Leading indicator

In downtown Vancouver, in a premium building with the best view, he’s delighted to have finally received an offer for his condo. That’s the good news. The bad news? It’s conditional on the buyer selling his own unit in the same building. “And nothing’s moving,” he says. “The market just cooled.”

Across the ditch in Victoria, where the average house prices is still $600,000 and the average family income’s barely $76,000, an immaculate, updated mansion in the prestige Uplands area was just reduced in price. Again. It’s the fourth chop, from $1.8 million down to $1.3. “The vendor is quite flexible,” the listing agent says. “Just offer something within reason.”

In Calgary a 39-unit condo development, nearing completion, was announced as sold out weeks ago. Err, not exactly. This mass email just went out:

ANNOUNCEMENT OF A SPECIAL OFFER
For You, Your Family and Friends!

We only have a few units left at Varsity Landing and we want to present you with a special offer.

We will give you $2000 if a friend or family member purchases a home at Varsity Landing.  In addition, we will give your friend or family member six months free condo fees!

Simply register your friend or family member with our Sales Centre, and if they buy a home by October 31, 2011, our lawyers will send you a cheque for $2000 when they close.  It’s that simple!

Back in Vancouver’s hottest hood this year, the west side, a listing which hit the market two months ago at $2.6 million, with the vendor expecting freshly-arrived horny Asians to turn his front lawn into a bidding-war battleground, sits. No offers. No war. New price.  The owner sighs and says it all looked promising, until a flood of properties hit the market – and the buyers left.

Anecdotal evidence of a tectonic shift? Absolutely. Nothin’ scientific about this stuff. But then, that’s the thing about real estate markets. They’re 90% emotional and 10% economic. People buy when everyone else is, and the perception exists of a rising market. Then, just as emotionally, they stop when sure-thing price gains look illusory and everybody worries about all that debt. More than with any other asset (the possible exception is gold, down again Wednesday), buyers create their own market. This is why you can have dumbass prices in Surrey or Oakville, and yet crickets down the road in Abbotsford or London.

This week the establishment spit out new numbers to disprove any real estate slowdown. Here’s the Teranet-National Bank index, for example, trumpeting a 1.2% price hike across the country in July, from June. Annualized, that’s a blistering 14% increase, at the same time most other assets on the planet are being sold off.

In five of our six biggest cities, this report says, housing prices are at record highs. But at the same time, US real estate continues to crash. That country’s leading measure of house prices, the S&P/Case-Shiller index, is a morass. Says founder Robert Shiller, prices have 10-25% yet to go and will not bottom “for years.”

If this contrast does not make you question things, you’re not paying attention. Canada’s very economic health depends on two things – US demand for our stuff, and commodity prices. Last time I looked (a few minutes ago), both were about as robust as Michael Jackson. Not hard to understand why couples would now be reluctant to borrow hundreds of thousands to buy houses at record high prices. But it is hard to fathom how Teranet-National Bank, or CREA, or Scotiabank (a new report says housing is a ‘notable outperformer’) can ignore their professional responsibilities to put these numbers in context.

I don’t worry for the people who come to this pathetic blog. They’re already over the top. But I do fret for the young couples who believe the house-pumping puff pieces in the local rag, the misleading social media campaigns spread by developers or the push-up anchorettes on Global.

Stop worrying about equity markets, precious metals or forex. Real estate is now the most dangerous asset class in the nation.

In the real world, anecdotes are leading indicators. Indices lead astray.

166 comments ↓

#1 49 on 09.28.11 at 6:45 pm

Thanks very much for the blog…
I’ve noticed that comments tend to consist of rants, gloats, anecdotal observations, links to websites/information and responses to your commentary.
Have you ever thought of having 2 areas to post:- One for data and links to data (eg 2010 June Regina RE sales data), media articles etc. and one for comments, speculations etc?
An RSS feed to a part of the site which would capture news items per key words such as “Canada”, “Real Estate” etc. may also be of value as well.
I know that I could set up custom searches on my own for all of the above, but would rather get this info from your site.
Hope this doesn’t sound critical, as you run an awesome website, with some great perspectives on issues germane to us all…

#2 Off the river on 09.28.11 at 6:52 pm

Anecdotal evidence indeed. With all the science that has been behind the “Economists” who run this stupid country, I’ll certainly take the advice of the guy who writes this stupid blog.

Grath any thoughts or ideas on Currency trading? Where do you think the CAD will go?

#3 vatoDETH on 09.28.11 at 6:52 pm

Falling oil prices drag Canadian stocks lower

http://www.marketwatch.com/story/falling-oil-prices-drag-canadian-stocks-lower-2011-09-28?siteid=rss&rss=1

BMO predicts loonie will hit 93 cents by end of 2011

http://montreal.ctv.ca/servlet/an/local/CTVNews/20110928/loonie-economy-markets-110928/20110928/?hub=MontrealHome

#4 Jon on 09.28.11 at 6:57 pm

First!

#5 Dan in Victoria on 09.28.11 at 7:03 pm

And in Victoria
I just checked my realtor e mail for houses with suites 16 listings, one back on market, 5 current, 10 price reductions.
The others will be adjusted shortly too I would guess.
Lots are sitting and are being reduced in price.
(At least the ones that I track)

Went into a resturant for lunch today with a friend most times you wait for a seat…
Today half full, still crappy service……
Things (too me) seem to be on a razors edge.

#6 martin on 09.28.11 at 7:04 pm

great !!

#7 martin on 09.28.11 at 7:04 pm

you are fun to read men

#8 firrssst.again on 09.28.11 at 7:07 pm

“they’re not making any more land”

#9 bigrider on 09.28.11 at 7:22 pm

I sure hope your ‘anecdotal’ evidence of a tectonic shift in RE is correct this time. I can tell you my anecdotal evidence tells me people are fed up with the equity markets for sure… not so much RE.

#10 LB on 09.28.11 at 7:25 pm

Query:

“……real estate is NOT the most dangerous asset class in the nation”.

Should that read:

“……real estate is NOW the most dangerous asset class in the nation”?

#11 Dave on 09.28.11 at 7:27 pm

As always, enjoy reading your blog & advice Mr. Turner.

#12 Spiltbongwater on 09.28.11 at 7:28 pm

I saw an advertisement in Sundays paper for new houses in Maple Ridge B.C. Buy now and only pay $9?? for the first year for a 1/2 million house. Yeah, buy it and next year watch your payments go to $1900 monthly.

#13 ballingsford on 09.28.11 at 7:35 pm

No kidding, a rental neighbor of mine recently bought a home in the Suburbia neighborhood of Kanata. Move in date is November. He’s kinda young and not from this Country. Living with his Dad.

He asks me “When are you going to buy?”. I reply “Once the housing bubble burst is over.”

He responds that “Housing prices never go down, only up!”.

I say “Is that so?!?!?!”.

What else could I say. Neighbor guy thinks he’s smarter than the average Joe so why bother wasting time explaining things to him and getting nowhere.

I don’t like him much anyway!

#14 Drew on 09.28.11 at 7:36 pm

Ultra early post. Is this a sign? Garth must be preparing for a big trading day tomorrow? Let us know man, we want to tag along!

#15 Patz on 09.28.11 at 7:36 pm

I think it’s too late for all but the luckiest or most aggressive, price–cutting seller. Hope you have a pretty sign; you’re gonna be watching it for awhile.

#16 Onemorething on 09.28.11 at 7:37 pm

“But then, that’s the thing about real estate markets. They’re 90% emotional and 10% economic.”

Well, that’s what those stuck “priced out” are hoping for right now.

I personally dont care if I ever purchase another property if the numbers dont add up. There will be so many other liquid plays which dont include high taxes and maintenance.

Canadians, like the Aussies/Kiwis sitting in those commodity countries while finding RE relief may also find tighter lending and job loss a barrier.

Get used to renting, having to move the family for work to make ends meet. My parents moved over 20 times during the 30′s into the 40′s.

While RE prices were artificially climbing the last 10 years so did your salary and the need for your job.

Also, Asians who have relied on RE as a safe haven for so many years will now look to alternatives.

It’s a game changer coming! Look at the EU, look for protectionism, look to the G7/G10 coordinated talks to go sideways and this whole effort to take down the markets.

#17 Honus Wagner on 09.28.11 at 7:47 pm

“Real estate is not the most dangerous asset class in the nation.”

Did you mean ‘noW the most dangerous…’? Or going for sarcasm?

Corrected. — Garth

#18 bigrider on 09.28.11 at 7:47 pm

Anyhow, 60k price reduction on a house for sale on my street after three weeks on market.

I hope there is a second reduction and a third.

#19 Extron on 09.28.11 at 7:47 pm

Thank You Garth for your insights.

#20 Wills on 09.28.11 at 8:01 pm

“…Stop worrying about equity markets, precious metals or forex. Real estate is __not___ the most dangerous asset class in the nation”

– is that what you meant to write?

Nope. Fat fingers syndrome. — Garth

#21 michael smith on 09.28.11 at 8:01 pm

“Stop worrying about equity markets, precious metals or forex. Real estate is not the most dangerous asset class in the nation.”

Enough said.

#22 lotuslander on 09.28.11 at 8:01 pm

My favorite weather predicting”for sale” sign on West 57th between Granville and Oak St flipped right over on its post due to the heavy winds the other night. No one has fixed it in 2 days. The sign has been up for 3 months now. I use the “for sale” signs around the West Side as weather vanes … when the wind blows from the West it means good weather while a wind blowing from the East means storms are coming.

On my morning drive along SW marine Drive and up Bleinheim I have noticed a lot more signs have popped up in the past 2 weeks ensuring I will be able to forecast the weather for some time to come.

What the news reports don’t show you about Vancouver’s West Side is that more and more old established businesses have brown paper covering the windows and “for lease” signs displayed. The Starbucks at the corner of 18th and Dunbar has been out of business for a year now. I have never seen Vancouver look so sad and unkempt as it is right now, neglected lawns and hedges in front of once-beautiful homes, now waiting for a buyer that hasn’t come.

#23 bill c on 09.28.11 at 8:02 pm

Whats that I smell. Is that a buyers market. Or is this the end of real estate in Canada.

#24 Timing is Everything on 09.28.11 at 8:16 pm

#14 Drew said “Ultra early post. ”

I took my meds too early today, Garth…Thanks a lot. Now it’ll take me 3 days to get back on schedule.

#25 Pathetic Pete on 09.28.11 at 8:38 pm

Garth said, “don’t worry for the people who come to this pathetic blog. They’re already over the top.”

Sir Garth, are you saying you feel we, the people of this pathetic blog, have gotten the message and hence you don’t need to worry about us or do you see us as lost causes?

Let’s vote on that. — Garth

#26 stage1dave on 09.28.11 at 8:40 pm

I’m still trying trying to visualize the offspring produced by the amorous devotees of Amway & the Hitler Youth…LMAO!

On the realistic side of things, sister & brother-in-law (who’s NOT an idiot, btw) in Calgary have decided after 3 mos of no showings or interest in their 750K “inner city” attached bungalow (duplex?) to switch the mortgage to “interest only” & rent to corporate clients to pay the mortgage.

(Isn’t an “interest only” mortgage kinda like “military intelligence” information?)

On the island, my step-sister took a 40K haircut on a nice working man’s bungalow (with a basement!) to get out of their mortgage commitment. (279K asking, 234K offer; 240K sold)

Top of the market appraisals on these places were almost 790K & 320K respectively, btw.

In Edmonton, everything is rosy apparently…with SF dwellings selling in the 360-370K range compared to 453K in ’07, NOW IS A GREAT TIME TO BUY!

The GF & I are resisting that urge somehow, but continue to fill the shop compound with restorable Buicks, Fox bodies, & the odd GM musclecar in need of TLC. (68-71 Mopars are still too damned expensive) The downstairs is being taken over vintage japanese guitars & my proliferating OPC collection.

On a completed unrelated note, my previously mentioned brother-in-law (did I mention he’s NOT an idiot?) has retired from his teaching career & decided to market my aviation artwork to occupy his spare time…I sure hope this venture outperforms the Calgary RE market!

This post had better be into the double digits; no FIRST-crap here…

#27 Mr. Lahey Trailer Park Supervisor on 09.28.11 at 8:45 pm

Stop worrying about equity markets, precious metals or forex. Real estate is now the most dangerous asset class in the nation

What Garth is saying in Lahey talk is very simple. The real estate shit hawks have arrived!

#28 T.O. Bubble Boy on 09.28.11 at 8:45 pm

Almost all Preferred Shares lit up GREEN today, and still pay those juicy tax-efficient dividends (unlike Yellow Media).

#29 I'm stupid on 09.28.11 at 8:45 pm

Hi Garth

I had a question I hope you or anyone else can help me with. I was a the bank today talking the nice lady at the bank. I asked the following question

What happens in the event of a capital loss in your TFSA account? Can you top up the account to bring it back up to the current max of 15k?

She proceeded to call her head office then revenue Canada. Apparently nobody ever asked that question. Hope anyone can answer. It would be usefull information since I aggressively trade that account.

Thanks

Nobody cares how much money you make or lose inside your TFSA. You can place only $5,000 of new money inside the account each year. If you lose it all, your problem. If you double your money, nice. But you cannot replace losses with new money. If you make a withdrawal of original funds in one year, they can be replaced – but not until the next year. In other words, in 2012 the amount you can have deposited in total cannot exceed $20,000 over four years, regardless of investment gains or losses. Shame on the bank. — Garth

#30 Stevenson on 09.28.11 at 8:50 pm

Very interesting that we seem to be ignoring the how everyone(scotia bank, Teranet-National Bank, CREA) is wrong and what we believe is still correct. Hmm..maybe bigfoot is REAL?

So there is a unit that has not been purchased? We should jump all over that news?? Well then here’s news too… Toronto house sold 71,000 over asking price in a bidding war. Does this mean we are out of hope already?

http://www.theglobeandmail.com/life/home-and-garden/real-estate/done-deals/bidding-war-drives-selling-price-of-bloor-west-home-up-71000/article2167122/

You realtors never learn. Bidding wars destroy markets. — Garth

#31 Ben on 09.28.11 at 8:52 pm

You can’t day trade real estate. Isn’t this volatility in the equity markets heaven? I love it!

#32 Kilby on 09.28.11 at 9:02 pm

What happened at the “big meeting” between Harper, Flaherty and Carney yesterday? Haven’t heard anything. Maybe they are waiting on the vote in Germany tomorrow??

#33 Jamaican_Gal on 09.28.11 at 9:13 pm

Garth, thanks for all the hard work you put into this pathetic blog. I come here everyday without fail and do enjoy your posts and the ensuing banter.

Thank you, kind sir. At least I know I won’t be “the sweaty thing in the night” if I continue to heed your prudent advice.

#34 Tim on 09.28.11 at 9:18 pm

It seems as though almost every type of asset except gold and real estate has tanked. THough it has tanked in many other places, it seems to hold up in Vancouver. I guess if we wait long enough, Garth will finally be right!

I have never forecast that real estate would tank. But it will correct – in some places mildly, in others wildly. And I am already right. — Garth

#35 One Defrauded on 09.28.11 at 9:18 pm

Listening to the MS talking RE heads on radio yesterday in SW Ontario, banking/RE analyst stated “The RE market is improving greatly for the housing consumers” sounds to me like RE decline has indeed begun, but it is in how you say it to so as to not panic the heard and hasten the descent that counts.

Two years ago I drove out to AB via the trans-Canada and noticed the large number of hotel/motel businesses for sale along the route especially north of Superior….

Things have changed and I noticed many of those same businesses are not operating, they are just boarded up! Expectations and lives broken, but I wonder where did those folks go? Do they feel defrauded of their dreams?

#36 Keeping the Faith on 09.28.11 at 9:21 pm

#30 Stevenson = Loser Real Estate Pumper

#37 I'm stupid on 09.28.11 at 9:25 pm

Thanks Garth

#38 jess on 09.28.11 at 9:30 pm

NOAA’s Climate Prediction Center: La Niña is back
September 8, 2011

#39 Stevenson on 09.28.11 at 9:31 pm

#36 Keeping the Faith

I am not a realtor and unless you bought a few properties during 2008 and sold them the past 2 years. I am the winner and your the loser.

Oh are you on the waiting list too?

#40 Stinky the Fish on 09.28.11 at 9:43 pm

God, I’m so wastted/ Sorrru Garth I’ve gott nothing today extra to sayy/

#41 Nemesis on 09.28.11 at 9:44 pm

“I do fret for the young couples who believe the house-pumping puff pieces in the local rag, the misleading social media campaigns spread by developers or the push-up anchorettes on Global.”… Hon. GT

‘Nem’, too. It’s why we do what we do.

A ‘public good’. Pro Bono (the best ones always are – e.g. Nostra’s trawlings through/links to the ‘fringe’; which, co-incidentally, save some OSINT analysts so much time they’ve erected a shrine to him in their bunker cubicles).

“In the real world, anecdotes are leading indicators.”

Hallelujah, GT.

They’re even better when you aggregate them and run them through the ‘Kraken’ (it’s a SuperComputer). Field work helps, too.

Now get to work on those political anecdotes and gift us a Roman a clef. The laughs will come in handy… or failing that, the denouement of the family holiday dinner featuring your brother’s outré guest.

#42 Habbit on 09.28.11 at 9:48 pm

Thanks again Mr. Turner for trying to educate the young folk and the clueless. Oh, and me too.

#43 City Slicker on 09.28.11 at 9:49 pm

in 2012 the amount you can have deposited in total cannot exceed $20,000 over four years, regardless of investment gains or losses. Shame on the bank. — Garth
————————————————————
Garth does this mean if you scored a big capital gain you can’t keep more than $20,000 in there??
Please clarify.

Incorrect. The TFSA can hold unlimited amounts, but only $20,000 (by 2012) of that can be contributed. The remainder must be earned within the plan. — Garth

#44 neo on 09.28.11 at 9:52 pm

“But then, that’s the thing about real estate markets. They’re 90% emotional and 10% economic.” – Garth

Couldn’t the same be said of the roller coaster stock market right now?

Homes don’t pay dividends or generate operating profits. Scant comparison. — Garth

#45 penpal on 09.28.11 at 9:53 pm

Copper fell 7.23% today.

It is down over 25% from recent highs and is an acknowledged bellweather of global economic health.
It is telling you that economic activity is slowing dramatically.

The commodity currencies (Australian, New Zealand and Canadian dollars) weakness confirm this indicator.

Economic contraction is and will be the global state of affairs for a while.

Canadian RE market is cooked, price action all to the downside now.

Time to pay the piper, suckers!

Gold just fell back into the $1,500 range. Commodities take it on the chin when economic growth recedes. — Garth

#46 Nostradamus Le Mad Vlad on 09.28.11 at 9:55 pm

-
“. . . until a flood of properties hit the market – and the buyers left.” — The co-relation between the pic and that sentence can be traced to what happened Boxing Day 2004 — everyone was frolicking in the water, having a great time.

Then the tide receded, as it always does. But the ocean went silent, and only the locals could see there was something wrong, and so left, pronto. The animals had already gone to higher ground a few days earlier but again, no one noticed.

The tsunami hit, flattening and destroying everything in sight and nothing could stop it. History rhymes and repeats, we’re just too blind to see.
*
Civil Liberties Kinda goes with economics; Bailouts Curious as to why the western govts. have agreed to bail out the Eurozone, that debt is being passed on to families, a lot of whom are unemployed. Where do govts. think the money will come from? A fairy godfather? 1:27 clip Frugal living; Peasant Hunting for the rich; Ben’s Monty Python Moment “We seriously wonder if he bothered to proofread his speech in Cleveland yesterday.”; Geithner “This is the bank that has provided the $500mm to Solyndra.” Obummer was involved (in some way) with Solyndra; 1896 Was this person right on the money or what!

Canary Islands Also a sign of the times; The Shah of Iran Yes, that is correct. Iran was allowed to build Nuke power plants, but not under the present system. Who is a corrupted, two-faced liar? NATO’s war on Libya is directed against China, which also incl. Russia, Pakistan and Iran. If one pokes the bear too frequently, it will stand up for itself, and wipe thee poker out; Fukushima The govt. is trying to keep its people ignorant, with the blinders on; FBI FF’s “And BTW having built model airplanes myself, they don’t carry extra payload, certainly not enough plastic explosive to be anything more than a very expensive fire-cracker!” wrh.com; Facebook More naughties; 4:22 clip Palestinian bid in to become a state, US and Israel against it. I understand Section 377 of the UN Charter allows a would-be country to avoid a vote altogether, so Palestine may choose to go that route; Alternative news sites under attack by French police.
*
Flying Pig over Scotland? What do they have in common?

#47 Stinky the Fish on 09.28.11 at 9:56 pm

I love this site!!!

#48 penpal on 09.28.11 at 9:59 pm

# 39 Stevenson

you are a genius…c’mon admit it

might as well, it’s the internet after all and you re an anonymous poster after LL .. c’mon tell us how great you are and how smart you are

if you were anybody pal, you wouldn’t be bragging about it on a blog

#49 Stinky the Fish on 09.28.11 at 10:04 pm

My buzz is slowly coming to a close. Maybe I’ll pack it in for the day…

#50 CyberNick on 09.28.11 at 10:12 pm

I heard an other anecdote: One of my wife’s co-workers has a friend who’s house sold in 4 days for $60K over asking at $740K in the Westboro neighborhood of Ottawa. Apparently the “winning” bidders were a couple in their thirties.

So, is anecdotes all we have to go on? Where is the real raw data that we can plug into excel and analyse for ourselves?

Another thing I heard is that banks don’t always approve mortgages for outrageous bids even if is within the pre-approval limit for the bidders. That would be prudent of them, but I kind of doubt that they do it. Anyone know for sure?

#51 Markey on 09.28.11 at 10:42 pm

What planet is this guy from? http://www.businessinsider.com/lessons-from-the-canadian-housing-market-2011-9

#52 nonplused on 09.28.11 at 10:43 pm

Nice post again tonight Garth, you are on a roll.

I still think real estate, or specifically housing prices, are a function of income, interest rates, and lending practices. Right now the lending practices are a bit more sane but still loose, rates are stupid low, and the income side is the one under pressure. But any one of the three can start a correction if the other two cannot be ‘adjusted’ to compensate. I don’t see how rates can go lower unless CMHC starts paying people to take a mortgage. Lending practices are already recklessly loose. Income is declining for many people.

Here is some food for thought: Now that the Australian real estate market has vapour locked, Canada is the only country in the western world where housing prices are not falling. Why are we so different? Different even than Australia? It’s not like we have a land shortage. We have one of the lowest population densities in the developed world. Mind you, Canada is mostly uninhabitable, but that goes for both the developed and the undeveloped land.

The one thing Vancouver has got going for it is that you won’t freeze to death if the power goes out for a few days.

#53 JohnnyBravo on 09.28.11 at 10:45 pm

Some of you might be interested in this piece, called “The Dirty Big Secret of the Home Ownership Delusion.” It’s about home ownership in Scotland, but perhaps there are some parallels to Canada.

http://www.renegadeeconomist.com/news/the-dirty-big-secret-of-the-home-ownership-delusion.html

#54 Waterloo Resident on 09.28.11 at 10:48 pm

Hi Garth !
I’ve got a GREAT IDEA for your blog !

Look at the Globe and Mail and when they have comments someone can then post a reply to someone else’s comments, that should be what you do here too, so that people can post a comment to someone else’s comment.

Just my little idea, I hope it helps.
Take care.

#55 TurnerNation on 09.28.11 at 10:58 pm

#27 Mr. Lahey Trailer Park Supervisor on 09.28.11 at 8:45 pm

What you need to remember is: A Sh!t leopard never changes his spots Randy.

#56 eddy on 09.28.11 at 11:00 pm

interesting podcast about banking-

Ellen Brown
Economic meltdown

http://radiofetzer.blogspot.com/

#57 Toon Town Boomer on 09.28.11 at 11:01 pm

Garth that correction you mention, what’s it gonna be in Saskatoon wildy or mildly?

#58 not 1st on 09.28.11 at 11:02 pm

Homes don’t pay dividends or generate operating profits. Scant comparison. — Garth

True, but they also can’t go to zero, like stocks can, they aren’t controlled by a corrupt board and you get to live in your investment too. Thats real estates dividend.

Ever heard of Detroit? — Garth

#59 Zamphir on 09.28.11 at 11:13 pm

@Stevenson

Do you know how to use your and you’re correctly in a sentence? If not, you’re sounding more like a realtor.

#60 Bobby on 09.28.11 at 11:32 pm

I have been looking at homes here in Victoria. There is lots on the market with many sitting empty. No they are not moving.
If the mansion in Uplands has dropped significantly other homes will follow suit.
An economist from a Credit Union in Victoria was on the radio today saying that prices will always stay high in Victoria. The same old rhetoric, only so much land, USDA, yada, yada. Obviously he hasn’t lived here long and witnessed the crashes in the past. Perhaps he should get out of his office more and have a look around.

#61 Peter B on 09.28.11 at 11:38 pm

I predict that if house prices do fall in Calgary condos will get hit hardest. Here are my reasons.

Condo’s are somewhat new to Calgary. Meaning the people who live in them have not been paying off their mortgage for long and will be more tempted then someone who has owned a house for 10 or more years to send the keys to the bank. (this will also be helped by the fact that in Alberta banks can only go after the property)

Once people start abandoning the Condo the building still has to be maintained even it many of the units have been abandoned. This means higher Condo fees leading to more abandoned condos.

I can’t say for sure but I suspect a lot of these Condos are being bought by fools as investments. I also suspect that these fools have a higher debt load then the rest of us.

Finally, bedbugs love multiple unit buildings. You spray or heat treat in one apartment you they just go to the next apartment. This will be an even bigger problem with high rise condos (aka all you eat buffets for bedbugs). Renters will be counting the days tell their lease expires if the building has bedbugs. Also they will be reporting the address to http://bedbugregistry.com/ making it even harder to rent or sell those condos.

#62 The InvestorsFriend (Shawn Allen) on 09.28.11 at 11:43 pm

SHILLER A SHILL FOR DOOM?

What is with Gary Shiller and his doom?

In fact his own index shows United States House prices rose slightly in each of the last four months (July, June, May and April).

His own, 20-City index was:

March 137.63
April 138.43
May 139.81
June 141.48
July 142.77

Read it and (don’t) weep.

(you may need to sign up for a free password)

http://www.standardandpoors.com/indices/articles/en/us/?articleType=XLS&assetID=1221192472066

Even with seasonal adjusting it is still up these past four months, though in that case May was flat. I am not sure seasonal adjustments apply after a 35% crash… recoery from the crash may over-whelm any seasonal tendency.

He also keeps bleating that his seasonal adjusted P/E is still high at 20. I don’t know I calculated same for the DOW and it was 17 times the average of the past 10 years earnings and this is lower than the average historical of 20 times.

I think Shiller is some kind of perma bear.

#63 Westsider on 09.28.11 at 11:50 pm

It’s not over yet!!!Last weekend a house across from me on the westside was for sale for $2.2 mill. A realtor bought it for $1.88 last year. There was a line-up of expensive cars and Asian families for the open house. “For sale” sign up the same day.Just an anecdote!!……and a house 2 doors down still has the Christmas wreath on from last year.

#64 City Slicker on 09.28.11 at 11:54 pm

Incorrect. The TFSA can hold unlimited amounts, but only $20,000 (by 2012) of that can be contributed. The remainder must be earned within the plan. — Garth
———————————————————–
Thx. Does this mean no more contributions or TFSA after 2012?

No, they continue. — Garth

#65 Gord In Vancouver on 09.29.11 at 12:07 am

Thanks, Garth.

#66 Don on 09.29.11 at 12:07 am

Declining commodity prices just as Garth has stated many many times. I feel a chill in the air.

I have made sure I lectured all my much younger siblings to wait this one out. In our family common sense rules. One of them is a realtor.

Garth and fellow bloggers like-minded or not, thank for all the knowledge and advice. Yes, even the nut bars and egomaniacs. Psst. It’s good to know what Nutty thinks.

Thanks for the blog Garth. Safety in truth

#67 Jon B on 09.29.11 at 12:09 am

With respect to #29 (I’m Stupid – I like the handle) and his experience at the local bank today, let’s all understand something here. It is possible that years ago banks were institutions that employed people who worked in local bank branches that actually held credentials in economics and commerce. Banks today in this country are NOTHING MORE than customer service centers. I doubt you will find a bank manager that has a degree in econ or an MBA. From my experience the average bank employee is like a grounded flight attendant interested not in my personal safety but in my personal indebtedness to their employer.

#68 Thetruth on 09.29.11 at 12:10 am

#45 penpal

Good post. Interesting info indeed.

#69 Don on 09.29.11 at 12:16 am

Dan in Victoria: I feel the same chill in the air in Victoria and you are right about the restaurants. No one is talking real estate at the water cooler or at the coffee shops like a couple of months ago.

Oh yah Garth, I know that’s not a real picture of a Vancouver Beach, because very few people actually swim in the ocean there. Tons on the sand, only tourists in the water. lol

#70 hobbygirl on 09.29.11 at 12:16 am

Shame on the bank. — Garth

Well what would you expect for an employee making $11/hr? Talked to a teller today, banks use slave labour.

#71 Clem on 09.29.11 at 12:26 am

In the real world the only anecdote that matters is your own.

#72 young & foolish on 09.29.11 at 12:33 am

… can’t understand all the confusion over TFSAs …. what happens in “the plan” stays in the plan but your contributions are limited to 5K per year ….

Oh, but RE does pay dividends … I pay part of my landlord’s salary!

#73 Nostradamus Le Mad Vlad on 09.29.11 at 12:35 am

-
#41 Nemesis — “. . . they’ve erected a shrine to him in their bunker cubicles).”

Yeehawww! I’ve made Dilbert status at last and my own cubicle to boot! What an honor! Where’s the pointy-haired boss?!

#38 jess — Hi Jess, just wondering if La Nina has some effect on transporting Fukushima’s stuff here? I’ll see what I find.
*
Give Greece A Chance The EU (and IMF) is responsible the current brouhaha and Banxters screwed the system up while none of us were looking; The Euro Delusion No more need be said; Probably goes with this link — UK Not the greatest place to live, according to Brits. They should try Baffin Island in January, free of charge; Update on quirky things “Today, the S&P opened at 1178. So, in real dollars, investors have lost 80% of their investment since 2000.”; Germany and US On a collision course; UK opposes Euro financial tax, wants it global; USPS Privatization? If so, means workers would probably go to McJobs wages.

Brazil, Europe, Govts. all over and Pennsylvania; Citigroup 20 year chart; EU Sustainable? “The Sixth Mass Extinction”; Cdn. Hedge Funds being seeded by CalPers?

Smart Meters in BC; Japan Radiation worse than expected. With the Canary Islands in the east, Japan in the west, guess who is in the middle? Russia and Iran Be prepared; Monsanto Bio-piracy, being sued by India; The Toilet called, but note the source — Cult Of The Guardian It’s dangerous; Ahmedinejad and Obummer Where does the trust go? Never mind the BS, but Germany’s democracy is fading. The Fourth Reich?

Put down that Carrot and back away slooooowwwwwwwllllyyyyyyyyy “Big Ag is scared that small producers are going to take away a little bit of the market share.”; Supercookies That’s how Facebook and others track sheeple, even when the programs are shut down. Better to unplug the computer; Northern Lights over southern England; Staying Sane in a dumbass world; The Police To Serve and Protect Dick Cheney; m$m junk Harper PM for 15 years? Siberia sounds exciting (or separation)! Libya The west may have lost, but they have also alerted China and Russia to what they’re trying to accomplish.

#74 John on 09.29.11 at 12:40 am

Garth – “If you make a withdrawal of original funds in one year, they can be replaced – but not until the next year. In other words, in 2012 the amount you can have deposited in total cannot exceed $20,000 over four years, regardless of investment gains or losses.”

Original funds and profits are not distinguished from each other in the TFSA, as you said no one cares. According to the TFSA website the amount you withdraw is automatically added to your limit for the following year, so if you have $30,000 in your TFSA you can withdraw it all tax free and your limit for the following year will be $35,000, assuming you have already contributed the limit in the previous years.

#75 Lawn (South) Asian on 09.29.11 at 12:47 am

I drive down Grandview Highway (West 12th Ave) in Vancouver every day, to and from work. I’ve never seen so many homes listed, as I have in the past couple of weeks. I always thought Spring was the “listing boom” time of year. Glad our places are pretty much paid for (valley home paid off, and condo in Van with very little left to pay).

I often look (okay, I’ll admit, mischievously) at the yuppie-wannabes driving their leased Bimmers and Benzes to their leased homes. I smile as I drive my paid for pickup home to my paid pad….

#76 Carp on 09.29.11 at 1:22 am

I feel bad for my friends. They moved from Ottawa to TO and bought an old house in Oakville that needed repairs, pipes bursting, commutes too long and lots more debt. They should have rented and listen to this blog. I hope they sell and come back here.

#77 Signpost in the bushes on 09.29.11 at 1:24 am

Garth, please check this out; Gordon Pape’s book “The ultimate TFSA Guide” suggests that one can replace any amount (including gains such as capital gains, dividends or interest) that is withdrawn in a given year during the following year, in addition to the new year’s allowance(?).

If the cumulative consumer price index for the years, 2009, 2010 and 2011 increases the existing $5000.00 allowance by more than 5%, then the new allowance for 2012 may increase to $5500.00

Yes, I said withdrawals can be replaced in the following year. — Garth

#78 lokoutbelow on 09.29.11 at 1:41 am

Garth, love the blog. Here is the problem, at some future point in time you are going to be right and the future is not far away, I hope, but the wife is getting impatient renting a matchbox in the sky and my personal credibility about the impending collapse of real estate prices in Lotusland is in serious jeopardy.

Here is a question, our favourite Minister of Citizenship and Immigration, the tough James Kenney recently issued a Ministerial order to “cap” the number of Immigrant Investors to be admitted to Canada at 700 applicants. In 2010 the number admitted was just over 3200.

In addition, I now learn that the Skilled Category of potential immigrants has also been capped at 10,000. Last year, the number was around 45,000.

Both these “caps” are in effect until July 1, 2012, then they reset to zero unless the Minister issues another order. I have never heard the rationale or the political spin for this order. Do you think this major reduction is contributing to the lack of buyers for expensive real estate in Vancouver? I keep hearing that if there were no immigrant buyers there would not be a real estate market in Vancouver/Richmond.

I mean, I don’t know too many Canadians who have a personal balance sheet that allows them to buy a $2Million+ 3600 sq ft place that was built in about 90 days. What exactly is the financial profile of a potential buyer at these prices?

#79 wetcoaster on 09.29.11 at 1:47 am

Victoria also just had a new condo development get put on hold. They blame the HST but I call bullsh*t, the tide is turning and the developers smell it coming up their backsides.

Toss in the Bear Mountain fiasco and all the burnt corpses littering the hillsides of Langford and the inevitable landslide is in motion.

http://www.concertproperties.com/news/press_releases/articles305.htm

#80 Crash Callaway on 09.29.11 at 2:13 am

That Calgary condo situation is damn near like deputizing bounty hunters to bring in buyers dead or alive.

This is almost as funny as the Calgary realtor on the TV news last week presenting the scheme that $1,000 in beer would be given to the purchaser of her house listing.

They’re getting desperate!

#81 Jimbo on 09.29.11 at 2:14 am

Gold will do whatever it takes to buck inexperienced riders off the horse. It will violently crash down (like it did a few days ago), rise up hopefully, fall again, and then fall some more. It will crush all the hopes and dreams of new gold speculators who thought they would get rich.

Their confidence will be shaken to the core and they will sell out of their position for a loss after asking themselves, “Gold? What was I thinking?” Once all the new investors are out of the game and turning their attention to a new hot story, gold will suddenly and unexpectedly jump much higher. You just watch. It might take weeks or many months, but it will happen.

I’ve been in this game since gold was $250/oz and that is just how it works. I’ve seen it over and over and over again. We’re 10+ years away from the true gold finish line, where we have a global manic bubble blowout and 90% of your neighbors have piled into gold.

Historically, gold is a great investment for economic “extremes” – deflation or hyperinflation. Do your homework. It’s a poor investment in “normal times” when there is business as usual.

Do you think we are in normal times? Nor do I.

#82 big jon the foolish renter on 09.29.11 at 2:17 am

Clearly prices are going skyward I live in a building where 2 bedrooms were selling at 460K two years ago, the recent realestate flyer I received the last 5 , 2 bedroom units averaged 429k, and that fall was the time to make the next purchase, as the next 6 months are the best time to buy/sell. I found this hard to fathom as usually sales are low through the winter, but the realesate agent states he is a marketing expert. I have lived here for two years for 22K, so I think I am ahead of the game, no monthly fees, no mortagage, no interest, and no commission and 30k drop in price. Anyway my girlfriend says I am nuts to rent on 130k salary but I think I will wait a bit longer before making the plunge into Vancouver real estate….

#83 Deliverator on 09.29.11 at 3:22 am

http://www.caseyresearch.com/editorial.php?page=articles/doug-casey-answers-hard-questions-about-hard-times&ppref=GLD419ED0911C

Doug Casey interview on what he sees coming.

The 12 minute mark is prophetic:

“I’m getting kind of interested in American real estate. If I owned Vancouver real estate, incidentally, I’d hit the bid tomorrow morning. This is one of the last remaining bubbles in the world in terms of real estate.”

#84 Your Mom on 09.29.11 at 3:55 am

Frankengranite

#85 Aaron - Melbourne on 09.29.11 at 4:18 am

today’s useless anecdote from Melbourne Australia:

Took a temp staff work colleague out for lunch as a thank you for leaping to our aid this morning.

Discussion turned to Real Estate at her insistence and she proceeded to divulge that she and hubby have FIVE investment properties – that’s their retirement plan she tells me. I’m guessing they’re each leveraged against another.

Stongly advised me to “put my stake in the ground – anywhere – prices always go up, ah, except at the moment.”

LOL. They always go up except when they don’t!!! What was almost even more hilarious was the advice to buy in particular suburbs of ill repute and questionable patronage. This was after the admission she regrets advising her neice to buy because now she is struggling with repayments.

At some point the penny will drop.

I didn’t bite much today in deference to workplace diplomacy.

#86 C on 09.29.11 at 5:15 am

On the Calgary MLS, we have noticed mutli-million dollar listings dropping by $1-2 million dollars over the span of a few years (it takes that long to sell many $1m+ homes in Calgary BTW).

The game is afoot!

#87 David B on 09.29.11 at 6:54 am

RE:

ANNOUNCEMENT OF A SPECIAL OFFER
For You, Your Family and Friends!

Does this mean cash back to all who have signed sealed deals in place in this unit?

#88 Q on 09.29.11 at 7:17 am

re; lotuslander and westcoaster….good observations. I have for 35 used Robson Street as an economic barometer. When you see the number of “available for lease” signs increasing on the worlds most expensive food court…. you know that a full B.C type collapse is coming soon….

#89 jess on 09.29.11 at 7:21 am

Outsourcing and detention bed investing
——————————

http://www.nytimes.com/2010/08/30/nyregion/30border.html?pagewanted=all

September 28, 2011
Companies Use Immigration Crackdown to Turn a Profit
By NINA BERNSTEIN
Private security companies have turned the detention of unwanted immigrants into a multinational industry with a history of abuse.

Detention centre riot: Criminal charges may be laid against some of those involved. (ABC TV)
Map: Sydney 2000 Related Story: Villawood takes stock after night of chaos
Related Story: Detainees being pushed to ‘breaking point’
A former immigration detention guard says the corporation running Australia’s detention centres, Serco, has been throwing raw recruits into Villawood without proper training.The former guard at Villawood, who wishes to remain anonymous, has revealed to the ABC’s Lateline program a privatised detention system in crisis.

He says problems at the Sydney centre have been building for some time so he is not surprised about this week’s riots.
=====================
http://www.serco.com/

public private
Through a 10-year public private partnership we now provide driver examination services at 92 centres throughout Ontario. We paid C$114m for the concession to provide these services directly to the public. This is the first contract of its kind in North America and demonstrates an attractive model for providing similar services elsewhere

#90 Mingeford on 09.29.11 at 7:37 am

Even the Hulk meister is feeling the pain:

A 65% reduction in asking price for his Florida pile. From $25 million to $8.85 million since 2006.

http://tinyurl.com/6bxch3m

#91 GregW, Oakville on 09.29.11 at 7:53 am

Hi Garth, I recall hearing the Mayor mention recently that depending on the outcome of the Provincal election, if the uploading is cut, thus the planed operating budget that is expecting the uploading moneys with need to change or property taxes could go up as much a 6% in order to generate the short fall.
(It’s not an exact quot.)
My feelings are a 6% property tax increase, ‘if’ it were to happened would certainly effect familys budgets IMO.
I hope people are paying attention and remember to vote for what they think is best overall.

#92 jess on 09.29.11 at 7:54 am

Vlad

Walker Circulation

http://e360.yale.edu/feature/radioactivity_in_the_ocean_diluted_but_far_from_harmless/2391/
An especially strong Walker circulation causes a La Niña, resulting in cooler ocean temperatures due to increased upwelling.
The Walker cell is indirectly related to upwelling off the coasts of Peru and Ecuador. This brings nutrient-rich cold water to the surface, increasing fishing stocks
http://en.wikipedia.org/wiki/File:LaNina.png
schematic diagram of the quasi-equilibrium and La Niña phase of the southern oscillation.
“The Walker circulation is seen at the surface as easterly trade winds which move water and air warmed by the sun towards the west. The western side of the equatorial Pacific is characterized by warm, wet low pressure weather as the collected moisture is dumped in the form of typhoons and thunderstorms. The ocean is some 60 cm higher in the western Pacific as the result of this motion. The water and air are returned to the east. Both are now much cooler, and the air is much drier. ”
http://www.windows2universe.org/earth/Atmosphere/walker_circulation.html

#93 cash is king on 09.29.11 at 7:58 am

So if the US housing market will fall another 10 -15%, and will not hit bottom for a few more years. Knowing that consumer confidence (which translates to consumer spending) starts with jobs, which housing creates, it appears that the US economy will not be recovering “for years.”

It appeas that the US is replicating Japan….with Canada 5 years behind the US housing cycle. This is going to get ugly.

#94 Bob Copeland on 09.29.11 at 7:58 am

Wasn’t that exactly what happened in the US? It brings to mind a song from the ’60′s or ’70′s, “Where were you when I needed you?”! In 2010 I finally sold my $2.2 million dollar house (cost to build in 2006) for $1.4 million and felt lucky. Make them listen, Garth.

#95 T.O. Bubble Boy on 09.29.11 at 8:00 am

Ever heard of Detroit? — Garth

Continuing Shawn Allen’s note on the Shiller house price index, Detroit and D.C. were the only 2 US cities to show YOY growth:

http://online.wsj.com/article/SB10001424052970204010604576597131207120672.html?mod=WSJ_RealEstate_RIGHTTopCarousel

Too bad this “growth” was after a 43% drop, or as the article states:
…there are signs that Detroit’s residential real-estate values may be stabilizing—at levels comparable to 1995…

Wow – imagine you endured life in wonderful Detroit for 16 years, and your biggest investment still returned a big fat ZERO.

But, that could never happen in Canada, right?
(Oshawa, are you listening?)

#96 Stevenson on 09.29.11 at 8:51 am

#48 Penpal

No need to get all heated up.

I am no hotshot I don’t need to prove anything. I am just stating the obvious which is whoever bought instead of waiting and renting made a profit. The savers who rented are currently in the worst of a situation possible. They missed the boat and your cash is worth less.

Then on top of that if the RE market does ever tank, they will inherit part of the problem too. Ever thought that savers who “believe” the bubble theory are just followers too of the wrong extreme?

Don’t worry though you made your bet already and maybe your day will come. Some wait for opportunities with wishful thinking and then there are people who seek opportunities and execute.

#97 Waterloo Resident on 09.29.11 at 8:54 am

I have read many times here in Ontario that the Alberta economy is the HOTTEST in Canada, so why is it that your housing market is suffering, shouldn’t ALL of Calgary / Edmonton’s homes be selling for WAY OVER $5 Million each ???

I think that would be reasonable.

#98 Kilby on 09.29.11 at 9:02 am

Victoria and surrounding municipalities, residential price reductions.

September 707
August 701
July 479

Will see what October brings….

#99 blase on 09.29.11 at 9:07 am

#70 Hobbygirl

I worked for Bank of Nova Scotia in the early 90s as a teller while going to university, and made $11/hour to start! If what the clerk at the bank told you is true, that means Scotiabank tellers haven’t gotten a raise in the starting pay in nearly 20 years! Yikes.

#100 bigrider on 09.29.11 at 9:08 am

The real truth on gold and silver.

http://www.mineweb.com/mineweb/view/mineweb/en/page103855?oid=136259&sn=Detail&pid=92730

In essence, make sure you buy some and own some.

Yeah, ‘truth’ from a mining site. — Garth

#101 blase on 09.29.11 at 9:10 am

BTW, I wish I would have stayed at that job. People I know who worked there straight out of high school were already making $30-40g/year as loans officers, with bank share purchasing plans. Would have been a great time to get in the banks, and wouldn’t have had to go $40,000 in debt in student loans. Luckily teaching in Korea saved my arse.

#102 Ronaldo on 09.29.11 at 9:14 am

#63 Westsider – as in the past several decades, the realtors were last to jump in to their own charade and will end up being the “greater fools” once again. What goes around comes around. This time will be far worse than all the others. It seems that the closer you are to the action the harder it is to see what’s taking place. Or, it could be as in the stock market, greed takes over and denial sets in. A good recipe for disaster.

#103 Peter on 09.29.11 at 9:20 am

My niece works for a condo developer in Toronto and notes slower sales than expected last month. Any other anecdotal tidbits on Toronto?

#104 fancy_pants on 09.29.11 at 9:42 am

pic caption:
“Warning: Cougar sightings, swim at your own risk.”

#105 fancy_pants on 09.29.11 at 9:43 am

and speaking of banks:
In ’92 I graduated with a B. of Commerce honours degree and I couldn’t even get a job as a bank teller. I was a young, educated, courteous and presentable guy. Timing plays a huge role – economy went sour as I completed my degree.

Gal I knew got a teller job though – uneducated bimbo but had the the legs and chest for the job. Too bad a shark was hiring and not a cougar. I ended up going back to school and getting into the IT field – no regrets. ce la vie.

#106 bigrider on 09.29.11 at 9:52 am

Since I have not seen it posted yet here you go.

Condos in T.O do for a fall, or not ?

http://www.moneyville.ca/article/1061465–video-toronto-becoming-a-town-of-renters-as-investors-dominate-condo-market

#107 JohnnyBravo on 09.29.11 at 9:53 am

#62 The InvestorsFriend (Shawn Allen) on 09.28.11 at 11:43 pm

Are you sure you are not confusing Prof. Robert Shiller of Yale and creator of the Shiller Index, with Gary Shilling, financial analyst? Shilling was on Bloomberg yesterday talking about deflation.

#108 WTF People on 09.29.11 at 10:00 am

Ever heard of Detroit? — Garth

Continuing Shawn Allen’s note on the Shiller house price index, Detroit and D.C. were the only 2 US cities to show YOY growth:

http://online.wsj.com/article/SB10001424052970204010604576597131207120672.html?mod=WSJ_RealEstate_RIGHTTopCarousel

Too bad this “growth” was after a 43% drop, or as the article states:
…there are signs that Detroit’s residential real-estate values may be stabilizing—at levels comparable to 1995…

Wow – imagine you endured life in wonderful Detroit for 16 years, and your biggest investment still returned a big fat ZERO.

But, that could never happen in Canada, right?
(Oshawa, are you listening?)

———————–

WTF? Who the hell cares if your home hasn’t risen in value for 20 years? Your primary residence is NOT an investment – it seems like the majority of the numbskulls posting comments don’t realize that. Your residence is where you live, raise family, etc. and you can’t measure it’s value using a simplistic financial metric like resale value. What’s 20 years in a home worth to you? For many people, a lot more than the current ‘sticker price’. By all means, be prudent and don’t overextend yourself, but you should not plan your future security based on what your house is worth? If it appreciates, fantastic, you have extra $$ you can cash out of at retirement when you downsize. If it doesn’t appreciate, you better have planned prudently and NOT considered it as an investment.

Similarly, speculative ‘investments’ like gold or some other snake-oil are not a prudent investment strategy either. As part of a diversified strategy, some is good, sure. But too many people are taking the ‘oh $h|t, the world’s going to fall apart – I better stock up on bottled water, buy a generator, and bury my net worth in bullion out in the woods’ these days. It’ll all blow over – relax, and stop thinking your home’s an investment – it’s not, regardless of how much you’ve paper-made/lost on it.

#109 Daisy Mae on 09.29.11 at 10:03 am

Pathetic Pete: “Sir Garth, are you saying you feel we, the people of this pathetic blog, have gotten the message and hence you don’t need to worry about us or do you see us as lost causes?

Let’s vote on that. — Garth”

I was wondering about that, myself! LOL

#110 disciple on 09.29.11 at 10:06 am

My weekly review of the local paper indicates noticeably more Power of Sale properties, there are many Reduced listings, but there are still the stubborn overpriced listings in “desirable” neighbourhoods. I’m suspicious of the reduced and power of sale properties with the thought of “grow-op” in the back of my mind. The grow-op two blocks away on a quiet street went on sale this week, I suppose the mandatory waiting period before listing it is over. The realtor left the lights on overnight and you could see the blind-less windows all fogged up. The hydroponic humidity must still be trapped in there, they should have at least left the upstairs window open or something.

#111 refinow on 09.29.11 at 10:23 am

#18 Big Rider wrote

“Anyhow, 60k price reduction on a house for sale on my street after three weeks on market.

I hope there is a second reduction and a third”

I agree that it is likely to be the truth… but what you are hoping for is directly pulling down the value of your own house as well.

Once that house sells it will now be used to determin values of homes on your street….

So maybe you should be helping him paint and clean up his property to get it sold and maintain your own equity…… Instead of hoping for his financial downward spiral…

Unless you are renting on the street if that’s the case set up a lawn chair and watch the carnage…

#112 Hammer1 on 09.29.11 at 10:25 am

” both were about as robust as Michael Jackson”-Garth
Bwahahahahahahah, funny..NOT….just bad badbad..similar to toilet humour. I thought you were above that.

Apparently not. — Garth

#113 Rt Honorable S Harper on 09.29.11 at 10:27 am

Garth,
yesterday the GF and I see a house on MLS we LOVE – detached house in Bloor West, stylish renovation, 2 bedroom, 2 baths, parking, nice backyard. perfect for us. we were so impressed with the pics and video of the house we thought it got to be out of our price range. we were surprised to see it as $449,000, which would be in our range (we currently rent a nice condo in toronto for $1,600 a month all inclusive). we aren’t rich by any stretch, we make 120k a year combined. anyway, i thought you would get a kick out of this – my brother is a real estate agent and so i showed him the house on MLS, he said he noted the agent was not accepting bids on the house until a certain date and the “technique” being employed is common – list it low, do some open houses and market it, and then led a bidding war ensue.

#114 TaxHaven on 09.29.11 at 10:36 am

“More than with any other asset (the possible exception is gold, down again Wednesday), buyers create their own market. This is why you can have dumbass prices in Surrey or Oakville, and yet crickets down the road in Abbotsford or London.”

Re gold: this is flat out incorrect. Gold is one asset that trades WORLDWIDE, unlike real estate, and has a far larger, far older and far more liquid market. Demand in Vietnam affects the gold price far more than selling in Ponoka – or Vancouver.

So, go long. Good luck! — Garth

#115 Timing is Everything on 09.29.11 at 10:44 am

#105 fancy_pants

Maybe she ‘enhanced’ her resume.

#116 Pr on 09.29.11 at 10:45 am

The *leader* of usa tell the citizen before the bubble bust: THEIR IS NOT HOUSING BUBBLE! So make sure you remember that.

http://www.youtube.com/watch?v=9QpD64GUoXw&feature=player_embedded#!

#117 Timing is Everything on 09.29.11 at 10:53 am

‘Ottawa threatens to pull B.C. RCMP’ – Times Colonist

http://tinyurl.com/44cwajm

Should read ‘Ottawa and RCMP hold gun to head of BC citizens’

#118 bigrider on 09.29.11 at 10:59 am

#111 -Refinow response to bigrider.

I think you are relatively new here so I will fill you in on my previous posts.

I own my home. No mortgage and have more of my net worth in financial assets.

I am surrounded by friends/aquintances and those in the building industry constantly stating the benefits of RE over stocks and how RE investing is sure fire and stocks are for suckers. Seems they have been proven right past decade.

As to your point of my house dropping in value as the one on my street does. I want nothing more than for that to happen , knowing full well that will be the experience of all the other neighborhoods in the GTA ,same decline. I want this notion of RE being a superior investment to financial market investments to come to an end. A brutal end preferably. Period.

I view my home as a place to live only, as a necessary liability..it’s value is of no consequence to me. If it drops to a nickle and my financial assets hold up, then I will be able to buy a home ten times as nice,in the bridal path, for 50 cents or a dollar.

#119 maxx on 09.29.11 at 11:11 am

RE stats- what a joke. Anything emanating from the cartel is complete, self-interested confabulation, designed to play on the fears of dumb-ass borrowing.

I receive a monthly newsletter from a highly successful realtor. I know him personally and believe that he is, to a point, respectable. This month, the letter I received is the FIRST which makes no mention at all of: “rising, hot, balanced or sellers” markets. The articles are on home decor, recipes, etc.
Telling, after years of rah-rah-sis-boom-bah.

#120 Mister Obvious on 09.29.11 at 11:12 am

#52 nonplussed

“Canada is the only country in the western world where housing prices are not falling. Why are we so different? Different even than Australia?”

——————

It’s because we have a reputation to protect.

#121 JohnnyBravo on 09.29.11 at 11:16 am

#108 WTF People on 09.29.11 at 10:00 am

Actually, history shows that in the long run, while the price of a home may increase, or decrease, its value remains pretty stable. One way to anticipate an RE price correction is by comparing price appreciation to the rate of inflation.

The price of your primary residence certainly can matter. If prices plunge, you could find yourself in a negative equity situation, where your mortgage is bigger than the market value of your house. If you have to sell you will give up the house, but still have the debt. Negative equity is a common problem in the US right now and it’s causing a lot of economic pain. This also happened to people in Canada in the downturn after the ’80′s boom.

But I do agree with you that people should not count on their homes to fund their retirement.

#122 Dorothy on 09.29.11 at 11:20 am

#108 – WTF People

This is the first common sense post in a long time. Your principle residence is a roof over your head, NOT an investment in the regular sense of the word.
You need to be prudent when buying in order to make sure you can afford it and will not wind up in a financial mess if interest rates rise or you lose your job. But you shouldn’t expect your home to be your future financial nest egg. It’s a place to live, and that’s all.

Like everything else you buy, you need to shop around to get a feel for local pricing and then haggle a bit to make sure you don’t overpay. Not because its an investment, but because you don’t want to get ripped off. After all, you haggle for other stuff you buy such as vehicles, but we don’t consider them to be investments, just purchases we like to own. And houses are no different (unless your buying some sort of income property like an apartment building). But I’m talking principal residence here.

Renting works well for many, but there are many more who enjoy the security and permanence of owning their own front door. And there’s nothing wrong with that (even in today’s market) providing you buy within your financial means and don’t overpay for it.

So if you fall into the latter category you should go ahead and buy while prices are down and interest rates are still low. Because we earn money in order to buy the things we want and enjoy, and that includes our principal residence.

#123 Junius on 09.29.11 at 11:23 am

#96 Stevenson,

You are just repeating the usual Realtor spew. Nothing we haven’t heard over the years on this blog.

First of all you assume that everyone here who thinks Real Estate is going down is a basement dwelling renter just champing at the bit to get a house. Not true. Most of us are owners.

This is like the Wall Street banksters who think people who want them regulated are only jealous of their bonuses.

The reality is that we have created an unsustainable economy floating on a sea of debt. The current debt crisis will only be solved by deflation and write-offs. This is why we are most of us are so confident of the impending fall of housing prices in Canada.

Your analysis of the US situation is once again typical Realtor hogwash. Robo signing and Ninja loans did not cause the US housing crash. They were by-products of the debt bubble. The market crashed because the debt levels were unsustainable. The fact that loans were given so easily and poorly simply adds to the degree of the crash but it was not the cause.

This is why Canada will fall as well. As Garth points out in his post it appears we are seeing the signs clearly. We are a debt soaked society. The fundamentals are similar to the US, UK, Ireland, Spain, etc.

There are differences but there are more similarities. The CMHC will be our Freddie Mac and Fannie Mae. We will see lots of mortgage fraud or at least fabrications of income. We have had many people buy well above their means with little or no money down.

At the end of the day the cause is the same and that is what concerns most of us. Policy induced spending on credit is the cancer of the Western World. The increases in house prices are merely a effect of cheap credit. However, like in the US, as the tide swings it will cause economic pain across this country.

Contemplate that while you sit in your near empty open houses this week.

#124 David B on 09.29.11 at 11:26 am

Recession and Deflation ….. hey did we not talk about this way back when?

http://www.bloomberg.com/video/76255786/

#125 T.J. BONES on 09.29.11 at 11:27 am

Sir Garth the Initiate ( Teacher ) This week while I was being interviewed for the Ontario Election, the discussion turned to economics, to the reporter I asked have you not read Garth Turner? Do you not know where this is going ? Economics is the world. He was unclear as to both. The whole interview was one sentence. I congratulate you with being able and enduring this discretion from reporters and politicos. Please keep up the struggle, for some of us are listening. P/S Woodstock!

#126 maxx on 09.29.11 at 11:39 am

#31 Ben on 09.28.11 at 8:52 pm

You can’t day trade real estate. Isn’t this volatility in the equity markets heaven? I love it!

Me too!!! Have a small pool of funds for the purpose- made a killing (healthy 5 figures) on my first trade. Harvested the gains and looking for the next bargain.
This is so not me as I’m a capital S saver. Feels great though. With baby steps, will carry on with much study, observation and due diligence- but only in my little pool of equity dollars.

#127 Form Man on 09.29.11 at 11:55 am

#123 Junius

Excellent post. I have spent years in the real estate development business. I am currently completing a housing development in the Okanagan. There has been widespread fraud in the approval of mortgages for several years now. We are in almost exactly the same situation as the U.S. and Ireland were just prior to the collapse of their housing bubbles. The extent of this fraud and the financial liability to taxpayers via CMHC will become apparent in the next 2 or 3 years.

#128 bill on 09.29.11 at 12:42 pm

One Defrauded on 09.28.11 at 9:18 pm

A friend of mine travelled the northern superior route about the same time as you and made the same observation.
we thought it had a lot to do with no one interested in hunting or fishing and other out door activities.
the mosquito /blackfly count is off the scale so that didnt help.

#129 wtf????? on 09.29.11 at 12:59 pm

American oil junkies are their own worst enemies. Talk about a strange addiction. The yanks are so addicted to Suadi oil the they allow the Suadi ‘dealer’ to abuse them because they hold the dope the Americans need to get an easy fix.

http://life.nationalpost.com/2011/09/28/saudis-export-anti-christian-and-anti-jewish-textbooks-across-the-world-report/

Meanwhile….they ‘movie stars’ in Washington are protesting any movement of Canadin oil across the border from the most abundant source of petro products on the continent. Could it all come down to corrupt American officials taking bribes from Saudi lobbyists?

Whats up with Canadian politicians and business leaders…the Asians are begging us to ship them our oil?

http://business.financialpost.com/2011/09/29/china-to-north-america-send-us-your-oil/

How about calling your MP and demanding we stop financing global terrorism out of Saudi Arabia and create hundreds of thousands of jobs and trillions in tax revenue in Canada instead of pandering to the American junkie. Those morons are so corrupt they won’t agree on the time of day unless they get paid by someone.

#130 Bill Gable on 09.29.11 at 1:56 pm

Vancouver For Lease and for sale signs have taken a large hike. DT office space, Coffee shops (egad, in Vancouver?) tons of space, nobody wants.

Burrard is one of the most over priced commercoal streets in the world. I know a guy that owns a large concern on that street and he told me business was ” slow”.

Folks – Mr. Turner has done everything but hit you on the head with his motorcycle helmet – get this straight…this Recession is starting to bite.

Look up stagflation.

#131 bigrider on 09.29.11 at 2:01 pm

#96 Stevenson and #123 Junius

Yes stevenson not everyone here who thinks RE is going down is a basement dweller. I own my home outright and believe this elusive correction will come eventually.

Actually, if by some form of magic I could write a cheque to someone that could make it come faster, I would.

#132 poco on 09.29.11 at 2:21 pm

Stevenson–taken from your post #39

I am not a realtor and unless you bought a few properties during 2008 and sold them the past 2 years. I am the winner and your the loser.
______________________________________________
and what of the many home owners who did buy in 2008 and didn’t sell in the last two years???—where are they today????
remember–the one thing you’re not considering is that “all markets are not the same” As i’ve consistantly posted the tri cities area (BC) has been declining since the spring of 2010, along with many other areas of the lower mainland—do you not comprehend the statistics coming out of BC by the many posters here—this market is in decline and will quickly pick up speed as our economy goes for a dump

how about those that bought in 2008 and didn’t sell like this
#402-2477 Kelly Ave–bought in 2008 for 353.9k—has been listed for a long long time–now at 318.8k–check out the building–others underwater also—
or what of the ones who bought in 2008 who have sold recently into this declining market
#14-3065 Dayanee Springs–bought june 08-519k–sold –504k
#2507-400 Capilano–bought dec 08-358.9k—sold 315k

no Stevenson, i’m not cherry picking here–i’ve got the numbers to back up what i’m seeing –you’re welcome to them all–check them all out if you like but i doubt you’ll do it—me thinks you listen to MSM too much
______________________________________________
your post #96
I am no hotshot I don’t need to prove anything. I am just stating the obvious which is whoever bought instead of waiting and renting made a profit. The savers who rented are currently in the worst of a situation possible. They missed the boat and your cash is worth less.

Then on top of that if the RE market does ever tank, they will inherit part of the problem too. Ever thought that savers who “believe” the bubble theory are just followers too of the wrong extreme?
______________________________________________

i was rolling on the floor after i read that bit of garbage–i presently rent after selling in 2009—from the price declines i’ve tracked on properties i’m interested in (some 60 to 80k) i figure i’ve paid for my rent in price drops til 2013–and they have a lot more to go—so who’s ahead here –i have the stats if you want them

it’s funny, many of the properties i tracked that were selling while underwater have now been sold or have been taken off the market. I bet the owners who bought probably thought they were getting a great deal–and they were for that time period —but now they will be underwater quicker than the previous seller

sorry Bud but you’re out in left field

#133 Tony on 09.29.11 at 2:29 pm

#81 Jimbo on 09.29.11 at 2:14 am

I think gold will fall off a cliff and finally hit the U.S. 200 dollar an ounce level it was back in 2001. Gold has to react to severe deflation not just a rise in the U.S. dollar.

#134 WTF People on 09.29.11 at 2:52 pm

#121 JohnnyBravo on 09.29.11 at 11:16 am
#122 Dorothy on 09.29.11 at 11:20 am

Thanks for the posts, both. I get carried away when I see a lot of people arguing over the details when the very premise (of a principal residence being an investment) is essentially making these debates into a horse-before-the-cart set of arguments. I don’t think many homeowners need to debate about whether to sell their homes unless circumstances are forcing their hand (a forced move due to job relocation, etc.). Admittedly though as one of you mentioned, we do want to make sure we’re not screwed over (pay too much) when we buy it, so for those people the rent vs buy may still hold up to some degree. Last thing I think we should all be doing though is bailing on our principal residences because prices might go down! Vancouver is an extreme example where you may start to question whether to cash in your good fortune as a homeowner if you find yourself sitting on a huge paper goldmine of equity, but even in areas like Toronto that aren’t that high above their historical salary-adjusted prices (<20%) I don't think we should be encouraging people to cash out their homes to potentially save a drop in real estate prices..

#135 WTF People on 09.29.11 at 3:03 pm

Here is the data. Look at the last 2 columns. Toronto is not THAT expensive (relative to past data). Vancouver, even Montreal (arguably) – sure – that’s bad. The rest of Canada – not so bad..

The fields are:
Region
Average price Aug., 2011
RateHub PPP Index*
% of pre-tax income towards housing Today
% of pre-tax income towards housing since 1985

Canada $393,100 1.00 49 44
Atlantic $234,300 0.60 39 38
Edmonton $375,500 0.96 39 38
Montreal $377,200 0.96 55 42
Ottawa $377,300 0.96 43 40
Calgary $415,200 1.06 39 41
Toronto $586,600 1.49 61 54
Vancouver $843,300 2.15 96 64

#136 Junius on 09.29.11 at 3:05 pm

#127 Form man,

Thanks. I have posted here before that it was my ability to obtain a 7 1/2 times income mortgage off an online form that first got me wondering about the situation. After a meeting with the mortgage broker and their promise to show me how to push the number up higher I had my initial moment of clarity in Fall 2009.

Then I found this Blog among others.

There are thousands of bad loans and fraudulent mortgages in Canada just waiting to be revealed in the near future. It is just a matter of time.

#137 disciple on 09.29.11 at 3:20 pm

The only thing keeping stocks and bonds afloat right now is Big Pharma, both legal and illegal. Banks are in on the action with money laundering, again, both legally and illegally. The unfunded liabilities WILL be funded, by us, in a government-masked privatization maneuvre already begun that Canada will not escape.

You see, an increasing number of people’s lives depend on the unnecessary and addictive products they peddle. Most of you on this blog probably didn’t know that Vitamin B3 and nicotine are medical analogs and are essentially the same thing in vivo. It’s not the nicotine that is addictive per se, it is the nicotine in combination with the other additives that make people succumb to the addiction. Not by accident, I can assure you.

And the good paying jobs in healthcare, from physician to pooper-scooper depend entirely on Big Pharma profits. That’s why both Canada and the US don’t mind running nosebleed budget deficits, because they know they’re friends in Big Pharma will pay them handsomely eventually through your indentured servitude in wickedly crafty ways they have already thought up for you (taxation and war). Chicago, Portland, LA are the next false flag terror targets.

Healthcare jobs are among the only good-paying jobs left. Even the promise of IT was an empty one. Now you understand why Bill Gates is pulling another Operation Rockefeller a century later. What do you think the purpose of “free” vaccines for the emerging markets is for? To create future sickness and markets for their slow poisons and therefore save the world economy. Bill Gates knows exactly what he is doing. Do you?

#138 wtf????? on 09.29.11 at 3:31 pm

Oh Oh…Canada’s debt and deficit watchdog has outed the Conservative the national debt as being unsustainable vis a vis the current tax revenue…..IOW’s we’re going backwards fast. Will the Cons start to cut the fat? Will they do the Liberal/NDP dance and raise taxes to maintain the status quo? Either way…..it’s gloom and doom for the average citizen not unionized and coddled by cosy civic service arrangements ( wink wink gush gush) with sloppy fat pensions, wages and perks galore.

‘Malcontents’ some Libs call us for pointing out the obvious….ad hominem attacks are the order of the day. It doesn’t change the facts eh citizens?

#139 Nostradamus Le Mad Vlad on 09.29.11 at 3:40 pm

#186 Sky on 09.29.11 at 1:34 am — Tyranny can also be spelled as “You won’t even recognize this country by the time I’m finished with it . . .”, which gives everyone a clear understanding of the super-size ego now in charge.

Aaahhhh vanity — thy name is Stevie Harper!

#92 jess — Thanks for the update. “The water and air are returned to the east. Both are now much cooler, and the air is much drier.”

If the air and ocean are much cooler, with the air being a lot drier, that seems to indicate a cold winter, esp. if there are Arctic outflow winds — that will give Vancouver an ice cover.

#95 T.O. Bubble Boy — “. . . your biggest investment still returned a big fat ZERO.”

So much for greedy boomers who bought McMansions. They are beyond screwed. BTW, where is Mikey the Realtor and BPOE these days?

#117 Timing is Everything — “Ottawa and RCMP hold gun to head of BC citizens”

Interesting. Now that the HST is toast (which was handed to us unexpectedly by Campbell, on orders of Harper), all levels of govt. are going to have to tax sheeple in other ways to pay their own bills, plus their bloated salaries and perks.

Yep, Harper and minions are doing their level best to turn Canada into a third world dictatorial police state.

#140 penpal on 09.29.11 at 4:47 pm

@ 102 Ronaldo

Let’s hope so.

It couldn’t happen to a nicer bunch of people (Realturds, that is).

Karma is a bitch!

#141 T.O. Bubble Boy on 09.29.11 at 4:50 pm

@ #122 Dorothy // #108 – WTF People:

While I completely agree with your posts (that people should only buy houses as shelter, not as investments), that is the opposite of essentially every single Bank/Realtor/Government Official would say.

How can a bank promote the idea of paying interest over 25-35 years, which equates to basically doubling the price of the house, and yet have the people spending the money get back HALF of the money paid.
(e.g. $500,000 house = $1M after interest payments, but is still worth $500,000)

#142 jess on 09.29.11 at 4:59 pm

“asset strippers”
Danes see case of TDC.
See bill L213 -
======

Does anyone know which European countries had the most PE (private equity)down payment for buyouts?

#143 penpal on 09.29.11 at 5:04 pm

@ # 96 Stevenson

How have they made dime one if they haven’t sold.

If they have sold and managed to actually clear any money after ALL EXPENSES ARE TAKEN INTO ACCOUNT ( Realturd commission, land transfer tax, renovations /decorations, closing costs, possible mortgage early termination fees, interest, etc., etc.), now they have to buy another place which, wouldn’t you know it, has also gone up in price.

They are therefore no further ahead if they CONTINUE to be a home owner.

If you think that what you have witnessed in the past few years is indicative of the longer term price dynamics of the RE market in Canada you are either obtuse, illiterate (as in can’t read history) or outright delusional.

Disclaimer:

1) have owned and bought and sold a great number of buildings and property in my life as a primary line of business.

2) Sold everything several years ago, did very well. Still own substantial development land which is long term “land banked” and now retired.

3) Detest RE agents in general, had good luck in finding ‘decent ones’ to sell my properties over the years.

#144 JohnnyBravo on 09.29.11 at 5:12 pm

#134 WTF People on 09.29.11 at 2:52 pm

As you and Dorothy assert, while a home is an asset, it should not be treated like an investment, meaning you should not buy one in the hopes of realizing a profit. I have also said this a number of times on this blog.

I don’t think Garth is advising everyone sell their homes and rent. I think his main point is to avoid excessive debt, especially during times of economic uncertainty. Today we have both economic uncertainty and historically high home prices. It’s not about predicting future home prices; it’s about assessing the risks. And right now the financial risk associated with buying/owning a home for most people is high due to the big debt they would need to assume.

Also, many people may be better off renting and investing their savings in other assets (the historical evidence on this cuts both ways). It may be sound financial advice, but it does ignore the many intangible benefits one can derive from home ownership. In short, it’s not always about the money.

I have also said that would-be retirees who own little more than their homes in Vancouver and yearn to live down south have indeed hit the jackpot. Sell your Van house and live out your golden years in Florida or Arizona. It’s the arbitrage play of a lifetime, only helped by the high dollar.

#145 timo on 09.29.11 at 5:34 pm

#135 WTF People on 09.29.11 at 3:03 pm

Pre-tax?

Your mortgage should be less than 28% of your pre-tax income. Factor in also the fact that r/e ownership is at record high’s and a very large segment of the population are going to cash in and downsize in the next 5 years. Your going to run out of buyer’s for the bubble sooner or later if rates stay low.

#146 Stevenson on 09.29.11 at 5:41 pm

Poco #132

No your not cherry picking the properties. After all you chose 3 different properties to support your point? Not sure if you were in a cave but if you look at the “overall” market the RE market is exploded since 2008 bottom. I can’t believe I needed to reinforce that.

Also I am glad your calculations for your rent is covered until 2013 and so sure that it will keep on falling. Apparently you have been to the future.

Some of these posts are quite amusing. Dreaming and Hallucinating. Until the day comes don’t be so sure about what will happen.

Also put your money where your mouth is. Admit it, a lot of you are still skeptical of what will happen with this RE market. If you are so sure why not sell your properties and rent. Then leverage as much as you can along with the cash from your property and short the hell outta the market. You know why you won’t? Because you are unsure and unaware of the unknown.

If everything was as predictable as Stats would you be where you are at now? hahaha…. seriously u don’t think everyone can read a chart?

#147 timo on 09.29.11 at 5:43 pm

#124 David B on 09.29.11 at 11:26 am

Recession and Deflation ….. hey did we not talk about this way back when?

Yup and if they do not print.. deflation is at hand. They cannot get wages to rise because debt must be paid off and any stimulus will run for safety instead of stimulating the economy. It is just a natural market cycle.

good link..

#148 Stevenson on 09.29.11 at 5:53 pm

Penpal #143

Glad you did well with RE. Shows how easy it is to make money through RE.

Also its called opportunity costs plus tax free appreciation on primary residence. You find me something that has that type of return. + what they could of done with the money they used for rent.

I myself have dual citizenship and able live in another part of world operating my business, but still able to carry a primary residence property in Canada. Its little bit of an exception, but that’s besides the point. Are you were able to go back to 2008 you would not purchase properties? Are you serious?

#149 Stevenson on 09.29.11 at 5:55 pm

*correction “Are you telling me if you were able to go back….”

#150 spaceman on 09.29.11 at 6:22 pm

136 Junius

Bang on, and nobody talks about this. I was pushed to buy @ $600.000 5BDR with 2BDR suite, easy on my salary alone $68,000, this is 2009, but didn’t do it.

But how many did, at 2% 35 year amort, and a 5% down. And how many at 40 year amort?

I have seen 4 forclosures advertised via MLS in Victoria Sannich, in the last year… The perfect strorm cometh.

#151 TurnerNation on 09.29.11 at 6:30 pm

MAPLE GROUP ANNOUNCES EXTENSION OF OFFER TO OCTOBER 31, 2011

Maple Group Acquisition Corp. has extended its offer to acquire a minimum of 70 per cent and a maximum of 80 per cent of the shares of TMX Group Inc. to 5 p.m. (Eastern Time) on Monday, Oct. 31, 2011, unless further extended or withdrawn. The offer is part of an integrated acquisition transaction, valued at approximately $3.8-billion, to acquire 100 per cent of TMX Group shares.

The investors in Maple Group Acquisition Corp. are: Alberta Investment Management Corporation, Caisse de depot et placement du Quebec, Canada Pension Plan Investment Board, CIBC World Markets Inc., Desjardins Financial Group, Dundee Capital Markets Inc., Fonds de solidarite des travailleurs du Quebec (FTQ), GMP Capital Inc., National Bank Financial Inc., Ontario Teachers’ Pension Plan, Scotia Capital Inc., TD Securities Inc. and the Manufacturers Life Insurance Company

#152 Painted Toenails on 09.29.11 at 6:49 pm

Friend of mine has leased their office and warehouse space for almost two decades. Business is down considerably the last two years and they are starting to seriously worry. I have NEVER heard them talk about burning through their capital just to stay afloat. They’ve got loyal customers too. It’s just that money isn’t moving. Some are spending, but not enough and nowhere near the levels they were a while ago.

They want out of their lease. Their landlord has been trying to sub out their space for many months now. They are offering a big signing incentive. No luck.

Another friend has subbed out the entire main floor of his retail/warehouse shop. He’s moved all his stuff upstairs, everyone is crammed in. Can’t be because sales are up. The signs are there if you want to acknowledge them. Most people are just starting to get worried. Businesspeople in this town have been worried for a while now. We know what’s up.

Winter’s coming kids, batten down the hatches.

#153 ballingsford on 09.29.11 at 7:00 pm

People keep forgetting a rule of thumb to live by or come close to. Your net income should live by the 25% rule. 25% for the place where you live (rent/mortgage), 25% for bills, 25% for spending, and 25% for saving.

If folks are paying more than 25% and even worse, more than 50% for their dwelling, then things are really messed up!

I’m good in most of the categories, but I haven’t been able to hit the 25% savings one (yet). But then again, I like great food and wine. I won’t hesitate to buy a nice rib roast once a month and great wine on the weekends.

#154 Junius on 09.29.11 at 7:07 pm

#150 spaceman,

Exactly. When the bank tells you how much money they will lend you there is a rush of euphoria. You feel rich because of all that money. You feel like you won the lottery. This is a bank after all.

Then reality sinks in. If you are lucky.

#155 I'm stupid on 09.29.11 at 7:26 pm

#135 WTF people

Your comparisons are irrelevant. You may not be aware that we were in a bubble in 1985. So you are comparing one bubble to another. Why not do a comparison between today and 1992? I bet the numbers will look a lot worst. Think about it.

#156 Nostradamus Le Mad Vlad on 09.29.11 at 7:29 pm

-
Thought For The Day: “A dishonest government creates a dishonest people!” — Michael Rivero

Kinda goes with the CPC!
*
Wall St. protests Numbers are growing, 12 consecutive days now and Unions joining up on Wall St.; China Loan shark market crashes. The evil lynchpins always get their just desserts; Greece What happens there is a preview of what happens here; 2:40 clip Ron Paul asks ‘What is a dollar?’; Unemployment Not looking so good; The Forty Year Old Virgin “As a side note, look at the headline on the newspaper in the cartoon illustrating this story.” wrh.com; Gold “This is a short but hysterically funny video.”; Bill passed – no shutdown.

Germany The Fourth Reich ignores Geithner; Fannie and Freddie screw taxpayers again; F speaks More bubblegum bafflegab. The Yanks will do whatever they want, and Harper, like a good little puppy, will let them. Talk is cheap, as these two dickwads have proven before; Funding “Since Christine Lagarde is in the news again today (story below), pushing for an expansion of the IMF’s Bailout Fund from $350 billion to $3.5 TRILLION, here’s another quick look at who funds the IMF.” Hence, taxes explode; Obomba and Pelosi Crony socialism at it’s worst.

12:48 clip McNATO. That’s how they are treating this invasion — as a junk food run, stealing all the burgers and handing out goodies to their friends; The US is slowly managing to unite the world against them; Kosovo Leading to WW3? Egypt al Jazeera offices raided; Ethnic Cleansing Straight from the horse’s mouth; Vaccine Surveillance and tracking program. Big Brother in all her glory.

NATO in The Toilet “Gaddafi is going to turn Libya into the new Afghanistan / Vietnam, knowing that in the long run, the US will lose.” wrh.com; CC Stoopids One wonders just how low they will have to stoop to pet these dinosaurs; London home fire “So, we have explosions and a fire in a Palestinian home in London that kills most of the family and before the smoke even blows away the authorities are already declaring it ‘not suspicious’.” wrh.com. There really are two separate sets of laws; Robots Gene Roddenberry would be proud; Egypt II “US tries to turn the New Egypt into the Old Egypt, forgetting that was why the Egyptians kicked the Old Egypt out!” wrh.com.

#157 jess on 09.29.11 at 7:30 pm

“First it was Vermont – now it’s Montana. Governor Brian Schweitzer of Montana said he plans to ask the federal government to exempt his state from requirements in the Affordable Care Act – so that he can set up a universal, single-payer system like in Canada. Earlier this year – the state of Vermont started moving in the same direction too. Governor Schweitzer said he wants to create a system modeled after the Canadian province of Saskatchewan – where less is spent on healthcare – but there are better results and people live longer. Today – Canada has a nationwide single-payer system – but it started with one province – Saskatchewan – and spread across the rest of the nation. Let’s hope we see the same thing sweep across America.”

http://www.truth-out.org/montana-follows-vermonts-lead-path-state-level-single-payer-system-and-more/1317311418

#158 Steven Rowlandson on 09.29.11 at 7:35 pm

Garth the gold and silver markets are not free markets yet. They are for now manipulated by financial and political institutions and that is just the way it is for the time being. That is why the price looks a little low at the moment. They are just trying in vain to make the unbacked fiat look good….LOL
Paying down the government debt would be a better more moral approach to the problem and serve the public interest to boot. Just my opinion FWIW.

#159 EB on 09.29.11 at 7:58 pm

#152 – People are giving a lot less too – one of the sites I consult for lives off of donations as part of their income stream. Things have simply dropped off of a cliff since the start of Fiscal 12. Add in endowments getting trivial income as well relative to the happy projections of a few years ago, and everyone is hurting.

#160 poco on 09.29.11 at 8:17 pm

#146 Stevenson

No your not cherry picking the properties. After all you chose 3 different properties to support your point? Not sure if you were in a cave but if you look at the “overall” market the RE market is exploded since 2008 bottom. I can’t believe I needed to reinforce that.

Also I am glad your calculations for your rent is covered until 2013 and so sure that it will keep on falling. Apparently you have been to the future.

Some of these posts are quite amusing. Dreaming and Hallucinating. Until the day comes don’t be so sure about what will happen.

Also put your money where your mouth is. Admit it, a lot of you are still skeptical of what will happen with this RE market. If you are so sure why not sell your properties and rent. Then leverage as much as you can along with the cash from your property and short the hell outta the market. You know why you won’t? Because you are unsure and unaware of the unknown.

If everything was as predictable as Stats would you be where you are at now? hahaha…. seriously u don’t think everyone can read a chart?
______________________________________________

as i said i have pages of properties that are selling for less than the owner paid 2-3 even4 years ago–not just 3—read much??? —as i said i’ll list them but i doubt you’ld follow up on them

that’s my whole point–you’ve got you’re head stuck in the sand—not all areas saw the big increase since 2008 and parts of the tri cities were included and if you can’t comprehend and see that —well, i feel sorry for you

if you can’t see the future and what’s to become of this housing market in the rest of the country then again, i feel sorry for you

“put my money where my mouth is”–you again failed to comprehend my post —I DID SELL–ya bought in 1977–you figure out what i came out with–and guess what –the house i sold dropped in value after i sold–sold a condo too–just last Jan—had it since 2003—and i could buy it back for less than i sold it for today—check them out –Coq—Silver Spr Blvd—they’re all selling for alot less than 2008

unsure and unaware of the the unknown–not a chance
you’re the one who sounds like he’s in complete denial

speaking of charts, you should look at a few of the local ones–it will be an eye opener–or do you do your stats as this young female realtor does
–just got this one in the mail–they all crack me up
Port Coq-condo sales for Aug–(23) # of listings (66) which transpires into 35% of sales to listings-so she says–sounds pretty good –the thing is, the young foolish realtor fails to tell you that there are over 250+ condos for sale in Pt Coq which brings the sales to listings down to less than 10%
oh but according to CREA we are in a balanced market–my ass

please when you post about the TO market –don’t confuse it with the BC market–totally different in many areas out here

you posted your son bought a townhouse a short time ago–big gamble in these trying times–hope it doesn’t end up like these two buyers of small townhomes
308-1661 Fraser st–bought dec 07-309.9k–sold 283.5k
103-1661 Fraser st–bought dec 07-319.9k –sold 291k

if you had followed this blog for any length of time, you’ld have seen my many many posts with regards to the decline in prices in this area–so who’s been in the cave–i do my homework –you obviously don’t

this is now old (from Jan 2011) but a good indication of delines and increases in parts of Van

http://www.youtube.com/watch?v=q3qK1AI5bmo

#161 Timing is Everything on 09.29.11 at 8:42 pm

#139 Nosty

Yes, anti-HST pay back perhaps.

To be fair the headline should have read:
‘The Harper Government and RCMP brass hold gun to head of BC citizens’
———————————————————
Then there’s always good ol’ Mackay…Spot the psychopath…

http://tinyurl.com/656f4ap

http://tinyurl.com/73wq8

#162 pablo on 09.29.11 at 8:58 pm

http://ca.finance.yahoo.com/news/Canada-housing-market-strong-capress-966732123.html

http://news.yahoo.com/photos/alessio-rastanis-comments-bbc-television-monday-gone-viral-photo-170504092.html

opinions are like assholes, everybody’s got one.

#163 Stevenson on 09.29.11 at 9:53 pm

#160 Poco

Didn’t bother reading your whole post after your first few lines. I couldn’t help it. You have a few pages of properties selling for less what they sold for in 2008? That’s how you have come to your conclusion that the sky is falling? So now you not only got confirmation bias but selective reading too? No I can’t see the future and I remain neutral. Its amazing how you think your opinion trumps the global factors that influence macro economics. Garth was right the greater fool is the fool that follows. In this case you are following the voices and information you would “like” to hear.

#164 Stevenson on 09.29.11 at 10:02 pm

In the end savers will get screwed. You get none of the gain but will share the pain. WTF is up that?

#165 One Defrauded on 09.29.11 at 10:19 pm

Bill (128) Met a Gold Corp guy east of Terrace Bay ON, said lumber and mills shut down now, and passport control by the USA has discouraged tourism… He bought a nice house for about 40k…. on a lake…. Goes in to the mine to work for a week, out for the next. Park warden told us hard to get committed employees … Many have left for greener fields, just dont know where! High fuel prices and highest camping fees in the country did not sit well with us either. Like I said many broken dreams of the defrauded throughout the land especially in Northern Ontario along the Trans-Canada.

#166 Jimbo on 09.30.11 at 4:55 pm

#133… “I think gold will fall off a cliff and finally hit the U.S. 200 dollar an ounce level it was back in 2001. Gold has to react to severe deflation not just a rise in the U.S. dollar.”

Severe deflation = Massive counterparty risk. You hold corporate bonds. Will that company go bankrupt? You hold treasuries. Will governments be able to pay you back? In severe deflation, counterparty risk becomes a real concern.

But gold bullion has no counterparty risk. That is why in past “severe deflations” its real price (price of gold versus price of everything else) has risen and why gold stocks in that environment have outperformed.