HAM & eggs

“Garth Turner has never been more wrong,” the note said. And attached to it was the latest pumper piece (above) from the house hornies who run GlobalTV in delusional BC. The vid is dished up as proof that real estate is hot since hordes of Asians are swarming West Vancouver, paying insane prices – like $1.5 million for a shack listed at $1.2. The experts who confirm this: one realtor, one juiced-up resident and one unintelligible recent immigrant-investor. Wow.

Of course, this rush into one area of Vancouver comes just as sales crash in another – Richmond – which two months ago was also overrun by little people with bags of money, presumed to be Mainland Chinese. And back in March GlobalTV (and the rest of the media) was forecasting ever-higher prices in Richmond which, of course, have started to fall. So now the west side is touted as infallible, just as hot Asian money (HAM) is believed endless.

Of course, this tells us nothing about where housing is headed. But it confirms human stupidity.

This is classic frenzy at the top of an unsustainable market. People rush to buy because others are buying. Objects take on added value because they’re coveted. Emotion trumps reason as valuations detach from reality. Bad decisions are piled so high atop other bad decisions that they start to look reasonable. Then somebody stands back and sees the whole rotten towering pinnacle of greed and want is without foundation. And down it goes.

This is Bre-X. It’s Nortel. It’s RCA. It’s Pet.com. It’s LinkedIn.

All the video posted here shows is how collections of humans can believe their own bullshit. It’s called mania. And it always ends the same way.

Why? Simply because manias create their own demand, so the fundamental reasons something should rise or fall in value, are swamped with pressing bodies. For example, when everybody in west Van or Leaside believes houses there will shoot higher in value, they try to profit. Homeowners sit tight on properties they’re convinced will appreciate wildly, while buyers clamour to get in at any price.

Demand outpaces supply. The crowd hears on Global about shacks selling for $1.5 million, and more demand bubbles up as greedy money moves in. No longer do economics apply. Houses don’t appreciate because of wage growth, consumer confidence, new jobs or economic expansion. They jump instead simply because people want them. Then fools rush this blog to loudly proclaim, “Holy crap, it IS different this time!”

Trouble is, people are people. There was a time, remember, when everybody wanted Tickle Me Elmo.

Others, I noticed, seized on a Friday mortgage rate cut by a few of the banks as more ‘proof’ housing will continue to swell. Oh, how wrong.

First, the banks are trying to squeeze every possible positive fluctuation out of the bond market. It’s called ‘marketing.’ As stocks wobble, money flows into the fixed income market, driving prices higher and yields lower. Two months from now, it could as easily be reversed. What really matters is the Bank of Canada, which will raise its key rate this year. Several times.

Second, let’s get a grip. The reduction was one tenth of one per cent. Oh. My. God.

Third, rates can rise or fall, but the impact on real estate will be moot. There’s no hope of sustaining this market in a nation where people have never owed more money, and have already pushed home ownership to unheard-of levels.

So remember these days. Listen to the voices.

Pray for Global.

231 comments ↓

#1 HouseBuster on 05.27.11 at 8:21 pm

Ludicrous!

#2 Hoof - Hearted on 05.27.11 at 8:24 pm

Fiiirrrzzzztttt !

#3 Runawayscreaming on 05.27.11 at 8:33 pm

Indeed Global TV is pathetic but the proceeds of corruption in the People’s Republic of China are flowing into Vancouver real estate at a disturbing rate probably independent of the bubble. Here is an interesting interview of former Vancouver city councillor Peter Ladner on the topic of the flight of money from China:

http://www.youtube.com/watch?v=Z5SAgli5Yww

#4 Hoof - Hearted on 05.27.11 at 8:34 pm

I wish some good old school investigative journalism would get involved.

I submit that it would be quite easy for a party or parties to rig a sale ,in cahoots with a “seller” …sign a ” deal” for “$X” over ” list”…..then call the media and promote it.

How do we know that the deal is not rigged and bogus…has numerous “subject to’s” and the sale may fall through ?.

Do a follow up via title search…see who the players are.

This sounds exactly like what happened in Richmond…but it was revealed a scammy realtor was tying people up and trying to flip the paperwork.

Richmond is FLATTER than an Asian chest right now…more listings and literally no sales.

IMHO, this is a tried and true snakeoil stunt that has P.T. Barnum ROTFL -HIS- Ass Off.

#5 Bill Gable on 05.27.11 at 8:35 pm

Global employs one of the dimmest and least credible RE experts (*don’t make me laugh) Sarah Daniels, to trumpet RE. She was a TRAFFIC REPORTER. SHE READ SCRIPTS, badly.

Today the condo that we are in is one day from the fourth week on the market and one person is seeing it in on Saturday afternoon.

The Manager of the building told me he will eat his hat if she gets the outrageous amount of money she wants for a place with windows that have to be all replaced -former tenants destroyed the floors. The drier doesn’t work, and so we have to hang our clothes. The dishwasher leaks. All the taps leak, both toilets run, and the there is a one inch crack under the sink. Think about 100 K in remediation, and they are fine. Oh, did I mention we are moving?
In case you care – I have some perspective (*yes, I have lived in TO and NS, and Ottawa, and China, and Hawaii, Mexico City, and Virginia, and Belize and UK and Washington DC) – and I can say from my perspective – Vancouver is a an overpriced, pretentious, no culture, sewer.

#6 Dom on 05.27.11 at 8:37 pm

Realtors and the other vested interest groups are in a PANIC as sales have crashed so hard that these people are in financial trouble . Realtors , mortgage brokers etc have got used to easy fast money and now the bills are starting pile up to the point of trouble. A reatlor buddy has complained of the slow market and believe it or not the mindless pumping by CREA since his “delusional clients” as he likes to call them think the market is doing well. His business is down but he didn’t say by how much but it was clear he wasn’t happy. The realtors on this blog can pump all they like but it won’t change a thing. You really can’t blame realtors since they have lots of free time. If the market was doing so well why are they on this blog?

#7 Jon B on 05.27.11 at 8:38 pm

I’d like to get a piece of HAM if the gravy train comes by North Delta. mmmmm. HAM.

#8 Imstupid on 05.27.11 at 8:40 pm

It’s just stupidity. China has put restrictions on buying because they have a housing bubble so large that all the hubba bubba gum in the world can not create such a massive bubble. ITs something like 73 times average household income if I remember correct. Mostly financed by money borrowed from loan sharks or people who lend to loan sharks who intern lend to others. Something is very wrong and everyone knows it but are to afraid of what is going to happen that the thought of it or mention of it scares everyone. Do people assume that we will have generational loans passed on from parent to children then grandchildern? I guess only if it’s gov’t spending but won’t fly with others. By the way you can get a 99 year loan in China so 73 years is not so bad.

#9 Mr. Reality on 05.27.11 at 8:49 pm

The degree in which this stupidity is being played to the masses is unbelievable. I have so much to say at this point that i will only say two things…..

Short the TSX. Short the S&P 500 and the Dow. Short Oil.

Use inverse ETF’s and wait it out.

These asian investors are parking their money in a country that has 100% exposure to the motherland. When people move money en masse out of any country that means trouble.

The problem is these idiots don’t realize that Canada’s exposure to China commodity wise is so large they will lose huge in their investments. What a joke. Once the China domino falls, it will take the world with it.

Lot’s of money does not mean smart money.

Mr. R.

#10 LJ on 05.27.11 at 8:50 pm

Those mortgage rate cuts are starting to hurt the banks. Look at their balance sheets and profitability for the last quarter. Sure, they can hand off the paper to CMHC, but they are earning such a low rate that they have to try to make up for it with volume – which is now on the downsloping side of the mountain.

“Then somebody stands back and sees the whole rotten towering pinnacle of greed and want is without foundation.”

#11 NFN_NLN on 05.27.11 at 8:53 pm

People, Rose Li is a cunning investor and sharp as nails. Look at the way she carries herself, she oozes charisma and talent and she ought not be contradicted. Of course she deserves 3 houses worth a million a piece. Show me one other person that is more deserving and I’ll show you a fool. It all makes sense.

#12 Victoria on 05.27.11 at 8:54 pm

I still want them to come over to Victoria – I want to get rid of my house.

#13 Cato on 05.27.11 at 8:58 pm

I’m really not concerned with Chinese buyers, many of whom will find themselves held hostage to our system of taxation by a fixed asset. What they see as an investible asset is really a financial anchor by way of taxation. Vancouver is a city with expensive appetites, the more the merrier I say.

I’m more concerned about the effect this sort of fluff reporting has on fellow canadians, many of whom are gambling with debt. To his credit Carney has been consistently raising the alarm bell – but I rarely see the message passed on by the likes of Global. The cautionary warnings are consistently drowned out by this sort of fluff reporting. Who you gonna trust, the govenor of the bank who actually sets interest rate policy and has vested interest in economic health of the country – or someone newly arrived who lived entire life under authoritarian regime that suddenly thinks they have western capital markets all figured out. The herd in Vancouver seems to be choosing the latter.

#14 T.O. Bubble Boy on 05.27.11 at 9:01 pm

I think I’ve read this story before…

I do not like them in a box.
I do not like them with a fox.
I do not like them in a house.
I do not like them with a mouse.
I do not like them here or there.
I do not like them anywhere.
I do not like green eggs and HAM.
I do not like them, Sam I am.

#15 smoking man on 05.27.11 at 9:04 pm

Greece is going to defalt. Usa keeps going into debt china turning us capital into hard assets.

Pause. Just won 2k on a slot at woodbine. Wo hoo

Money is going to our safe bonds. Are dollar will surge BOC rate is going to drop in the fall
Not go up because the high dollar will kill jobs. And the BOC only moves on wage inflation

WINNING.

#16 Keith in Calgary on 05.27.11 at 9:05 pm

For Jean-Claude Juncker, the prime minister of Luxembourg, the threat of immediate market turbulence means the usual norms of transparency don’t apply. (think about that for a minute then read on)

“When it becomes serious, you have to lie,” Juncker, who as the chairman of the regular meetings of euro zone finance ministers is one of the currency union’s key spokesmen, said in recent remarks.

The European Central Bank is basically done like dinner……..just like the Canadian real estate market……..

All that is keeping it barely afloat is lies, lies and more damn lies……..

#17 Bill Gable on 05.27.11 at 9:07 pm

Addenda;

Just got some very scary, but credible info on Shanghai RE. Friend is a Canadian by birth, and was my host for my extended stay, while studying in Shanghai.
He says that many of friends are afraid out of their minds – because the loan sharks (sorry) “facilitators” are starting to get out the pliers and blowtorches. Consumer good sales have fallen off a cliff, unless top luxury brands – Chinese don’t drink VO.
No one is selling anything. Shanghai is a disaster, and let’s not mention what is it, 23 ghost cities? The GDP that China has been falsely trumpeting has been capital outlays on a scale that would make Rameses II look like a piker.
This jig is up – watch for cascading bank failures.
The whole deal is coming unravelled.

#18 Drew on 05.27.11 at 9:12 pm

rates aren’t going anywhere if he is this pessimistic:
http://business.financialpost.com/2011/05/19/bocs-carney-off-the-record-rate-hikes-u-s-debt-woes/

#19 bridgepigeon on 05.27.11 at 9:15 pm

5 Bill
Curious to know your favourite place where you lived…

#20 Maxamillion on 05.27.11 at 9:18 pm

Think Cabbage Patch Kids when adults were wrestling each other for the last one on the shelf.

#21 Bottoms_Up on 05.27.11 at 9:30 pm

#129 Imstupid on 05.27.11 at 4:59 pm
——————————————
No, I’m not ‘rastionalizing’ a losing situation, let’s talk real numbers.

I could conservatively get $335,000 for my home that currently has a mortgage of $280,000.

That leaves me $55,000, more than enough to pay agents/lawyer/bankster and still get my down payment back (Ok, so in the end I don’t make any money but currently I’m not in a losing situation). And, yes, I would be in a losing situation if the market corrects 15%, but it’s not going to force me to declare bankruptcy as you suggest.

You mention lost $$ due to property tax and insurance. Well, here in Ottawa rents are crazy-high (as I outlined, mortgage payment plus property tax is actually less than monthly rent), and renters are also expected to carry insurance. So these two items are a wash in the example.

#22 squidly77 on 05.27.11 at 9:31 pm

The stages of the credit cycle of boom and bust:

The upswing usually starts with an opportunity – new markets, new technologies or some dramatic political change – and investors looking for good returns.

It proceeds through the euphoria of rising prices, particularly of assets, while an expansion of credit inflates the bubble.

In the manic phase, investors scramble to get out of money and into illiquid things such as stocks, commodities, real estate or tulip bulbs: ‘a larger and larger group of people seeks to become rich without a real understanding of the processes involved’.

Ultimately, the markets stop rising and people who have borrowed heavily find themselves overstretched. This is ‘distress’, which generates unexpected failures, followed by ‘revulsion’ or ‘discredit’.

The final phase is a self-feeding panic, where the bubble bursts. People of wealth and credit scramble to unload whatever they have bought at greater and greater losses, and cash becomes king. Charles Kindleberger

Got Tulips anyone ?

#23 Mr. Lee on 05.27.11 at 9:32 pm

I get a kick out of those who suggest the Mr. Carney will not raise interest rate or may even reduce them. Well, perhaps he will. Ask yourself this though, are stagnant rates going to keep inflation from going up and possibly leading to stagflation? Will we enter an era of bi-flation where durables like housing feel the price effect of Canadians having to fill their gas tanks of put the KD on the dinner table. Na……just my imagination, Carney will hold the line, house prices will go up forever, and hey……it is different here.

#24 BrianT on 05.27.11 at 9:36 pm

#13Cato-You might not be aware that Alan Greenspan also had an impeccable reputation while things were still afloat-the guy threw out lots of warnings about “irrational exuberance” while keeping the bank rate incredibly low and doing everything possible to keep a bubble inflated.

#25 TaxHaven on 05.27.11 at 9:41 pm

Garth, when you have the choice of paying over C$1m for a CONDO in Shanghai, Guangzhou or Beijing (let alone here in Taipei), a SFH in West Vancouver is CHEAP, CHEAP, CHEAP. My wife’s nephew & his wife just paid the equivalent, in cash, of C$1.4m for a condo – and that’s in Taiwan, never mind Shanghai… Any guesses? He’s in semiconductors.

In the Lower Mainland you get LAND, parking, lawn, a huge house and a garden etc., unobtainable in most of urban Asia.

Your last three points all deal with rates and mortgages – irrelevant to buyers of West Van property, as I’ll bet 70% of them pay cash or huge downpayments with financing already set up.

Who wouldn’t want to live in West Van? Beautiful place if you can afford it. Good schools, safe neighbourhoods, less aggressive government, more predictability in life. Believe me, they are NOT-NOT-NOT coming here with their money looking for the much-vaunted Canadian social welfare system…!

Wake up, Canadians…you have no idea how much unencumbered debt-free capital people here have that would be very interested in purchasing SFHs in such places as West Vancouver, were it able for regulatory/citizenship/taxation reasons to do so.

And why not Seattle? — Garth

#26 tanev on 05.27.11 at 9:44 pm

Noticed bank stocks gapping down big and on big volume today….could be foretelling something…hold on to your hats guys.

#27 eltabarnacos on 05.27.11 at 9:44 pm

#21 ????????????????

#28 eltabarnacos on 05.27.11 at 9:46 pm

Okay so why dont we sell Vancouver to the chinese???

I mean why would we keep a place where the real estate is owned by the chinese and where you can’t afford to work and buy yourself a home because the price of your home is so crazy its dictated by how many rich chinese are willing to pay for it!!?

#29 Blobby on 05.27.11 at 10:02 pm

It’s ALWAYS global isnt it?!?

This is the SAME global that’s always running ads saying it’s an award winner and the most trustworthy newsource…

If Global really is canada’s best news.. We’re in SERIOUS problems!

#30 Crazy on 05.27.11 at 10:15 pm

With the information that I am seeing coming from the US, I would not be surprised if by this upcoming Winter, rates are exactly where they are now.

USA is in shambles.

Carney is selling Canadian dollars like they are going out of style to keep the loonie low, but it is not working. He will have to start printing soon.

#31 TurnerNation on 05.27.11 at 10:18 pm

Wait, I thought this ersatz blog was undersexed??

#32 disciple on 05.27.11 at 10:20 pm

I think there will be an unexpected shock with oil at over $200 barrel because China will be forced due to its imminent bubble burst to display some military chutzpah in Africa and Pakistan in response to Nato. Just watch…

#33 Cato on 05.27.11 at 10:21 pm

#9 Mr. Reality – the problem is we face global insanity. The various fiat pigs are playing a farcical game with lipstick hoping to be just a little less ugly then the rest of the swine. Capital is scared – its sloshing around looking for a safe haven but there isn’t enough room in the liferafts for everyone.

The US is in dire straights, at the moment the USD looks just a little less ugly than the euro but thats just because Europe is starting to hit the wall first. America’s time will come but not until Obama uses the Fed to buy one more term in the white house.

World central banks will fight any signs deflation with continued currency debasement, and rather then force austerity on its citizens government will continue to monetize debt. This makes shorting the markets a dangerous proposition, you can’t fight the Fed.

There is only one trade I see to make in this environment after stellar gains of last few years and thats gold. Central banks are once again accumulating the worlds oldest reserve currency. These aren’t speculators, these are the financial elites slowly and deliberately making a move under belief fiat system in its current form may not be saved. It might be archaic but gold is the store of value they’ve chosen to move world to in event of crisis. What comes next is likely a new world reserve currency.

My strategy is wait for fear to once again take hold of the world, then grit my teeth and move back in. The stage will be set for more intervention by central banks, driving up equities and commodities once again. Until that time markets might get correction everyone is hoping for – but then again maybe not. The USD is not the safe haven it was back in 2008. One thing is for certain, this mess will end BADLY for all but those who are prepared.

#34 Patz on 05.27.11 at 10:24 pm

Garth that piece is actually about West Vancouver, not the west side. Doesn’t affect your points but now they’re trying to say that West Van is a ‘new’ discovery of the HAM.

#35 45north on 05.27.11 at 10:32 pm

Bill Gable: the condo that we are in has been on the market four weeks and one person is seeing it in on Saturday afternoon.

yeah, so where is the Hot Asian Money ?

Just got some very scary, but credible info on Shanghai

The whole deal is coming unravelled.

pretty scary

#36 Sea Wave on 05.27.11 at 10:33 pm

Re. the video:

So “Rose Li: Investor” has purchased 3 houses in Vancouver because China’s taking steps to deflate their massive real estate bubble and are thereby discouraging people like “Rose Li: Investor” from further speculating in Chinese real estate.

Speaks volumes about the level of sophistication “Asian Investors” bring to the Vancouver marketplace, and the inevitable outcome.

I wonder which bubbly market “Rose Li: Investor” will buy at the top in next?

#37 45north on 05.27.11 at 10:35 pm

The next housing shock:

http://www.cbsnews.com/video/watch/?id=7361572n&tag=re1.channel

the video explains robo-signing, how companies paid people $10 an hour to sign their names as officers of the bank

#38 T.O. Bubble Boy on 05.27.11 at 10:38 pm

Ottawa to announce financial literacy leader.

Garth – will it be yourself, Gail Vaz-Oxlade, or Rob Carrick?

#39 Aussie Roy on 05.27.11 at 10:40 pm

Aussie Update – China

China to stress test its banks.

http://www.marketwatch.com/story/china-banks-to-stress-test-govt-debt-other-risks-2011-05-27

The tide is turning in Australia
Bears outnumber bulls among home investors

http://www.abc.net.au/news/stories/2011/05/27/3229227.htm

As cost of living pressures rise the ALL IMPORTANT people per household rise – No shortage here.

http://www.news.com.au/money/property/aussies-sharing-houses-longer-14pc-of-buyers-seek-housemate-to-help-pay-mortgage/story-e6frfmd0-1226062213195?from=public_rss

#40 Abitibidoug on 05.27.11 at 10:42 pm

It’s late at night, and as I drift into REM sleep I dream about when “experts” said the same thing about Tokyo in 1989. My next dream is in Summer of 2000, when coincidentally there was a lot of rain just like this month, and that shining star called Nortel was on top of the world. Shares were a bargain at $120 each, it’s such a great company that it can only go higher! It must be just a dream, could anyone actually have bought into such hype?

#41 Jsan on 05.27.11 at 10:47 pm

Most Chinese are new to Capitalism, they have no concept of bubbles nor do they understand what happens during the aftermath when a bubble collapses. They are mostly not sophisticated, street wise investors as some would try to have you believe. They follow the herd mentality. When one person does something successfully they all follow blindly along believing they will find the same success. They are like the mass of very naive brand new to investing people that blindly got into Tech and Internet stocks at the peak of the 2000 stock market bubble. They did not get in because they carefully researched the Price To Earnings ratios and growth potential of the companies they invested in, they got in because they heard from their brother in law, from the TV, from the coworker that all you had to do was buy any Internet/Tech stock and you were guaranteed to make money.

The sad part of all this is that the greed from overseas is destroying the affordability in this country and keeping many Canadian Families and individuals that want to buy a HOME, not play the housing casino, from ever being able to afford.

The question I have to ask is “where is your government in all of this”? Why are they not protecting you? I don’t live in Vancouver or Toronto but I sure as Hell would be calling the government non stop until they put an end to this nonsense. There have been measures put in place all over this planet to keep this sort of fiasco from taking place. Get off your hands and start demanding the government to reign the foreign ownership in.

Australia put an end to it.

http://www.news.com.au/money/property/australian-federal-government-gets-tough-on-foreign-ownership-rules/story-e6frfmd0-1225857643432

.

#42 JohnnyBGood on 05.27.11 at 10:54 pm

I wish a friendly, Asian immigrant would offer ME a cool two million for my place in T.O. If there really is something of substance to this “Han invasion”, is it possible that TREB is NOT running ads on the mainland, enticing house horny Chinese with hot money to come buy, buy, buy while prices–which have only doubled in the past several years–are still cheap, cheap, cheap!?

#43 Where's the money Guido? on 05.27.11 at 11:03 pm

Now, that was a hockey game! Not the crap I’ve seen the Canucks a part of this year so far.

#44 squidly77 on 05.27.11 at 11:09 pm

It’s the Chinese that need protecting, let them buy and buy and buy, Canadians need to step aside and let them play, they will meet Mr. Market soon enough.

Capitalism is both glorious and ugly.

Unless your a bank, in that case it’s always glorious.

#45 squidly77 on 05.27.11 at 11:10 pm

I am assuming that they are not using CMHC.

#46 Calgary Car Guy on 05.27.11 at 11:16 pm

First post but long time lurker—great blog Garth. I have worked in car dealership retail service for 35 years and for my current employer for the past 18 years. I know my customers and my business well. Some recent views are- RE agent in the other day and asked her how RE is right now in Calgary. Too much inventory, she said, hard to sell. Blamed it on other agents telling people to wait until spring to list and now the market is too flooded.
New car sales are slow, spotty. Used car sales are strong. People bringing cars up from the U.S. has dropped to almost zero in the last six months or so. At one time a couple of years ago I was dealing with US imports daily.
Still lots of money people in Calgary and will spend where necessary but not as flagrantly as a few years ago. The rich are always the biggest whiners about wanting something covered after warranty expires or will go to top management to get a deal. The poorest people are seldom that way and that has always bothered the hell out of me so I go to bat for them sometimes on my own.
There definatly are more people these days who are really strapped for cash. I had a customer in with a 4 year old SUV not that long ago with a serious issue that was covered by their extended warranty but they could not afford to pay the 150.00 deductible!! They took it home and parked it for about a month and then brought it back for the repair. I have noticed an increase in the number of people who will turn down recommended maintenance and just do an oil change.
Not a huge change but noticeable.
I read on this blog recently that Albertans have the highest household debt in the world and after reflection I don’t doubt that. Albertans in general have a very strong positive outlook for the future economic prospects of Alberta and themselves and are not afraid to run up debt if they have to or want to.
I’m a divorced 53 year old guy paying big jack alimony and child support until 2016 but I’m debt free and living cheap. I have a nest egg left but it aint huge and I’m very risk averse as it’s all I’ve got. I’m watching this all unfold with great interest but, like most, really wonder where we all will be 5 years from now. Thanks again for your blog Garth, I’ve been learning lots here.

#47 randman on 05.27.11 at 11:19 pm

“The question I have to ask is “where is your government in all of this”? Why are they not protecting you? I don’t live in Vancouver or Toronto but I sure as Hell would be calling the government non stop until they put an end to this nonsense.”

Our Government? Bwahhhahahaha

You mean like……

“We’re from the Government and we’re here to help you?”

Run as fast as you can if you ever hear those words…

#48 Mr. Reality on 05.27.11 at 11:27 pm

#35 45north on 05.27.11 at 10:32 pm

Bill Gable: the condo that we are in has been on the market four weeks and one person is seeing it in on Saturday afternoon.

yeah, so where is the Hot Asian Money ?

Just got some very scary, but credible info on Shanghai

The whole deal is coming unravelled.

pretty scary

Well hook us up and post it…….

Mr. R.

#49 KingBubbles on 05.27.11 at 11:30 pm

Great post and awesome video. Sleezy and slightly sinister at the same time.

#50 nonplused on 05.27.11 at 11:30 pm

So we (ok the US) exported our (their) inflation to China, and now the Chinese are sending it back to Vancouver? I guess what goes around, comes around.

I smell a rat. First, why are the rich Chinese paying 1.5 mil for a crack shack or a tear-down when they could pay 2.5 for a mansion? Or drop 4 or 5 on something even Garth would live in? And b), how are they getting past all the capital controls? It isn’t exactly easy for the average Chinese to move large amounts of money out of the country. And III), as Garth pointed out, why only Vancouver?

Tin foil hat theory: they are laundering drug money (mostly BC pot). One member of the gang sells his house to another for $1,000,000 more than he paid for it, then they get a cheap Carney loan and make $3000 mortgage payments. Since that is well under the $10,000 banker flag, they can pay it cash each month and have the $1,000,000 in a clear account. They even pay a bunch of Canadian Asians $1000 each to put in phoney bids so the final swap price looks legit to the bank. Although they are getting a bit carried away with this now (do you really need 26 bids to justify $350,000 over list?) The Asian thing is a cover story. And they beauty of the whole scam is that when the gig is up, they just default on the loan and let the banks try and find any assets the buyers might have. Just a Harley, and that probably stolen. This deal is even better than the CMHC 0 down variable mortgage 35 year amortization loan the grow-op industry has been enjoying immensely for all these years. Glad to see CSIS is on it.

#51 BondGuy on 05.27.11 at 11:32 pm

Re: JohnnyBGood:

Yeah, I’m replying with a huge delay; I don’t have much time to replay here.

You wrote:
“Debt derives its value from future wealth. This means the economy, and thus the money supply, must grow in order for debts to be serviced….
Therefore the money must be created first, then the economy catches up. Due to the exponential function (which gives us the “miracle” of compound interest), the rate of money growth and economic growth must be forever accelerating….
If you are interested, google Modern Monetary Theory (MMT) to understand how money works in a debt fiat money system with floating exchange rates (particularly in the US)…”

It’s interesting that you cite MMT; one of the planks of MMT is that reserve ratios don’t matter (which you had written about).

However, if you look at “money”, you realize that the definition that matters is: “money is a short-term liability issued by an entity that is perceived to be creditworthy”. However, there is built-in vagueness: what is “short-term”, and what is “creditworthy”?

What has to be understood is that ANY private sector entity can issue liabilities and hope that those liabilities be considered “money”; the whole trick is to convince everyone else that you are “money good” (creditworthy). In other words, banks and the government have no monopoly on the creation of “money”. (Take a look at the definitions of “broad money”; they include commercial paper issued by non-bank private entities.) And private money is not just confined to commercial paper: pretty well all commercial transactions between businesses are done using credit (accounts payable). So therefore, pretty well any business in a capitalist system “prints money”. Some like Canadian Tire, take this almost literally (although Canadian Tire money is not supposed to be considered “money” for legal reasons).

Therefore, there is no magic behind “money creation” by banks. The advantage banks have are (a) they have liquidity access to the central bank and (b) they have legal privileges for the acceptance of their liabilities in transactions. Those are important, but you need to keep in mind that most business transactions in a capitalist system do not rely on the banking system directly.

#52 Aussie on 05.27.11 at 11:32 pm

#41 Jsan re Australia put an end to foreign ownership – sadly I wish you were right, and yes the government did tighten up the rules a bit, but there is still a lot of foreigners (particularly Asians) buying properties here. In any case, the horse has already bolted and many properties are already in the hands of overseas owners. They are also buying up all the farmland, and the Government doesn’t seem to mind at all – just so long as the bubble keeps going. It’s only recently that real estate prices have taken a bit of a dive and many potential buyers are waiting by the sidelines. Let’s hope the Govt doesn’t intervene, and this is the start of a long, long decline.

#53 Basil Fawlty on 05.27.11 at 11:45 pm

“Vancouver is a an overpriced, pretentious, no culture, sewer.”
Wow, talking about over dramatic!
Good grief we have people from all over the planet living here from every race and they bring their food, music and traditions. How in the name of crap can we have no culture? Over priced, sure. Pretentious, okay. A sewer, did you happen to look around in Belize City and Mexico City? Now there are some sewers, Vancouver does not even smell, except for a couple of blocks.
Of course, the more people that hate this place and stay away, all the better. I liked Vancouver pre Expo 86, when few knew we existed.

#54 Jimbo on 05.27.11 at 11:51 pm

I also believe that what is happening in Vancouver is a classic market bubble and will collapse someday – maybe in months or maybe in years. So I’m not too concerned about the prices.

What DOES bother me is that Canadian culture is getting completely decimated in much of the city. I know, I know… It’s politically incorrect to suggest that Canada has a unique culture. And the new definition of “racist” is anyone who opposes selling Canada to China.

But in Richmond, Burnaby, Vancouver, and large parts of Coquitlam, Surrey, and now West Van, Canadians have moved, or are moving, out in droves. Many schools are almost completely ESL. Potential Canadian buyers can’t afford to buy. And Canadian owners are taking the money and moving away.

I can’t, for the life of me, understand why the government doesn’t tax the snot out of offshore buyers. You have money to burn and want to bid $1.5M for a shack making it impossible for our own Canadian kids to buy a home? Then you can afford a 100% “offshore speculator” tax on the purchase. The last time I checked, Canada is an independent and sovereign nation and has every right to put its own citizens FIRST.

God bless Canada.

#55 Nostradamus Le Mad Vlad on 05.27.11 at 11:57 pm

-
I still prefer bacon, fried eggs, bread and tomatoes, along with an ultra-strength dark mocha. Now doesn’t that sound healthy and nutritious? I thought so!
*
#40 Abitibidoug — Noted, and it was shortly after that, that a lot of things went belly-up, just like right about now. “This is classic frenzy at the top of an unsustainable market.” — Goes with Doug’s post.
*
Chavez “In fact, Venezuela has the world’s largest oil reserves, including its heavy and extra-heavy oil.” Guess who wants it. Sharing Blame World economic rebound weakens, so find some scapegoats; US Consumers not spending frivolously.

Japan beats deflation; Inevitable – Euro default, and Pending home sales hit the skids.

Typhoon strengthens; One day . . . , and Polluted Pacific.

‘Net Censorship. Shades of Nero? and Sarkozy trying to play god. Big Brother is right up our collective backsides, and we don’t even know it.

NWO George H. W. Bush used that term. Remember, all US Presidents since him have been placed there by TPTB. Elections are meaningless. Soros – Is he actually a conspiracy theory? Silver is Money, not gold. Short article.

No Labeling? Stick to Farmer’s Markets and small stores. Predicting ‘Quakes Italy’s gone nuts. Easy Way Out How consumers are cheated.

#56 Tim on 05.28.11 at 12:06 am

“And why not Seattle? — Garth”
Declining economy, guns, poor health care, Republicans…

#57 BPOE on 05.28.11 at 12:07 am

You see folks I have been right all this time. If you purchased that home in WVan last year your up 100’s and 100’s of thousands of dollars. Where’s Junius? or the american? Paying higher rent on their basement suites. Folks the FACTS have spoken. Vancouver is a WINNER.
Folks lets get down to the TRUTH. There is no bubble. How can there be a bubble when investors pay in CASH with NO MORTGAGE. Don’t you see? Don’t you get it? It is different this time and it has been for over a decade now. The american snake and basement suite renter Junius would have you believe otherwise. But folks I ask to as this question “If you bought a house in West Vancouver 10 years ago would that house have gone up in VALUE?” Folks of course it did and will.
I’m tired of the liars like the american and junius who are shameful conmen. They disgraced themselves and their family renting. They lie consistently about Vancouver real estate never making anyone rich. They make up lies about interest rates going up then when mortgage rates go down they jump up and down moaning about how small a percentage of the drop. Never once admitting they were maybe wrong. They do not have your best interest at heart. They want you to feel their failure, to be a failure like they are. Do not let that happen to you. Vancouver soars over the world The Best The Richest The Unstoppable Vancouver. Everyone with money wants to live here. God Bless

#58 SMOKING MAN on 05.28.11 at 12:23 am

When I play poker cash games more often than not I walk away with more money than I started. You see I don’t play my cards (fundamentals) I play the players. When I sit down I don’t play any hands for about three passes of the blinds, studying my opponents I know who to avoid heads up, who to bully, who I can bluff against.

When it comes to investing and real estate The herd drives the market, Income to Price ratios don’t mean squat. How the herd in each market reacts to news is what you need to watch and understand.

Most of you bubble heads play like a guy who will wait all night for pockets aces, you are afraid of risk, your are all probably really smart, look around In you life and notice that the people you think are idiots tend to have the most gold, and the biggest boat. I have won more hands with 7 2 than aces.

Risk kids is where you score, understand the herd, screw fundamentals is a sure fire way to prosperity.

But most of you are to smart to see that.

#59 the_apocalyptic_one on 05.28.11 at 12:25 am

In the end the majority in any society can never be wealthy, the truly wealthy are too smart to allow that to happen. So all that exists is an illusion of wealth which the majority of ‘Greater Fools’ Canadians are laboring under. The only way for all Canadians to simultaneously become truly wealthy would be cash their one asset, all at the same time. And we all know what will happen to that asset, if everyone tried to cash out at the same time. So this is a sweet illusion created by the magicians of high finance, who are laughing all the way to the bank. O I forgot the magicians are the banks!

#60 Cognizant on 05.28.11 at 12:26 am

The HAMs don’t realize that the million$ they are plunking down on a suburban Vancouver family home is not securing anything much of real substance or value.

Most of these properties produce (economically) only basic shelter and certainly don’t provide enough space for anything more than the most basic veggie garden.

More importantly, a foreign crown holds the title and “owns” the property they are “buying.” I don’t think these buyers realize the same crown can extort from them any sum her majesty wishes via the municipal taxman. For all those millions they really only secure “exclusive access”, nothing more. We DO NOT have property rights in Canada!

Unproductive residential real estate in Canada is a stupid and very unsecure place to put your wealth; even if it wasn’t a manic bubble.

(By the way, I don’t think HAMs are the only ones ignorant of all this!)

#61 West Coast on 05.28.11 at 12:47 am

What do you have when a developer government is in cahoots with a MSM?

We in BC have a government that is trying with all its might to sell this province out from under Canadians. It is obviously going to fail and it is short sighted.

It demonstrates spectacular disrespect for the citizens and if frankly developers and their cronies are cashing in on the naivety of people that only see their property value “increasing”.

This is going to hurt.

#62 Fleabitten Monkey on 05.28.11 at 1:01 am

500 prospective buyers, 26 offers – were these all different bidders or a handful of bidders, or fewer, repeatedly upping each other? Out of 500 buyers, even 26 different bidders would seem a pretty weak wouldn’t it? To me that means potentially 474 people thought the place was garbage. Hardly indicative of a frothy, swarming market.

#63 EJ on 05.28.11 at 1:03 am

Isn’t the concept “buy low, sell high?” All these fools buying at astronomical highs are going to wake up with a severe hangover. I am amazed our government lets this obvious foreign money laundering continue. Canadians, run while you still can.

As a result, I have moved away all of my Canadian investments and savings (sell high). Congratulations, Carney, you’ve just driven another investor away from Canada with your 0% policy. I know your puppet masters dictated this, but you are still personally to blame.

I have come to the conclusion that no majority anywhere will ever realize the proper course of action until they’ve been beaten over the head with the 2×4 of reality. If the majority is telling you something, do the exact opposite in silence. There is no point in warning anyone since they are too brainwashed to listen to reason.

#64 kc on 05.28.11 at 1:06 am

33 Cato on 05.27.11 at 10:21 pm

America’s time will come but not until Obama uses the Fed to buy one more term in the white house.

or until obama topples over the WRONG hornets’ nest… you can’t keep going over seas (Israel) hitting bees with sticks and figure that you won’t get stung….

#65 Devore on 05.28.11 at 1:09 am

And why not Seattle? — Garth

Why not Sydney? Oh, bubble over, right.

#66 TakingResponsibility on 05.28.11 at 1:22 am

Holy crap, people!
Calling for government protectionism???
Restriction of Foreign Investors???
You know, so that We can have a real free market.
Freaking contradictory…

True – Mainland China is second only to the States on the number of billionaires – must be because they are good Capitalists! Uber-Capitalists is perhaps a better term!

But Do Not Fear all you Sam I Am’s – it is highly highly doubtful that “HAM” created or is sustaining this made-in-Canada housing bubble.

Nationalism (irrational fear of Others) + State Protectionist Policies = ?? Oh, I don’t know – is it Free Markets…

Haha….Damn Emotion – really does lead to all sorts of irrational investments and generalizations!!

#67 Gary in Alberta on 05.28.11 at 1:29 am

#25 TaxHaven – Great post and i totally agree with you on the incredible amounts of unlevered offshore funds available for “safe” real estate and “safe” residency, especially in an overpopulated, polluted world.

Thus the Vancouver and Toronto and perhaps to a lesser extent, some other Canadian real estate markets can easily and justifiably continue to increase in price (even substantially) on at least a selective basis.

In some ways it is no different (at least to the purchasers) than gold and silver bugs continuing to buy in even though the price of these metals has gone up in multiples over the past ten years or so.

The Asian/ East Asian demographic in both cities is well entrenched and safe and the culture of the purchasers/ new Canadians can easily be continued.

There is a strong safe education, health care, economic and social system in place for the purchasers and the climate ain’t all that bad.

When one looks around the world at places one may want to “retire” to if one is monied up already the Canadian scene is really compelling so don’t be surprised that this may continue for some time yet.

I’ve been spending quite some time on the thought of expatriating from Canada and in reality find it quite difficult to locate a peaceful place where i would feel comfortable enough. Too many warts on so many of the pigs out there.

The end result may be Vancouver Island/ Victoria as not interested in the hustle-bustle.

#68 reality guy on 05.28.11 at 1:35 am

Let keep this real.

If your young and can’t afford a house in vancouver or the lower mainland. I suggest you go else where.

Because we don’t want your trailer park, poor asses living in this city.

Vancouver AKA the next china.

And Christy Clark thinks raising minimum wage will solve it. Forget it. Its only going to cause wage inflation to add to high property expenses and taxes. all it spells is higher unemployment

GM will move to Detroit good-bye to the Canadian auto industry, there will be more to come as USA get more competitive with Canada.

Got a job offer to go down to Indiana last week, they will actually give me a place to live as part of the 2 to 5 year contract to get me down there. When I told them how much a tear me down was up here, the guys negotiating with me laughed. ‘NO WAY!!’ was what they said.

Several years rent free, huge savings. Something my co-workers haven’t heard of for quite some time. (SAVINGS)

#69 ken s on 05.28.11 at 1:44 am

Good god doesnt ANYONE here read the chinese blogs??

The corruption is so deep, Washington (dc) is a kid zone
by comparison. Chinese peasant farmers have been
dredged of multi multi billions. (in RE scams/seizures/
penny payoffs. The very first Hooker
Billionaire lives in Beijing (have links –& multi links
to all above)

D’ y’all know what that lil Google box is for? I know,
y’all is so rich y’ hire peasants to do that. Have a lychee, dude. (see also Baidu etc etc) Gman runs info
circles around you –and you wonder why.

There are 2 ends to theft: the scammed loser, the scammer (then the SAFE HAVEN) .

Read about parents commiting suicide because the tuition owed was jacked up 5x by University depts
No pay, no Diplo.

The money is fleeing cuz this will end, or the party
is pissed with you, etc

The money is often very dirty dude. Now you have a Reason to not read those blogs. Have a lychee dude.

KenS in La La…

#70 Utopia on 05.28.11 at 1:51 am

“All the video posted here shows is how collections of humans can believe their own bullshit. It’s called mania. And it always ends the same way.”
———————————————————————
Ain’t that the truth.

Miss a day, you miss a lot it seems. My computer went on the fritz yesterday. On my return tonight, a battle of words has broken out it seems.

Even the cursing had begun before the first of the daily posts hit the main page. You are right though, manias lead to bullshit thinking.

I want to call some of these guys scallywags and liars, but you know, I think they actually believe the crap they spew. They really think Vancouver is invincible.

I don’t put much stock in what Global says though.

It is astonishing they have not figured out Vancouver is in a bubble yet, and they are local. The Wall Street Journal on the other side of the continent can see it clear as day though and has commented now that the big Van is in the same company as the most expensive places on earth.

Seems quite a few of the US media have picked up the story lately and I see bits and pieces here and there. They must be shaking their heads in disbelief. You can almost hear it in their words.

Been there an done that. They know the outcome too well already. It is like an R/E death watch has begun too as some commentators settle back in the big easy chair with a bowl of popcorn, Just waiting for the day it finally goes down.

I know I will feel no satisfaction from saying “I told you so” when that day finally comes. But it is inevitable.

#71 Whistle punk on 05.28.11 at 1:58 am

What can you say ? It is the same old shit over again, Global BC rolls in it.

Bring on the crash wipe out everything and we can end all this crap.

The only good thing about Global BC is Robin Stickley she is easy to look at.

#72 obert on 05.28.11 at 2:01 am

The sellers will start listing once the prices start falling – not the other way around. The investors will be the first, and the builders with excess inventory next.Then when supply overwhelms the demand, the prices will go down faster and faster -with debtors defaulting – till a new equilibrium is found. This is like it happened in the US and Europe. No reason for this to be different in Canada.

#73 Islander on 05.28.11 at 2:12 am

Can we settle this once and for all?
Are there really that many Chinese buyers?
Victoria Real Estate Board keeps stats on where buyers are from, doesn’t Vancouver?
Let’s talk data, not TV.

#74 Utopia on 05.28.11 at 2:39 am

#5 Bill Gable

“Vancouver is a an overpriced, pretentious, no culture, sewer.”
——————————————————

Man, you said it Bill. About the only really happy folks there are the hobos living in Stanley Park. Rent free, debt free and away from all the pretentious idiots.

#75 Canuck Abroad on 05.28.11 at 2:56 am

9 / Mr Reality – Be careful holding inverse ETFs for long periods. They are intended as day-trading vehicles. Do your own due diligence of course, but before laying out cash, you should carefully read how returns are calculated and look at some long term price charts when prices for the underlying stay flat. You may be surprised.

Ben Bernanke has even admitted that one of the goals of his grand QE2 experiment was to keep equity prices up. You should not underestimate how long and how hard they will try to prop up this facade. The market will ultimately win because they have repaired none – NONE – of the rot from 2008, ie all the worthless paper on bank balance sheets. The US should have chosen the Swedish solution but chose the Japanese solution instead. And so now we all wait for the inevitable outcome. Personally I am watching for a currency crisis, but as they say the market can stay irrational longer than you or I can stay solvent.

5 / Bill Gable – Totally agree on the Vancouver assessment. Have always wondered if people who pump it have actually lived anywhere else. Vancouver is nice little town for sporty people I guess, but otherwise it’s a cultural wasteland with bad weather. Always amusing to see it lumped into the same sentence as New York, London or Paris…

#76 Jon in Cowtown on 05.28.11 at 3:23 am

Garth: stop bleating, you’re right Sonny Jim, have confidence, the Asian property hunters in the lower mainland are just that, num nuts!! We see it all the time here in Cowtown, agents of the peoples republic buying up crap oil sands properties and then expecting to put them online in a year or two ….. duh…. and pigs fly. The old adage ” more money than good sense” comes to mind. The proceeds from the distribution arm of the peoples republic, aka WalMart, have to to be parked somewhere, we’re just the unhappy recipients.

#77 betamax on 05.28.11 at 4:25 am

#29 Blobby: “It’s ALWAYS global isnt it?!?”

Remax is a major sponsor of Global News, and they get what they pay for.

#78 Genghis on 05.28.11 at 7:50 am

Things must be looking up in Arizona. This palace, which sold US$800K last year, not much more than the current SFH in Toronto. Purchased recently by Sarah Palin for $1.7m.

http://money.cnn.com/galleries/2011/real_estate/1105/gallery.sarah_palin_home/index.html

Nothing is looking up in AZ. Go and see. — Garth

#79 Kaganovich on 05.28.11 at 7:57 am

#75 Canuck Abroad

Your point is definitely pivotal. To me, the Fed is basically the money herder, directing it towards the equities markets through QE/POMO, and then back towards bonds by ending the easing. I think what may be the deciding factor is how much crappy assets the banks were able to unload on to the taxpayer’s back over the past three years, and only when the connected ‘few’ have eliminated alot of their risk will the life support be unplugged. Maybe Garth could write a piece on inverse etfs for the great unwashed (myself included).

#80 T.O. Bubble Boy on 05.28.11 at 8:09 am

Thanks always to Aussie Roy for the links… apparently the Australians are finally starting to get their dose of reality.

I noticed this other article — the 30% increase in defaults in Q1 over Q4:

http://www.news.com.au/money/property/home-loan-defaults-up-as-households-feel-stress/story-e6frfmd0-1226063849927

Interesting fact from this — the proportion of customers at least 30 days late was 1.79%.

Now, Canada’s default rate (according to the Canadian Bankers Association) is 0.42%. The only difference is that this is for 90+ days late vs. 30 days late on payments. The all-time high in Canada was apparently 1.02% in 1983.

http://www.canadianmortgagetrends.com/canadian_mortgage_trends/2011/02/skin-in-the-game.html

So, Australia is about 4x further down the path to sanity!

#81 ottawan on 05.28.11 at 8:14 am

Some (NOT all) Banks are starting to compete with each other on GIC’s. I got a GIC equal to the ING rate at a major bank, just by telling them I was putting my money with an online bank that paid more. AND it wasn’t a large amount… less than $30,000. REMEMBER the posted info is negotiable.

GIC investor = loser. Inflation is 3.3% and your non-sheltered interest is 100% taxable. In that GIC doesn’t pay at least 5%, you are digging a hole. — Garth

#82 Lisa on 05.28.11 at 8:49 am

Our rental ain’t that great…we pay $2,000 a month because we need the space of a whole house, insurance, all utilities. The appliances aren’t very good and the basement is wet.
With those costs, we could have a comparable mortgage.
Boom or bust, it still costs money every month to live.

You have no mortgage debt. No interest charges. All your available capital can be invested for income. You have no property taxes. No maintenance or depreciation. No illiquidity. Get some perspective. — Garth

#83 BoomerBoy on 05.28.11 at 8:53 am

“What really matters is the Bank of Canada, which will raise its key rate this year. Several times.”

By the time the BoC finally begins raising rates, it will likely have been at least a full year (September 2010)) since the last increase. Back then the rate rose 75 basis points in total, and the real estate market shrugged it off.

Why will it be different this time?

#84 Edward on 05.28.11 at 9:20 am

#67
Just like the Mac owners who spout “my computer is diffferent, it’s better, unlike yours” you are up to your eyeballs in it. RE is about demand, not related to any fundamentals in the real world. The motto is used to justify the demand but saying RE is high because of education, stability, climate (? think Siberia) is placing the cart before the horse. The Canada myth is part of the bubble; soon we will be hearing other myths about this country…
Markets and RE move by emotions; “Animal Spirits” (see book).

#85 Bottoms_Up on 05.28.11 at 9:47 am

Nothing is looking up in AZ. Go and see. — Garth
—————————————————–
Not true Garth. Was just in the Phoenix area for two weeks (visiting the parents in a house that cost them $32/sqft).

Weather was D-Y-N-A-M-I-T-E (it was a unique experience consistently waking up every day to comfortably hot weather, blue skies etc.).

Beer was C-H-E-A-P (30 MGD for $19).

Food was C-H-E-A-P (chicken breasts for $1 per; cheese/milk/cream close to 1/2 of what we pay).

Vehicles about 1/2 what we pay in Canada.

AND, the shopping centres, highways etc. were PACKED.

Certainly did not look like a severe recession/depression. In fact I would say the opposite.

Cheap beer and chicken? Do you wonder why? — Garth

#86 Young Old Fart on 05.28.11 at 10:12 am

#5 Bill Gable on 05.27.11 at 8:35 pm

….In case you care – I have some perspective….

================================
Yawn……….

We don’t…..&%@# off….

#87 Imstupid on 05.28.11 at 10:25 am

#21 bottoms up

Firstly I was under the assumption you bought in a major market. Ie Toronto Vancouver. Second I assumed you paid average sfh of 700k. With a 6-9 year gross income value. In saying that Ottawa is special. It’s the capital reccesions rarely hit Ottawa because of all govt agencies. Two types of industries people who work for govt and people who provide services to people who have govt jobs. Both pretty secure. But to go with the numbers here they are. Just because your safe doesn’t mean everyone is like you. If you didnt over spend like most you will probably be safe.

300k price
280 owing
55k equity that’s what it is right
Now asume what you wrote
15% decline. Then add the other cost
5% commission
1500 legal
2-3k penalty
15% decline= about 50k loss
5% commission = about 14k
Legal and penalties gives us a grand total of
About 68k that puts you 12k underwater. It may not wipe you out but most used their homes as ATMs and have consumer debt also so if you bundle the remaining debt and I’m not saying you have any but if you did it’s big trouble. All that debt would no longer be secure so interest rates would not be prime plus 1% with interest only payments. It would have to be bundled up and paid within a 5 year period. It’s not bad unless your income places you into high debt ratio. If it does you would have to pay atleast 8% interest and still need to have money to pay rent and live. I say rent because it’s a hypothetical if you sold of course. If it were Toronto or Vancouver you must double the figures fir Toronto and 2.5 times for Vancouver. So in conclusion it’s not the loss in itself that foces bankruptcy but all the other factors that the majority of people are obligated to. Consumer debt that includes car loans credit card balances and lines of credit plus all those store cards. Add it all up with Canada having a consumer debt ratio of 150 if home don’t continue to rise in value most will be filling chapter 11. Or suffer for 20 years to pay debt. And you will write back something like I won’t sell so no problem. So I’ll answer that now if your home goes under water meaning more mortgage than worth on renewal of mortgage bank will force sale or you ll have to bring cheque for shortage. If I know one thing it’s that the banks don’t like unsecured risk.

#88 RoninBC on 05.28.11 at 10:26 am

Someone please send the HAMs up here to the Okanagan. RE market is absolutely dead! You rarely see “sold” signs. Properties sit and sit and sit.

#89 Abitibidoug on 05.28.11 at 10:28 am

I’m missing something here. if prices have gone this high, why isn’t there a flood of new listings by people eager to cash in on big gains? If you bought your house in Vancouver area many years ago and have a small or no mortgage, you have a winning lottery ticket and should cash it in. Take that big wad of cash, invest it, move to some economically depressed area where housing is cheap, retire and live on Easy Street. Isn’t it strange how every week millions of people buy lottery tickets for an unlikely chance of winning, but people who have the equivalent of a winning ticket don’t bother to cash it in?

#90 FranSix on 05.28.11 at 10:37 am

Chinese buyers are taking advantage of their foreign exchange advantage, which is a pegged Yuan to the U.S. dollar, which they are putting into hard assets.

There’s so much of buying up of anything remotely resembling a hard asset,(including other currencies) that this contributes to weakness in the greenback.

You would have to look into the process of exchanging Yuan for $CDN assets to make sense of it. The price is up, so they are actually losing on the foreign exchange benefit in the long run.

#91 Painted Toenails on 05.28.11 at 10:53 am

Calgary Car Guy – enjoyed reading your post. Always interesting to hear what the salesperson who actually talks to customers has to say, not the ‘spokesperson’ for corporate Canada.

I’m seeing it here too. Small decreases in spending, delaying purchases, more comparison shopping. I have had quite a few ‘big’ customers for years. They, like me, like technology and always want the best, newest stuff. They still do, only now they might buy it for themselves and one or two more senior people. The other staff members are outta luck, making do or even worse – having to turn stuff in. No more freebies on the company.

We are in Southern Cali looking at houses this week. Niiice. The locals say the temp here right now is 15 degrees cooler than usual.

We laughed. We’re Canadian. Driving the PCH, top down, tunes up and the sun on our faces. 26 degrees at some points yesterday.

I’ll let you all know if we buy something…..stay tuned.

#92 ontheshoreline on 05.28.11 at 10:59 am

Ed,I have a Mac and PC.
The Mac(and the ipad and the ipod)kicks the PC’s ass.
The PC is there only to run some very specific marine electronics software that is only available in windows.
Sorry off topic but I do love my Mac.

#93 April on 05.28.11 at 11:00 am

Does the US have stronger restrictions on foreign ownership?

#94 TurnerNation on 05.28.11 at 11:24 am

US Yield Curve vs. S&P 500 animated historical chart.

Fun. Click on the Animate button.

http://stockcharts.com/freecharts/yieldcurve.html

#95 Ronaldo on 05.28.11 at 11:28 am

I also remember the rush to buy Cabbage Patch Dolls (at any price). Also recall vividly what happened in the period between January 73 and September 74 when houses were selling before the sign was banged into the lawn. Bidding wars back then too (all realtor driven) and sucking people in like there was no tomorrow.

That period saw houses in West Vancouver double and then crash 30% overnite in the fall of 74 and melted down even further from there. It wasn’t even an increase in the interest rates that did it. It was simply the Arabs putting an embargo on oil and driving the prices up and creating shortages where people had to line up for hours to get gas.

And then came runaway inflation and wage and price controls. If this thing that is going on right now were to be investigated, we would likely discover some very interesting scams as was the case back in the early 70’s.

I believe something similar is taking place right now. Doesn’t matter anyway because by fall, this whole thing is going to be unravelling so fast that it will make your head spin. Mainland Chinese or NOT. Wait and see. Garth is absolutely right.

#96 Ben on 05.28.11 at 11:30 am

The Chinese love to gamble, ever go to a Casino?

#97 JohnnyBGood on 05.28.11 at 11:30 am

@ 51 BondGuy

Good reply. I’ll try to address your points. Forgive the length.

As I said in other comments, I think MMT has merit, but I do not necessarily accept all of MMT’s assertions. I’m still learning about it.

Yes, credit is issued everyday by businesses and individuals–and in very large amounts, in aggregate. And yes, our economy does rely heavily on this credit to keep businesses, well, busy.

A couple of points about this:

First, a technical nit. When a corporation issues commercial paper, they are not extending credit, they are borrowing money. Commercial paper is just a short-term, unsecured IOU. People who buy commercial paper are using existing money to do so. No new money is created.

(I’m guessing the reason commercial paper is included as “broad money” is because, otherwise, the money used to buy it would technically have been destroyed as it is when a bank loan is repaid.)

Second, when a business or individual issues credit––to a customer, for example––no new money is created. There is a new liability on the part of the customer, yes, but it’s based on existing money. Even if the chain of credit extends all the way back to a bank, it was the bank that created the initial money that the company used to extend credit to its customer. The company did not create new money in this deal.

Only chartered banks and trusts (I believe), and central banks can actually increase the debt money supply.

Banks create new money via loans. A bank loan is the borrower’s liability and the bank’s asset. Central banks create new money reserves in order to buy gov bonds. These reserves are the liability of the central bank.

(Yes, they technically borrow from themselves in order to lend money to the government via the dealer network. Nice trick. In actuality, we the people pay for this new money in the form of inflation. No free lunch–– not for us anyway.)

The reserves are the CB’s liability, the bonds are its assets, and the reserve money is used by banks as the base for loans. Though as you point out, in some countries banks don’t need reserves to lend money. But you still need the CB to create the money that is used to monetize gov debt. They use these mechanisms to add or drain liquidity from the system as needed.

This new money is used to expand the economy, and yes, it is created out of “thin air” because the money comes first, the wealth that is used to pay it back comes later.

Some see this as a fundamental flaw, and advocate for a commodity money system, like a gold money standard. Because, technically speaking, in a gold money system, new wealth must be created BEFORE new money can be created. People use surplus income and savings rather than debt to invest in wealth-generating productivity.

I’m not a gold money advocate, I’m just saying.

#98 gus on 05.28.11 at 11:32 am

Mr.Garth
You are very right about the this very wrong market.
been waiting for a while to purchase a simple house in gta, but it seems impposible.
I have a good job with a good salary, but even though it is very hard to buy teardown house in this bidding war RE.
It looks like a black market controlled by the banks and influx of rich people.
the global economy is crashing where canadian RE is out of this planet.
In other word the hard worker canadian can be a house dreamer but not a house owner . Very sad.

#99 Dr. WAYNE on 05.28.11 at 11:34 am

Isn’t human nature confusing … why is it that the same people who would scoff at the May 21 end of the world bull sh++, will run headlong into believing the Global piece. Stupidity, I guess, comes in many forms.

#100 BrianT on 05.28.11 at 11:46 am

#89Abit-What you are missing is that the owners of these properties are not single guys-if they were they would have cashed out. Generally speaking, women will not happily live in economically depressed areas even if (or especially if) they have millions of dollars-by and large that is a male aspiration. Women want to live where RE is expensive. This is partly cultural and partly genetic.

#101 Bill Gable on 05.28.11 at 11:48 am

The ONE person that was to see our overpriced condo – evaporated. Agent called this morning and told us that the lookie too was sick – “can I come over and take come pictures”? (*This genius should have done that about what, five weeks ago?)
The word ‘real estate agent’ does not mean this person could even sell water to a man dying of thirst – it just means that they can con enough people into giving them a TON of money for doing nothing more than putting up a sign and driving around in their BMW.

Prediction – a lot of RE twits are going to turn in their license.

The Lawsuit on-going in Toronto should be interesting.

#102 mousey on 05.28.11 at 12:15 pm

#28
Yup, sell Vancouver to China. Very funny. Lots of sold signs here in rarified Vancouver west side. Now seeing houses that sold about a year ago, being listed again. Likely the flippers at it again. It is like watching a film loop in my neck of the woods. Bung listed, sold quickly, orange fencing around the trees, dozer shows up, house pushed over, foundation poured, ginormous house slapped up, insta landscaping in, for sale sign up again, sold sticker pasted on. Rinse and repeat. Went for a wee walk with my son and we counted 10 tear downs within the first 30 minutes. We stopped counting after that.

On the matter of interest rates, I have to say I’m getting annoyed that they haven’t been raised. Senior folk relying on interest for income and responsible savers are being punished for the debtified masses who have gorged on cheap rates and wobble on the edge of the financial ruin. Can we please quit stoking this engine and raise the rates already?

#103 AG Sage on 05.28.11 at 12:21 pm

>#90 FranSix on 05.28.11 at 10:37 am
>Chinese buyers are taking advantage of their foreign exchange advantage, which is a pegged Yuan to the U.S. dollar, which they are putting into hard assets.

I’m pretty sure the Yuan (for the moment, anyway) is pegged too low. That is a foreign currency exchange DISadvantage for these buyers. The Yuan is kept DEvalued to keep exports pumped up.

Chanos in an interview the other day said, however, that it is become a question of which direction the yuan would move were it allowed to float. So, there is that. But that’s a highly contrarian opinion. The general opinion is that it’s an artificially weak currency.

#104 Canuck Abroad on 05.28.11 at 12:23 pm

99/ Dr Wayne – It’s called the optimism bias and it is not stupidity but it is human nature, and coincidentally it is the cover story on this week’s Time magazine…

http://www.time.com/time/health/article/0,8599,2074067,00.html

People will believe the Global piece because they want to think their house will be the one to sell for twice what they paid, their investment portfolio will be the one to earn 50% per year, just like people believe their governments will make things better, their banks are honest, their tenants or customers will always pay on time…you get the picture. End of the world stuff is just so gloomy.

#105 MSM bias on 05.28.11 at 12:26 pm

One Global news producer lives on a block in Vancouver that BC Assessment values properties at between $1.5 to $3.5 million.

Go figure.

#106 BrianT on 05.28.11 at 12:30 pm

#103AG-Using economic trade theory, the Yuan is priced accurately-China has balanced trade right now-importing about as much in dollar terms from a group of countries as it exports to Europe and North America.

#107 BondGuy on 05.28.11 at 12:37 pm

JohnnyBGood in #97 wrote:
“(I’m guessing the reason commercial paper is included as “broad money” is because, otherwise, the money used to buy it would technically have been destroyed as it is when a bank loan is repaid.)

Second, when a business or individual issues credit––to a customer, for example––no new money is created.”

First: I take it you have never settled for a security purchase in a brokerage account with the “sell money market fund” option. If you do so, you just bought something without involving the banking system. Your broker may use the settlement system, but they only settle net amounts at the end of day, not on a per-transaction basis. In the U.S., I believe you can write cheques against money market funds (at least you could). Because of this, money market funds – which hold commercial paper – are considered money in measures like M3.

Second: accounts receivable can be rediscounted. In other words, they are part of the money market, and can be viewed as functionally equivalent to money in the bank, or government obligations (notes, coin, TBills). Also, accounts receivable are vendor financing, and if they are short term, are pretty much cash equivalents.

Historically, businesses operated by netting out credit obligations, either by exchanging goods and services, or else rediscounting others debts. The privileged position of banks in the settlement of debts is a recent phenomenon (post 1800s).

#108 Sunny on 05.28.11 at 12:44 pm

Cato
“but I rarely see the message passed on by the likes of Global. The cautionary warnings are consistently drowned out by this sort of fluff reporting. Who you gonna trust, the govenor of the bank who actually sets interest rate policy and has vested interest in economic health of the country – or someone newly arrived who lived entire life under authoritarian regime that suddenly thinks they have western capital markets all figured out. The herd in Vancouver seems to be choosing the latter.”

Nicely put!!!

#109 realpaul on 05.28.11 at 12:52 pm

I have pointed out in the past the ‘lemming-like’ behaviour of the Chinese culture. It manifests itself in auto purchases and even….restaurants….school districts. It is very much a ‘dim sum’ phenomenon where whispers whirl and not to be out gunned…the herd rushes in the direction of any ‘action’. Welcome to the wacky world of Chinese culture……..mini vans one year…….Camry’s the next….one dim sum palace is hot……then it’s not.

Given my knowledge of the goings on inside China……IMHO…..the foriegn invasion aquiring real estate on spec will only abate when our own government introduces legislation to curtail it…..as so many other countries have done.

Hoping the deluge will simply ‘go away’ is to base ones premise on historical Canadian population and economic dynamics. Keep this in mind…….there are thousands of cities in China with populations above the gross number of citizens in Canada….including the hundreds of thousands of ‘passport of convieniance’ holders. The billion and a half Chinese nation has to make you understand that the deluge doesn’t function on the same paradigm as the norm for Canadian demographics. These are foriegners remember……not Canadians….buying real estate on spec.

#110 debtified on 05.28.11 at 12:55 pm

Had lunch with my brother yesterday. He’s in the home renovation business serving Greater Vancouver Area. I asked how’s life and work. Right off the bat he mentioned the place he is renting is for sale by the bank. The owner declared bankruptcy. The house was purchased at over $600K in 2007. It is now for sale for over $400K.

The owner is not concerned. He has collected so much money via HELOC (and Credit Cards) and sent them back to Asia to build a house and a business for himself. He’s heading back home.

Then my brother proceeded to talk about how well his renovation business is doing. There are lots of renovation work to build rental units within an existing house (including garages and sheds to rent out). The homeowners could not afford their mortgages. SFHs have turned into MFHs. This is very common in GVR. HELOCs, LOCs and CCs have become a regular source of funds for essential expenses because the income from employment is simply not enough to cover all of the living expenses. One CC pays the other and that cycle continues until the ceiling is reached. Most people are stressed out by the situation but seems to have gotten themselves into a slippery slope they couldn’t escape from. The house, the biggest expense, is always the last one to go.

In this blog we have people with opposing views argue about whether there is (or isn’t) subprime mortgages here in Canada. I am surrounded by people (up to two degress of separation) who have mortgages they can’t sustain. To me, that is proof that banks have loaned more money to people who cannot realistically service the debt. That is subprime.

#111 FranSix on 05.28.11 at 12:56 pm

@Yuan Pegged ‘Too Low’

You don’t want a Yuan pegged much higher, because that will cause the immediate collapse of the peg, which is bound to occur at any rate. As long as the dollar keeps declining, it staves off the inevitable. Ask yourself why the Chinese are just so damned anxious to swap currency for another asset. Its like the Vietnamese Dong in that respect, but a much huger macroeconomic.

Depeg the Yuan, you’ll get the same result as the Thai Bhat during their real estate collapse. But moreover, you’ll get asset deflation in just about everything the Chinese have been throwing money at.

#112 Daisy Mae on 05.28.11 at 1:01 pm

Well, this present situation is quite disgusting…and it’s easy to sense your anger. I’m angry, too! What the hell is WRONG with people? Whew!

I know a couple with a ‘tear-down’ in Richmond who have set their price and do not intend to budge….while we all watch sales diminish. Good luck to them. I don’t have a speck of sympathy.

#113 Edward on 05.28.11 at 1:03 pm

China’s Ghost Cities
Check out this video http://www.youtube.com/watch?v=rPILhiTJv7E
Chinese house flippers are spreading their wings; it is the house lusty who create the illusion they are buying into some kid of Canadian dream.

#114 Edward on 05.28.11 at 1:06 pm

Add to the China bubble illusion…
This is a country run by a propaganada machine; they have spent the alst half century creating, perfecting, and believing in their various propaganda and now it turns to housing but, more than communisim ever did, other countries are buying the illusions.

#115 Where's the money Guido? on 05.28.11 at 1:19 pm

RE: #110 debtified on 05.28.11 at 12:55 pm

That seems like the ultimate scam. Buy a house (or 2, 3), max out all the houses via Helocs etc., then send the money back home, bankrupt yourself, and bolt the country to let us dumb Canuck taxpayers pick up the tab. No wonder we’re getting inundated with the Chinese, they’re stealing us blind legally !!!!!
What a perfect scam.
What recourse do we have (even with recourse mtgs.), if they no longer live here? Would we be able to track the money being sent back. I doubt. We’re huge suckers and the world knows it, that’s why theyr’re coming here.
I hate our gov’t for letting this happen.

#116 maxx on 05.28.11 at 1:24 pm

Either markets (all of them) come down to reality or currencies end up devalued. Horrible prospect when wages are declining.
Tomorrow’s cheaper dollars will not come soon enough to solve economic problems the way politicos wish.
There is rarely a good time to undertake a course correction, however the longer central banks wait, the longer the increasing pain will endure.
Raise rates now.
This will push unstable, greed-based money behaviour out and usher in what makes Canada so fiscally admirable at the grass roots level.

#117 Westsider on 05.28.11 at 1:24 pm

This is Brian Yu in today’s Vancouver Sun -“Consistent with elevated bankruptcy filings, the subdued labour market, and increased strain on household finances, there has been an upward trend in mortgages that are in arrears.

Based on data adapted from the Canadian Bankers Association (which includes information from chartered banks) approximately 0.47 per cent of B.C. mortgages were in arrears for three months or more on a seasonally-adjusted basis in February. While these figures are low, and well below highs during the late 1990s and early 2000s, the proportion in arrears has been significantly higher since the recession and into the recovery phase. Before the recession, this measure hovered in a range of 0.15 per cent to 0.20 per cent.”

#118 Daisy Mae on 05.28.11 at 1:45 pm

“To his credit Carney has been consistently raising the alarm bell ….”

Too little, too late.

These three — Harper (the economist), along with his cronies, Flaherty and Carney — are largely responsible for this mess.

#119 betamax on 05.28.11 at 1:56 pm

#110 debtified — thx for the info about renovations. A friend of mine in the roofing business says roofing is dead now, so owners seem to be spending their HELOC money on building suites rather than roofing.

The savings rate has been negative in BC for ten years, and I suspect it is grossly negative in the GVRD. I make more money than most, and I would hate to pay the bills these people must endure monthly.

#120 Ottawa on 05.28.11 at 2:20 pm

Hi,

Just a curious question. Do banks offer same mortgage service/rate to foreign real estate buyers in Canada? If Yes, Does CMHC insures them?

#121 JohnnyBGood on 05.28.11 at 2:50 pm

@107 BondGuy

Excellent. Your knowledge of finance is impressive. However…

I am not, nor was I ever, arguing over what types of financial liabilities or assets are defined as “money” in the various monetary aggregates, or in what constitutes the money markets. Nor did I say that financial transactions must always involve banks.

(RE: “sell money market fund” option. All you’re doing is settling a trade by using money from a fund you already hold. I don’t get your point.)

What I’m talking about is where NEW money comes from. How money is actually created in a fiat debt money system with a monopoly currency. Like ours.

It speaks to what is happening today; why commodities and energy are through the roof; why wages aren’t going up; why the big money centre American banks and Wall Street are swimming in cash even while they are actually insolvent.

And, fundamentally, why Canada has a housing bubble.

#122 Mikey the Realtor on 05.28.11 at 3:10 pm

The Chinese and Italian dementia is unstoppable folks, DA and I can’t shake these 2 off our backs. They are walking in with suitcases of money trying to buy up anything made of brick. Vancouver and Toronto are the next Monte Carlo, Monaco. You heard it here first. Anyone not getting in now is being priced out as we speak, Vancouver Bear has now come to his senses and realizes that he needs to get in NOW or he is out forever. Who is next?

#123 Felix Seto on 05.28.11 at 3:15 pm

My parents own half of kits and I plan to own it soon. I pay no rent and take hand outs from my mommy and daddy. i have no balls, but I have more money than most of you.

#124 Jim on 05.28.11 at 3:33 pm

Shocking how little the average homebuyer or seller knows about the Mainland Chinese home buyers.

#125 deep thinker on 05.28.11 at 3:34 pm

regarding 41 Jsan

I think your wrong – indeed I think we have a fairly brilliant government that’s learned a lot from how “some groups” tend to act by studying Japan from the late 70/ early 80. Most of you are too young to remember that the US MSM was lamenting the *loss* of such properties as the Rockefeller Center or Pebble Beach golf course to the Japanese (or VG’s “Sun Flowers” for that mater). The feds have help pushed up the country with tremendous inflow of capital, all eventually taxable, made a lot of ma and pop “50K a year types” millionaires and kept a lot of people busy (i.e. employed in the “free market” not the “government” market. A few Canadians will get hurt in the eventual correction, but in the mean time it’s been a hell of a good party. And as I remember both the Rockefeller Center and PB were bought back for around half of the previous sale price. No doubt after China crashes, Ma and Pop will be buying back, post crash, at an even better “spread”, my guest about 20 cents on the dollar. What a great way of fleecing the foreign “investors”. It’s sort of like a mining stock boiler room blown up to the federal level. Bring a million, we won’t ask how you got, and you too can live on gold mountain. Sure some Canadians will get hurt, but what’s a few bankruptcies here and there, considering all the fun we’ve been having over the last few years! They say 20% of GDP is construction related- too bad it’s also highly cyclic. I suggest getting out of those great high dividend “strong” Cdn bank stocks and then you too can play the game of buying 20 cents on the dollar, when the s……

After all, does anyone really serious believe Vancouver is the best place on earth – hell I rate it on the same scale as Belmopan, Belize.

#126 TurnerNation on 05.28.11 at 3:36 pm

What’s all the fuss about. We can easily resolve that thorny ‘O Canada’ issue – the line “God keep our land….” – by changing it to read:

“Garth keep our land”

#127 BoomerBoy on 05.28.11 at 3:48 pm

When it comes to house porn, I’m reminded of the movie “Full Metal Jacket”, especially after viewing the video.

“Me so horny…me love you long time.”

#128 Mark on 05.28.11 at 3:59 pm

Living in Vancouver makes me somewhat of an authority on real estate. What the news story isn’t telling you is that West Van is THE most expensive market in Canada…always has been. Even if prices crash in BC, a cheap house in West Van would then sell for $1-million. In the less expensive markets of the Lower Mainland and Fraser Valley if you could find a house for under $500,000 you would be a hero…at least this is somewhat true for early 2011. West Point Grey is another neighbourhood where dumps for houses are selling for $1.5-million…didn’t see a story on that on Global. If there’s one knock against Vancouver, the Lower Mainland, and the Fraser Valley, it’s the expensive real estate. Other than that it’s still the best part of Canada in which to live…certainly can’t beat this climate :-)

#129 BondGuy on 05.28.11 at 4:43 pm

JohnnyBGood “(RE: “sell money market fund” option. All you’re doing is settling a trade by using money from a fund you already hold. I don’t get your point.)”

You just settled a transaction via the use of money market fund – which is just a collection of commercial paper. Money is what you use to settle transactions, and so we can see that commercial paper is private money. At no point during that transaction did you need money in a bank, or government issued paper.

“What I’m talking about is where NEW money comes from. How money is actually created in a fiat debt money system with a monopoly currency. Like ours.”

Almost every transaction between businesses in our economy is instituted on a credit basis. Those receivables are the equivalent of bank loans (but without the regulatory or legal overhead). And they are “new”: they can come into existence even without either entity holding any fiat currency or bank deposits. Yes, they are typically settled via the banking system, but that occurs later – hopefully after the product purchased has generated cash for the payment.

I agree that government money is at the base of our system (along with banks that are backed by a central bank). But you cannot ignore the web of private money that lies on top of that base; that is where most of the action is – at least when there is confidence in private money.

For example, despite the growth of mortgage debt, mortgage loans on bank books are not really growing – they are in fact being ultimately financed via securitizations (Canada Mortgage Bonds). Therefore, it’s not really correct to say that there’s a lot of money creation going on. (Well, money is being created when the initial loan is made, then destroyed when the securitization is done.) And in all of these transactions, there is almost no interaction with government base money.

#130 Been There, Done That on 05.28.11 at 5:04 pm

“The market is being driven by mainland China.”

In what universe does it make sense to allow a communist state to drive up our cost of living? At some point the policies that result in HAM will end, and prices will once again be based on what the locals can afford.

In the meantime, Canadians are forced to pay higher property taxes so foreigners can manipulate our economy.

How can people not see this? It’s like the old Roadrunner cartoons where Wile E. Coyote has already gone over the cliff but doesn’t realize it until he looks down.

#131 renters rule on 05.28.11 at 5:27 pm

Um, I am thinking Chernecki is in a conflict here? He has a house in West Van (shouldn’t he have to disclose that?). I know, because I used to rent a little house in Eagle Harbour, the same neighbourhood Teddy lives in…..(although he lived blocks further from the beach, and on the other side of a hill, putting his entire street in shade except for the early hours in the mornings, but at least he can tell people he has a houe in wv)…and where Teddy would let his large dog run amuck, including yes, relieving its massive bowels on our front lawn (no poop scooping for our entrepid reporter!). One day I caught them in the act, told him off… he shrugged and walked away… thanks Ted!

I moved away in 2006, but I was living the high life, renting a small 2 bedroom house a block from the beach for $1500 a month in a neighbourhood of $1 million+ homes. The light bulb was definintely on at that point… and that was FIVE YEARS AGO…..

#132 charles on 05.28.11 at 5:38 pm

Garth; sometimes I think you dont fully understand people other than Canadian people. I will give you an example: close where I live, houses are now 620K-810K and you see several families living in one house. People will do what ever it takes to keep their homes. Mr Bush after 9/11 thought going to middle east was going to be piece of cake. He did not fully understood people, underestimate them.,,,..I see lots of Indians, Middle east and chinese people where I live.

You have an interesting mind. — Garth

#133 Jody on 05.28.11 at 5:51 pm

We will have hyperinflation, it will nail us good. I found a great article on zerohedge, good stuff.

http://www.zerohedge.com/article/guest-post-economic-death-spiral-has-been-triggered

The yanks and the euro trash are in a race to the bottom and we WILL be affected by this, big time. You will wake up one day soon, go to your bank and not be able to withdraw YOUR money. Any food that I use a lot of I am stocking up on now, hyperinflation will nail us. Just look at your grocery bills from the past year, milk is up more than 100%, how is that not hyperinflation? People will deny, deny, deny, retards.

You have no idea what you’re talking about. But good luck hoarding tuna and toilet paper. — Garth

#134 Linda on 05.28.11 at 6:10 pm

China already owns the U.S. and Canada. China has bought 49% of the dirty Alberta tar sands. They own pretty much, all of Vancouver. They own our BC timber. China has trillions in U.S. T-bills. China just has to play along with any governments in the worlds, greedy and corrupt politicians. Canada and the U.S. handed them our industry, for cheap labor, and even cheaper child labor.

The citizens of this country, are becoming more poor by the day. We can’t support our small businesses. In BC big businesses, all lined up at the trough and squealed for the HST. Utility company’s are now squealing, because, we have had to cut down on heat and hydro.

Underground co-ops are thriving. Underground tradesmen are thriving. I save $3000 on my bath room reno, through the underground. Every community, must be able to feed all of the people, with a hundred mile radius. Some people are even using hay burners for transportation. We have gone back to WW11, people are all planting victory gardens. We intend to cheat greedy businesses, out of every cent we can.

#135 Tripp on 05.28.11 at 6:25 pm

#122 Mikey the Realtor on 05.28.11 at 3:10 pm

“Vancouver and Toronto are the next Monte Carlo, Monaco”

Mickey, obviously you have never been there. However, in the age of fast online searching ignorance is not an excuse anymore. A three minute investment would help you avoid being an embarassment.

#136 kits on 05.28.11 at 6:46 pm

not taking a view … but the CDN bond market (BA futures market) is not pricing in aggressive hikes … pricing in a 25 bp hike by the end of this year and 75 bps, cumulative by Spring 2012. Carney’s language lately has been very dovish …. concerned about C$ appreciation and European debt situation …. do not overstate the magnitude and impact of potential rate hikes.

#137 Daisy Mae on 05.28.11 at 6:55 pm

NFN_NLN on 05.27.11 at 8:53 pm

“People, Rose Li is a cunning investor and sharp as nails. Look at the way she carries herself, she oozes charisma and talent and she ought not be contradicted. Of course she deserves 3 houses worth a million a piece. Show me one other person that is more deserving and I’ll show you a fool. It all makes sense.”

It does not make sense. Isn’t she just a ‘greater fool’? She got caught up in bidding wars — the prices she’s paid for those houses are not sustainable. How many times do we need to be told?

#138 Daisy Mae on 05.28.11 at 7:12 pm

on 05.27.11 at 9:41 pm

“Garth, when you have the choice of paying over C$1m for a CONDO in Shanghai, Guangzhou or Beijing (let alone here in Taipei), a SFH in West Vancouver is CHEAP, CHEAP, CHEAP.”

Not by Canadian standards. And in Canada, that’s what counts.

#139 lesser-fooled on 05.28.11 at 7:26 pm

Just look at your grocery bills from the past year, milk is up more than 100%, how is that not hyperinflation? People will deny, deny, deny, retards.

______

I wonder if Garth knows that they changed the way we calculate inflation in the past years which makes the 2-3% numbers a real joke.
Has anybody seen a price reduction on their grocery bills, on rent, on houses or on gas prices?

The real inflation rate is 8%
http://biglicknews.blogspot.com/2011/01/real-inflation-rate-is-8.html

Not in Canada it isn’t. In any case, hyper-inflation is not even on the radar. — Garth

#140 Daisy Mae on 05.28.11 at 7:29 pm

Cato “My strategy is wait for fear to once again take hold of the world, then grit my teeth and move back in. The stage will be set for more intervention by central banks, driving up equities and commodities once again….”

Well, anyway….I have an excellent advisor and am just hunkering down and feeling protected. It is all very scary!

#141 Cato on 05.28.11 at 7:32 pm

#24 BrianT – I think Greenspan was blinded by ideology. Carney may suffer the same affliction, he spent alot of years at Goldman Sachs. Time will tell.

The most dangerous economic ideology in Canada is belief the country requires a weak currency to compete. We are going to face a choice in not too distant future. Let the CDN float freely, or intervene and attempt to chase the USD down. Will gov’t rob canadians of their standard of living in a vain attempt to save a few manufacturing jobs – or will free market be allowed to pick the winners and losers. Once we see the loonie approach 1.10 I think the political scrambling will start to begin.

#142 Hoof Hearted on 05.28.11 at 7:36 pm

OTHER scam via Govt’s……

COLLEGE (aka Higher Education) CONSPIRACY…

http://www.youtube.com/watch?v=VpZtX32sKVE&feature=pyv&ad=6739540474&kw=politics

Seems to be a parallel universe with RE…

#143 Tom from Mississauga on 05.28.11 at 7:40 pm

The Chinese Investor was struggling to pretend she actually had an accent. First language was English. Totally fake.

#144 jess on 05.28.11 at 7:46 pm

some more on the “rich” chinese getting ripped off by
“education” agents

China Rush to U.S. Colleges Reveals Predatory Fees for Recruits
By Daniel Golden – May 22, 2011 12:01 PM ET
China Rush to U.S. Colleges Reveals Predatory Fees for Recruits
By Daniel Golden – May 22, 2011 12:01 PM ET

#145 Daisy Mae on 05.28.11 at 7:49 pm

Utopia on 05.28.11 at 2:39 am#5 Bill Gable

“Vancouver is a an overpriced, pretentious, no culture, sewer.”
——————————————————

“Man, you said it Bill. About the only really happy folks there are the hobos living in Stanley Park. Rent free, debt free and away from all the pretentious idiots.”

That’s a little harsh. I was born/raised in Vancouver and still hold a soft spot for it. It is a beautiful city. Maybe some of populace leaves something to be desired — politicians included — but don’t paint the entire city with the same brush.

#146 wetcoaster on 05.28.11 at 7:55 pm

Good luck Miley the realturd. Big price cuts in Victoria the past week means the fools here are cutting bait fast while the Asian idiots with their dirty money keep Global in the news bizz. A few of the upper $800-900 K’s were slashed by a hundred grand each.

This is the prime time of the season where the greedy wake up and have no choice but to begin hacking and slashing, and it has started in earnest in the garden city.

Have a nice summer Miley, Burger King needs your help.

#147 TaxHaven on 05.28.11 at 7:59 pm

#124 Jim, SO TRUE. But I feel somewhat of an expert: I’ve lived there 20 years. I’m married to one. We just bought a house in Canada with cash. We bought it partly for the schools. No, we don’t want Canada’s social welfare programs: in fact, we wish we didn’t have to pay in to them.

The Chinese are NOT an invading yellow horde, ignorant of “bubbles”, or unfamiliar with capitalism. In fact, they have more of the latter – wild west style – than does North America. And they really do believe, if you need a massive loan to buy, you can’t afford it…

Chinese buyers won’t “support the market”, but they will hold up certain high-end segments (NOT Saskatoon, or Hamilton, or Kenora) for a long time.

#148 Nostradamus Le Mad Vlad on 05.28.11 at 8:07 pm

-
Credit where credit is due, and congratulations to Barcelona.

They played so well in the UEFA Champions League Final today, beating Manchester United 3-1, they were reminiscent of the Habs in the ’70s and the Oilers in the ’80s, using their tic-tac-toe passing diamonds.

Move on to next year!
*
Attack Of The ZombieSheeples The article says move out to the country.

No Roses Where did GW go?

Pakistan The US is pushing its luck, as China has said an attack against Pakistan is viewed as an attack against China. And this. US$32 Billion How many schools, freeways or suburbs could have had major facelifts with this money?

UN Is it the US$, UN, NATO, CFR, WTO or anything else that’s on the verge of collapse? Expensive Gas is keeping people home, which is what TPTB want anyway. 2015 – An interesting year, for more than one reason.

Narcolepsy from swine flu vaccine.

Near Fukushima “Remember that while attention remains focused on Fukushima, there was a major release of radiation near Ibaraki which has never been officially acknowledged or explained.Ibaraki, specifically the Tokai Nuclear Power Plant and the JCO Nuclear Fuel Processing Facility, are also in the direct path of Typhoon Songda.” wrh.com. Tokai.

Egypt Permanently opens Gaza’s borders after four years. Globalist strategy of using tension. I’m not tense!

#149 Bill Gable on 05.28.11 at 8:17 pm

Update on “condo sale”. The ONE person in four weeks that has shown any interest, was “sick”. So the bright realtor came and took pics. (*We are renters = scum).

So, playing mini Garth – I said ” how’s the market” – nary a beat – “Real Estate always goes up”.

I paused. “Live here in 1980-81 – I asked”, butter not melting in my mouth….”prices crashed 55-65% in 18 months”. (*This person probably was about 2).

Suggest that if you have a license maybe you should know what the hell you are talking about – as you can imagine, she would be the last RE person I would talk too, much less sell our home.

Do it on craigslist.org and get a greta Notary – simple.

People are liars. They can’t face truth. Vancouver is about to be destroyed.

#150 Dom on 05.28.11 at 8:34 pm

People think they smart buying houses and then renting it out. The sad part is it just breaks even at 2.25% interest rates. Don’t want to go into details but 35 year mortgage and a $470000 with $20K is $1550 at 2.25% and can be rented for $1600. Is it me or is this place cash flow negative? They think they are so smart.

#151 chubbychops on 05.28.11 at 8:50 pm

Garth,

My husband is an avid fan of yours and is glued to your blog daily. We are presently in the People’s Republic of China where the Great Firewall of China allows your blog to come through but none of the photos of anything Chinese, including empty Chinese cities and today’s blog photo. Just thought you should know that the Chinese censors read your blog!

How about the pictures of fat white chicks? Do they make it? — Garth

#152 TurnerNation on 05.28.11 at 9:54 pm

At the new Ritz Carlton residences in Toronto there are 13 units for rent on MLS…from $5000 to $20000 per month range :-?

http://tinyurl.com/3gyrk6d

#153 DJH on 05.28.11 at 10:17 pm

#145 wetcoaster on 05.28.11 at 7:55 pm

#145 wetcoaster “Big price cuts in Victoria the past week means the fools here are cutting bait fast while the Asian idiots with their dirty money keep Global in the news bizz. A few of the upper $800-900 K’s were slashed by a hundred grand each.”

Wetcoaster, you’re cherry picking information in order to make a point. House in my Victoria neighbourhood just sold for $1,215,000. Asking price was 1,250,000. It was on the market for about two weeks.

#154 45north on 05.28.11 at 10:23 pm

Hoof – Hearted: talking about the house in Vancouver listed for $1.2 million and sold for $1.5 million: it would be quite easy for a party or parties to rig a sale

yeah it would

Bill Gable: Update on “condo sale”. The ONE person in four weeks that has shown any interest, was “sick”. So the bright realtor came and took pics. (*We are renters = scum).

yeah the bright realtor would make you feel déclassé Thanks for the update.

[email protected]

#155 BC Bring Cash on 05.28.11 at 10:25 pm

“everyone wanted tickle me Elmo”
How about the Cabbage Patch Kids of the late 1980’s that were going to be worth a fortune. When they were available at a retail store people would trample each other to get one. What are they worth now? Bugger all I suppose. Just like a lot of our RE that is being flogged lately as a can’t loose investment.

#156 Mikey the Realtor on 05.28.11 at 10:30 pm

#134 Tripp

I was talking pricing, was that so hard to understand? obviously

#145 wetcoaster

It sounds like you taken over the tone of Junius, I’m just going to take a wild guess and say that you’re his twin inadequate brother or his bunk buddy occupying his mother’s basement.

#157 Hoof Hearted on 05.28.11 at 10:53 pm

#129 Been There, Done That

Its very simple…

China saw what happened to Russia…..that political bubble collapsed.

World militarists, including Napoleon and Hitler…regardless of their zealousnes realized that any effort to take over China was a losing effort….aka don’t go there…….losing proposition.

The basic premise is whether it be a military engagement or economic one..China will trump any opponents.

China , it appears via the evidence…has realized that an “economic” war is more economic in the world order…..as opposed to a military engagement.

I mean..really..why is it , de facto, creating, if not encouraging , its own citizens to overwhelm a given local economy and , like “Invasion of the Body Snatchers” allow economic incubi to effectively take over a local economy.

Suggest everyone rent the movie ” The Thing “(original or re-make) and see the apropos symbolism.

#158 Burnt Norton on 05.28.11 at 10:57 pm

#127 Mark on 05.28.11 at 3:59 pm

“Living in Vancouver makes me somewhat of an authority on real estate…”

Impressive credentials.

—————————-

#147 Nostradamus Le Mad Vlad on 05.28.11 at 8:07 pm

Bah! Spoiler. I was just settling down to watch the game on PVR. Didn’t think the result would be posted on an RE blog. Yeesh. There goes my excuse to avoid watching the romcom my wife rented. :(

#159 BPOE on 05.28.11 at 11:05 pm

So true folks. It is truly different this time. Not hogwash theories like Shiller but true hard cash for homes exchanging hands
*************************************
mousey on 05.28.11 at 12:15 pm
#28
Yup, sell Vancouver to China. Very funny. Lots of sold signs here in rarified Vancouver west side. Now seeing houses that sold about a year ago, being listed again. Likely the flippers at it again. It is like watching a film loop in my neck of the woods. Bung listed, sold quickly, orange fencing around the trees, dozer shows up, house pushed over, foundation poured, ginormous house slapped up, insta landscaping in, for sale sign up again, sold sticker pasted on. Rinse and repeat. Went for a wee walk with my son and we counted 10 tear downs within the first 30 minutes. We stopped counting after that.

#160 Junius on 05.28.11 at 11:29 pm

#122 Mick,

You said, “Vancouver and Toronto are the next Monte Carlo, Monaco. You heard it here first. ”

You are an idiot. You heard it here again.

Monaco is a tax haven. Travel 20 minutes by train West or East and you are in much cheaper property in France or Italy. You have no idea what you are talking about as usual.

#161 Junius on 05.28.11 at 11:34 pm

#57 BPOE,

You have been right all along? Give us a break.

Last month “Richmond was not part of Canada”. Now it has crashed. However you have moved to West Van.

Running out of Snake Oil supply pretty quickly aren’t we? Time’s up.

#162 Nostradamus Le Mad Vlad on 05.28.11 at 11:38 pm

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Utah brings back the silver dollar. Gold as Money? Some seem to think so. I guess the western fiat currencies are going to hell in a handbasket. Falling Off A Cliff What exactly happens? Food Riots in developed world.

9:19 clip Debunk this!Great Flood This could be part of the NMF line, whereby several of the central- and mid-west states are under water, mortgages and defaults incl.

8:20 clip Recall Lockerbie? It was framed on Quadaafi. Libya Seems the west has won, and thus divvies up all the spoils (oil) to share among themselves. Libya, like Iraq and Pakistan, will be a colossal mess by the time the west has finished with it.

With Libya close to finished, Yemen up in arms where does Saudi Arabia come in? The west might try and mess them up as well as Quatar. Naval Expantion? Chindia and Myanmar join forces.

Door Closing The US debt is somewhat higher than previously spoken of. Jim Sinclair “The rock and the hard place is a time when the Western World is simply screwed.” Closer To The Edge The US$. Why Does the economy suck? ‘Coz it’s run by men?

Inflation with a cartoon to match. Game Over? Greece, and Oil Speculators.

#163 randman on 05.29.11 at 12:05 am

Chubbychops

“Just thought you should know that the Chinese censors read your blog!”

Found the same thing when I was in China
couldn’t read Mish’s site at all
He is a predicting a massive China bust!

#164 In Van on 05.29.11 at 12:33 am

Moved here 15 years ago from back east. There are all kinds of peculiar cultural and economic factors that make the whole HAM thing hard to comprehend, not just in real estate. In a fit of curiosity I walked into a Chanel boutique awhile back to see what a purse would cost for my wife. About $1800 bucks for the basic. The store was mostly full of very young asians (and a couple tatooed white goons who bought some stuff for a few grand, paid in cash). The teenage asians driving BMW’s/Bentley’s, etc. in Van are a phenomenon I don’t understand firsthand, but I’m informed that offshore wealth parks them over here to go to school with (or without) mom and gives them unfettered cash with which to buy Bentley’s, Chanel purses, and (in my observation) Hello Kitty paraphanilia. The adult versions seem obsessed with houses. I guess it’s cultural. In response to Garth’s question “Why not Seattle”, I understand Canada has way easier admission standards for wealthy “investors” than the US. Anyway, quite interesting, I’d love to hear from a Chinese person who knows the real story.

#165 Slow Learner on 05.29.11 at 1:15 am

Lot of west coast residents here talking about the high cost of living. I was done in Seattle on the Victoria Day weekend, crazy number of shoppers from Bellingham to Marysville with BC plates. Small wonder, prices are between 10 and 50 percent less than Canada, just 15 minutes over the border. Add in the BC real estate cost, HST and high income taxes, and it all really doesn’t seem sustainable.

Low interest rates have been stimulating the Canadian economy with consumer debt for a long time now, following the USA model from 2002 to 2007. The USA had to go into insane deficit spending to bail out the economy when the music stopped. Why would Canada be different? Aren’t CMHC insurance payouts, if there is a wave of Canadian foreclosures, just a bailout by a different name that will drown the feds with payouts to the banks?

#166 VancouverJoe on 05.29.11 at 2:41 am

#109 realpaul “I have pointed out in the past the ‘lemming-like’ behaviour of the Chinese culture. It manifests itself in auto purchases and even….restaurants….school districts. It is very much a ‘dim sum’ phenomenon where whispers whirl and not to be out gunned…the herd rushes in the direction of any ‘action’. ”

Exactly! Observed such behavior many times in different circumstances in Vancouver. I would say that Vancouver is not West anymore. It is East now. It is not Canada … Pity.

#167 Utopia on 05.29.11 at 4:19 am

Vancouver has a long history of anxiety related to real estate dealings with the Chinese. The suspicions have always run deep and the resentments have often bubbled over into shades of racism. This has been going on for as long as I can recall to be honest.

Much of the current angst actually has its roots in the huge amount of investment that poured into the city in the year or two preceding the handover of Hong Kong to China. The sheer volumes were intimidating. People then, like today, felt it was an Asian invasion in progress.

There was often a suggestion that dirty money was entering our economy but not a whole lot of evidence was ever provided to back up the claims.

The case was certainly not helped though by incidents such as that where the Premier of British Columbia, a Mr Bill Vander-Zalm was caught accepting a bag of cash in the middle of the night from a Chinese realtor during the Fantasy Gardens sale and fiasco.

Nor was the attitude improved when Li Ka Shing, a developer and billionaire, acquired the old Expo site on very favourable terms over the extreme objections of local Vancouver developers.

He went on to have site remediation provided that exceeded the value of the property purchase price and walked away with the property at no net cost as it rose in value to astronomic values. People then were apoplectic over the issue.

When Stanley Ho, a Billionaire gambling tycoon out of Macao later built one of Vancouver’s most expensive and notable homes just steps from Lost Lagoon you could almost hear the collective fear welling up in peoples voices.

It’s a take-over. Don’t Canadians have rights anymore they would whisper to each other in Robson street coffee shops.

Resentments grew as Vancouver took on the new flavour of an International city that was tilting decidedly to the East. Locals who grew up there complained about the change then just as much as they do today.

But the money from Asia kept pouring in and investment grew and flourished despite the objections. The political class was always more open to expansion and incoming money than the average local though, especially as Vancouver suffered through periodic economic droughts.

The city meanwhile became known as a hot destination for investment in China all through the 80’s and 90’s and becoming especially acute today during our current housing bubble.

Hotels were built, while select downtown properties were acquired, renovated and rebuilt into new developments.

The demolition of the old Georgia Medical building was just such an example of Chinese investment that rankled a few (and yet that project was much appreciated in the end).

I can clearly recall too that in the late 70’s and early 80’s the small area behind Hastings Street in downtown Vancouver (China-Town) was known as the Golden Triangle. At that time the property there was highly speculated upon and became more valuable per square foot than any other property in the city at that time.

Astonishing really, because the buildings were old, derelict and mostly low rise affairs which abut Canada’s most notorious slum. Chinese-Canadian old money was focused on it though and as that money was generally unwelcome elsewhere in the city then, prices rose almost to bubble proportions even while the rest of the city was in recession.

Over the years not much has changed except the Chinese have now extended their reach and many thousands of newcomers have arrived. The old-timers from Hong-Kong and the new blood from mainland China do not always mix well if you are curious and even they have some simmering resentments between them when it comes to business, culture and investing styles.

In the past much of the investment money and home buying was restricted to the City of Richmond, Vancouver’s downtown core and Chinatown itself. These were areas that the new immigrants felt most comfortable in and where their money was most welcome. Now it is everywhere, citywide. West Van is the new target…..and why not?

I really don’t see the problem myself. Despite some notable affairs in the past, most of the real fears have never come to pass. The Chinese incidentally have a very long history in Canada and especially BC going right back to the days of the first settlers and the building of the CPR where they played a notable role placing the bags of dynamite for rail construction through the mountains.

We all seem to be stuck in some time-warp where we refer to both those who have lived in Canada for several generations and those who have come recently as “the Chinese” though. Rarely do we refer to any of them as Canadians. Do we behave the same way with the Greeks, Italians, English or German offspring?

Lets keep in mind that almost all of us here are immigrants or children of immigrants from other countries. Few of us are natives. Maybe we should start referring to our neighbors who we currently identify mostly by their Asian origins (or money) as Canadians for a change because most of them are in fact citizens.

They cannot therefore possibly be displacing (real) Canadians from their cities and their homes with the power of money (as some suggest) when they have the same rights and responsibilties as citizens like you and I.

For those who keep freaking out about Chinese investment in Canada by non-citizens…what is your problem anyway? Investment is investment. If a foreigner wants to put money in the pockets of Canadians for a property sale during a bubble then enjoy it while it lasts.

Lets keep in mind that many of us have pension plans with money that is invested in the Chinese economy directly too. The trade goes both ways. Some of you posters here need to go and figure it out. Ask yourselves…..

Do you hate money or are you just racists?

#168 Utopia on 05.29.11 at 4:57 am

#100 BrianT

“Women want to live where RE is expensive. This is partly cultural and partly genetic”
—————————————————————————–

Well that explains everything Brian.

But if you are correct then there should be a shortage of women in poor areas of town. I will bet though that the only postal code where only a rare few women are present is the male-only penitentiaries because as I have noticed, women are present in equal numbers…well,…. pretty much everywhere….just like men.

Guess I don’t agree that women are genetically predisposed to expensive real estate. It is scientific fact that they are genetically attracted to guys on Harleys though.

Not good science maybe, but it will do.

#169 Utopia on 05.29.11 at 5:28 am

Is it Yuan or Renminbi?

What exactly is the correct name for China’s currency and money? Since we discuss it everyday here we might as well get more familiar with the terms and know what we are talking about.

This Wiki will help…and there is a fascinating discussion of past hyperinflations in China, changes to currency over the years and a great bit about the millions upon millions of strings of copper coins minted during the Song dynasty. They do everything a little bigger in China. Even the hyper-inflations are as spectacular as the fireworks.

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

#170 Daisy Mae on 05.29.11 at 9:20 am

Thirty-one percent of BC families must chose each month, whether to pay the rent or buy food.

#171 BrianT on 05.29.11 at 9:26 am

#167Ut-I am surprised you aren’t aware of this fact-it isn’t a secret. The large population of North American expats in countries such as Thailand, Malaysia, Phillipines, Costa Rica, Panama, etc.etc.etc. isn’t a 50/50 split male and female expat-my guess would be more like 70/30. The low cost of living is the big attraction-a far bigger attraction for the average guy than the average girl. Look-there is a reason those Sex and the City movies are set in Manhattan as opposed to Panama-the whole idea of being a rich person living in a third world environment isn’t that alluring to most women.

#172 vreaa on 05.29.11 at 9:32 am

“Bad decisions are piled so high atop other bad decisions that they start to look reasonable.” – Garth

Very well put.

#173 vreaa on 05.29.11 at 9:33 am

Five Couples Lost To Vancouver Because Of RE Prices – “In the past few weeks, the number of our friends who have either moved away, taken steps toward moving or expressed interest in leaving Vancouver has been truly alarming.”

http://wp.me/pcq1o-2pp

#174 timbo on 05.29.11 at 9:34 am

Utopia,

investment in real-estate follows the norm where there is a return said property is rented out. anything else is speculation on a future gain.

you have a land speculation bubble in van right now which does not follow income fundamentals. Offshore money is driving this ponzi scheme and when it bursts taxpayers will be holding the bag.

it is sad that our government does not properly regulate land speculation by outside economic interests in a way to limit these ponzi schemes but human nature and greed rule.

#175 xindai shan on 05.29.11 at 9:50 am

168 – Utopia,

Reminbi is rarely used, nor is Yuan for that matter, except in formal terms. In general conversation and business transactions, people generally say kuai for money. Cash is xianjin. Engish people butcher the pronounciations.

Xindai shan = mortgage credit mountain. :)

#176 xindai shan on 05.29.11 at 9:53 am

#169

And Canadian Chinese butcher Engish spelling!

#177 lesser-fooled on 05.29.11 at 9:59 am

Utopia:
If a foreigner wants to put money in the pockets of Canadians for a property sale during a bubble then enjoy it while it lasts.

__________

Well that is only 1 side of the coin,
to be fair you should also mention: “and for those unable to get on the wagon, then Suck it, enjoy 15 LONG YEARS of higher rent so you end up paying extra hundreds every month so you find it impossible to pay food for your kids.
FOr those able to get on, then many of you will not know when is the crash so you’ll end up losing Milions of $$$, Suck it up!!!
For every other worker, enjoy the crashed economy when it bust!

#178 Mr Buyer on 05.29.11 at 9:59 am

It is very rare that an entire country (looks like even the entire world soon) gets a simultaneous object lesson in both the value and limits of an idea. You know how in order for an idea to become reality it takes a cooperative and sustained commitment to said idea being reality. I was working in Northern Manitoba as a raft guide (what seems like a hundred years ago now) and I was stuck waiting for the Beaver (an iconic float plane) to come pick me up, 50 miles from a telephone pole, while we were transferring equipment one day. Well usually when you do not like the weather in Manitoba you just have to wait 20 minutes but this day it was raining cats and dogs and blowing and it would not let up. I was really feeling the cold and it was starting to look like I was going to get stuck out there for the night. Everything was soaked so it was going to be difficult to start a fire. Luckily the moss was like 2 feet thick and not completely soaked all the way down yet but it was still quite damp. Of course I had only a few matches left so this was going to be tricky. I had to keep a flame on the moss long enough for it to dry out, catch fire, and keep going. After unsuccessfully searching for dry kindling for 20 minutes I was starting to worry about a night with no fire. I remembered the bills I had in my pocket and I pulled out a dry five and lit it up. It burned long enough to dry out the moss and 10 minutes later I had my fire. As the $5 bill was literally going up in smoke it came to me that it was only paper in my given situation. I had the rest of the night by a warm fire to ponder the level of cooperation and commitment that was required on an ongoing basis for that paper to hold the meaning it has. A house is a shelter and that reality seems constant but the financial value of a house has suddenly and drastically changed seemingly independent of traditional elements of reality that justified such changes in the past. I can not help wondering if all the ideas we have accepted as REALITY can not be simply changed by choice and for the better. My point here is that drastic changes are required to secure safe futures for our children. We have witnessed the power of ideas and their impact upon one of the most important elements of our lives (our homes). It is a great opportunity for all of us to continue on with the drastic changes required in the short and long term to guarantee a place for our children (a place to live, learn, work, grow, get medical care and raise their children). If I am not mistaken an economist has brought us to this place we are at now. I wonder how bad the scientists would mess things up if they were given power (rather than serving the powers that be). Just a thought. I have found many scientists to be human so there is a good chance we would end up right back here. It is just that as bad as things are now, there are serious decisions and actions that must be made and done relatively quickly to attenuate the impact of population growth, resource consumption and climate change. I fear it is quite likely that we may all wind up scratching out existences under very harsh circumstances (even the not so elite Elite over the long run).

#179 Cam R on 05.29.11 at 10:01 am

My daughter closed on her toronto condo 6 months ago.
She bought to rent it. Its been empty for 6 months.
She has it listed and now just wants her money back.
I cant understand all this hype about sizzling market.
Something is not right here.

#180 Chad Kroeger and Hugh Hefner on 05.29.11 at 10:36 am

#100 BrianT

“Women want to live where RE is expensive. This is partly cultural and partly genetic”

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

Far be it that we would ever imply they are all a bunch of goldiggers…

#181 Chad Kroeger and Hugh Hefner on 05.29.11 at 10:46 am

Utopia

The demolition of the old Georgia Medical building was just such an example of Chinese investment that rankled a few (and yet that project was much appreciated in the end).

======

My understanding from a party who works for another developer is Shon is a rags to riches story…and is quite locally based.

BTW a couple of the Terra Cotta nurses statues(who were called the Rhea sister…Gonorhea, Diarhea…etc) are re- established at the top of a couple of new UBC buildings

#182 Hoof - Hearted on 05.29.11 at 10:53 am

Intersting lawsuit re CMHC

http://blog.myleakycondo.com/index.php?op=ViewArticle&articleId=5285&blogId=1060

#183 maxx on 05.29.11 at 11:14 am

#133- Linda-

“We intend to cheat greedy businesses, out of every cent we can.”

Yes!! In our household, that means:
No subscriptions of any kind, no automated payments out of our bank account, no free personal information or surveys that businesses can then sell to 3rd parties, return ANYTHING that is not 100% up to snuff (keep all of your receipts, they are goods and services contracts-call the toll-free number on packaging if you’ve lost the receipt), contest and argue every single cent of pricing error, source anything you can from a second-hand store (especially the “frills”), pay cash as often as possible and never, ever pay banks a service charge (easier than you might think).

#184 Fleabitten Monkey on 05.29.11 at 11:24 am

A real example of someone who lost his shirt in West Vancouver. A friend of ours buys a place just past the Dundarave area around West Bay Park for $1.4 mill and puts in another $400K in renovations. Decides to move back into the city area and lists the place for $1.8 mill. Not takers. Long story short he had to successively reduce the price over the course of last summer and finally sold it for near what he bought it for, less commissions. Where were the swarms of HAM? As far as the media goes the HAM is not a new phenomenon. This was by all accounts a really beautiful property, great view, incredible garden, the works.
Explain that one for us BPOE.

#185 Abitibidoug on 05.29.11 at 11:32 am

@ Utopia #167:
I also have a hard time believing women only want to live where real estate is expensive. The economy isn’t doing all that great in parts of southwestern Ontario (St. Thomas, Chatham, Windsor) and yet a lot of women still live in this part of the country and have no desire to leave as they are close to family and friends. The same goes for mill towns in northern Ontario like Iroquios Falls where the economy has seen better days. Also, wouldn’t any women also want to retire as men would if the opportunity (as I described above) presents itself?

Response to Garth’s comments on posting #138:
I don’t know what the real world inflation rate is, but it’s definitely higher than 2 to 3% annually. The people who come up with these figures assume we buy a goods like a new colour TV or computer (which have gotten cheaper) every 3 months and rarely buy food or fuel. It looks suspiciouly like the same kind of “creative” accounting that went on in Nortel or Enron.

#186 Utopia on 05.29.11 at 11:40 am

#162 randman

“Found the same thing when I was in China couldn’t read Mish’s site at all. He is a predicting a massive China bust!”
—————————————————–

Mish is right. China will experience a bust and when it comes the repercussion for everyone else will be super sized.

I find it interesting that so many investment commentators are in complete denial of the prospect of a serious China slowdown. The myth of never ending growth in excess of 8% GDP annually has fully captivated their thinking. They are just blind to the idea of this story coming to an end.

And these are smart guys. They know better. It does not even matter how many Chinese or other Asians want to join the West at the big-spending party where we casually throw away as much as we actually consume. There simply is not enough resources to go around at the rate that China growth is accelerating.

There is no doubt that they are responsible for much of their own home-grown inflation too despite the many objections and blame placed on US led Quantitative Easing. Did they really think they could add millions upon millions of vehicles to their roads each year for example without impacting growth/inflation models domestically?

The current model is just not sustainable though and in more stark terms, continued exponential growth there can only end in a disaster if not contained.

Fortunately that economy will be hitting the wall soon enough and a slowdown should be welcomed with a sigh of relief by everyone. The number of distortions built into the system now virtually guarantees that a slowdown will come about.

Every issue from extremely high levels of bank reserves to the imposition of capital controls, high (and rising) interest rates attracting global liquidity, excessive capital investment in infrastructure, a property bubble over the moon, empty cities etc. are all warnings that their economy is a risk of major instability. That it is now beset by imbalances that will be difficult to reverse gradually.

Some of these economic commentators argue forcefully that surplus investment and too much cash and bank reserves cannot possibly be a bad thing. (Boy, do those guys need a review of the basics or what!). They insist China is different. I don’t suppose you have you heard that one anywhere before, have you?

Needless to say Canada can expect an oversize hit to its income as commodities take a tumble and China slows along with the rest of the globe.

We need to recognize in this country that we are vulnerable to a Chinese led dent in our income that has as much potency as a major recession in the US.

The Chinese are simply such voracious importers of commodities globally that a hiccup there will result in falling prices here even for products we do not ship to them directly. They do not, in other words need to even be our customer to impact our bottom line as commodities tend to generally rise and fall as a group.

This is all the more reason why a majority government is important for our country right now and why many appreciate the strong positions the Conservatives are taking on economic issues right now.

The last damn thing we all need is a bunch of bickering, back-pedaling and pandering to every small or large interest group when big-thinking, decisiveness and consensus is required on the economy at large. I certainly encourage the Government to act with steadfast conviction and confidence where the countries business and economic interests are at heart.

We can easily see what is coming. Best we get prepared ahead of the curve and don’t get caught short when the slowdown arrives.

#187 JohnnyBGood on 05.29.11 at 11:44 am

@ 51 frank on 05.24.11 at 11:40 pm––and anyone else who is interested in the scenario below, as described by frank…

“I recently bought our “dream” home… I turned it into an expense and future capital loss. My professional corp owns the house and writes off the mortgage payments, …I rent the house from my PC. Eventually I expect to have a capital loss from it’s sale when I retransfer it to myself.”

I was curious about this bit of accounting legerdemain myself (purely for my own edification), so I asked my accountant who is a CA. He said it makes no sense to do this. If I wanted a detailed explanation he would have to bill me. But frank, or anyone else who is interested in this maneuver, should talk to their own accountant first.

Than again, as far as I’m concerned, for practical purposes, its a moot point because I think one should never speculate with one’s home.

#188 Hoof - Hearted on 05.29.11 at 11:45 am

Utopia

Your latest quasi biblical posting is good and creates a drum roll for extrapolation

No one is trying to be racist….the issue is in the reverse context. Another group is getting its butt kissed…to the exclusion of others.

When we talk about ratios…..its a relative number, but a fairly good indicator.

Canada was effecitvely built by immigrants from all over the world. It was a loop system….a generation would arrive, usually dirt poor….do the shitty jobs, build up their savings , work up the economic ladder and often end up middle class and in some cases even better.

Their children would be 1st generation and their immigrant family helped and encouraged them to make a better life for succeeding generations.

IMHO, we aka ALL Canadians….. whose immigrant ancestors followed the old school start at the bottom do have a right to somewhat resentful.

Its becoming clearer and clearer that much of the citizenry is being pushed down the ladder of opportunity. In the big picture…what right does a defineable group have to enter another country, literally dump money in….drive up an asset which in the public psyche is one of their goals and dreams.aka owning that home…especially when other jurisdictions have reognized this and set limits to foreign ownership.

To allow someone with bulging suitcases of cash from no audited source to buy and bid up RE…dump the family here…take advantage of the social system…and the f*ck off back to their home country and work under another CHEAPER tax regime is bullsh*t.

It should be interpreted as the local politicians have written of the locals as being capable of supporting the economy(insulting) and ignoring what could become massive wake-up call by the local voters.

They have effectively, and de-facto let mainland China
rule from afar…we are beholden to what levers they pull. Why did China try to stop internal bubble…it must know that its citizens wil escape to a less restrictive regime aka BC.

Offshore ownership restrictions will come….one way or the other…

#189 realpaul on 05.29.11 at 11:55 am

#53 BF & Daisy # 144. I have posted many times in the past that Vancouver is in fact a sewer. Yes….I always get responses like yours as well from people who get all ‘tribal’ on the chastisement. The fact remains that Vancouver pumps 800 MILLION litres of RAW SEWAGE into the not so pristine waters of Vancouver Harbour and English Bay EVERY DAY. They were taken to court by Enviornment Canada and lost only to weasel out by ‘promising’ to do better.

1) The gooey sludge you see at low tide ( especially along Jericho Beach) is undiluted raw human fecal matter.

2) Hospital waste and virulent bacteria is present in sand as far away as the coast of Oregon and the yanks are furious we do nothing.

3) You have to step over a huge sewage pipe to walk down the seawall at Kits Point….didn’t you ever wonder what the piping is for?

4) There are 24 sewage outlets draining into False Creek alone. What do you think that sharp smell of ca-ca is when it warms up in August?

5) Where is the sewage treatment plant or pumper stations leading out of downtown? The closet station is IONA in Richmond ! Does anyone think Prince Robertson has ( like Canute) willed the sewage to travel uphill over the the crest and out to the Iona jetty? There is an interesting video taken by a diver of the outflow from the bottom of Main St……( don’t eat your lunch first)…but it will put you off local shrimp and crabs for sure.

6) The Suzuki Foundation has tested the groundfish in English Bay and found that 99% have pre cancerous lesions….yummy…buy some fish off the docks .

7) Every morning at sunrise a crew of city workers has to skim the shit scum off the sand at English Bay in the west end because its piled ankle deep after the high tide overnight.

8) There are warnings that high coliform content in the water is dangerous to your health and extremely harmful to children and pets….lets go for a nice walk eh?

I could go on and on…about the extreme bedbug…..unchecked superbug in the hospitals……massive rat and roach infestation……let alone the mold…etc etc etc….too many to list.

No…its all public information and available for everyone who’s willing to look. The PR campaign to keep Vancouver ‘the best place on earth’ is generated by the tourism lobbies…..not from reality.

#190 Utopia on 05.29.11 at 12:01 pm

#140 Cato on 05.28.11 at 7:32 pm

You sure made a good point there Cato, best post I have read in awhile. I can see we are going to be doing some real soul searching in this country in the coming years as the US dollar continues to decline. Tough decisions lie ahead.

#191 Ben on 05.29.11 at 12:34 pm

#164 Slow Learner

Couldn’t have said it better, I haven’t worked in my home town of Edmonton for 10 years. Why? …. because if your not in some oil, pipe, welding or machinery related industry there’s nothing there. Oh wait…. I take that back, I had two calls recently from head hunters looking for telecom guys (like me) and their paying a whopping $25 an hour! I just laughed and told them no thanks, I’m currently on contract in Dallas, Texas to AT&T making $50 an hour and averaging 60 hrs a week working remotely from my extended stay room (complete with everything, including outdoor pool, barbeque and lawn furniture which cost’s me a whopping $750 a month.
Ya, I’ll jump right at that $25 an hour high paying job in Edmonton and spend a minimum twice as much while I’m there to live in the god for saken place.
No Thanks!

#192 tran, Calgary on 05.29.11 at 12:42 pm

Why are Canadians paranoid about Asian money? Canada has much to learn from Singapore.

#193 Sunny on 05.29.11 at 1:29 pm

here is your proof Garth

http://www.bclocalnews.com/tri_city_maple_ridge/mapleridgenews/business/122754428.html

Since when is an unsupervised survey done by a real estate development company proof of anything? — Garth

#194 Daystar on 05.29.11 at 1:53 pm

Check out this link:

http://www.youtube.com/watch?v=VgXi2iKpX_0

Now… go on and y’all tell me that China is a backward nation who’s sole wealth comes from stealing, ignorant fools…

To believe that the #1 manufacturing powerhouse nation in the world doesn’t not have wealth that is not earned outright, is to believe the nonsense of fools. My oh my, the ignorance that prevails from some bloggers on this site. One can see wealth creation created by design, innovation and simple skill errecting a 15 story hotel in six days and yet, the simple minded still continue to deny.

http://www.youtube.com/watch?v=4JYMYZ_F88w&feature=related

Stolen money…. my ass. (borrowed, duh… how did most of us buy our first, second and third homes?) Shake down iffy lending practices all y’all want (and there’s no place like home, right?), I’m certain shell game ponzi schemes abound with credit (just like here) but the only real difference between us and them is the color of our skin. If we were dealt their hand in cards, we’d be just… like… them. Thats what really scares some of us, doesn’t it? That they can be just as corrupt, just as self serving, just as cruel, predudice and racist for that matter, as our selfish selves…. Some of us should really pray that we really are different than the Chindians and good luck with that. The more I read, the more I see us as exactly the same:

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

#195 Hoof - Hearted on 05.29.11 at 2:05 pm

# 19 realpaul
#165 VancouverJoe

Yes…..I think it quite an obvious fact.

In essence and no disresepct intended…Asians simply have more greater fools, and moreso under the current circumstances. The culture is based on flipping….but their supply of greater fools will dry up.

…….on par with the market can sty irrational longer than you can stay solvent. The joker in the deck is how much more can be milked for China before our Gov’t wakes up and stops this crap.

#196 miketheengineer on 05.29.11 at 2:09 pm

Garth et al:

Nostradamus le mad dude…this ones for you

http://www.solarham.com/

Geomagnetic Storm
M Class Flares

Potential Big Earthquake? Hope not.

Mike

Picking up some extra cases of bottled water, just in case.

#197 Dean-o on 05.29.11 at 2:33 pm

Hi there, love the blog Garth. I don’t share the majority of your political views but I’ll take good advice from anyone if I can judge it to be solid.

Question for you, or anyone, to weigh in on.

My wife and I own a house. I know that means we’re crazy, but here we go. I’m 37, wife is 33…we have no debt other than our mortgage (we paid big bucks to kill off our student loans!). We both walk to work and have a used car…our mortgage is 200k (just bought the house) and we make 150k between us. The house is in an incredible neighbourhood in a small Canadian city. We love life here…simple, quiet but with loads of fun things to do and family close by. We can walk almost any where we need to and the neighbourhood is ‘mature’ with most houses being 100 plus years old. It’s 1km to downtown.

So, we have only about 10k in savings at this point (all of our money went to paying off the 80k in student debt). With our budget we can save 3500 max a month. I think that’s a lot of dough…but what do we do with it? I was always told that being debt free is the way to go so I was thinking we could pay off the mortgage in about 8 more years while saving money as well. Our incomes will rise as well (provided we don’t lose our jobs…) so that will give us more to save. OR…do we bail on our house while we can, rent and stuff all the money into our pockets so to speak? I didn’t think a 210k purchase price was crazy (my friend just paid 650 in Van…he makes less than we do).

So, have at it! Any advice? I can’t handle bankers…I don’t trust them as I know they’re told exactly what to say and how to say it by people without my best interests at heart. Thanks!

#198 BrianT on 05.29.11 at 2:37 pm

Here is some truth about economics from Gonzalo Lira-don’t hold your breath waiting to hear a MSM “economist” repeat this http://gonzalolira.blogspot.com/2011/05/fiscal-spendingthe-steroids-of-gdp.html

#199 SMOKING MAN on 05.29.11 at 2:41 pm

Look at the BOND yeilds free falling.

http://www.bankofcanada.ca/rates/interest-rates/canadian-bonds/?page_moved=1

Can you say in a few months 5 Year fixed rate mortgages at record lows………………….

I can……

Thanks Greece

#200 TurnerNation on 05.29.11 at 3:05 pm

#179 Dean-o on 05.29.11 at 2:33 pm

I’ve never seen Garth post any political views. In fact I’m still guessing as to which party, if any, he supports.

(But the whole idea of 2 or 3 parties is insulting to any thinking person. What, we are permitted to hold and support only 2 or 3 belief systems in our “land of freedom”, all of which are designed to seperate us rather than to unite?)

#201 Dean-o on 05.29.11 at 3:15 pm

TurnerNation…he was a Conservative MP (more PC I would say!). There is very little political content on his blog, I agree, I wasn’t referring to the blog in that regard.

#202 Hoof - Hearted on 05.29.11 at 3:26 pm

#193 Daystar

Yeah, but it didn’t stay up long, they didn’t account for this

http://www.youtube.com/watch?v=o7gFlSGXt_k

#203 TS on 05.29.11 at 3:30 pm

F can kill this HAM game anytime he likes. Put a cap on mortgage insurance. Say $500,000. tops.
Guess he wants to repatriate some of our money back first. Does anyone here realize that many foreign companies are the top exporters out of China? This is quite an economic game Governments are in. The Chinese are more capitalistic than the U.S. in many ways. They just do not care about social programs. Social Darwinism at its best. A healthy global economy requires a level playing field. Not gonna happen in this Century. Way too much greed.

#204 Edmontonian on 05.29.11 at 4:11 pm

It’s interesting watching the Train Wreck about to happen as far as R.E. is concerned. Here in Alberta people continue to buy in our overpriced RE market.

Do people even realize: Foreclosures up 600% since the fall of 2007, with currently historically low interest rates-it’s crazy!

Most indebt consumers in Alberta in the whole G-20! Household debt as high as 220% of income in areas of Edmonton & Calgary!

We have more consumer debt in alberta to income THAN GREECE has Federal debt to Gdp!

It’s no wonder 25% of Edmontonian Families live below the Povert Line, and we have a 20% high school drop out rate.

#205 jess on 05.29.11 at 4:12 pm

hope those smart bombs know the difference between pipelines

Libya’s enormous aquatic reserves

non-renewable resource fossil water:
Lying beneath the four African countries Chad, Egypt, Libya and Sudan, the Nubian Sandstone Aquifer System (NSAS) is the world’s largest fossil water aquifer system, covering some two million square kilometres and estimated to contain 150,000 cubic kilometres of groundwater.
==
wikipedia
The Nubian Sandstone Aquifer System (NSAS) is the world’s largest known fossil water aquifer system. It is located underground in the Eastern end of the Sahara Desert and spans the political boundaries of four countries in north-eastern Africa.[1] NSAS covers a land area spanning just over two million km2, including north-western Sudan, north-eastern Chad, south-eastern Libya, and most of Egypt. Containing an estimated 150,000 km3 of groundwater,[2] the significance of the NSAS as a potential water resource for future development programs in these countries is extraordinary. Recently the Great Man-made River Project (GMMR) in Libya began extracting substantial amounts of water from this aquifer, removing an estimated 2.37 km3 per year. This system is primarily used to supply water in the Al Khufrah Oasis.

“Libya could start an agro-business similar to California’s San Joaquin Valley.

#206 Devore on 05.29.11 at 4:18 pm

#177 Mr Buyer

I had the rest of the night by a warm fire to ponder the level of cooperation and commitment that was required on an ongoing basis for that paper to hold the meaning it has.

Things have value because people impute them to have value.

That same piece of paper will buy you a loaf of bread and a gallon of water when you are in a city starving and thirsty. A house could just be firewood, because no one is living in it or cares about it.

The value of things has nothing to do with belief in ideas or cooperation, as you’ve just proven with your tale. It is the result of a complex meshing of trillions of individual decisions and interactions (which is why it will never be successfully modeled or manipulated). In isolation, when you are the only one imputing value, things are worth what they are worth to you, at that moment in time.

#207 Utopia on 05.29.11 at 4:20 pm

#177 Mr Buyer

Thanks as always. Your posts are like a breath of fresh air on this blog. I appreciate the way you express our genuine collective concerns for the future without adding all the panic many other express.

#208 jess on 05.29.11 at 4:21 pm

China drought affects more than 34 million people

BEIJING — A debilitating drought along China’s Yangtze river has affected … The State Grid, China’s state-owned power distributor, reportedly said this …
=
reversals
worst drought to hit central China in half a century has brought water levels in some of the country’s biggest hydropower producing regions to critical levels and could exacerbate electricity shortages over the summer.

#209 maxx on 05.29.11 at 4:23 pm

#196 Dean-o-
Wow! You have great beginnings as you seem to really have your acts together. I don’t know the amort. on your mortgage, nor how the 150K a year is split between you, but at first glance, here’s what I would do (25 year amort. and 50/50 income split):
-first of all, you paid what seems like a reasonable price for a place you love to live in; enjoy, it sounds wonderful;
-3500.00 savings a month? Fabulous!
-if you guys have mortgage payment of around 1200.00 a month, double it up if the bank allows it (=14,000.00 total from 42,000.00 annual savings =28,000 balance);
-each of you max out your rrsp (if 50/50 split =13,500 each, so 27,000 from 28,000 =1000.00 balance);
-take the rrsp tax refunds + 1000.00 (balance above) and max out your tfsa’s;
-reserve 3000.00 for a slap-up vacation (you genuinely deserve it!); AND
-throw any remaining money 50/50 at the mortgage if it allows you any additional pre-payments as well as an emergency fund;
-finally, prepare to get rich!

Best of luck!

#210 Devore on 05.29.11 at 4:30 pm

#183 Fleabitten Monkey

Indeed, where was HAM? That is what many sellers in Vancouver are asking themselves every day.

HAM has been with Vancouver for decades. It was here in the 90s (anyone remember those dark days?), it was here in 2008 (seems everyone’s forgotten that one), and it will be here 10 years from now. Irrelevant. With each bubble HAM gets trumpeted up, then fades without word.

#211 maxx on 05.29.11 at 4:38 pm

#187 Hoof – Hearted-

“Offshore ownership restrictions will come….one way or the other.”

And not soon enough!

#212 Abitibidoug on 05.29.11 at 4:40 pm

@realpaul #188:
There’s all this money flowing into Vancouver and no money for a waste treatment plant? What’s wrong with this picture? There should be a steep tax on all houses that sell for over $1 million, as well as new tax assesments on a all houses which reflect this new value while it lasts. That money can then be put into a fund to build a new sewage treatment plan or expand an existing one.

#213 BrianT on 05.29.11 at 4:44 pm

#193Day-Us and them? You might have access to millions of taxpayer dollars that you can squirrel out of the country but I can assure that the majority of readers of this blog do not.

#214 Devore on 05.29.11 at 4:49 pm

#198 SMOKING MAN

Can you say in a few months 5 Year fixed rate mortgages at record lows………………….

So 5 year drops 0.5%, some mortgages drop 0.1%. I wouldn’t hold my breath if I were you.

#215 Utopia on 05.29.11 at 4:54 pm

#187 Hoof – Hearted

In reference to my so-called “biblical posting’ Hoof that you have argued against I can only reiterate the comments already made there.

Nobody in this country is being over-run by foreigners at this time. Investments in property by Asians (both Canadian born and new immigrants) continue much as they always have for better or for worse. It is really just business as usual for the most part.

All that has changed is the specific circumstances of Vancouver’s peculiar real estate market but it is not driven primarily by foreign purchasing anyway.

The media has unfortunately portrayed the Chinese and some offshore investors as the ones who will save the bubble from bursting and this was a terrible mistake in my opinion.

By doing so they have created a target group to blame when the bubble ends as it inevitably will. It will be remembered as a Chinese bubble then because of a few notable purchases by a few outspoken Asians in a few select postal codes at a very specific period in time. Very ignorant reporting in my opinion.

In the meantime, if you have personal regrets about not having bought earlier you should not blame the Chinese from overseas or those Asians born in Canada for your theoretical loss. They are not at fault.

Do you not recall how CMHC rules were modified? How interest rates were dropped to emergency levels? How banks pumped lending for bloodless young newbie virgins and how the Realtor class invested heavily in making us all believe it really was different this time?

Like you and I, the Chinese have also take a huge risk investing in a bubble economy. They have a 100% chance of losing money by purchasing right now if you will agree that housing is in a bubble.

Do you envy them that?

And lets not forget that the entrance of Hot-Asian-Money is a phenomenon that has appeared only at the latest stages of the housing peak.

They are literally the last ones in and will therefore be amongst the biggest losers when it all comes crashing down as they were the buyers of the “top”, the real Greater Fools.

I therefore fundamentally disagree with the idea of limiting ownership of private residences for new immigrants or for foreign investors at this time. The market will bubble and burst with or without them anyway. No law is needed to limit ignorance of market fundamentals. That is for individuals to reckon with.

So stop with the blame. You really have no perspective.

#216 Kits on 05.29.11 at 5:23 pm

#196

My guess is … no question about it – keep your house. $200k is not a crazy large mortgage for family income of $150k/yr and growing. I would also venture that your small city did not have the crazy run up in prices that Vancouver did. You need to factor in the cost of getting out of your investment and the cost to eventually get back in – if that is your goal. I would pay off the mortgage as quickly as possible while the rates remain below the long term average. Enough said, it sounds like you have it all … good jobs, great neighbourhood, no debt other than your mortgage …. etc.

FYI – my wife and I rent in Vancouver. We have very good jobs and could pay cash for more than the average house. We believe that Vancouver is in a bubble of immense proportions. Even if it is not, we doubt the prices can continue to increase at their current pace and therefore returns from our investments are likely to exceed those of RE.

#217 Utopia on 05.29.11 at 5:24 pm

#188 Realpaul

There is certainly some truth in what you wrote Realpaul. Good post, we should get more of the facts about Vancouvers sewage issues out in the public eye.

Victoria is even worse but that is another story.

When I was a kid we actually used to dig for oysters and clams in English Bay. No, I am not kidding. They were edible too. We would catch crabs of all variety, collect sand dollars, fish for ground sharks and even happily swim off kits beach without fear of catching a permanent illness.

False creek was always a bad spot though. It has been a polluted cesspool since before I was born and actually it is probably cleaner now than it was in the early sixties.

Going to the beach was mostly a joy though and I spent a lot of time there in days long since gone now. The place barely merits a photo now. Even the seaweed bulbs and snarls mixed with whale foam are long gone. Seen a shell washed up lately?

The whole damn thing is a poisoned sewer of waste and excrement and the city should be ashamed for collecting taxes and not making efforts to maintain the balance in a such a closed loop environment.

Hell, there used to be live seals living off the rocks near Stanley Park, not just the refugees held captive in the city zoo. Only the rocks remain now; covered with sick gooey black and green algae blooms. The Seals have long since died off or departed.

Ya,…Vancouver. It’s sure is the Best F*****g place on earth. Go for the views and but leave your human pride behind. Take a barf bag with you.

They can keep it for the local collection.

#218 Hoof - Hearted on 05.29.11 at 5:27 pm

#210 maxx

Not sure where you live…but I live in the ground zero area of HAM here in BC

More and more people are seeing that HAM money hollows out an area….its illusionary , but very politically prositutable .

I submit to all to have a look at who your elected officals are…..at Local , Provincial or Federal,levels of Gov’t.

From my vantage point, they are a bunch of leading edge boomers…kids in a candy store, that either are in denial or heads up ass likely both.

Turf these tumerous SOB’s at the next chance…here in BC we have civic election in Nov 2011….and holding our breath for the Provincial writ to be dropped.

Again, a pox on the “olde hippy house”….which is often a Million home these gravy suckers had the good sense to chose their birth date.

#219 Hoof - Hearted on 05.29.11 at 5:33 pm

#211 Abitibidoug

What wrong with an outhouse in the backyard?

Who needs a sophisitcated shitter?.

The Chinese cal it “night soil”…you blend it in with your garden.

#220 eddy on 05.29.11 at 5:33 pm

the guy who did the film 7/7 ripple effect says QE2 is illegit

http://www.youtube.com/watch?v=oNnyctcE4eQ

#221 Daystar on 05.29.11 at 5:46 pm

#214 Utopia on 05.29.11 at 4:54 pm

I quite concur with your comments today. China’s economy cannot chug away with 8% + GDP and get away with it forever. Commodity export driven economies like Canada and Australia have the most to lose. China has been, upon reflection, the one nation that has kept the world from slumping into a depression since 08′, but if their economy slumps the world will feel it.

Chinese immigration has done the books big favors here at home. Ask any Canadian that moved out of Vancouver during the big inflate. Their ownly complaint is selling too soon. My town is full of them, but this windfall could end soon with a big slowdown in China’s economy and then what… are we to take our talking points from those who undoubtedly are racist/predujice, playing the scapegoat card to solve all our problems?

In the meantime, its laughable the double speak certain commentors have here on this site concerning Chinese immigration in Vancouver. On one hand, Chinese immigrants are smeared as thieves “investing” with stolen money, ready to bolt at any sign of a slowdown, with not one penny of their own skin in the game, but on the other, they are supposedly economic/political exiles communist China no longer wants. All the while, there is no evidence whatsoever to support these accusations which makes it all too boring a read. We hear everything from Chinese grow ops to triad drug and prostitution rings to illegally borrowed money to finance borrowed money for the great Vancouver RE bubble…. (must I educate the uneducated with everything? H.A.’s control the majority of weed exported in Canada, and well over 90% of cocaine imports, asians control opiates outside of scripts and its free for all with all the rest, whether its E or meth, sex, you name it)

Meanwhile…. when it comes to the world of credit… where is the proof? Where is the hard evidence?

What, are some of us bloggers to lazy to copy and paste a link? Where has this talk ever gone mainstream? Yup. Thought so and all the while, to the more educated reader it reeks nothing more of belittling an individual/group to build one’s self up.

Its disappointing to witness “puritans” degenerate anywhere. Sadly, they exist here as well.

#222 Hoof - Hearted on 05.29.11 at 5:48 pm

#214 Utopia

I am not blaming the Chinese per se…and why would I.?

What unfolds is a reflection of Gov’t policy.

IMHO…the system in BC was rigged….Expo 86 bears far more scrutiny.

Vested interests set up BC to be a dumping ground for expatriate Hong Kong residents and their $$$$ prior to 1997 takeover of HK from mainland China.

The scandalous sale of the Expo lands to Li Kai Shing , which ,once audited, netted the BC taxpayer ZERO ..set in motion this money laundering.

Version (2) happened in early 2000’s when more HAM $$$ came to BC…as it was clear business as usual in China and HK

Unfortunately, previous immigrants who paid their dues the hard way, and their descendants…have not only ben pushed to the back of the bus..its off the bus and under the bus.

The HAM $$ are addictive to Gov’ts, they can’t admit it….now the cows are coming home.

it never should have happened, but its a cancer and a blight on everyones future.

Our so-called elected officials and our senior bureaucrats should have forseeen this, but then why should these gravy suckers care? …they get great pay and pension overseeing what is inherently is a major scam few really ever benefitted from.

Its a disaster in the making

I am not sure why your are in denial re HAM…when 99.9 % of the neighbours are of Asian descent…in expensive new digs….at least in my hood

#223 Imstupid on 05.29.11 at 5:51 pm

179 dean-o

Your first mistake was to pay your student loan so fast. You should have gotten tax planning advice to get the most taxable return on your loan payment. I don’t know how fast it was paid if it was over a span of one year or several years. If you already got advice to get the most tax benefit disregard what I said.

As for your home. It depends on several factors

1 how secure your job is
2 how much do you like the home and neighborhood
3 what is rent for comparable living standard
4 how inflated is the market relevant to household incomes is it 4 time average living or higher

My advice at this point is pure logical. Try to save at least 6 months living expences. I know that is seems essesive but better to have more rather than less. Don’t put that money in risky investments that’s what I call a war chest must be liquid and secure.

After you have that your sitting pretty. The options open up for you you can pay your mortgage off to become debt free or partially pay faster and get investment advice to set up in the future.

The point I’m trying to stress is that based on you household income and mortgage amount you should have nothing to worry about. Who cares where the market goes if your happy with your life.

I know others are going to say things like sell your crazy. Im not stupid I know prices will correct eventually. And when they correct you won’t lose that much. This is why to sell you lose 5% realtor fee plus legal fees and mortgage penalties. It will probably end up being 7% of sale price total. Then you have to rent and let’s say maintainence of your home is price of half the rent. The remaining half would be gone if your rented if you stay that half would pay interest and some principal. You would rent for 2 years by the end even with a 20% correction you would break even. The fact is that you did what others didn’t and that buy a house to make a home well within your budget actually below your budget. So would two years of sacrifice be worth 10 20k if that that’s up to you. But by the way you expained your situation your happy and you can’t put a price on happiness.

#224 lesser-fooled on 05.29.11 at 6:00 pm

Daystar:
Now… go on and y’all tell me that China is a backward nation who’s sole wealth comes from stealing, ignorant fools…
_____________

Yeah right, so muslim terrorists are not dangerous because you have a video of muslims building a house??

Why dont you go live in China and see how many people don’t Scam you?
Enjoy it there with your kids and feel free to let them try a job at the local manufacture plant…
Oh and by the way, dont forget that you have no free speech there, dont speak against government to anyone cause surely, they will tell their dictators about it and you’ll end up in jail,
Enjoy!

#225 lesser-fooled on 05.29.11 at 6:04 pm

Daystar, by the way did you ever hear about fake eggs? fake rice?
drywall giving cancer to homeowners?
baby milk with melamine?

But don’t worry, you won’t hear about those in China, for they control the internet!! Muahahahahahahahah

#226 Cato on 05.29.11 at 6:07 pm

#193 Daystar – I’ve found most of the time prejudice is due to fear. We are about to enter an age Niall Ferguson has referred to as the eastern ascendancy. The world many thought they knew is about to change, and the scale of change could rival the change brought about by the great wars. Perhaps China is simply taking the place it rightfully should have occupied 500 years ago – perhaps western dominance was an anomaly that never should have existed.

I personally can’t fault anyone from china using any advantage at their disposal. In my personal dealings I’ve met some who are true entrepreneurs, but I’ve also met others who clearly have enriched themselves on the backs of others utilizing an authoritarian regime as a tool for slavery. Do we have any moral obligations as Canadians in welcoming this money that is seeking to flee the misery it created or is a dollar simply a dollar regardless of where or how it was earned.

The world we thought we knew simply cannot exist any longer, no matter how hard those in power attempt to perpetuate the unsustainable economic model. China deliberately manipulated its currency to its advantage and western governments were full willing participants. We did not live in a free & open market, but in centrally planned economies where the winners & losers are decided by gov’t policy.

The free flow of cheap goods benefited western consumers – it artificially boosted standards of living that never should have existed. Its been going on for nearly a generation, many simply cannot imagine life any other way. It was political suicide to question that economic order and those in power played on the short term political gains to be had perpetuating it further. Its brought us to the point of collapse.

The world simply cannot exist with one area of the world producing goods for sole benefit of another that produces nothing in exchange. This is the crux of our current calamity. Had the free market been allowed to exist it would have delt with that imbalance harshly and we would have been forced into a model of sustainable trade. Instead the trade primarily flowed in one direction – they manipulated their currency, and we manipulated our debt.

As shocking as examples are of China’s misallocation of capital & resources (ie ghost cities) it doesn’t compare to allocations they have gotten right. The scale of industry over there is unfathomable for those who haven’t witnessed it first hand. The trade imbalance has shifted the worlds economic engine, and its not going to be easy for the west to get it back. Its going to take a complete economic reorganization to set things right. Its going to be a difficult transition on anyone who isn’t prepared, most aren’t and this fear could bring about some unpleasant political consequences.

#227 eddy on 05.29.11 at 6:55 pm

Defense Against the Psychopath (Full length Version)

(37 min film, but well worth watching)

http://www.youtube.com/watch?feature=player_embedded&v=MgGyvxqYSbE

#228 BPOE on 05.29.11 at 6:56 pm

Shiller, the american and Junius all kicked to the curb as Vancouver powers over all the naysayers. Folks the news is in and it is FANTASTIC. Folks were going higher AGAIN! Folks, interest rate announcement coming and don’t be surprised with an interest rate DROP. Worst case scenario is interest rates staying put.
_______________________________
With the Bank of Canada now widely expected to hold off on a rate hike at least until autumn, house prices in Canada are likely going to stay hot for a few months longer.

The central bank will again leave its benchmark lending rate unchanged at one per cent at its regular policy announcement on Tuesday, according to the unanimous result of 22 economists surveyed by Bloomberg News.

With signs the U.S. and global economies have entered a soft patch and the European debt crisis continuing to roil, most economists do not expect the bank to raise its overnight target rate until at least September. That would mark a full year on hold for the bank, which last raised rates in September 2010.

The upshot is, these ultralow lending rates will continue to a fuel a Canadian housing market that appears in full spring bloom. Average prices hit $372,544 in April, up eight per cent year over year for the third straight month, led by a supercharged Vancouver market.

#229 realpaul on 05.29.11 at 7:05 pm

#216 Utopia…….Victoria is worse……not by a long shot. Both cities purge raw sewage into the surrounding waters…Vancouvers pushing out nrea ONE BILLION liters every day. Victoria should be ashamed….Vancouver should be arrested….by comparison.

Anytime I watch the kids rolling around in the sand at local beaches I feel sorry for them that they have been so misled as to not realise they are coating themselves in hospital waste and feces. I don’t want to think about the sweaty volley ballers desperate for activity in this crap mill of a no culture town .

People wonder why their kids and pets come down with all sorts of illnesses and skin rashes. Don’t they recognize the English language signs warning of coliform in the sand and water? I don’t know about you…but that much fecal matter….any amount of crap is no where to place your kid down into. There have been cases of serious infections…..but you’re not going to hear about that from the Vanc Tourism ghouls that are pimping for the hotel trade. Swimming……..are u kidding?????? I have a cleaner toilet than English Bay.

#230 Nostradamus Le Mad Vlad on 05.29.11 at 7:07 pm

-
#195 miketheengineer — Hi Mike — Good to see you’re still hovering!

Thanks for the link. ‘Quake time? Don’t bet against it, as there’s lots of change happening daily now. Keep in touch!
*
Nuke FF Sheeple are expendable.

12:47 clip Big Banks ripped people off before, so they will do it again. Unsustainable “Of course the debt is unsustainable. It was never otherwise! Private Central Banking is a system of the money-junkies, by the money-junkies, and for the money-junkies.” wrh.com. Egypt “This is a “crisis” only in that the US and Israel are opposed to Islamic governments that avoid central banks and who refuse to do as they are told. The “crisis” is that the Muslim Brotherhood is doing what HAMAS did in their post Shin-Bet days; actually acting like a government taking care of the people, rather than politicians posing for TV cameras.” wrh.com.

Insecticide Yes, we’re eating it courtesy of GM foods.

Texas, like Utah and Vermont will eventually walk away from the US, primarily because of the US Fed, the Pentagon and WH. Other states will go their own way. Chances are good provinces and territories up here will do the same.

Record Snow in Yosemote waterfalls and area. GW? Sure, and pigs fly too.

Cybernutz “And JUST in time to support Obama’s call for a more secure (under government control) internet! See Senior Defense official hedges on US involvement in Stuxnet here. Google Speaking of Google . . .
Vampires The world needs a good clear-out, a spring cleaning of the best quality. Begin with the elite!

Liquid Lithium Not as good as draft Guinness, but not bad!

Not CSI “Not quite the image of police work you got from CSI, is it?” wrh.com.

4:57 clip Is the US the next USSR? Both Soros and Obama have read Karl Marx, so I wouldn’t put it past them.

#231 lesser-fooled on 05.29.11 at 7:59 pm

The more I think about it, im taking a guess at BPOE being right!!
I mean they are 1 BILLION in China!!! Even if the economy slows there, all it takes is that 5% (or maybe only 1%) of chinese wants a home in Vancouver and the price can go up to 10 million for a SFH thats 20×20

* People choked, brutalized then arrested for kissing and dancing in the US after order of the judge to “no dancing” in the Thomas Jefferson (king of free speech) memorial
http://www.youtube.com/watch?v=8jUU3yCy3uI&feature=share