require nothing more than posting it on MLS.

You are propogating the myth of the “professional”, “career” realtor, a pillar of the community like doctors and lawyers….they are hucksters of the highest order and drift in and out of the business with the tides.

I have had the misery of having to try to deal with dozens of realtors in my house searches and sales, and this opinion is not an uninformed one. ….and I quite successfully sold 2 properties on my own without any ‘help’ from those w@nkers.

#110 Got A Watch on 01.03.11 at 11:58 am

The more they attack you, the more you know you have already won. Denial is a way of life, a faith-based economic system.

You know you’re really getting to them now Garth. LOL at their feeble assaults – the Farce is strong with them

#64 #70 #82 <——- what they said!

#72 Judy – without knowing anything about Charlottetown or PEI (all real estate is local after all): a regular 3 bedroom detached house should (theoretically) cost 3 to 4 times (say 3.5) the average family income in the area (in a mythical "normal" balanced market). So, for example if family income is $60K, the typical home should be around $210K – you can get the income stats by Googling it from Stats Can etc easily enough, then work it out for yourself – compare with Toronto at 5.8-6 range now (overpriced bubblish) or Vancouver at 12-15 now (insanity). Let us know how it works out.

#111 dark sad person on 01.03.11 at 11:59 am

Assets, not commodities, affecting consumer behaviour – which accounts for two-thirds of the economy. I guess your friends must own a lot of feeder cattle and cotton. — Garth

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

Also-Credit not Cash affecting consumer behavior-

The Credit market is (get this silly hyper-inflationists)
20 times the size of the Cash market-
Put the wheelbarrows away-lol

I see a lot of people here follow Peter Schiff–

I would never call Schiff stupid but he sure as hell has missed a lot when his Hyper-inflation/China decoupling theory’s blew up in his Clients faces-not long ago-cuz-
he flat out missed seeing “all” of this and he’s missing seeing the high probability of it all happening again-

http://2.bp.blogspot.com/_nSTO-vZpSgc/SXR7NBCHaKI/AAAAAAAAFY4/lA3LpVHJGq4/s1600-h/%24SSEC-weekly.png

http://1.bp.blogspot.com/_nSTO-vZpSgc/SXR8BSzBXwI/AAAAAAAAFZA/F5EsLd9CbZQ/s1600-h/%24Nikk-weekly.png

http://2.bp.blogspot.com/_nSTO-vZpSgc/SXR9Jeqe4II/AAAAAAAAFZI/zyAdCDwvh4w/s1600-h/%24TSX-weekly.png

http://2.bp.blogspot.com/_nSTO-vZpSgc/SXR9Jeqe4II/AAAAAAAAFZI/zyAdCDwvh4w/s1600-h/%24TSX-weekly.png

http://4.bp.blogspot.com/_nSTO-vZpSgc/SXbruNT3DXI/AAAAAAAAFaM/KmVr7LYUrpE/s1600-h/%24SPX-weekly.png

Schiffs clients portfolio a week later-when the Hyper-inflationary pipe dreams went south-

http://2.bp.blogspot.com/_nSTO-vZpSgc/SXuj9sc6cDI/AAAAAAAAFfk/lzLgjUQC7NQ/s1600-h/schiff-portfolio.png

#112 S on 01.03.11 at 12:02 pm

#57 ted23

Sorry “S”. Taking 4 months and looking at 40 properties says more about you than the Realtors. Its clear you have no idea what it is you want and piss people off by wasting their time. Give it up already. Take the time to interview agents first, then when you have found an agent you can can work with use him/her to give you access to all the properties. None of the listing agents you met will serve you because they already represent the seller. There is no extra deal because you use them. Presumably you don’t pull your own teeth or do self surgery. Go get yourself some representation stop farting around. Service and time wasters like you make this business a pain in the ass. Sign a buyer agreement and make sure your agent gets paid for the service they provide you. Its commission sales. Don’t waste their time.

You’re calling me a time/service waster, but telling me to get a buyer’s agent? The reason I didn’t get a buyer’s agent is because I didn’t want to waste one’s time. And I know exactly what I want, and it is not overpriced run-down garbage that is currently on the market in Ottawa (and I had a few agents admit that the quality of listings currently sucks in this town). So yes, given the slim pickings around here, looking at 40 houses (many as open houses, to not waste a listing agent’s time there) is a must. I’m not some HGTV idiot that will pick one of three houses and buy it on impulse. I’ll actually take the time to SHOP for the biggest expense I’ll ever make. And as a qualified pre-approved buyer with a good downpayment, I’m not wasting a listing agent’s time having them show me a property. It is their job to show me the property they are trying to sell. Sorry if I’m making them work for their commission. And yes, I know they are representing the seller, but that doesn’t give them a license to lie about it. And obviously I didn’t piss any of them off since they all wanted to represent me. You must be a “Realtor” or have some close connections to one.

#113 choda on 01.03.11 at 12:05 pm

#110 David

Absolutely agree. being involved in the real estate business for 9 years as a mortgage broker, i can say in general, realtors are only out for themselves. i’ve worked with the good, the bad and the ugly. who am i kidding. just mostly bad and ugly. generally, the more sucessful the realtor, the lower the ethics. lots of mortgage brokers are just as bad but realtors take the cake. i applaud the opening up of MLS. those turds have made far too much for far too little work for far too long.

#114 BDG-YYC - on 01.03.11 at 12:07 pm

#103 Oasis on 01.03.11 at 11:03 am
… and …
“Assets, not commodities, affecting consumer behaviour – which accounts for two-thirds of the economy. I guess your friends must own a lot of feeder cattle and cotton. — Garth”

Let’s be fair here … I offer “Average Friend’s” balance sheet for consideration …

Lets get the liabilities out of the way first …

Liabilities:
– A shitload equal to or greater than Assets including: mortgage, HELOC, student loan, car loan, MC, Visa, Eatons, Bay, Sears, C-Tire, Home Depot, Rona, Husky, P-Can, Esso, etc. etc. Accumulated Property Tax, Income Tax arears, Condo Fees in arrears, overdue phone balance, overdue cable, overdue heat, power, etc. etc.

Assets:
Condo … equal to mortgage outstanding,
Car … almost worth the remaining payments
Bricabrack … but good bricabrack. GIC’s $150 TFSA,
$1500 RRSP.
Commodities – you betcha look !

oil … 3/4 tank and a litre of motor oil
gold … 2 wedding rings, engagement ring & misc. gold filled doodads.
silver … 1959 silver dollar, a couple of dimes and a few doodads … oh and a fork from somewhere.
copper … 30 feet of nomex from the reno.
wheat …. Oh yea! … Aunt Jamima, some white, whole wheat, 2 cake mixes.
corn … 2 cans niblets, corn oil, corn syrup, corn flakes (3- 1/2 boxes)
cotton – Woah … like check out the closets man !
coffee – 6 pounds – Timmies of course.
sugar – 12 pounds … including the cake mixes. Brown, Icing, granulated … and a couple cubes from somewhere.
live cattle … does 12 pounds of hamburger count? Oh … and 2 Big Macs from friday.

Now try and get along.

#115 Herb on 01.03.11 at 12:08 pm

Garth seems to be a MSM puppet in most of his posts.

Got to hand it to you, #41 Carmen. That’s the funniest thing I have read on this site.

It even beats Greg W.’s complaint (at #33) about the poor “tail” at the Garth town hall orgies he’s attended.

#116 S on 01.03.11 at 12:10 pm

#31 OttawaLuke

So who would you recommend, for future reference?

I liked Nancy Allen, a Coldwell Banker agent. She was honest about the market and where it’s going. Kind of discouraged me from buying (even though I was at one her of open houses).

Anyway, I think I’ll enlist Nancy’s services to look for a lot. Building looks like a better option since for the price of dumps/fixer uppers in central Ottawa, you can build something really nice a little farther out.

#117 Bob Copeland on 01.03.11 at 12:34 pm

As an American living at the time in Indiana, a conservative state, I wish you were around 3 years ago to save me. I lost well over a million dollars invested in both a 10,000 sq foot home and a commercial building that I closed on in February 2008. I see where Canada is running down the same path as we did. Keep preaching no matter the critics. Let’s say the impossible happens and Canadian housing keeps going up forever and ever. I know it’s impossible but let’s dream. Is your investment advise wrong or bad? No it’s perfect! I’m now 62. What a difference it would have made in my life looking back.

#118 dark sad person on 01.03.11 at 12:38 pm

European nations begin seizing private pensions

Hungary, Poland, and three other nations take over citizens’ pension money to make up government budget shortfalls.

The most striking example is Hungary, where last month the government made the citizens an offer they could not refuse. They could either remit their individual retirement savings to the state, or lose the right to the basic state pension (but still have an obligation to pay contributions for it). In this extortionate way, the government wants to gain control over $14bn of individual retirement savings.

In November, the French parliament decided to earmark €33bn from the national reserve pension fund FRR to reduce the short-term pension scheme deficit. In this way, the retirement savings intended for the years 2020-2040 will be used earlier, that is in the years 2011-2024, and the government will spend the saved up resources on other purposes.

http://www.csmonitor.com/Business/The-Adam-Smith-Institute-Blog/2011/0102/European-nations-begin-seizing-private-pensions

#119 Devil's Advocate on 01.03.11 at 12:42 pm

#110 David on 01.03.11 at 11:40 am

Sorry to hear about your bad experience. While there is no such thing as “buyer beware” in a real estate transaction there certainly is in the REALTOR® you choose to represent you.

Imagine, for jsut a moment, if everyone were to try buy and sell their own homes… really think about it. But of course there is no need for the services of a good REALTOR®.

Nah David, we’re not going anywhere. This welcomed shift in the market might cleans our ranks of those “w@nkers” you encountered but a good number of us will remain.

#120 dd on 01.03.11 at 12:45 pm

An orderly or unorderly decline of the US dollar is underway. The establishment is talking about its replacement – Soros

http://www.benzinga.com/11/01/744897/george-soros-the-united-states-must-stop-resisting-the-orderly-decline-of-the-dollar-th

#121 dd on 01.03.11 at 12:50 pm

…If they’ve been listening to smart people like … David Rosenberg.

DR smart? But he is predicting $3000 gold. Actually he love bonds and gold: the barebell approach.

Usually smart. — Garth

#122 dark sad person on 01.03.11 at 1:05 pm

#121 dd on 01.03.11 at 12:45 pm

An orderly or unorderly decline of the US dollar is underway. The establishment is talking about its replacement – Soros

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

An orderly or unorderly decline of every currency is underway and has been since 1922-

What would they replace the $ with?

Does one piece of garbage food in a dumpster look any more appetizing than another?

#123 dd on 01.03.11 at 1:07 pm

.#76 Nostradamus jr. on 01.03.11 at 5:57 am

…Nostradamus jr has been on record …Lone exception is Vancouver Proper…

How about the predictions that didn’t work out. Remember? How about Vancouver proper prices would be up 50% this year. If not you would leave this sight forever. Not living up to you word.

#124 Basil Fawlty on 01.03.11 at 1:08 pm

The best place on earth.
“THERE WILL NEVER BE A SURGE IN LISTINGS IN VANCOUVER.”
The Titanic was also sworn to be unsinkable.

#125 Azza4 on 01.03.11 at 1:13 pm

Debt comes home for Canadians. Charities are launching educational programs in BC schools. (Good!)

http://www.montrealgazette.com/business/fp/money/Debt+comes+home+Canadians/4042127/story.html

#126 dd on 01.03.11 at 1:17 pm

#98 Moneta

‘There will never again be a gold standard. — Garth”

The World Bank pres said the other day that gold could be used as a reference point for currency. Sure not a gold standard but gold is going to be part of the solution.

http://english.peopledaily.com.cn/90001/90778/98506/7239822.html

#127 jjpetes on 01.03.11 at 1:19 pm

Moneta,

Do us all a favor and stop your attempts to correcting the posters here. They have an opinion and leave it at that. As for your criticism on my post above, gold, silver, oil, RE, your bus pass, and other tangible assets are not rising on assumptions but long term trends in the expansion of the money supply mostly through credit expansion.

I actually agree here with Garth that under the current policies gold will not be used as backing our monetary system. Will the system eventually deteriorate to the point where it will? That is an event no one knows, yes even Garth. Do I want it to be is another question or is it my wish to that I say what I think is completely irrelevant.

Weimar Germany is a completely different matter altogether. They first went into a hyperinflation before stabilizing with a new currency in some part by the backing of Tangible German property however, after going through an extreme hardship of a hyperinflation it was the people that wanted the currency to work is what provided it with the most stability. So the idea that your statement which capital ratios being based on risk weighted assets is a relatively small part of a faith based currency system.

Where did I say that went full gold in my portfolio? You cannot make a statement about assumptions about the price of gold then turn around and assume on your own about what I am saying. If you actually read rather than assumed you would have seen from above where I said: “protecting our wealth by tendering an allocation of some of our paper assets into hard assets”.

Do more reading and less assumed refuting and you might be able to get a student credit card for this blog.

jjpetes

#128 dd on 01.03.11 at 1:20 pm

.#123 dark sad person

“What would they replace the $ with?. Does one piece of garbage food in a dumpster look any more appetizing than another?”

It will have to be something you can’t print out of thin air.

#129 Bobby on 01.03.11 at 1:31 pm

I’m in the market for a newer home and don’t use a realtor to act on my behalf. Rather I just deal with the listing agent. Any offer I make will immediately discount half of the realtor fees. Why pay for a service you are not getting.
All the information you need is already out there. Once you decide on a property, you can get the assessed values of the property and the neighbour’s house from the municipal rolls. An independent appraisal can be had for $350 so you can see what the property is really worth. Your bank will do the same thing before offering a mortgage. A home inspection can be had for $300. You can have your lawyer write up a clear offer for less than $500. Set a price you are willing to pay and stick with it.

So tell me again, why do I need an agent to act on my behalf?

When it comes to sell my house, I will just use a selling agent to list on the MLS and will agree to pay him for only the services he does on my behalf. The real kicker is to offer about 2.5% of the selling price to the buyers agent on completion of a sale. If the agent who does the listing wants to earn his keep, he will have to bring you a buyer.
It’s easy. The CREA wants to make it sound complicated so you will use the services of a realtor. It can’t be that difficult if it only takes a few month course to get certified.
Happy New Year!

#130 the commenter formerly known as... on 01.03.11 at 1:31 pm

Please do not put up Bullish links. I don’t read ‘em! I only fill my heart with the “Melt down” scenario…

#131 dd on 01.03.11 at 1:38 pm

If law makers do not raise debt ceiling the US will default on bonds.

“This is not a game,” Goolsbee said on ABC’s “This Week.” “If we hit the debt ceiling, that’s essentially defaulting on our obligations, which is totally unprecedented in American history

http://www.foxnews.com/politics/2011/01/02/white-house-warns-failure-raise-debt-limit-mean-economic-crisis/

#132 Moneta on 01.03.11 at 2:08 pm

jjpetes on 01.03.11 at 1:19 pm:

You’re explaining why it makes sense to own gold and I agree. But I thought it made sense to elaborate on variables that could ruin the gold bugs’ party.

#133 Mikey the Realtor on 01.03.11 at 2:08 pm

David 110

“Most realtors are lazy (among other qualities)..they do NOT want a stable market, they prefer a rapidly rising, if not frenzied market that results in quicker sales that require nothing more than posting it on MLS.”

This is somewhat of an accurate statement, although we do provide a great service as DA has pointed out, don’t ask me to explain, we just do. Falling prices and a balanced market is a huge eye sore for us realtors, this is where I disagree with DA, he tends to think that a balanced market helps out his paycheque. He has a lot to learn it looks like.

#134 The Original Dave on 01.03.11 at 2:14 pm

wow, for those of you that love the rare earths, Molycorp is over $58 a share today. Up 16%. Rare element resources (ree on amex and res on tse) is over $17 a share. It was just over $1 in 2009.

#135 dark sad person on 01.03.11 at 2:15 pm

#129 dd on 01.03.11 at 1:20 pm

.#123 dark sad person

“What would they replace the $ with?. Does one piece of garbage food in a dumpster look any more appetizing than another?”

It will have to be something you can’t print out of thin air.

**************
Now we’re talking-
Despite all the nay saying about gold backing-i think somewhere ahead of us-likely measured in years gold will be used to sop up currency debt-in order to halt a deflationary crash-
There simply is not enough cash in the system to cover debt and there is no way in hell they can or will even try to print it-
All printing is doing-is allowing the politicians to get re-elected and recapitalize their pigmen masters as they speculate in commodities driving prices into a runaway blowoff pattern-just like oil did at 150/bbl-shortly before it collapsed to 30/bbl

http://finviz.com/futures_charts.ashx?t=CL&p=w1

Meanwhile-totally clueless politicians are whistling as they walk past the graveyard–

#136 goldenfox on 01.03.11 at 2:17 pm

And people give these people their life savings to invest???

http://network.nationalpost.com/np/blogs/tradingdesk/archive/2009/12/14/td-tosses-cold-water-on-gold-party.aspx#ixzz0Zl51WY8u

#137 dark sad person on 01.03.11 at 2:21 pm

Oooops

-likely “not” measured in years

#138 David B on 01.03.11 at 2:31 pm

Canada’s top-paid chief executives only have to work until 2:30 p.m. Monday to make the same amount of money the average Canadian will earn for the entire year, a new study suggests

Read more: http://www.cbc.ca/money/story/2011/01/03/money-canada-ceo-wages.html#socialcomments#ixzz19zsfzRyD

————–

And there is no doubt in my mind they are the ones standing in lines overnight buying up multi million dollar homes because they know how to make easy money. LOL

#139 T.O. Bubble Boy on 01.03.11 at 2:38 pm

I have a new term for the magic “recovery” that got Flaherty to be Canadian Newsmaker of the Year:

THE HELOC BUBBLE

Follow the chain of events from the start of 2009, and the reason the housing/mortgage credit bubble keeps growing should be rather obvious…

A) Early 2009: Home Reno Tax Credit is introduced

B) Also in 2009: CMHC’s “strategic objective” is implemented, allowing HELOC’s to be securitized in pools with other mortgages (page 25)

C) In 2009′s “action plan” 4.6M Canadians spent BILLIONS on home renos (the $3B estimated cost for this tax credit would equate to $20B in spending, since the credit was only 15%).

D) For the billions in home reno spending, 48% did not pay for the entire reno with cash/savings, and many went over budget.

E) Banks like TD started providing 125% of the house value in collateral mortgages.

F) Then, finally, the reports and warnings on Canadian household debt starting appearing in the media.

So – just to recap:
1) Government provides tax incentives to take on home reno debt
2) Government takes home reno debt risk away from lenders via securitization
3) Government pumps out advertising to promote home reno debt as a good thing, and the public believes them
4) Debts keep piling on
5) Banks increase the amount of debt households can get
6) Government warns not to take on so much debt

Just a tad hypocritical, you say?

#140 Live Within Your Means on 01.03.11 at 2:58 pm

# 58 nonplused on 01.03.11 at 2:23 am
3 Dodged-A-Bullit-in Alberta

While I take your point that fridges have risen in cost even less than houses as #1 Danforth suggests, my experience with the appliances around here: Every 2 years something needs a new control card for $200 and I’d have been better off with the old dishwasher that had a crank control knob or a fridge with no microprocessors, even if they use a little more energy.
…………………….

When we did some renovations 10+ yrs ago we replaced a dishwasher, fridge & stove. Hubby has had to do repairs on DW. Soap dispenser opens as soon as it is turned on. Saw some really great deals on Bosch dishwashers but they were stainless which we didn’t want. SIL has one and its r. quiet and is super efficient, water wise. But their water useage is included in their taxes, which discourages consumption. When you fly over Mtl. it’s amazing to see the no. of swimming pools. As of Jan 1/11 our water rates increased 27%, but the execs pay increase was somewhere around 20%. And our electricity rates went up 7+%. Emera, parent of NS Power, are investing/buying up utilities in various US states, but have a monopoly here and we, NS’s are paying for it.

Year after purchase of stove, they had to replace something on the oven door as liquid/moisture seeped in. Its back again. The electronic control panel went 2 yrs ago. Hubby found one for $300. and replaced it himself, otherwise it would have cost us $500+. Its a Fridgidaire Gallery – convection with warming oven. The plastic has yellowed and the plastic handle on the warming draw has cracked. Our washer & dryer are Maytag. Immediately after we bought the washer we noticed the enamel on the tub was rusting and they had to replace it. At least they have ‘crank control knobs’ which my hubby can work with if something goes wrong.

………………..

Reminds me of compact fluorescents. I don’t know how the rest of you are doing, but mine are burning out just as fast as the old incandescents unless I leave them on all the time (outdoor lights, those are lasting on all the time), and when I need the light in the winter is when the waste heat is welcome anyway.

…………………………

We bought a bunch of those at Costco and within less than a year (not much useage) they went caput. Husband hated them as they did provide much light. Plus, have learned they have to behave special disposal handling as they contain mercury. We’ve replaced some of them with similar ones but which provide much better light. Not sure if we can even buy reg. lights now.

When we had our house resided, etc. contractor broke motion light sensors. Husband has bought 5 since, all of which are made in Mexico :-( and none have worked longer than 2 weeks. Sure you can buy commercial ones, but they are VERY expensive.

Hubby has been working on the ‘family’ room downstairs for the last 3 days, rewiring with tiny halogen pot lights to replace 2 long, ugly fluorescents. Made in China or Mexico. Wonder how long they’ll last. He & I will be so glad when it’s finished. Especially me who has to contend with the never ending drywall dust, etc. We also had to hire a guy over the holidays to retape, etc. the basement due to our house having had to be lifted last summer. Hopefully, by the end of Feb. all will be painted downstairs, floors will be laid, etc. A neighbour will repaint 2 rooms that he already painted last spring before we discovered the problem and do the rest. Yep, maintenance is a costly affair. Thank goodness hubby is knowledgeable and can do much of the work himself. Because he takes pride in whatever he does, he doesn’t take shortcuts. And, electricians have approved his work.

#141 HouseBuster on 01.03.11 at 3:01 pm

#45 UrbanCowboy – He wasn’t right on everything… His stock recommendations took a beating like everything else did in the meltdown.

#142 PTDBD on 01.03.11 at 3:06 pm

News Flash or Satire?:

The U.S.A. “debt ceiling” has been raised 74 times to date. Obama declares it “a waste of time and energy” and eliminates it once and for all.

(things have reached such a state, that either is a possibility)

#143 canuckfilly on 01.03.11 at 3:08 pm

Happy New Year to everyone, with hope that some of the info and advice sticks for some folks.
Long before I started reading this blog and corresponding with Garth even before I read his books, my husband and I had discussed the topic of “who’s going to buy our house when we are finally ready to sell”? We saw our kids with not enough money saved to buy anything at all and they are the norm we feel. They are all in their 30′s , went to school too long or were too unfocused, no matter how much advice we gave them.
We worried about how the upcoming generation is going to pay our CPP out. Not that I believe the Canadian governments actuarians or CARP.
I worked in health care for 41 yrs and let me tell you no one can continue to pay for the current cost to keep folks in care or testing. There will be extreme revamping of the system so actual users will pay more. Healthcare money has to come from somewhere. Euthanasia may be legalized as in Holland.
So I think Garth’s general premise about housing for aging boomers is right on. But there are many factors at work here changing the way we are going to live our lives. So with stagnation of wages and huge increases in consumables and housing something has to give. We will all need more disposable income if we wish to maintain our current lifestyle.
The government has to get the money from someone to run the behemoth at Ottawa and Victoria and Edmonton etc. Guess who it will be from. Now weren’t RRSP’s a good idea, look at all that untapped taxable potential.
I think that people or companies who stand to make the most from a housing bubble are the ones we should view with skepticism. They have the most to gain and greed drives a lot of folks. Houses should be just that, a place to live.

#144 Macrath on 01.03.11 at 3:27 pm

The American Dream

http://www.youtube.com/watch?v=Kv2oCXbW4r0&feature=player_embedded#!

A cartoon lesson in credit, foreclosure and the Fed.

#145 kitchener1 on 01.03.11 at 3:39 pm

Seriously, a lot of the talking heads are living in a bubble.

I spent some time in the US during 06 and saw the same thing over there as is happening here.

I know of few close friends that lost a lot of money and have yet to recover.

exact same story there, no matter if I was in Las Vegas, Glendale California, Boston etc.. Everyplace was different etc…

Here is how it will go down;

F will change the rules in the new budget, either it will be 10/30 or 10/25 if CMHC’s books are really bad. He does not have a choice, CMHC simply cannot continue to lend at its current rate.

Carney will raise rates in June might only be .25 basis points but that will signal that the cheap money era is over. Really depends on what the bond markets are doing at the time.

This will be after another 6 months of sales volume declines and prices will start to move down– fast.

All of those expired listings will come on the market, at once. RE agents buddy of mine commented on it being a busy Jan and Feb for listings. Mentioned that his brokerage, as well as diff ones he knows off are getting a lot of pre listing activity phone calls.

Just by talking to my buddies in the biz, it tells me that what Garth saying is very true, and he has way more contacts then i do.

basically, mortgage broker buddies are telling me it about as slow as they have ever seen in new mortgage approvals. My RE buddy is telling me that there will be a lot of listings coming online– same with his friends in the biz. Tells me that almost everyone he knows has at least 1-2 listings in the pipeline but only a handful of his assoicates have sellers looking to buy.

The property investors I know are telling me the same thing, and these are guys in there 50′s who have been in the biz for 30 years. They are saying that the same thing happenened in the 80′s and 90′s bust. Other interesting tid bit they told me is that the Ontario housing tribinual is backed up like never before. Lots of people out there are having a hard time making rent.

Thats the view from people in the biz.

#146 Derek on 01.03.11 at 3:48 pm

#48 smart alox wrote:

#147 Original Bear on 01.03.11 at 3:49 pm

New Bear Prediction for 2011!

This is the year my friends!

This is when the crash will happen in Vancouver!

Forget what we said for the past couple of years!

Forget that 2010 was to be the year of the crash!

So what if we have been wrong for so long it hurts.

All of our arm chair analyses should have paid off by now. Our decisions to sell at the “peak” in 2008 and rent was clearly the right choice as prices plummeted right?

And good thing that the market collapsed after the Olympics; after the ever so slowly inching interest rates; after the new April mortgage rules; after the surge in inventory…

Here is to a successful string of predictions and constantly revised predictions and explanations of why the RE market is still hot, and why the market will collapse!

Oh wait, haven’t we been saying this for four years now…I mean now five years?

Oh well, we will surely get it right one of these years.

Here is to the Vancouver crash of 2020!! It is just around the corner!

Lol, silly little bears…

#148 vreaa on 01.03.11 at 3:53 pm

“We aren’t selling yet but when I think we can clear $3.5M (after fees) we likely will. 10% to go …”

http://wp.me/pcq1o-1HK


Pretty classic. Prices treble or more over ten years, and the players are still holding out for the last 10% of gains.
How many other (thus far invisible) sellers are in this situation?
Many are sitting on large, life-changing paper gains and feeling sure that they’ll be able to realize them.
What will their response be when prices instead stagnate, or begin to drop?

#149 realpaul on 01.03.11 at 3:54 pm

Heres an example of the class war mentality of the unions. That doctors and cab drivers should have a differential in income is blasphemy according to the Cuban style labour queens.

http://www.vancouversun.com/business/CEOs+will+have+earned+average+workers+annual+today/4052268/story.html

It is this same thinking that has the labour goons in the civil service having wet dreams about being ‘equal in pay and stature’ to the private sector. Although they nothing of the same level of work and take zero risk with their education, careers or businesses, the labour dunce thinks that he deseves to be ‘recognized’ in the same manner as someone who is actually creating wealth.

#150 Two-thirds on 01.03.11 at 4:07 pm

“Dude, have a drink. Bed your wife. It’s only a house. And never admit you come here. — Garth”

So, the first rule of Greater fool is: “you do not talk about Greater fool?”

If so – neat. I am just curious to see a picture of Garth’s alter ego.

#151 Leasa on 01.03.11 at 4:07 pm

Hey Garth, still out there doing your thing, eh? LOL I just happened to be researching real-investments and came across your blog. Have you considered analyzing the investment opportunities of farms, with regards to the global depletion of arable soil? I am finding in the short and long term there is no better or wiser investment to be made anywhere and the values are going up…up…up and will continue to do so. Here’s a good place to start your research, you will find it’s a good jumping point for your google searches:

geomorphologist David Montgomery, author of the 2007 book Dirt: The Erosion of Civilizations: “Just when we need more soil to feed the 10 billion people of the future, we’ll actually have less—only a quarter of an acre of cropland per person in 2050, versus the half-acre we use today on the most efficient farms.”

Read more at Suite101: The World is Running out of Arable Land http://www.suite101.com/content/the-world-is-running-out-of-arable-land-a256323#ixzz1A0GrYs7K

BTW since I haven’t seen you in the media lately, I am wondering if your pot-stirring abilities are waning?

#152 Abitibidoug on 01.03.11 at 4:07 pm

Recently I read an article (in the Globe and Mail?) describing how real estate in Australia is greatly overvalued from a bubble there. It seems Canada, Australia, and possibly China, are the last countries experiencing a bubble that hasn’t corrected yet. They likely will, given the experience in the United States and Europe.

The problem is, that when there is a bubble most people don’t realize it at the time and only after it corrects itself. In March 2000 when the tech bubble peaked, how many article were there on the front pages of newspaper business sections saying there was a bubble? How about in 1989, the last time real estate peaked? How about in early 1980, when gold peaked? Most articles said they all could go higher, and gave “good reasons” why or said this time will be different. Will this time, in 2011, be any different? Only time will tell, but I’m sure glad I don’t have a big mortgage on an overpriced house.

Now for my new year’s resolution: to get more money out of the orange guy’s shorts and into some better quality investments other than real estate.

#153 Coho on 01.03.11 at 4:10 pm

Everyone knows that companies big and small alike are having some or all of their manufacturing done overseas. Below is just one example of the “little guy”, the individual, getting in on it.

Employer Location: USA

Job Description: Need CAD drawing of simple round tub.
I have pics and sketch. Need autocad file, iges, pdf ISO view layout. Should take less than 2 hrs

Employer History:

Total Spent: $71
Hours Billed: 20
Jobs Posted: 6
Jobs Filled: 3
Average wage paid: 71/20 = 3.55 per hour.

Is this all this person can afford to pay? If so, then that is a sobering example of where we’re at financially isn‘t it? Or is it getting the most for the least amount of money? In that case it is laugh now — and cry later. Not only are our politicians selling us out, we are doing it to ourselves.

The job was filled by someone in Eastern Europe. Hourly rate: less than $4.50 per hour. Probably good pay for this person. However not doable for a Canadian or an American. Comparable technical level here (depending on the application) presently pays four to seven times that hourly amount.

Unfortunately, our wages WILL eventually come way down until some kind of equilibrium is reached in the global market place. We’re heading for second world status saddled with first world debt levels. How will the debt ever be re-paid if the jobs and wages aren‘t there? More and more employers will be faced with the choice of either closing down or telling their workers they will have to accept lower wages and/or less hours if they want to keep their job. Can you imagine trying to pay a 400K mortgage and/or other debt with a 40K household income?

Back to the job posting…of course this sort of thing could be spun as an example of a job no one (Canada or the USA) wants, similar to what has been said about illegal aliens hired for dirt cheap on crop farms and orchards. The propaganda is that we feel we are “too good” for these jobs, when the reality is that we cannot live on such poor wages. How do they (aliens or other immigrants) do it? One reason is because multiple families live together like many other cultures in the world, whereas Canadians and Americans traditionally have lived as single families. This is likely to change soon. It won’t be the end of the world, just the end of the middle class and the lifestyle we‘ve known.

It has been quite the fancy bit of social engineering — using global economics and immigration policies to undermine societies. Elevating certain groups (of average people) to the detriment of others of same. Using pawns against pawns. What a mess. Here’s a conspiracy theory for you. We live in a legitimate world run by principled legitimate people (at the top).

#154 Chaos on 01.03.11 at 4:10 pm

The Dark Sad one is absolutely correct.

Remove instant credit from the equation and let’s see what happens to the price of houses, cars, haircuts.

The absence of credit does not equal a life of hell.

invariably it is the existence of too much credit that results in a credit purgatory. A life of hell on earth.

The next revolution begins with people saying:

“I’m mad as hell and I’m not going to live in credit hell anymore.”

That’s how the wheels fall off the machine.

Regular programing will now resume.

#155 Derek on 01.03.11 at 4:13 pm

#48 smartalox wrote:
actually, since the house is a consumer good, it has actually depreciated in value since 1959 (due to wear and tear, age, outdated electrical, etc.) The value of the property (location of the land) has risen to camouflage this loss, and still appear to be a gain.
Of course. That is absolutely true. But the topic was the price of a new house or fridge in 1959 versus a new house or fridge in 2010.

#67 Devil’s Advocate wrote:
Ahhhhh, I see Derek that you have found the hidden immunity idol.
If that immunity idol is a cat, then yes, I have found it — or seen it at least. I doubt that it’ll help me much in the long run though.

#55 Michael wrote:
Land only has an increasing value if we can increasingly extract value from the land (either directly or indirectly). Selling the same thing back and forth all the time does not make it more valuable (in a real sense).
Yup, that’s what I would say. I may have confused you because I was talking about the price of the land, which is a different thing from the value. Value is dependent on what you can earn from the land, not what you pay for it. Whereas price is just what some mug will pay for it. At the moment building plots are way over-priced, so the houses that are built on the plots are way over-priced but that won’t last.

#156 Live Within Your Means on 01.03.11 at 4:16 pm

Re RE agents – Although I tried to talk my Sis last spring to rent when they sold their house, they bought a condo nearby. They interviewed a few agents, one of which was an old friend of her husband. They went with a young married woman with a couple of kids. They were really pleased with the hours she put in selling their home, hiring stagers at her own expense, and finding them a condo townhouse. She drove them to many listings, etc. and they were really pleased with her. BTW, they have sold a few homes, one being in Atlanta, GA many years ago.

When we sold our last townhouse 20+ yrs ago, we went with a non-MLS guy. I checked out areas and houses on my flex day off for several mos. We zeroed in an area where we wanted to live and our agent made the arrangement. There are some good RE agents out there.

#157 realpaul on 01.03.11 at 4:29 pm

People have been mentioning Spain as a cause for another EU disaster…but…keep in mind that Spains public debt is 57% while Canada ( according to the IMF) is 80% ++. Just a fun fact for those planning on taking out a teaser rate mortgage in the new year.

http://news.smh.com.au/breaking-news-world/china-backs-spain-to-emerge-from-crisis-beijing-20110103-19dys.html

What would you prefer a low mortgage and a doubling of taxes…or and increased intrest rate and a mortgage you could afford instead of having 100% of your pay stolen from you in taxation so that the government can continue to support the fat greasy civil service? You can’t have both.

We either cut spending and the size of government or we decide that paying higher rates and taxes is OK. One will support the sloppy fat civil service and impoverish everyone or…….the second option is to cut spending and make it possible to feed yourself and have a roof over your head.

#158 Vancouver on 01.03.11 at 4:38 pm

Hi Garth,
I shake my head at all the negative comments made about you. I have read all your books and follow your blog. Thanks to you, I have made a whole lot of money that I invested following your advice.
Thanks

#159 45north on 01.03.11 at 4:44 pm

Moneta: In 2005-2006, when I was arguing with the “boys” on American blogs

I don’t remember you on thehousingbubble.com but there you are “Juno”

if you’re in Ottawa look me up

#160 45north on 01.03.11 at 5:16 pm

Leasa: Just when we need more soil to feed the 10 billion people of the future, we’ll actually have less—only a quarter of an acre of cropland per person in 2050, versus the half-acre we use today on the most efficient farms.

funny that for that last 60 years or so in Canada we have steadily built subdivisions on the best farmland. The momentum is still there because the land holding companies have a huge stake in making sure that the land they are holding is developed.

I see the rising price of gasoline/diesel fuel will increase the cost of food and at the same time reduce the usefulness of the far suburbs because the cost of commuting will be too expensive.

#161 Nostradamus jr. on 01.03.11 at 5:25 pm

I’m relocating to Windsor…buy myself a Mcmansion…rent out rooms to ELS students….then invest the rental $$$ as a professional gambler at Caesar’s Hotel and Casino in Windsor.
Some will call renting to students as ….”giving back to society” but I prefer calling it, “investing no more than 40% of my net worth in R E.”

Nostradamus jr.

#162 Nostradamus Le Mad Vlad on 01.03.11 at 5:50 pm

-
#212 Sean on 01.03.11 at 12:05 am — “To everyone else get out of debt fast.”

Sage and very good advice.

#213 GregW, Oakville on 01.03.11 at 1:46 am — G’day Greg — Thanks for the link.

#140 T.O. Bubble Boy — Excellent post and links. Can anyone say the Cdn. banks are as safe as marshmallows on hot tar?

I didn’t know that oil (as usual) was the cause behind WW1. I do know that Winston Churchill experimented with mustard gas on the Kurds during the 20s and 30s (the-then WMD). So the beat goes on and on, finding new ways to kill one another.

#34 canali — “. . . a heady period in “A return to normality?”.

‘Normal’ does not reflect reality anymore. Be interesting to e-mail OJ in a few months’ time to see how things are shaping up then and there.

Hmmm. Too philosophical for me at this time of day!

#42 Milhous Plumbers — “What’s made in Canada now?”

The Toronto Maple Syrups and the Vancouver CaDeadweeds!

#46 Dan in Victoria — Excellent post!

#59 Coho — “A reset is in process.”

It will be one helluva reset when all the shit hits the same fan at the same time, but it is necessary to flush the toilet, as it is overflowing presently.

#64 Brandon — I would go with #3 — Bargaining, as there seem to be plenty of goodies being thrown around to entice sheeple. #4 — Depression will be along in spring / summer!

#80 Canuck Abroad — “. . . in the UK market is lack of available financing.”

Credit is being tightened way up very quickly, but what are the reason(s) for this? Do banks know something sheeple don’t? What are they hiding behind their backs?

It doesn’t seem plausible for hyperinflation to happen when credit is contracting.

#87 Moneta — “Because we are a societty fixated on material goods.”

Soon to be replaced by a need for the simple things in life.

#88 Willa — “They’ve joined the dark side. And they bought a house two years ago. With money they don’t got.”

Perfect description for renters to keep renting, sellers to keep selling and buyers to venture to the dark side.

#99 Dodged-A-Bullit-in Alberta — “There was a time where the cost of a product was equated to quality. This is no longer true . . .”

Correct. Slap ‘em together and sell ‘em from Walmart. No quality means no craftsmanship and no credibility. A shame we have to learn the hard way.

#118 Bob Copeland — “I see where Canada is running down the same path as we did.”

Thanks for the post — it’s refreshing to have a post from one who has “been there and done that.”

#121 dd — Probably why the neocons are looking for war at every opportunity. The established state cannot last much longer, esp. with Obama and Soros at the helm.

#123 dark sad person — “An orderly or unorderly decline of every currency is underway and has been since 1922-”

That would be in tandem with #80 Canuck Abroad’s post about credit being tightened up (deflation).

#132 dd — Could be the kickstart to TSHTF as mentioned earlier.

#143 PTDBD — If Obama has declared it pointless, it is because Soros told him to announce it, so the tsunami has swamped us. Guess we look for more FFs all over, to keep our attention diverted away from reality.

#155 Chaos — “The absence of credit does not equal a life of hell.”

Hi Chaos. Good post, along with DSP’s and #80. Been to hell, done that, NO MORE!

#158 realpaul — “. . . Spains public debt is 57% while Canada ( according to the IMF) is 80% ++.”

Indeed. Spain changed govts. then pulled out of Af’stan shortly after the Madrid train bombings, while Canada stays in an illegal war based on the US’s wants and needs.

Chretien, a liar on the GST, was right about peacekeeping; the CPC are an entirely different matter. The link from yesterday shows the real reason for the US staying in that part of the world until 2014 — that is when the new gas and oil pipelines will have been completed, so they want to use somebody else’s assets for their own gain.

#163 David on 01.03.11 at 5:55 pm

134 – Mikey “Don’t ask me to explain [re: the great service Realtors provide...], we just do.”

That has got to be one of the more arrogant and patronizing things I’ve been fed by a realtor…so congrats, because you beat some doozies.

Do you think so little of my (and other readers’) intelligence as to think that it is simply beyond our intelligence to appreciate whatever rationalization you might have for your industry’s insanely greedy fee structure?

Your ilk are less than useless. Let’s leave it as politely as that.

#164 Devil's Advocate on 01.03.11 at 6:03 pm

#156 Derek on 01.03.11 at 4:13 pm
#48 smartalox wrote:
actually, since the house is a consumer good, it has actually depreciated in value since 1959 (due to wear and tear, age, outdated electrical, etc.) The value of the property (location of the land) has risen to camouflage this loss, and still appear to be a gain.
Of course. That is absolutely true. But the topic was the price of a new house or fridge in 1959 versus a new house or fridge in 2010.
#67 Devil’s Advocate wrote:
Ahhhhh, I see Derek that you have found the hidden immunity idol.
If that immunity idol is a cat, then yes, I have found it — or seen it at least. I doubt that it’ll help me much in the long run though.

So near and yet so far. :-(

#165 David on 01.03.11 at 6:05 pm

#120 D.A. – Just to clarify….I have not had bad experiences with some realtors. I have had nothing but bad experiences with ANY realtor I ever met. Some were stupid, some were ignorant of their markety, others were liars, others still were so generally unintelligent as to not be able to sapeak in full sentences.

So insted of passing this off as just a “poor choice of agent by a less-savvy client” (that’s the glib gist of your patronizing comment, right?), answer me this:

Why are there ANY poor agents in your business? Given the lavish ads on TV touting the rigorous standards and high ethical attitudes, how do so many turds end up in your punchbowl?

Seems like an indefensible bit of hypocrisy to me….but then, I not much smart.

#166 goldenfox on 01.03.11 at 6:11 pm

We bought a bunch of those at Costco and within less than a year (not much useage) they went caput. Husband hated them as they did provide much light. Plus, have learned they have to behave special disposal handling as they contain mercury. We’ve replaced some of them with similar ones but which provide much better light. Not sure if we can even buy reg. lights now.
………………………………………………………………………

Be carefull removing those lights, as they can easily break in your hands. Apparantly they hold enough mercury to contaminate 60 thousand gallons of water. Purchased a whole whack of the old bulbs that were on sale. It ticks me off that there were no warnings about the dangers of these newfangled bulbs. Guess they were afraid nobody would buy them if they told the truth about them. Just like the food companies who were asked why they didnt want to label their genetically modified food and their answer was, “Nobody will buy if we do”. Well duh! Does the consumer have anybody looking out for them anymore?

#167 dark sad person on 01.03.11 at 6:12 pm

#154 Coho on 01.03.11 at 4:10 pm

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

Great post–

Down we go-
The market wants to bring us jobs through not only global wage arbitrage-but now also downward wage pressure from within-

The exact reason that being liquid/cash/whole in some form- when equilibrium is finally reached will make those people move to the front of the line of the wealthy-

This is the chance in a hundred million-”if” you can see it and if you play it right-to totally alter your financial life to the positive-

Your last sentence was perfect-

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

#135 The Original Dave on 01.03.11 at 2:14 pm

wow, for those of you that love the rare earths, Molycorp is over $58 a share today. Up 16%. Rare element resources (ree on amex and res on tse) is over $17 a share. It was just over $1 in 2009.

***********
Smoken hot-

Which brings up another question that always bugs me on days the TSX decides to have a holiday for whatever lame excuse-when US and world markets are open-

What if-
The Dow goes limit down on such lazy days and we can’t push “sell”?
We can push it-just nothing listening on the other end-
Then the Dow goes limit down the next day-
It’s possible in that scenario-the TSX might not ever open until a bottom was reached-

Another thing that bugs me (there’s many) is (going from memory) and unless its been changed- a TSX ratio to the Dow before we can can lock limit down-
I believe the Dow must drop 10% before we can lock-
So- theoretically if the Dow dropped 9.9% and held-the TSX could be in freefall with no lock-

Maybe someone here knows if that rule is still in place-

#168 dd on 01.03.11 at 6:14 pm

#122 dd

…If they’ve been listening to smart people like … David Rosenberg…

…Usually smart. — Garth…

Garth, you are usually smart too.

#169 David on 01.03.11 at 6:16 pm

#120 D.A. – Everyone does not need to sell their own homes….believe it or not there is another solution!

Dump the collusive gangster system and allow competiton to exist.

Think about that…really think about that for a second. You pompous twerp.

#170 Sam on 01.03.11 at 6:25 pm

The fridge and car horror stories: gimme a break.

Next some WAG will say he preferred the TVs and computers and networks from the 70s over today’s LCD and plasma and AMD 64bit and internet.

Get a grip.

I remember the old fridges – the size, the amount of manual labour for models well into the 70s, and yes, the older fridges used to break down a LOT more often.

And cars. OMG – you want to compare cars of today to yersterday? When did you have a recent car rust through?

a hundred times better traction, braking, accident safety.

Give me a recent $20,000 car over a $80,000 from the 70s and earlier ANY DAY.

The average 7 year old Corrola ran more reliably than the average 2 year old Ford Fairlaine. Yeah, I had one of those. I bet when the average age of the corrolas reaches 20 they’ll still run better than a 2 year old K-car.

Suck it up, complainers. One person getting a lemon proves nothing about the vast majority of cars or fridges or TVs. The good old days were the sh*t old days, and no amount of anecdotal bellyaching will change that.

#171 Cookie Monster on 01.03.11 at 6:58 pm

Animal porn! gimme a break, the shots shown here are nothing! They’re only the insinuation of animals having sex, it’s all soft core! You need to get some hard core vids from Mexico! Live action bestiality and the science of Pegasus! At least get a photo of some honking elephant penises for pure amazement! That’ll give the critics something to gock at!

#172 Cookie Monster on 01.03.11 at 6:59 pm

Get a shot of an elephant mounting a house! Now that would be appropriate!

#173 Angela on 01.03.11 at 7:01 pm

@#36: “Realtors just show up at the seller’s lawyer’s office on closing day for the check.”

What you said there reminded me of a time that I worked for a real estate lawyer. The secretaries do most of the work on RE files and we needed things like full names and dates of birth of the parties, survey documents, etc, that the realtor would often have, but there were so many who took the view, “Don’t call me till you have my cheque.” Guess they figured their job stopped once the agreement of purchase and sale was signed. How hard would it be to answer a couple of questions on the phone, i.e. what’s the client’s phone number!

#174 Mr. Lee on 01.03.11 at 7:23 pm

First, they ignore you. Then they ridicule you, then they fight you, and then you win.

M. Ghandi

“Real estate in which one resides should never be seen as a investment vehicle because one lives in it.” Warren Buffet…2006

#175 (low density) Sam on 01.03.11 at 7:25 pm

#153 Abitibidoug on 01.03.11 at 4:07 pm

> In March 2000 … how many
almost none. Looking back I’m surprised I didn’t get in, with tons of people telling me to get in. I was even working at a dot-bomb. Thank god for Eric Jansen, whose analysis kept me out.

> How about in 1989 … real estate peaked
NONE, period. Absolutely ZERO. Pre-internet you really had to look hard to find this kind of info.

> about in early 1980, when gold peaked?
NONE. Howard Ruff got out just barely in time, apparently, but he got out before his newsletter told his subscribers to get out, and by then it was a couple of weeks too late

Almost everyone who got in after 78 lost money, if memory serves. Many of those whose reputations were tied up in Gold rode the price down to $400 or lower before throwing in the towel.

#176 Oasis on 01.03.11 at 7:45 pm

Assets, not commodities, affecting consumer behaviour – which accounts for two-thirds of the economy. I guess your friends must own a lot of feeder cattle and cotton. — Garth

________________________________________

Assets, … you mean DEBT, which will be inflated away, thanks to Big Ben’s helecopters.

As for commodities, i guess you don’t eat Garth? or drive a car? or heat your home, use electricity, water, or pay property taxes? you have indoor plumbing?

no. commodites have nothing to do with the consumer. just like the 70′s ..

commodities, going MUCH MUCH higher, bond YIELDS will skyrocket, and Bernanke will keep printing as many trillions as Obama needs….

#177 john m on 01.03.11 at 7:51 pm

Great post Garth :-)..you have a way with words…i find it quite curious to what lengths people will go to try to be right when you have proven them all wrong from day one.

#178 torontorocks on 01.03.11 at 7:54 pm

Hi – am currently in London UK. Saw postings for a tracker mortgage (variable rate mortgage, based on a loan to value of only 60%, meaning a 40% down). I believe this was HSBC. Lloyds, ironically, does tracker mortgages in some cases up to 90% loan to value…

but I know that my relatives are finding that sourcing financing is a bit more difficult here than a year ago and just up to six months ago, I could get a 95% ltv mortgage.

#179 Devil's Advocate on 01.03.11 at 7:56 pm

#164 David on 01.03.11 at 5:55 pm

Do you really think Mikey exists in the form he presents himself? Don’t be so gullible. He is a fictitious character.

#166 David on 01.03.11 at 6:05 pm

I’d be happy to answer that question David… if you would in turn be so kind as to tell me what your employment is that I may equally respectfully ask you a few questions of it .

#170 David on 01.03.11 at 6:16 pm

#120 D.A. – Everyone does not need to sell their own homes….believe it or not there is another solution!
Dump the collusive gangster system and allow competiton to exist.

Think about that…really think about that for a second. You pompous twerp.

I challenge you to find anything… absolutely anything… quite so competitive as real estate David. Don’t believe me? You are most welcome to give it a try – apparently all you need is a 3 week correspondence course and some business cards. Maybe team up with Mikey. ;-)

#180 doctore on 01.03.11 at 8:13 pm

Well if the debt pile for Canadians was not high enough, last was it 148% of income, it is certainly trending higher. Out this past weekend looking at all the pathetic “boxing week held over sales” (ie. get rid of our chinese made junk excess inventory). There were plenty of people scooping up tv’s computers, fridges, bedroom sets etc. but all on credit. I saw the huge lines at the local furniture shop credit dept, I was at the brick and all the salesmen were busy on their terminals writing up financing agreements. We are just live for today pay for tomorrow society. The further we can push of the payments the better. But how long can it go on?

#181 jess on 01.03.11 at 8:20 pm

“Revolutionary Tax


The Secret Life of a Shopaholic: How an African dictator’s playboy son went on a multi-million dollar shopping spree in the U.S.
17th November 2009

http://www.globalwitness.org/library/secret-life-shopaholic-how-african-dictators-playboy-son-went-multi-million-dollar-shopping

==========================
are the loan servicers in another country?

Leakage
Outsourcing of an Information System
Business Process Outsourcing (India)

job market 2004
Company Profile
CFC India (CFCI) Services is a subsidiary of Countrywide Financial Corporation(America’s No 1 Home Loan Lender providing Mortgage Banking and Diversified Financial Services) and provides high quality and specialized business, financial and analytical processing and IT services to Countrywide in the mortgage and related financial services industry. Established in 2004,the company has a workforce of over 4800 employees
Voice And Accent Trainer

#182 Oasis on 01.03.11 at 8:26 pm

Official US DEBT, $14 Trillion +
who do you think bought the last few trillion?
Bernanke..

where do you think he got the money??
who’s going to buy the next few trillion?
where’s he going to get the money??

print print print… get it yet?

#183 DaBull on 01.03.11 at 8:26 pm

#1 Danforth on 01.02.11 at 10:44 pm

Comparable houses cost 20K at the time, so an increase of a multiple of 20x.

A new fridge cost $250 at the time, so an increase of a multiple of ~4x.

In 1959 all fridges were made in North America , In 2011 they are all made in China.

In 1959 Houses were made in North America, in 2011 Houses are still made in North America.

Enough said.

#184 jess on 01.03.11 at 8:26 pm

The Navenny Place apartments –
once valued at 9.5m euros – Unfinished /stand empty

It is home to 47 apartments – penthouses at the top, supermarkets and delis on the ground floor and an underground car park

The project was financed by Ulster Bank, part of the UK taxpayer bailed-out Royal Bank of Scotland.
Yet the bank put it up for auction with a reserve of just 550,000 euros. That works out at around 11,700 per flat.

Donegal for only €11,700 each — but you will need to buy the complete block of 47 units for around €550,000

…and the trades haven’t been paid…!

#185 Timing is Everything on 01.03.11 at 8:29 pm

#18 Phil…Clonazepam. It’s never too late to make a better decision. Think about it.

#186 TheBestPlaceOnEarth on 01.03.11 at 8:43 pm

BABABABABOOOOYAAHHHHHHHHHHHH
YEEHAWWWW. Prices sure to follow
()()()()()
British Columbia Assessment Authority data for 2011 show that market value for homes in the city of Vancouver rose more than 12 per cent from the previous assessment, while home values in Richmond shot up more than 17 per cent.
Read more: http://www.timescolonist.com/business/Property+assessments+jump+cent+Vancouver+homes/4053541/story.html#ixzz1A1Q2PJ3B

#187 45north on 01.03.11 at 8:43 pm

Nostradamus Le Mad Vlad: I do know that Winston Churchill experimented with mustard gas on the Kurds during the 20s and 30s (the-then WMD).

while at various moments tear gas munitions were available in Mesopotamia, circumstances seeming to call for their use existed, and official sanction to employ them had been received, at no time during the period of the mandate did all three of these conditions apply

http://en.wikipedia.org/wiki/Alleged_British_use_of_gas_in_Mesopotamia_in_1920

#188 Devil's Advocate on 01.03.11 at 9:05 pm

“It’s often useful to read the comments of people who loathe you. Happily, I have no trouble finding them.Garth

Apparently we have at least one thing in common. ;-)

#189 randman on 01.03.11 at 9:10 pm

There will never again be a gold standard. — Garth

Well Sir…..what standard will we use then?

Because the existing system is unsustainable

#190 Tim on 01.03.11 at 9:18 pm

Vancouver property assessments jump 12 percent in 2010.
How much will the correction be Garth? 12 percent?

Of course not. It’s going up forever. — Garth

#191 Nostradamus Le Mad Vlad on 01.03.11 at 9:25 pm

-
#172 Cookie Monster — Neat, but are we becoming a bunch of voyeurs in a peep show here?!

#179 45north — Thanks for the link.

#181 randman — “Because the existing system is unsustainable”

Good point and yes, the current system is totally out of whack. 3:02 clip Pitbull in action accompanied by neat music.

It occurred to me that the dog trying to tear away from whatever is on the tree represents the elite strangling sheeples to get what they want — a one-world govt. (Copenhagen still ranks as a miserable failure).

One thing the IMF has is the ability to buy gold bullion at US$42.20 / oz.; after selling plenty for zillions, what is their to stop them from buying back govts.’ hedges against instability?

Nothing. Except sheeples rising up in masses (as per Europe), taking the law into their own hands and see what happens after. There is plenty of instability anyway, primarily from Soros and Obama.

We’re all gonna break on through one day. It may be time to leave with guns blazing!
*
Ponzi Scheme Obama admits running a Fonzie scheme. 7:02 clip.

Well well well The CPC will try to besmirch this, but they are already a bunch of ass wipers, and we keep electing them.

Everything is going up (inflation) except temps., which are going down (deflation).

Goes back to #132 dd’s link re: Obama (via Soros) saying no ceiling on deficit. The elite are in the process of pulling the carpet out from under our feet.

Not bad for a dead person!

Google Removing the latest virus.

#192 jess on 01.03.11 at 9:31 pm

put backs

Fannie and Freddie asking for their money back along with Bond insurers etc… Many of the original deals with insurers and investors required lenders to buy back mortgages that failed to meet certain underwriting criteria….”

If there were underwriting problems on loans in Canada couldn’t the CMHC do the same thing ?

http://dealbook.nytimes.com/2011/01/03/fannie-and-freddie-continue-to-collect-on-bad-loans/?ref=business

#193 Moneta on 01.03.11 at 9:36 pm

45north on 01.03.11 at 4:44 pm
———
I never posted on thehousingbubble blog.

And yes I am in Ottawa… Is 45north a clue?

#194 Devil's Advocate on 01.03.11 at 9:41 pm

#187 TheBestPlaceOnEarth

#191 Tim

Assessed values have little if anything to do with what you can actually sell your home for and EVERYTHING to do with the municipal taxes you will pay on it. Hang on tight boys it isn’t the equity loss that will hurt so much as the increased taxes – all taxes.

#195 Timing is Everything on 01.03.11 at 9:42 pm

#72 TheBestPlaceOnEarth said – [Vancouver] Only City in Canada right now not shovelling
()()()()

Hey, what about Victoria? Just sayin’.

#196 Mikey the Realtor on 01.03.11 at 9:44 pm

DA, DA, come on now my fellow realtor friend, we are both trying to make a buck selling RE, why are you trying to take food off my table, sir?

David is a little upset and that is ok, we all get upset once in a while, look, after reading some of the posts here I even cry at the pure sadness of it all, but I just get up and keep moving forward like nobodys business.

#197 BC Bring Cash on 01.03.11 at 9:45 pm

RE#39 TIM
There are only 3 true professions that exist I have been told by wise old timers. They are as follows, Clergy, Lawyer and Doctor. Come on , a real estate agents activity is a profession. The bar has truly been lowered down to the gutter.

#198 robert in london on 01.03.11 at 9:50 pm

“The main thing everyone requires for their subsistence is a roof over their head…”

Unfortunately the next main thing everyone seems to need is the oil derivative to heat (and cool) the space between those walls and power their respective means of conveyance to and from the jobs they need to pay for all this increasingly expensive shit. The same speculating yo-yo’s and monetary policy hacks who brought you the six sigma event in housing are now doing their damndest to bring it on with oil (and gas) prices (again). What these completely amoral f***-ups have yet to figure out is that because of their pathological gambling with tax payer money, inputs are becoming too pricey to allow profits. No profits and this current obscene version of capitalism is finished for a generation. Its death will not be mourned.

#199 Devil's Advocate on 01.03.11 at 10:02 pm

#198 BC Bring Cash on 01.03.11 at 9:45 pm

RE#39 TIM
There are only 3 true professions that exist I have been told by wise old timers. They are as follows, Clergy, Lawyer and Doctor. Come on , a real estate agents activity is a profession. The bar has truly been lowered down to the gutter.

Come on now Tim… we both know what the oldest “profession” in the world is. She does it literally and, apparently, I do it figuratively. By that logic alone I rest my case.

#200 Mark on 01.03.11 at 10:08 pm

#183, “In 1959 Houses were made in North America, in 2011 Houses are still made in North America.

Of components that are heavily imported from China, as well as labour that originates from the same.

#201 David on 01.03.11 at 10:15 pm

#179 D.A.

Real Estate is super-competitive at the realtor level. A bunch of unskilled rubes all running around trying to collect as much loot as they each can in a massively corrupt game. That is your ‘competitive business’.

One layer above those wrestling pigs is an oligopoly, 95% controlled by 2 or 3 firms who have overseen the fixing of prices for several generations…fact.

You see the grunts, the ‘hitmen’, as the industry….you want us to be oblivious to the existence of the Dons who call the shots.

#202 ScottyMac on 01.03.11 at 10:18 pm

What do fellow bloggers think of the future of Muskoka real estate prices? Are they immune to a major correction or will they suffer the same fate???

#203 Devil's Advocate on 01.03.11 at 10:21 pm

#197 Mikey the Realtor on 01.03.11 at 9:44 pm

You familiar with Spike and Chester Mikey?

http://tinyurl.com/2wpk88g

You remind me of Chester.

#204 dark sad person on 01.03.11 at 10:33 pm

Hyper-inflation and a dollar with buying power?

I like it-
How friggen cool is that gonna be-wheelbarrows full of cash that will buy stuff–
WOO-HOO
I love this Bernanke guy-

Dr Copper a leading indicator of a healthy or unhealthy World Economy is diverging and not making conformation with the follow up indicators such as Employment/Manufacturing and World Trade and even more so with World Trade traffic -

(copper)

http://www.barchart.com/chart.php?sym=HGF11&style=technical&p=WN&d=M&x=35&y=11&sd=&ed=&size=M&log=0&t=CANDLE&v=1&g=1&evnt=1&late=1&o1=&o2=&o3=&sh=100&indicators=&addindicator=&submitted=1&fpage=&txtDate=#jump

(employment/manufacturing)
http://2.bp.blogspot.com/_nSTO-vZpSgc/TRw7rDGrr1I/AAAAAAAAKEg/o8fjQPjMB64/s1600/BLS%2BSummary%2B2010-10%2BManufacturing.png

(shipping)
http://www.bloomberg.com/apps/quote?ticker=BDIY:IND

So could Copper be rising because wholesale USD dumping or severe devaluation from printing-i wonder?
The dollar looks to be at the same level today as it was in Oct. 2008

(USD)
http://www.barchart.com/chart.php?sym=DXH11&style=technical&p=WN&d=M&x=55&y=3&sd=&ed=&size=M&log=0&t=CANDLE&v=1&g=1&evnt=1&late=1&o1=&o2=&o3=&sh=100&indicators=&addindicator=&submitted=1&fpage=&txtDate=#jump

Looking at copper again–it’s just barley above the price in Oct.2008

“Just” before it crashed -wierd huh
Look at that wicked volume drop off–ewwwwww

(copper)
http://www.barchart.com/chart.php?sym=HGF11&style=technical&p=WN&d=M&x=35&y=11&sd=&ed=&size=M&log=0&t=CANDLE&v=1&g=1&evnt=1&late=1&o1=&o2=&o3=&sh=100&indicators=&addindicator=&submitted=1&fpage=&txtDate=#jump

So–is “Something” is out of place?

Copper price blowoff characteristics when weighed against the non conformity and current USD strength?

Nawwww– can’t be-

#205 realpaul on 01.03.11 at 10:57 pm

Taxes have all been increased…….no duh ! EI & CPP , Property Tax, Utilities, Fee’s & Service Charges, Carbon Tax another 6 cents a litre here in BC etc etc etc.

Where is all this new revenue going? I’ll tell you where…straight into the deep pockets of the gluttonous civil service to keep hiring, wages, pensions increasing.

Will the citizen get more service from these parasites? Well no according to the most recent study that reported that the average government worker spends five hours out of each working day surfing porn and playing video games while ‘on the job’.

In the private sector the only job growth has been in the low paid service sector. The government has trumpeted this as a return to normalcy?

Big Labour has been bamboozled by the governments bribery into playing nice and keeping quiet. In fact the middle class sector of the working class economy has been gutted and the jobs the union has been mum on protecting have been ‘Bangalored’ by the millions and they aren’t coming back.

Labour peace has been at the expense of the average Canadian. A voice that should have been strident has instead chosen to slurp down the big bribes that the few working unions have taken in their own immediate self interest.

The civil service pigs hide behind ‘privacy’ initiatives and gloat when union ‘compensation committess’ adjudicate their porn watching office hours as ‘ equivelant’ to the private sector’ for pay. Nobody wants to talk about the perks and pensions that no one in the private sector receives for real done in a market setting as opposed to the ‘seniority based’ incompetance of the public service.

The payout to the civil service grows ever more unaffordable, fewer dollars get to the hungry, needy, children and seniors, homeless. These big payouts to the civic pigs are a bit like justifying kiddie rape and granny bashing as an avenue of success for the pecentage of the population that can morally turn a blind eye to the outrage.

So when you have to gas up, pay more rent, pay your property tax increase and a bigger hydro bill, camping fee etc …remember where your money is going and wonder if it wouldn’t be better to stop supporting these greedy pigs and start spending money more efficiently where it needs to be spent…hospital patients ( not hospital workers pay) classroom equipment ( not more perks and pay for union teachers) better civic service ( not make work projects for city union workers). Etc etc etc.

Think of the stories that have surfaced in the past few months alone where municipal, city, federal, provincial, school board, trust and administration, crown corp staff salaries have been made public showing that these greedy pigs are ripping the tax payer off for hundreds of thousands of dollars a year each and then having their associations justify the perks when anything is said in protest. WHO”S MONEY IS IT ANYWAY !!!!!!!!

You are one bitter little puppy. — Garth

#206 dark sad person on 01.03.11 at 10:59 pm

#193 jess on 01.03.11 at 9:31 pm

put backs

Fannie and Freddie asking for their money back along with Bond insurers etc… Many of the original deals with insurers and investors required lenders to buy back mortgages that failed to meet certain underwriting criteria….”

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

Might be a bit too late to get anything back from these guys-
A few on here called this one a while back-

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

“The news gets worse for Bank of America. Not only will it have to eat massive numbers of Countrywide-originated loans, but the bank may have to complete repurchases sooner than previously thought. Judge Eileen Bransten’s long-awaited evidentiary ruling in the New York state court makes it clear – MBIA can use statistical sampling to prove its claims against Countrywide/BofA. The ruling provides the bond insurer–and other insurers and private label investors–with a short cut to proving claims against lenders and originators of defective mortgage loans.”

http://subprimeshakeout.blogspot.com/2010/12/mbia-sampling-order-signals-shorter.html?source=patrick.net

#207 Dark Sad Monster Bunny on 01.03.11 at 11:00 pm

198 Bring Cash – those are the 3 “learned” professions
but there have been many more for centuries

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

but realtor isnt one of them!!

#208 David on 01.03.11 at 11:17 pm

#197 Mikey Again, the pompous arrogance. “DAvid is a little upset”.

As Garth says, they belittle the messenger because that’s all they’ve got.

One final insult: You, sir, are a realtor.

#209 45north on 01.03.11 at 11:18 pm

Moneta: yeah 45north is a clue

#210 BC Bring Cash on 01.03.11 at 11:33 pm

All this crap about housing being affordable. The way its grossly over priced today is one mother of a
rip-off. Back in the day not so long ago an immigrant off the boat in toronto in the fifties could support a family on a single income and own their own home. Where are we heading? No long commutes back then. The life style we dream about now.

#211 propellergirl on 01.04.11 at 1:54 am

Trolls are everywhere? Don’t you remember your “Billy Goat’s Gruff?” It wasn’t a “fairy” tale. I’m a newbie to your blog an admit to being a financial nitwit. Hopefully the more I read, the more I’ll eventually “get” and clean up my financial act to prepare better than I am at this point. I live in Vancouver, and rent and have been glad for sometime that I am not in indentured servitude to a mortgage. Banks set people up for huge falls and I speak from experience. I’m only marginally wiser now and maybe if I pay more attention instead of taxes, I’ll get it one day. Blog on Garth. I’m listening.

#212 Robert Dudek on 01.04.11 at 1:59 am

I am in general agreement that the outlook for Canadian real estate (not just residential) is not rosy, and that there is likely to be an adjustment over the next 3-5 years downwards (especially in real terms).

But I am extremely skeptical of the idea that interest rates are “certainly” going higher in 2011.

i) If the economy tanks, Carney will more likely LOWER rates.

ii) as long as US rates are near zero (and they will be as long as the US economy is in the crapper – see Japan 1990 to present), the BoC has virtually no room to raise rates. Already the differential between rates here and the US has sent the Canadian Dollar to the moon – and I’m stick to my belief that the BoC does not wish to have a 120 US cent loonie until I am proven wrong.

So either the economy sucks and rates don’t rise, or the economy strongly recovers and this ameliorates financial doom in the real estate sector.

#213 Oasis on 01.04.11 at 8:38 am

Copper price blowoff characteristics when weighed against the non conformity and current USD strength?
______________________________________

yes. of course. USD strength. strong against what? the Euro? mmm.. What about the Swiss Franc? Aussie$$? NZ $? .. loonie at Par? Gold $1400? strong against those?

i see.

poor copper. what about oil? what’s it doing at $92? and cotton? and wheat, soy, corn?

here’s what’s happening.

USD is toilet paper. Euro is toilet paper.

in the real world, people protect themselves by buying commodities. Gold, silver, copper, oil, food, etc etc.

_______________________________________
The dollar looks to be at the same level today as it was in Oct. 2008
__________________________________

why don’t you try looking at a chart that’s 40-years old. might give you some perspective. even longer if you can manage. but your brain might explode.

#214 Steven Rowlandson on 01.04.11 at 11:29 am

Hello Garth.
If you like fearmongering and criminal conspiracies click on the link and watch if you dare.
http://www.youtube.com/watch?v=Kv2oCXbW4r0

Steven

#215 GregW, Oakville on 01.04.11 at 3:06 pm

Hi #215 Steven, thanks for the link.
Might your link help to explain why F gets a red face when he speaks?

#216 GregW, Oakville on 01.04.11 at 3:29 pm

Hi #115 Herb, There were ‘orgies’? When, were you there? I wasn’t.

#217 GregW, Oakville on 01.04.11 at 3:36 pm

Hi #105 Kaganovich, Thanks for the link.

#218 GregW, Oakville on 01.04.11 at 3:53 pm

Hi #84 bigrider, Garth is not a number, so I don’t believe it’s even a correct measure of his net ‘worth’ to use them.

#219 dradak1 on 01.04.11 at 6:55 pm

“… bankers now tut-tutting about the need for tighter lending rules …”

But they are doing just opposite – they are offering more credit – I’m getting in last 30-40 days offers to increase my credit limit for about 30% – what is nonsense considering that I was out of job for about 5 months.