Careful

Why does anyone come to this blog? I wonder. No hot stock tips. Not enough half-naked babes. Too many wrinkly people. A surfeit of house-horny kids. Endless hectoring from a pathetic Harley owner. And thousands of comments from tin foilers, metalheads, pissed-off renters, boomer baiters, wannabe economists, whiny genXers, misogynists, feminists, doomers, Tea Party wackos, condo speckers and people in Vancouver captivity. Meh.

It seems clear, however, some folks believe reading this daily drivel will make house values go down. It’s what they live for. They dis real estate so they can get some. And when I spell out what housing did to America, for example, they cheer. It’s as if prices here can collapse without any consequence (other than they get a house). It makes the blog more delusional than the House of Commons.  Or Global TV.

I said recently (for a variety of reasons) the average house price could decline 15%, then enter a long comatose period. That seemed to disappoint some and enrage others, who believe real estate must (and therefore will) decline until they can afford it. So they pile on and forecast a 30-50% rout, taking a SFH in 416 to $450,000 and in Van to half a million. The justification (other than their own finances) is Phoenix or Vegas or Miami.

Well, ain’t gonna happen. Nor should you wish it. A halving of housing prices would drop our GDP by 5%. That compares with the sharp 2.6% contraction in the US economy in 2009 – enough to throw 14 million people out of work and gut the government. So imagine the consequences of a slowdown twice as severe in a country with one-tenth the population, and a commodity-dependent currency, run by people who want to buy more fighter jets and prisons.

In fact, it seems many of our delusional visitors have no idea what 15% means. First, this average number would translate into a 0% change in, say, La Broquerie or Chicoutimi (or Fredericton and Thunder Bay), but something closer to 20% in Brampton and 30% in Surrey. Given local conditions, there’d even be individual neighbourhoods exceeding that.

As for a comparison with US prices, it’s simply a myth they have plunged 50% across the country. While some postal codes in Phoenix are off 80%, other places have barely seen a perceptible change. Overall, US resale home prices between the fourth quarter of 2005 (then the median was $225,000) and today ($170,000) have taken a 24% dive. But new home prices (an important part of the market) have reversed just 11.6%. So, overall, the housing crisis has melted off something closer to 17% of the value of the entire housing stock.

Sadly for the Yanks, this came after interest rates and lending standards had declined, seducing record numbers of people into home ownership. In fact, the proportion of owners soared to a new high of almost 70%. Mortgage debt exploded, also to new heights. The government actively encouraged real estate investing with tax incentives and cheap money, because it goosed the economy. Lenders accommodated buyers with little, if anything, to put down. Speculators found cheap profits. And rising house values made people feel wealthy, so they borrowed against equity to buy stuff – like more real estate.

Hey, wait a minute. Hasn’t all that happened here?

Anyway, the bubble burst, as is always the case. Here are some consequences of a decline in real estate values half as severe as many virgins on this blog expect:

Almost a third of all single-family homes with a mortgage have a debt bigger than the place is worth. In Atlanta, that number is half and in Phoenix it’s two-thirds. New home sales are down 80%, and trades are decimated. Sales for foreclosed homes represent a quarter or all real estate activity, and are snapped up by often-wealthy vultures. About 13% of all houses in America are currently empty. Surveys of people under 35 show only one in five would ever consider buying a house. Fifteen years ago 90% of Americans wanted a home, now it’s 63%. The middle class has lost about $6.3 trillion in net worth as real estate crumbled. And, of course, the US economy has been whacked so hard more people are on food stamps (45.7 million) than live in all of Canada.

Is this what you want, so you can have a mortgage and a garage?

Economic forces (and all of history) tell us real estate values will eventually fall back to a level consistent with inflation, wages gains and GDP growth. Experts suggest that means American housing has yet to hit bottom. It means Canada’s a time bomb. House prices shot higher here as the cost of money plunged, not from prosperity. When normalcy returns, it won’t be pretty.

But how ugly is ugly?

Be careful what you hope for.

227 comments ↓

#1 dibbsy on 12.18.11 at 4:18 pm

Greetings from Brisbane where the spruiking never stops.

#2 WENDY on 12.18.11 at 4:29 pm

I GARTH , I HAVE YOUR BOOK ( THE GREATER FOOL ! ) AND I READ THIS WEBSITE EVERY DAY , AND NO I AM NOT BORED ! HA,HA ! I AGREE WITH YOU ON EVERY THING ! WENDY !

THEN STOP SHOUTING !! — Garth

#3 Mike on 12.18.11 at 4:36 pm

So not only is saving prudently for a good downpayment a fool’s game, but expecting a 30% correction on a market which has risen 100% in the past 10 years is considered unrealistic.

Oh well, I guess I’ve been the greater fool. My money’s being killed by inflation while I look at rising cost of living and rent.

I took my girlfriend to see a nearby semi. She didn’t believe how expensive houses had become. She figured the price was about 350k. I told her 700k. We spoke to the agent… it was 800k for a crappy semi in a reasonable location. It sold that week.

I’m really thinking now that Garth’s hypothesis is wrong. We’re not going into a downturn. We’ve been *in* a downturn. Currency is being devalued at a record pace, and our savings have been used to fuel a reasonable quality of life while riding this storm. When it is over, our wages will have 1/3 the buying power, the wealthy will be wealthier and house ownership will be the dividing line between the poor and middle class.

I’m going to shove more money in REITs and think about renting a room while I go back to school to study law or something.

#4 NFN_NLN on 12.18.11 at 4:36 pm

Don’t forget % is relative. A 15% plunge will correct a 17.6% rise. And a 30% plunge will correct a 42.8% rise!

Garth when you said interest rates are going up so ‘bond prices will go down and yields up’… I sold off my XBB and XRB and took profits. Will you also let us know when a good time to buy them back on the cheap is?

#5 Huuk on 12.18.11 at 4:36 pm

Thanks Garth, that is by far the most level headed and rational post I have read on this not-really-pathetic-at-all website. Keep bringing your readers back to reality, its refreshing.

#6 renters rule on 12.18.11 at 4:48 pm

I think that many of us are not hoping for a 50% correction because we want people to get wiped out. I think may of us are tired and actually appalled at the rampant consumerism that near zero interest rates and absurdly easy credit have caused in society. People driving leased luxury vehicles, living in granite and stainless homes with nothing down…. it is kind of gross.

Watching young couple on house porn channel looking for their first home, “we will have to rip out the kitchen, as this is just not (no granite or stainless). Really? “Unacceptable”? Not a rot problem, or safety problem, or things don’t work problem… no just, not acceptable because it is not beautiful and trending enough…..

Kardashians on tv, women in their 20s getting plastic surgery…. I mean REALLY?! WFT has happened to us all? It is all just so sad and vapid and empty.

#7 Brampton's a Bust on 12.18.11 at 4:49 pm

First!!!

#8 Kilby on 12.18.11 at 4:50 pm

Where we are looking at SFH’s on mid Vancouver Island there has already been a 15% or more decrease in prices based on the few homes that did sell in the last 6 months. Currently we are leasing a 563 sq. ft. condo in North Vancouver for $1,600 per month, the mainland Chinese owners paid around $540,000 for it. Although we are in Vancouver for 5 years of work, we would never buy here,even if there was a 30% drop in price as that would mean we would be buying an old, inefficient house for $700K or a poorly built granite and stainless condo with one parking space. Not concerned whether there is a 20% 0r 50% “adjustment” in prices…Just want them to stabilize somewhere…..

#9 Usuk on 12.18.11 at 4:58 pm

#7 Brampton’s a Bust on 12.18.11 at 4:49 pm
First!!!

———–

Nice try loser, you lose. At least you’re not as bad as all the know-it-all’s posting at 10pm on a Friday night trying to make themselves out to be some kind of success at life. 10pm on a Friday and you’re on this blog? If you were one of those posters, you’re an even bigger loser than Mr. Brampton here. Merry Xmas.

Usuk

#10 tomohawk on 12.18.11 at 4:59 pm

My understanding from what I’ve read about the Great Depression is that some people, those who avoided debt and leveraging during the preceding boom, made out extremely well. I think for savers who have seen the speculators and gamblers play – and win – like its Lotto 6/49 over the last couple decades this is tough to stomach. They want it to be payback time. Perhaps this is short-sighted but I think it’s also human nature to hope that the idiot speeder weaving through traffic get caught by the cops or the belligerent loudmouth drunk gets punched in the face.

#11 Waterloo Resident on 12.18.11 at 5:00 pm

Let us all hope and pray that RON PAUL wins the presidential election in America, that is what so many people feel these days !

The problem is that he is a BIG THREAT to the corrupt ‘big guys’, that is why the Media is being told to just ignore him. Check it out yourself here:

http://www.youtube.com/watch?v=Tb5aGgQXhXo&feature=related

http://www.youtube.com/watch?v=JViVLY_BRz4&feature=related

He’d be a bigger threat to the economy. Fortunately, he’s toast. — Garth

#12 Ben on 12.18.11 at 5:03 pm

I don’t know how far real estate will drop in Canada, but it isn’t rocket science to see the prices are stupid!
I can’t even get a job in telecom in my own country, let alone my own province… unless I want some tip/ring pulling $20 an hour job for some crap frame installation company.
Yet big companies are crying for me in the U.S. and paying me $50 an hour, working average 60 hr weeks. What gives? Everything is half the price down there but the yanks will pay me more then double what any company will pay me here?
Does everybody in Canada work in the oil patch and make 6 figures? Is everybody a doctor or lawyer in Canada and make 6 figures?
I mean you have to be making 6 figures to afford these shoe boxes up here… right?
No comprende!!

#13 Debtfree on 12.18.11 at 5:04 pm

I come here for the info/comedy/recon .
like this ..”It makes the blog more delusional than the House of Commons. Or Global TV.”
Now we are led by a newsreader/piece of shit from global in the house of commons and a broad . I guess stevie wanted him there because he can read a script so well . Free thinking not so much .

#14 Sue on 12.18.11 at 5:05 pm

#6 Renters Rule
Thank you, that is exactly how I am feeling. I just want a big reality check for people bc I can’t stand seeing the shallow and vacuous do their thing any longer.

#15 Trev16 on 12.18.11 at 5:05 pm

Garth,

Your right it is going to be ugly…..and the real estate market is so small in comparison to the other financial bombs which will be going off at the same time. Here is a great interview for people who still think everything is OK in the financial world (Max Keiser/Gerald Celente).

http://www.youtube.com/watch?v=-MrYmxuz0ik&feature=player_embedded#!

Cheers,

Trev16

#16 diharv on 12.18.11 at 5:15 pm

I hate our stainless steel upright fridge and freezer pair but thay came with the 495k house we vultched for 375k because everything , I mean even a mildly greasy fingerprint shows up . Constantly having to wipe it. Black is just as bad. I miss my nice white appliances and arborite countertops in my old house. Also when I watch house porn and I see a young couple with no clue lament in a perfectly good kitchen that there is no stainless and granite and it will all have to be ripped out , I want to reach in the TV and bitchslap them silly. Not bacause they’re better , but because the Jones have them.

Put the keyboard down. Slowly. Now step away. — Garth

#17 I love declation on 12.18.11 at 5:15 pm

Garth i wish for deflation. In fact i spent more money in 2008-2009 then the last two years combined. Why would i spend more in a year of deflation then the last two years of hyper inflation? because my money is worth more and i can get more for my money so i bought more good quality products. I hope we have deflation ten times worse then the great depression. I have no debt and money in the bank. I hate people with no money who buy houses and spend spend spend driving up the cost of everything. why should i have to compete with no money who is willing to over spend on money they dont have and will never pay back?

#18 Debtfree on 12.18.11 at 5:16 pm

@usuk did you know there are more than one time zone on the planet ? And when it’s 10 pm where you live it’s different else where . And that lots of us here haven’t place any importance on fri/sat night fever since the disco era. And we are not all christian either.

#19 Habs76-79 on 12.18.11 at 5:19 pm

Whether house prices decline nationally by 15% 25% 50% it does not matter what anybody here at this ” Pathetic Blog” says. Reality will just be… Be it 15% or crazy high 50% corrections. Be it 15% in Nowheresville Sask. or 35% in Calgary Alta or 40+% in fat headed GTA or whacko nutso GVA. Or pick any other locale in Canuck Land.

The questions are.

1: Will it be more a pop or a slow deflation?

2: How will those hit most deal with the mess they mostly created for themselves?

3: What pressures will be placed on all levels of govt. and how much shall it ultimately cost tax payers?

4: Those who can because they observed a wiser financial practice will they benefit from this? And how much?

I agree with this housing prices will decline to where they’d have been if they only followed the traditional model of natural state of inflation from where the beginning demarcation of the bubble began to where it ended. But they may also over shoot going backwards too because of the economical hit the correction will take, meaning the prices may decline in some or many areas even greater than to where inflation should have kept them at, at least for a short while say 5-7 years… But who the Hell knows?

I only know these things. IT’S NOT DIFFERENT UP HERE!

We are tied at the hip to the USA and nothing will change this any time soon if at all. Even our trade with markets like China and other SE Asia partners will hit as they are going just as mental with monetary policy and economic policy, some have many times worse/more difficult social policy issues to boot. Europe is a boondoggle mess too.

We Canucks in our inferiority complex driven smugness think/thought we could snooker the market, well we cant. 35million of us are not able to nor more blessed than the hundreds of millions of our western society peers let alone near 7 Billion others on this puny rock, in a puny solar system in the Milky Way Galaxy. We’ve just proven to live by being DELUDED.

REALITY ALWAYS WINS FOLKS!

TOUGH MEDICINE IS COMING and we have ignored the symptoms for too long.

#20 Sleepless in Vancouver on 12.18.11 at 5:26 pm

Garth, I think on balance you’re right about what will happen on a national basis in Canada. 15% might be a bit conservative, though, considering how much higher average SFH prices are Canada vs. the US right now.

I’ve lived through a number of corrections in Vancouver as an owner and as a renter. This market has corrected 50% in the past, the average correction has been in the 27% neighbourhood and in 2008, in only eight months it dropped 15-20%, with the biggest drops on the Westside of the city. Granted there were extenuating circumstances in all these corrections however as this blog points out repeatedly, there are no shortage of extenuating circumstances now.

Many peripheral areas outside of the Lower Mainland are already off more than 15%.Look at the Okanogan – off 30% and still dropping. Whether Vancouver drops 50% or 40% or 33.3%, when it pops I predict its going to drop a whole lot more than 15%.

As has been borne out in the US, the more a given market rises beyond fundamentals, the further and harder it drops. Vancouver will always be a more expensive market than most in Canada but it has also earned the “most bubbly market in North America” honour from Robert Shiller.

#21 Waterloo Resident on 12.18.11 at 5:33 pm

Garth, you said that we should be careful for what we ask for because it just might get ugly.

Here is what I ask for:

– I want house prices to fall by 50%
– I want unemployment to soar to 25%
– I want half of all government workers to be let go.
– I want police and fire departments everywhere to be shutting down and letting go of workers.

Oh wait, that’s America right now isn’t it?

Yes, that’s what I want for Canada, I want a swift kick in the butt for all of them, maybe THAT will wake them up?

#22 Westernman on 12.18.11 at 5:37 pm

Garth,
Good post.
The economic reset for Canada is on it’s way… you can see the signs all around you if you look. For most it will be a financial hurricane that will decimate them – maybe for the remainder of their productive lives.
However, I tell you , the smart ones ( and ya’ll know who you are ) will mop up…
It’s all in the mindset and attitude. Resourcefullness will be king, willingness to adapt and change will be queen and the acceptance of physical labour will be the pawns that will enable not only surviving this economic storm that’s coming but prospering despite it.
The biggest challenge for the aformentioned group will be keeping the tax man and the unprepared from leaching off your hard work, common sense and foresight.

#23 jess on 12.18.11 at 5:38 pm

understatements

The SEC claims that during his five years there, Syron signed off on filings that vastly understated the firm’s exposure to subprime loans.

Freddie claimed to hold no more than $6 billion of such mortgages at the time but actually held as much as $244 billion of loans it knew were subprime, the agency alleged.”

http://bostonherald.com/business/general/view/2011_1217sec_sues_hubs_syrongoes_home-loan_execs_hit

#24 Incubus on 12.18.11 at 5:40 pm

I think Garth is in denial, all bubbles eventually deflates, Canada is not different from other countries.
What is not sustainable cant last forever.

The graphic below shows that boom in 1970 and 1980 have reverted to the mean. So why this time would be different?

http://3.bp.blogspot.com/-i9zIsFQeA0s/TpYIIuzzMeI/AAAAAAAABSU/Ee4L0zm1Crk/s1600/homepricechart.png

So if we assume that the homes must fall by 50% in some place so be it. This happened in the U.S. why should we immune?

People are not interrested with the price decline of a shack lost in the forest.

I live in Montreal, houses have increase by more than 100% in the last 10 years while income have increased may be by 30%. A correction will occur and it will be more than 15%, I guess 30% or may be more. I really dont know

I am already owner of a house and an income property without mortgage.

#25 Mr. Lahey on 12.18.11 at 5:44 pm

Good evening blog dogs! This is my final entry (to the relief of many I am sure!) and of course the recap of the events of the FASTPGBDCParty. Our fearless leader, the all wise, all knowing, mystic reader of the financial tape, all seeing, all encompassing oracle from the east, financial prognosticator extraordinaire, communicator without equal, champion of the little guy, best selling financial author and educator of the illiterate masses, irresistible charismatic macho man to all women, lone voice of reason in the financial wilderness of Canada, unflinching opponent of the real estate industry, humourous, kind, compassionate, courageous and former right honourable outspoken parliamentarian, minister of national revenues and all round jolly good fellow Garth Turner continued to lead the hoedown all through the night until Saturdays morning. Saturday morning the bearded oracle led everyone including Ron Paul and Mark Carney to the large frozen Clydesdale manure pile outside of Sunnyvale. The oracle, still wearing his Scottish Highlands tartan kilt, ran to the top of the frozen manure pile and exclaimed, “I am standing on Ron Paul’s election platform and Mark Carney’s interest rate policy!”. The crowd roared with laughter except poor Ricky who finally, after the laughter subsided finally got the joke. “He just said those two guys are full of shit!” . The crowd roared with laughter once again. Now the shadow boxing sage yelled out, “what did the world have when we had the gold standard?” The crowd yelled in unison, “depressions and deflations”. The mystic one yelled out, “what have the last 10 years of low interest rate policies led us to?”, the crowd roared in unison, “a massive housing bubble!”. Ron Paul and Carney were almost hysterical at this point. The bearded prognosticator yelled out once again, “how will this end?”. The crowd yelled back in unison, “badly!” Finally the all knowing, all wise sagacious one yelled out, “who is the lone voice of reason in the financial wilderness of Canada?” The crowd roared, “you are!” At this point Carney and Ron Paul made a quick dash to Ricky’s beat up car and literally sped past everyone and out of Sunnyvale never to be seen again! The bearded one bellowed out, “who do you think won his debate?” The crowd roared “you did” and hoisted their hero unto their collective shows and marched him through the park to the singing of “for he’s a jolly good fellow, for he’s a jolly good fellow”. At this point the booze took over and I have no recollection of the ploughing match! My apologies fellow blog dogs, perhaps the participants could enlighten you and me on the results! This is Jim Lahey signing off and wishing everyone a wonderful Christmas and a prosperous new year! See you all at the SASTPGFBDCParty!

#26 Harry in Saskatoon, no bust here, maybe next year, or the year after on 12.18.11 at 5:48 pm

Garth, you are forgetting the fact that some places will not lose any value. The places that have a strong labor market, people moving to, low unemployment, commodities like ahem, Saskatoon, even Regina, Calgary, Edmonton. There might be little blips here and there but no crash in the western power houses.

I have said it before and I’ll say it again, until first time buyers are priced out of condos out here in the west, there is no bubble here. hence no crash.

The comic relief is appreciated. Really. — Garth

#27 Harlee on 12.18.11 at 6:02 pm

It’s all going to be a very big shock for the younger ones out there who have never really lived through an economic downturn like what is coming in 2012. Well…we all can’t stay innocent for all our lives. No 50% drop,but there will be some hurt going on. I’m adjusting and bracing myself financially the best anyone can for what is coming. I trust the rest of you will be doing the same.
YES WENDY!STOP SHOUTING! WE”LL HEAR YOU JUST FINE IN lower case…By the way,I love your hamburgers.
Now let’s see… if Charles Dickens was the author of this pathetic (?) blog….
Westernman would definately be Scrooge (no contest).Garth as the Ghost of Christmas Future,warning us of the dangers ahead. Junius as Tiny Tim? I don’t know who as the Ghost of Christmas Past…Who on this blog is Bob Cratchitt? Ah well,we haven’t heard from Mr. Lahey yet -He and his group are nursing hangovers in the trailer park.You see,that’s what all that Screech and highland dancing will get you….

#28 gladiator on 12.18.11 at 6:05 pm

It’s not like some people’s wishes will influence the market… Let them wish – the market will do what it should do, depending on how the powers to be “regulate” it.
The graphs depicting real estate long-term trends and market prices show a 50% decline will bring prices to normal levels. But bubble bursts cause prices to overshoot to the downside, so a 50+% decline is not excluded.
Many wise savers just want to get their moment of victory when they’ll laugh in the face of those who borrowed recklessly stupid amounts of money and live the high life on credit. But not all savers realize that this debt binge got us all (taxpayers) on the hook for paying the piper (the banks via CMHC) when the music stops and it’s gonna hurt everyone, albeit the borrowers will hurt the most.
The tinfoilers think the end of the world is nigh, but somehow they don’t say who the beneficiaries of the goods from FEMA camps inmates will be. If you put the whole country in labour camps – what are they going to produce and for whom? It means there will be buyers for those goods (free people). On another note, I couldn’t help but notice how fast the US army was withdrawn out of Iraq. What are they going to do on US soil?
Metalheads have their share of truth: PMs will have value in any new currency that TPTB may impose upon us. SDRs anyone? The Euro’s fate is still unclear, the US dollar’s hegemony is undermined by growing powers like the BRICs. So, when you have no confidence in the fiat currency, you preserve your labour credits in PMs and wait for the emergence of the new fiat stuff to exchange your metals into it and buy food and gas. We never know when “the switch” will be done, but better be prepared. I own no gold, btw. Canadian dollar is a more stable currency because no one’s trying to bury it and it’s a single-country monetary unit, so Canadian metalheads don’t have much turf to defend their actions, aside from saying that CAD has counterparty risk, which is not the best argument, because our govt is considered “stable” compared to others outside Canada.
Pardon my random thoughts, but I couldn’t resist to reply to your introductory note.

#29 F on 12.18.11 at 6:07 pm

With deflation will it hurt the banks?

Will it effect US and/or Canadian banks?

Will the taxpayer be on the hook for this if it does happen?

How do credit unions stack up against banks in Canada? By this I mean if things should go wrong, how will they hold up and would the government support or try to help them?

If everything went for a crap just how bad would you estimate it could get?

#30 Tony on 12.18.11 at 6:12 pm

#17 I love declation on 12.18.11 at 5:15 pm

Don’t chase a falling market with your money. This might last 15 or 20 years. Wait 15 years.

#31 Kathy on 12.18.11 at 6:14 pm

I got a phone Friday evening:”If your credit card debt is more than $10000-we can help”.I said that there is about $125 on my visa.”How much?”.I’ve repeated.He laughed and hung up.15 minutes later another call (windows & doors-or something like that):”Am I speaking to homeowner? “No”-I answered. “So,can I speak to homeowner?”he asked.”No.The homeowner doesn’t live here”-I said. Now his turn:”ARE YOU RENTING?” My turn: “Yes”.He laughed and hung up.About 2 hours later another call(I was really not sure if I should pick up-but caller ID showed our friend’s number):”We’ve bought a house!”-my friend was was really excited.”Our mortgage is just $250 more than rent!”When I asked about insurance,property tax and utilities she was not sure what I am talking about.”You should buy too.It’s easy!If you have not enough for 5% take some from your personal line of credit!”
Garth-I read your blog not because I want the home value in Canada to go down(my husband is a bricklayer),but because sometimes I need to make sure that everything is O.K.with me. ;)

#32 Min in Mission on 12.18.11 at 6:16 pm

#24 – Incubus, thanks for the link to the chart.

“Endless hectoring from a pathetic Harley owner.” – Garth.

Never thought of it as “hectoring”

#33 Curious! on 12.18.11 at 6:19 pm

15-20% in brampton/mississauga then! booyaa…i like this blog again!

#34 gtrz4peace on 12.18.11 at 6:21 pm

Everyone here who is saying it is pathetic when people tear apart “a perfectly good kitchen” because it’s not “granite or stainless”. 1) Some folks, myself included, have health issues that make laminate particle board countertops which outgas formaldehyde for life of the counter, a health issue – and for that reason folks like me would immediately replace with a non-outgassing countertop with 2″ x 4″ bracing rather than composite board filled with toxic outgassing chemicals.

I assume those posting about “granite and stainless” are using the terms symbolically to describe excess, rather than to tout the advantages of particle board that outgasses rather than a solid-surface counter material?

#35 Ammo & Viagra on 12.18.11 at 6:34 pm

Mr. Lahey, I guess we finally settled what kind of a contender R.P. is ….may he R.I.P.
It was a great time..got a wicked hangover from that screech..thanks for the eastern hospitality.
Just passing through western suburbs of Montreal heading back to the BPOE, Southwestern Ontario, where the weather is still balmy and the grass is still green.

#36 Curious! on 12.18.11 at 6:37 pm

IMO, the burning desire for a massive correction (notwithstanding the wider economic repercussions) comes from a sense of jealousy of not having things that others have…even though in reality, “others” can barely afford it…
So a massive re-alignment of values is in order, somewhat similar to the US where a house is no longer seen as a must…and it wont be for another decade at the very least.

I have personally just flipped my condo in TO and will look to invest in a balanced portfolio like Garth has been advising and of course renting…while keeping an eye out for a starter semi/town

#37 Mister Obvious on 12.18.11 at 6:39 pm

For years the one and only justification for purchasing at hugely inflated valuations is that “prices are irrelevant since they always increase”.

Thus, prices don’t even have to fall but simply stall indefinitely to land many players in heap of trouble in the coming years of slow growth and tighter money.

That scenario is clearly well underway right now.

#38 Ammo & Viagra on 12.18.11 at 6:39 pm

Mr. Lahey, you also made me realize that I could love the trailer park lifestyle. What a bunch of crazy but down to earth son’s of bitches ! thanks for slipping me that extra bottle of screech. It’s gonna be a very good Christmas.

#39 Oli on 12.18.11 at 6:40 pm

I find this article slightly ironic as it has been Garth shouting to the masses to be the lesser fool by leaving the housing market now before it implodes, to wait for the burst to swoop in on deals like vultures… He weote a hole book on it (Money Road)!

Now he is turning around to judge his readers for hoping his very predictions come true!

Albeit selfish, the reason I wait for the bubble to burt is to give the finger to all those hounding, judging and advising me on the importance of not wasting my money on rent and purchasing a place.

I had a real estate agent tell me “[I] shouldn’t be picky” when suggesting that for 300k a small townhome in a jam-packed subdivision in Oakville should not pose major structural issues.

I am tired of being looked down upon by family and peers, seen as less adult because I refuse to over-pay for a home.

Now I’m being judged by the financial guru for following the very words he told us should not be ignored!

I find this all so confusing. If we aren’t to buy low, sell high, resist the urge to act as sheeple… What ARE we to do?

As days go by this site seems to more further in the opposite direction of your book.

Garh, have you changed your mind?

Please clarify what your position is for the promotion of wealth management and paving the true Money Road.

#40 Canadian Watchdog on 12.18.11 at 6:45 pm

Looks like someone just joined the housing party.

Trust & Mortgage Loan Companies – Residential Mortgage Holdings

http://i41.tinypic.com/14tgue.png

Be careful with REITS.

#41 Pat on 12.18.11 at 7:07 pm

Garth, I’m having some trouble figuring you out buddy. You a kenesian or an austrien?

Vegetarian. — Garth

#42 Junius on 12.18.11 at 7:07 pm

#26 Harry,

A story for you from Edmonton. A relative there had to put their home on the market this summer. His job was “right sized” and salary reduced. He is the “powerhouse” resource area as you define it. They have been telling them for 2 years they will face a workers shortage. Now it turns out they have a cash shortage.

They listed their house and only got one offer. It was less than what they bought the house for 2 years ago. They took it off the market and will put it on next Spring when “it all comes back.” Meanwhile they can barely make ends meet and are borrowing from relatives to have a Christmas.

Of course, this is just one story. Or is it?

#43 Prepmonkey on 12.18.11 at 7:17 pm

The market will correct, long held assumptions that gave the people the courage to jump into the market will change, risks will turn off the euphoria after stories from the wilderness filter into the psyche. The MSM will cheerlead the real estate market as if it was a public service. People will feel ashamed and stupid for having leaped too far and will realize they had lost too much already and hunker down as “real estate” always goes up. What this blog has to say cannot be 100% accurate, even though the author has very strong opinions which I respect. Lots of archived bubble blogs on the Internet from the US crash to see how institutions and real estate players will attempt to hang on to the glory days.

#44 nocte_volens on 12.18.11 at 7:20 pm

When discussing how much RE will drop, shouldn’t we be looking at normal household income/price ratios to arrive an answer? Here in Kamloops, when I bought in 1997, prices were about 2.5-3 times income. Prices are currently about 5 times income, so shouldn’t we expect the ratio to revert to the mean? Does that mean a drop to the mean or a lesser drop and then years of stagnation as inflation fills in the gap? And I wonder about Vancouver: prices there are always higher than anywhere else in BC, so is a income/price ratio of 3 reasonable? Perhaps a ratio of 5 or 6 (or something else) is the correct average or normal ratio.

When friends ask what I think will happen to RE prices, I tell them that 5-10 years from now, prices will be the same as they were in 2000 adjusted for inflation/wages. They think I’m crazy (I may be, but that’s not the same as being wrong).

#45 jshum on 12.18.11 at 7:28 pm

for the sake of counter point, if the housing prices correct 15% that would be exactly how much what I was looking at increased in since 2008 when I looked in Winnipeg, if not more. Now I really can’t afford a house for the rest of my life. I was told in 2008 not to buy. Am I the great the fool?

#46 nocte_volens on 12.18.11 at 7:34 pm

Just realized I should have written price/income ratio instead of the other way around…sorry all.

#47 Sue on 12.18.11 at 7:35 pm

#33 gtrz4peace

Doesn’t a lot of granite spew radon? just sayin

#48 Hoof-Hearted on 12.18.11 at 7:47 pm

Re : Richmond BC( and your article yesterday)

WOW….I live here..and didn’t realize the drop.

Regardless, you ain’t seen nothing yet. If you toured Richmond, they are still building like crazy.

I would say that approx. 2000 new units on the market by say late spring 2012.

WTF these so called developers are thinking is beyond me. The market will be further diluted.

#49 Kip on 12.18.11 at 8:01 pm

Good post Garth and a dose of reality for some here.

The current population of the GTA is just over 5 million and will reach 7.5 million by 2025 or 13 years. That’s a GTA almost 50% larger than it is today in just 13 years.

We have a lot of work to do and much of it will be high rise whether we like it or not.

Canada, there is no place I’d rather be!

#50 Smoking Man on 12.18.11 at 8:05 pm

Little old me.
Extraordinary powers of observation.

Gartho this was one of your better posts but I’m Disappointed.
You left me off the list:
tin foilers
metalheads
pissed-off renters
Boomer baiters
wannabe economists
whiny genXers
misogynists
feminists
doomers
Tea Party wackos
condo speckers
and people in Vancouver captivity. Meh.

Little old me. Well this sums it up.

Extraordinary Powers of Observation.
Hegelian Dialectic Spotter.
Clairvoyant.
Drunk and Stoned.
Insane.
Diabolical hacker.
Day trader extraordinaire.
Extreme Gambler.
Fondness for Ladies of the night.
Pro- Liar
Anti School, pro Education

Have I let anything out?

I know its tempting isn’t it Gartotamul.

#51 TurnerNation on 12.18.11 at 8:34 pm

We flock here because every pther source says to buy as many homes/condos as possible (TV, Newspaper, Realtors, Bankers), while this arduous weblog whispers Sell.

#52 T.O. Bubble Boy on 12.18.11 at 8:35 pm

“It seems clear, however, some folks believe reading this daily drivel will make house values go down. It’s what they live for. They dis real estate so they can get some.”

I cheer for sanity to return to the market, so I can avoid bidding wars with debt-loving, house-horny families.

I cheer for CMHC to disappear, and stop convincing Canadians that taking on the maximum possible debt load is ok.

I cheer for the day when households with 6-figure salaries can buy something nicer than a condo or a particle board house in the boonies.

I cheer for the day when Garth is interviewed on every media outlet in Canada as the guy who called it.

#53 TurnerNation on 12.18.11 at 8:36 pm

This weblog is all about bikes, babes, and balanced portfolios. Boomer chic.

#54 Phoeey on 12.18.11 at 8:44 pm

First !!!

I come here to read Garth’s writings and often roar with laughter.
Where I live in Sydney the price of an ordinary house has risen from 3x an ordinary wage to 10x an ordinary wage over the last few decades. I expect a 70% decline in real terms to reverse this situation. It could take decades though.
Garth makes very good points about what has actually happened to prices in the US. Many places there still have severe shortages of housing and prices are still too high. Also each place is different. Sydney and Vancouver apparently are quite similar, but both are very different to Ireland, Spain, Vegas, etc. Why can’t morons acknowledge this difference? (This time is different ha ha ha).
Another point is where to judge the price drop from. Imagine that ordinary houses are selling for 100k and then price slowly rises to 200k and many sell for these prices. Then over a few months there is a mad rush and a handful of houses sell for 250k, 280k and one sells for 350k. Years later prices stabilise and many sell for 180k. Do we measure the price fall as being 10% from the many sales at 200k, or do we measure from the handful that sold at the fluffy prices in the 250k-350k range?

#55 Al on 12.18.11 at 8:48 pm

I think most people log onto this site to check if the fall in real estate has started and then they get the shock of their lives when they read articles such as the following on Market Watch; http://www.marketwatch.com/story/gta-realtorsr-report-mid-month-resale-housing-market-figures-2011-12-16

#56 Onemorething on 12.18.11 at 8:56 pm

USA Rewind to 1998, Canada 2003!

#57 Nostradamus Le Mad Vlad on 12.18.11 at 9:02 pm


Good, balanced post and early, too. I certainly do not want to see a 50% ‘whatever’ decline.

How ugly will it get? Depends on a person’s individual standing. Right now, there are way more families applying for help from food banks, Salvation Army, etc.

Draw your own conclusions — Prediction Our standard of live will hit the skids next year;
*
82% chance California going under, and others may follow; Banxters The offshore petroleum standard; 3:53 clip Pending EU collapse, and Leveraged Breakup; Pic (Chart) of the terrorism deaths and military spending (Can the Pentagon be farmed out to Andromeda?).

A Realistic Scenario as compared to optimistic / pessimistic scenarios; TPTB Those who make and break the rules; Financial Dunkirk UK plans to rescue ex-pats in Spain and Portugal if they tank. What if the UK and pound tanks at the same time?
*
Willie Nelson Occupy the food system; The m$m laughs at Ron Paul’s anti-war message. Unfortunately, Garth is right — Ron Paul will never win, as TPTB pick their ‘chosen’ one, not voters, and 3:03 clip Billary gets foot-in-mouth disease again; 4:51 clip More than the clip, the butchers of NATO want a civil war in Syria to allow them in carte blanche, and the Brits. are doing their part; Three myths re: the new detention bill; Dimbulb Bureaucrats Edison’s once-shining lightbulb; Seven Nations on neocon hitlist, because most have plenty of oil and central banks.

Two-faced Sarkozy on illegal downloading. Switzerland now allows it, France doesn’t, and DHS and RIAA as well; Big Sugar, Big Corn in scrap over corn sugar (liquid Stevia is much better); Matt Sludge Paid-for and controlled m$m as well? Big pharma raises its own prices, quite substantially; Iraq – Iran One thing leads to another.

#58 Junius on 12.18.11 at 9:04 pm

#55 Al,

Correction. People who come to this site would be shocked if the Real Estate Industry published anything but rosy statistics. No matter how they arrive at them.

#59 City Slicker on 12.18.11 at 9:12 pm

Garth what if people who can’t afford to pay mortgages file for bankruptcy, I hear they can keep the house if it’s underwater by a certain percentage.
How do you think Calgary will fall on the list of places hit?
I heard the reason we had a bust in the 90’s, or 80’s, was because the oil companies left or something like that.
Thanks for your insight.

#60 john m on 12.18.11 at 9:14 pm

Great post Garth….our country has changed since the last election in a very frightening way IMO.The same people that created this bubble are guiding our future in a very alarming way. I always thought even though i did not always agree that our Government in general worked for the best interests of the people. I no longer feel that way deception and dishonesty abounds. A combination of this incompetence,a faltering economy,overextended credit and the real estate bubble bursting (and it will) spells disaster IMO.

#61 Mr Buyer on 12.18.11 at 9:19 pm

The housing bubble is obscene and selective soft peddaling does not become a straight shooter. As for the recent news article that speaks of a potential glut of doctors it mentioned an average salary of 240k for our most important civil servants (Doctors are much more important than any professional class in my estimation and as such should be renumerated to an extent that puts them in the top salary bracket in the country). Well I can tell you that in the land of the rising sun a Cardio-Vascular surgeon brings home about half that (maybe 2/3rds if part time work is factored in). Training many, many more doctors is a key part of the solution. Quality health care for the people of Canada is possible and can be made much more affordable. The medical intrests of the Canadian people must superceed the financial intrests of the bussiness class, even the financial intrests of the doctors who would see patients go without treatment to maximise thier lifetime earnings. Those doctors are no longer docotrs in my estimation but simply lowly bussiness men (not unlike the regular season hockey players that see staying healthy for next season’s salary as thier main priority in the playoffs). The idea that bussiness and medical care can peacefully coexist is pure fantasy (along with the idea that bussiness like health care management is cheaper. Profit taking is not cheaper). Here in Japan there are private and public clinics. The private clinics will drag out treatment such that one must return multiple times for treatment of simple ailments while University based treatment centers will expidite complete, fast and efficient service as it is not cost effective to do otherwise (they do not get additional funds for seeing patients multiple times but rather a set fee for a given course of treatment and the doctors are on salary). Bussiness is about profit first, not cost effective measures. From the perspective of a bussinessman if cost effective measures maximise profit then so be it.

#62 City Slicker on 12.18.11 at 9:26 pm

My prediction is the housing bust will be worse in Canada. Why you ask, because when the US burst they didn’t have the European mess we’re about to go through.
Natural correction plus fall of Europe = much deeper recession.

#63 Tim on 12.18.11 at 9:28 pm

“thing closer to 20% in Brampton and 30% in Surrey. Given local conditions, there’d even be individual neighbourhoods exceeding that.”

Read Vancouver…

#64 Devore on 12.18.11 at 9:31 pm

It’s not a question of wanting or not wanting. It will happen, so you best be prepared. Like not having a house you owe more than 3 times your income on, so you can pay it off quickly. Like having a plan B if your livelihood depends on the real estate industry, so you can keep putting food on the table.

#65 Maxamillion on 12.18.11 at 9:33 pm

#46 Sue

Granite counter tops contain some uranium, which is radioactive and which decays into radon helps kill bacteria, doesn’t anyone see the benefit.

#66 Timing is Everything on 12.18.11 at 9:34 pm

When normalcy returns, it won’t be pretty.

The trouble with normal is it always gets worse…

http://www.youtube.com/watch?v=kybkiiAKMOY
http://cockburnproject.net/
——————————————————–
BTW Garth, you are very ‘tolerant’. Almost as much as Westernman. ;)

#67 Tim on 12.18.11 at 9:40 pm

I live on the west side of Vancouver and rent a 700sqr ft apartment for $1050 a month. For it to make sense for me to buy a condo, with ever increasing monthly fees, property taxes, random special assessments, and a good possibility that it will leak- like so many others, prices would have to drop a lot more than 15%

#68 Mr Buyer on 12.18.11 at 9:46 pm

I have a strange feeling that my one post a few weeks ago has moved me into the misogynist category (I extolled the virtues of my Asian wife and bemoaned the shortcomings and what I think are unreasonable expectations of North American women in general. Never a good idea to generalise. It is a poor strategy even at the best of times. Even about doctors and businessmen). I do not want to think of myself as a misogynist as I have a daughter to raise and have hopes and best wishes for her future (I hope to god she does not have to suffer through divorce and the ordeal of being a single parent as my mother did for a time in her life) but maybe I should take a long hard look at my current positions on the gender front. I noticed misandrics did not make your list. Is that because they do not frequent the blog or do you equate feminists with misandrics or does the current soicio-political construct render misandry an impossibility? (I ask only because I have two darling little boys to look out for as well and as their father it is my duty to do what I can for them).

#69 wtf????? on 12.18.11 at 9:48 pm

Still singing the ‘save the government’ song? tsk tsk. That vipers nest of nepotism and corruption needs to be ‘gutted’…to use your word.

“http://news.nationalpost.com/2011/12/17/immigrant-investor-program-in-maritimes-collapses-in-scandal-lawsuits/”

Not only does the taxpayer get skewered by having millions of useless parasites sucking off the lifeblood of tax revenue but the system has become so entirely arrogant in the lack of prosecutions that Canada rivals the worst of the third world for corruption…as has been proven time and time again. Time to get off your cloud dude. This is not an inside blog for civil servants to exchange vacation stories. We are real people who are sick of being ripped off by a cadre of slackers and thieves.

#70 shanks on 12.18.11 at 9:48 pm

vald, you know what that big pharma rises prices story actually means? they sold it cheap during its “live” trial before they decide its safe for rich people.

#71 Nemesis on 12.18.11 at 9:52 pm

“Why does anyone come to this blog?” – Hon. GT

Duh. Because you’re funny [and you care].

“Be careful what you hope for.” – Hon. GT

Well, strictly speaking, it had something to do with “not enough half-naked babes”… but I’d settle for, “Peace On Earth & GoodWill Towards All…”

#72 I'm stupid on 12.18.11 at 9:53 pm

Hi Garth

I’m just playing devils advocate. My understanding is as follows:
1.1 trillion mortgage debt
100-200 billion insured by chmc
Interest rate at lowest level in history
Household debt ratio at over 150%
Yearly service of all mortgage debt about 4 billion
Based on 30 year amortization

If the govt decided to make mortgages tax deductible as a last ditch effort to prevent a crash ie (15-20%) drop in property value and to allow the interest rates to normalize. it would result in a $1.6 billion in less tax revenue.

My question is this

Would it be possible for the govt to absorbe the loss in tax revenue? Also, at what point would it make sense for govt to do this given they insured so much debt?

I know you said it ain’t going to happen. I just want to know how you could be so sure?

Impossibly unaffordable, grossly unfair. The US is edging closer to eliminating deductibility. — Garth

#73 European on 12.18.11 at 9:56 pm

haha, great intro to the usually good blog

Its sounding like Garth is finally starting to be afraid of his own predictions.

Maybe this recession won’t be as forgiving as some would hope.

What goes up must come down.

#74 Peter on 12.18.11 at 9:56 pm

I want property tax included in the purchase price….lets say a 100 year exclusion.
Otherwise you are held hostage by some moronic municipal council charging you for their fancy garbage trucks and payoffs to friends.
Meaning you need a full time job just to pay the property tax so you only get to sleep there while you slave away during the day in your cubicle.

#75 I'm stupid on 12.18.11 at 9:59 pm

Sorry screwed up numbers

60 billion debt service
18 billion in lost tax revenue

#76 Mr Buyer on 12.18.11 at 10:05 pm

#35 Curious! you speak of jealousy as a potential motive behind many people’s desire to see a return to sane (a relative term for certain) house pricing. While this is indeed a potential reason it suggests housing is a question of choice to a degree that could exclude its essential nature. I would guess far more people want reasonable house pricing to house thier family while still being able to feed them (renting, buying or leasing). I could be wrong. I have found that I am completely out of touch with elements of current reality more frequently with each passing decade.

#77 Steady Eddie on 12.18.11 at 10:06 pm

I wish I could find a good book to live in. I would never have to come out and look at what they’ve done to my oatmeal.

#78 Timing is Everything on 12.18.11 at 10:10 pm

Oops…I meant to link this page for the lyrics to Cockburn’s song (The Trouble with Normal)..If you’re interested…

http://tinyurl.com/ktpwq6

#79 Renters Revenge on 12.18.11 at 10:12 pm

I am a renter and I have no illusions about what the consequences of this bubble bursting are for everyone, including renters.
Having said that, I really don’t see a mild 15% correction. Average prices in Canada are currently twice that of the average US price and their correction was over 30% peak to trough, on a national basis. Furthermore, once a correction is underway, buyers will be looking very hard at fundamentals. A tough look at fundamentals (incomes, and rents) will tell you that some places such as metro Vancouver are easily double fundamental value. Compounding this will be a loss of jobs and declining or stagnant income levels along with reduced availability of credit which will make fundamentals even worse than they are now. All simultaneous to a psychological risk aversion that will set in and create it’s own downward momentum. When all is said and done, I really don’t think 15% is the average decline.
I’m not hoping for more but I see a national average decline of 30% with some areas like Vancouver well over 50% off.

#80 MarcFromOttawa on 12.18.11 at 10:15 pm

I come to this site because the pictures are funny.

#81 Westernman on 12.18.11 at 10:26 pm

john m,
You thought the government worked in the best interests of the people??????
Christ’s testicles! How nieve can you get?

#82 Mr. Lahey on 12.18.11 at 10:26 pm

#37 Ammo and Viagara

Glad to hear you enjoyed yourself Ammo. Thanks for all your comments over the past two weeks. It was quite the bash wasn’t it? Have yourself a wonderful Christmas and prosperous new year.

#83 rosie on 12.18.11 at 10:29 pm

Beware getting what you wish for. Personally I wish for a candy crapping unicorn.

#84 eaglebay - Parksville on 12.18.11 at 10:30 pm

DonDWest from yesterday,

Technology is much more than the Internet.
All you’re probably using is the “web”.
The Internet is much more encompassing.
Get up to speed and get a real job, whiner.

#85 Devore on 12.18.11 at 10:37 pm

#65 Maxamillion

Granite is an all around poor food preparation surface. Although I hear it’s pretty good if you’re rolling lots of dough, which I assume the 20-somethings must do a lot of.

#86 Utopia on 12.18.11 at 11:00 pm

Ugly is right. We are in the sad predicament in this country that our housing correction is coinciding with a bursting of the property bubble in China.

With commodity prices set to decline as China slows and its GDP falls, we will experience a triple dose of declining resource exports, prices falling and a home made housing correction. These will be amongst the drivers in rising unemployment numbers.

Tough break because this country is also driven to austerity and budget cuts are the flavour of the day. Throw in an unfortunate interest rate increase, a consumer who does not have two spare nickels to spend on the good things in life and we have a wicked ugly broth stewing for the coming year.

Oh yeah, 2012 will be delightful. It is difficult to imagine how we will avoid both recession and a prolonged price correction in housing. The combination of these circumstances tell me this is shaping up to be much worse than many yet believe.

#87 604 on 12.18.11 at 11:01 pm

#38 Oli

I agree with you- the post is a bit hypocritical but the information is accurate.
I think the explanation of these sometimes hypocritical posts/information from Garth is that he is in the business of making money- he has to sell his information in different ways at different times- for some people to listen to the information you sometimes need gimmicks to sell whatever it is your selling.
Again what he is selling is truthful and relatively accurate.
I also agree with some of these people who take time to read and research the economy and information out there before deciding to carry a half million dollar mortage and made a very careful decision not buy even when everyone around them scoffs- so when the poo does hit the fan- we all want to say “told you so” and finally raise out noses at them- however the complete outcome for the Canadian economy is grim but we who has sacrificed, saved, rented, lived in crummy bsmt suites would like to finally see why we are doing what we are doing. At the end of the day we all end up paying the debt for others stupidity.
I think we all just do this to protect ourselves from serious debt disaster, while others don’t give a poo.

What am I selling in this post? Better explain that. — Garth

#88 look Out on 12.18.11 at 11:12 pm

Garth,

You have been preaching 10 – 30% since 2008 and earlier! Since then prices have raged further ahead.

So even such a decline in 2012/2013 just brings us back a few years where you already believed prices were unsustainable.

Guess you don’t like in Kelowna, Victoria or SW Ontario. — Garth

#89 sue on 12.18.11 at 11:20 pm

65 Maxamillion

…except for that minor little issue of lung cancer…

#90 Math is Fun on 12.18.11 at 11:20 pm

The year the current US President took office:

WTI Oil = $147 was reached on July 11, 2008
S&P 500 = 1,565 (I’ll be a jerk & take the Oct 2007 high)
Gold = $1,011 (03/17/08)

And today you ask?…

WTI Oil = $93
S&P = 1,219
GOLD!! = $1,590!!

I think the kids these days call it WINNING! Lol

#91 Utopia on 12.18.11 at 11:29 pm

#26 Harry in Saskatoon

Harry, the Chinese property bubble is bursting as we speak. That means commodity prices will decline, precipitously in some cases, and Saskatchewan could be sucking tail-wind within 12 to 24 months. You cannot seriously believe that a boom can continue without the worlds biggest resource buyer in the room.

Can you guess the outcome when potash prices fall?

#92 poco on 12.18.11 at 11:43 pm

#50bob’s my uncle on 12.18.11 at 8:33 pm
RE will be moving higher in 2012, we are seeing a pick up in sales as we get closer to the new year, even with xmas around the corner the market is still fairly strong.

Anyone waiting for a correction is sadly mistaken, you best start investing in preferreds because RE is not coming down anytime soon. Sorry for the disappointing news but someone had to tell you the truth.
______________________________________________

you probably forgot to include the tri cities sales in your analysis (Coq–Pt Moody and Pt Coq )
Dec 13–11 sales
Dec 14–8 sales
Dec 15–10 sales
Dec 16–5 sales
yup–hot –hot–hot—just like you say

#93 stage1dave on 12.18.11 at 11:48 pm

Thought I was another metalhead, until I figured out what PM stood for…hell, I’ve been hangin’ around for months & haven’t seen one Ozzie post yet! Closest we got was a mention of Bachman & “Jeff Beck”…oh well.

#42 junius; I think there’s a lot more people here in Edmonton hangin’ on by their fingernails. And this in one the healthiest (comparitively ) job markets in Canada. Prices off by over 20% from their highs, record low interest rates, & still I hear stories on a daily basis such as this.

Tho, there is a few optimists; customer dropped off some parts friday & mentioned that the housing market & economy will “take right off in the spring!” He’s lining up commercial property for purchase before then, to avoid the rush. Another large customer is sure a “major recovery” will occur as the snow melts. “Everyone is going back to work next year” was another one of his exhortations…

I smile & nod…gee, sure hope so…in the meantime, I’ll keep renting & try to keep the shop as busy as possible. Fingers crossed…

#94 Renters Revenge on 12.18.11 at 11:49 pm

US decline from peak 32% – CaseShiller
http://globaleconomicanalysis.blogspot.com/2011/06/case-shiller-nominal-and-real-housing.html

Not median price. — Garth

#95 Grim Weeper on 12.18.11 at 11:56 pm

Just finished reading December issue of Vanity Fair wherein Joseph Stiglitz states: “But anyone who believes that monetary policy is going to resuscitate the economy will be sorely disappointed. That idea is a distraction, and a dangerous one.

His views about the cause of the Great Depression and the current mess we’re in are well worth reading.

http://www.vanityfair.com/politics/2012/01/stiglitz-depression-201201

#96 Pr on 12.18.11 at 11:56 pm

…as the cost of money plunged… When normalcy returns, it won’t be pretty. They can, but they wont, rise interest rate, because its gonna be a blood bath. So they kick the cane. Until the cane hit a wall.

#97 OwlEyes on 12.18.11 at 11:59 pm

Prices don’t even have to fall much to hurt many. If they just kind of bump along for a long time, it should be an incentive not to own – since if you want to trade up or down there are high transaction costs that will get you. But if I am renting I would prefer to live in a well-managed property.

#98 OttawaMike on 12.19.11 at 12:00 am

This is why we pay realtors the big dollars.

When they take the time to stage a house and make a video with a perfect accompanyment soundtrack it all comes together.
Like Brandon your real estate pro did in this example:

http://www.youtube.com/watch?v=F_X2Fccr-SE&feature=player_embedded

#99 Peter Goesinya on 12.19.11 at 12:02 am

Garth, you are so wrong about Ron Paul.

Don’t be a fool!

The Tea Party is an economically-destructive, regressive, anti-social force. — Garth

#100 Jon B on 12.19.11 at 12:03 am

Why you ask? I’d liken the experience of my daily reading of this blog to comfort food for my brain.

#101 Waterloo Resident on 12.19.11 at 12:12 am

Wow, if Toronto’s population will double in the next 10 years, i guess that means that house prices will double too won’t it?

Didn’t I once tell everyone that a $800,000 house will soon be selling for $2 Million, and so on ?

I guess I was correct wasn’t I ?

The population will not double in a decade. How can people believe such trash facts? — Garth

#102 Stevenson on 12.19.11 at 12:25 am

Looks like I will be sticking around for a while. For those who thought I was wrong. Garth is simply covering his ass in case a correction doesn’t come or is very minimal. One day sell sell sell….then one day search for a good deal and pounce on it. Another day this will not end well or toes over leveraged and fear will cause people to sell off.

Truth is those of you who listened to him and avoided buying or selling within the last year and a half. You got punked hard. 15% max correction is nothin compared to the rally.

Remember speculating is not investing. Liquidity is great, but only comes second to profit.

I expected more from a realtor. — Garth

#103 Amarillo on 12.19.11 at 12:27 am

#22 Westernman “… Resourcefullness will be king, willingness to adapt and change will be queen and the acceptance of physical labour will be the pawns that will enable not only surviving this economic storm that’s coming but prospering despite it…” These are good positive words showing the right attitude.

#104 Canadian Watchdog on 12.19.11 at 12:32 am

Of course there is always ramifications with downgrades.

“The University of Toronto, the Hospital for Sick Children, the City of North Bay and a corporation representing 55 school boards in Ontario are among the entities whose credit outlook has gone from “stable” to “negative” because they are “linked” to the province, the influential credit-rating agency Moody’s said.”

http://www.theglobeandmail.com/news/national/education-and-health-providers-drawn-into-ontarios-credit-rating-woes/article2275760/

This signals a full downgrade in the coming months.

#105 Scib on 12.19.11 at 12:41 am

Why shouldn’t us renters be pissed off!
The house I was renting in Burnaby in 05 went up $15000.00 a month for 2.5 years while I paid 2100 a month. In that time it doubled in value. Meanwhile The assholes in Government and Banking would not lend my healthy growing business a dime unless I “owned a house”
I want payback.
I am also voting against the government in power for their sins even though I have always voted conservative.
I don’t care anymore what happens to this god damn country. I want justice!

#106 GregW, Oakville on 12.19.11 at 12:42 am

Hi #210 Sky, So it’s not just me wondering what’s up. It seems more noticeable on long road trip, some days. If you look up that is. Maybe it’s just more plans, but I don’t remember see it like that when I was a kid? I wonder if anything extra is getting into the rain now?

And yes, maybe we will soon see more of us running cars on solar sourced power, at least some of us, some of the time. I still think we’ll need a few CANDU’s to help recharge all the new plug-in cars, even on a com night.

If I recall correctly the sales guy for the ‘volt’ car said the gas tank was only ~35L and with a fully changed battery could go ~580 Km. (Toronto to Montreal is ~550km)
They recomend primium gas because it may site in the tank for a while if you only take short trip between pluging it in.

#107 cool on 12.19.11 at 12:48 am

Hey you guys, dont bring vegetarians in your fight…
____________________________________________

Garth, I’m having some trouble figuring you out buddy. You a kenesian or an austrien?

Vegetarian. — Garth

#108 westcanguy on 12.19.11 at 1:07 am

He’d be a bigger threat to the economy. Fortunately, he’s toast. — Garth
_____________________________________________

I wouldn’t call that just yet Garth. Sure, he’s had some endorsements from nobodys like Milton Friedman(when he was alive) and Peter Schiff but you can’t deny that he has a very solid base and is raising a lot of money. I think there is a growing belief that many are tired of the same old boys club that belong to both the dems(let down by Obamas broken promises) and the gop(flip floppers and crooks taking care of big business), eradicating the middle class. Now, is that base strong enough and will it grow is the real question and if it does, that group will support Ron Paul. The middle class is a dying group. They don’t have much to lose by going through the pain now. Most have lost their job or been down sized…not to mention either having lost their home or on the verge of doing so.

#109 westcanguy on 12.19.11 at 1:18 am

#26- Harry in Saskatoon spewed…
I have said it before and I’ll say it again, until first time buyers are priced out of condos out here in the west, there is no bubble here. hence no crash.
_____________________________________________

Good for you Harry! You keep drinking the kool-aid that the media feeds you and be sure to borow and spend that cheap money any way you can. It’s thinking like yours that made people rich selling pet rocks, mood rings and chia pets.

I’m in the recreational business and I cover Alberta and Saskatchewan and I can tell you…it’s not happening and when people aren’t buying toys…it’s not a good sign.

John Gormley is still preaching about the boom so it must be true, right?

#110 Nostradamus Le Mad Vlad on 12.19.11 at 1:24 am


4:48 clip This is designed to annoy the entire world. Rich and powerful meeting; South Korea’s stock market is plunging on news of Kim Jong Il 2’s death; EU bailout Seems David Cameron was right to reject the EU. TPTB are trying to get the UK horribly indebted; Addiction See how sheeple are still addicted to shopping (and RE), Breaking up banks and Tougher mortgage standards; Denmark brings along a new Fat Tax, yet allow cigarette sales and Monsanto to flourish, along with Junk Food sales to kids online; Bank layoffs in US not over by a long way.

Fund Investors favor bonds; The US Fed and unemployment, and 250 bln. reasons; Nine Things; EU leaders don’t have a clue; uyer’s Remorse; Outrageous Predictions; Utter Nonsense, and charts to prove it; Hedge Funds on the ropes?
*
The Emperor has no clothes. Hence, war on Iran with Syria involved; UK More taxes on the wealthy; Military Brutality Same as what we are having in NAmerica; Libya Scrambled assets; 2:47 clip Speed of light caught on film; SOPA and Big Brother Stop Online Piracy Act.

Christmas is a nice holiday, but it’s still a pagan festival; Why Do They Hate Us? Guess; Overturned Incandescent light bulb ban; TPTB are supposedly responsible the the Occupy movement.

#111 Emotions,hormones & duct tape on 12.19.11 at 1:29 am

Garth , you are a very smart individual because you are vegetarian. Not only are you very financially well off but you are going to live longer to enjoy all that you have created.
Do you have any great recipes?
I have a great vegetarian chile recipe that rocks…you just make the chile as you normally would but add TVP (textured vegetable protein- chunky or fine pieces)instead of ground beef ( or as I like to call it..ground dead cow with added shit, antibiotics, and growth hormone)..has a great consistency similar to meat, absorbs all of the flavour of the spices, but without the killing.
pretty good

#112 Bailing in BC on 12.19.11 at 1:36 am

Mr. Lahey

Thanks for hosting the FASTPGBDCParty. My head hurts today but I will be at the SASTPGBDCParty with bells on. Next year though I will double the recipe for the pine needle casserole. Did you see how fast it went? A very merry Christmas to you and yours sir.

#113 oh well on 12.19.11 at 1:55 am

“Vancouver is the riskiest real estate market in Canada with an average home price of $712,000. ”

This quote is from Garth Turner from March 2008.

Even if Garth is prediciting a 15-30% drop from today’s prices adjusted for inflation and GDP growth, it was obviously a great time to buy real estate in Vancouver in March of 2008, especially if you were buying for the long term (a life long home).

I sure wish I did. I would be even happier if I bought in the Fall of 2008. Now it seems, we may never reach that point again.

I chose not to buy then without having read Garth Turner, so I do not blame him for my mistake, but Garth should acknowledge that his gloomy prediction for real estate in 2008 was wrong, just like I was.

More risk now. But don’t let me stop you. — Garth

#114 westopia on 12.19.11 at 1:58 am

For those of you that missed Ron Paul on the Tonight Show with Jay Leno the other night – check it out. Ron Paul was epic! The guy is a hero. If he’s not elected down there, I say we bring him up here. First in Iowa, tons of support, standing O’s, the guy is a champ.

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

#115 Soylent Green is People on 12.19.11 at 2:02 am

BANNED

#116 TOC on 12.19.11 at 2:05 am

[6] http://www.financialpost.com/news/Housing+will+banks+next+sore+spot/3466046/story.html
Just a Little reminder of an article that came out about a year and a half ago. The only difference now, is the odds are even greater than they were then…..

#117 Burnt Norton on 12.19.11 at 2:08 am

#22 Westernman on 12.18.11 at 5:37 pm

A few questions for all the part-time Canadian social darwinists out there:

When you were born, did your folks pay the doctor(s) and nurse(s) and associated hospital costs for you and mom?

Were you 100% private schooled?

Have you been paying for private security / firefighting / garbage service / water supply / sewage treatment your entire life?

Of course, one might say, my hard-earned and loathfully-spent tax dollars more than covered those costs. Give me the option to pay my own way and I’ll get those services much more efficiently.

Maybe, unless one finds oneself in a vulnerable condition, through no competitive fault of his /her own.

The best players on the field elevate the quality of the lesser players around them.

Not only is compassion what makes us human, it is the key to happiness.

BTW, the context of your post above suggests that the word ‘leeching’ is called for rather than the word ‘leaching’, as written.

Spell-check: so anti-competitive.

And to think I was only public-schooled.

#118 TheRealTruth on 12.19.11 at 2:29 am

If it is only a 15% national decline here…then IT IS DIFFRENT HERE!

care to differ?

550,000!

#119 arbroathscotland on 12.19.11 at 2:30 am

Hey Waterloo Resident,
You are an idiot. I bet you tried to be a cop but never got on . Am I correct?
Whatever. This thing will happen and a correction is inevitable but when you start wishing for a lot of Canadians to lose jobs then Karma is closely on your tail. I think we all want common sence to come back to RE which it is. But be careful what you wish for.

#120 Alan on 12.19.11 at 2:38 am

I appreciate your revised and tempered real estate prognosis. Definitely looks better on you. The gloom and doom rant was getting old.

I don’t see anything seriously happening to real estate prices until interest rates get hiked a few times. Until then, all other asset classes, especially bonds and equity investments are suspect and whether you like it or not, real estate is still considered a place to park you money long term.

Longer term population growth in Canada is still positive. Whether you are renting or owning, you still need a roof over your head.

‘Doom and gloom rant’? This has consistently been my forecast. — Garth

#121 Rural Rick on 12.19.11 at 2:52 am

Hey folks take a look around. When I used to tell people about the value of shopping at second hand stores and selective garbage day picking conversation stopped and I was an object of pity. Now pickings are slim and everybody’s got the thrift shops on speed dial.
Next week they be stealing your air conditioner for scrap. Gonna be a hot summer.
Buy an ice company is my tip.
Invest wisely

#122 bubu on 12.19.11 at 2:53 am

Everybody is “concerned” with Italy or other countries in Europe but compare what is the family net worth in Canada or US with what is in Italy or France… Canadians are poor and way more in debt…

http://www.lefigaro.fr/conjoncture/2011/12/16/04016-20111216ARTFIG00306-les-italiens-sont-les-plus-fortunes-des-pays-riches.php

#123 Blacksheep on 12.19.11 at 3:05 am

Trees, obscuring view of forest.

As we accept that the end of “cheap oil” is upon us, we must realize the increased cost of energy inputs, will lead to reduced profits margins.

Global, over supply of cheap labour + squeezed corp.
margins, means downward pressure on wages and thus,
western living standards.

Does anybody think it’s coincidence that, house prices
massively inflated, while, wages went flat, in most western
countries?

Our consumer based society needs constant feeding to keep the ball in the air. The problem is that growth/debt are officially toast, at least for the foreseeable future.
So sovereigns will print as needed or the next decade will
be one of DE-leveraging, with a side of austerity.

I believe some people are expecting that some mild economic pain, may be in order, then It’s business as usual. I’m not so sure.

So when considering taking on new, long term debt,
we are no longer able to use the returns/incomes from the
past as valid reference points due to multiple factors
mentioned, likely changing.

In the scheme of things, I’m less concerned with the % of the RE correction, and more concerned consequences of said changes coming.

take care,
Blacksheep

#124 Al on 12.19.11 at 3:20 am

There’s only going to be a 15% drop in house prices??? So it looks like I’m the fool for not buying something 3 years ago! Given the 10% annual appreciation in house values over the past 3 years in my area, even with a 15% drop now I’d still be on top. What the heck??

#125 Brad in Calgary on 12.19.11 at 3:22 am

Garth, I’m having some trouble figuring you out buddy. You a kenesian or an austrien?

Are you serious? Are you new to this blog? Garth is a Keynesian to the core. Anyone who believes “global coordination” is the cure (instead of the disease) is a Keynesian.

Labels are the refuge of fuzzy thinkers. — Garth

#126 obert on 12.19.11 at 3:44 am

Well, I was wrong – i thought there would be a 30% drop in prices this year. So maybe it will happen in the coming year. Garth’s 15% decline would bring prices to 2009-2010 levels… way too optimistic. The 30% drop will bring them back to 2007-2008 level.

#127 Garth this is getting confusing on 12.19.11 at 4:14 am

Hey Mike, I’ve been a real estate bear for many years now, and have watched with incredulity as it has continued to soar. Your math skills are strong.

Why Garth is now tempering his predictions after years of housing increases is flummoxing me.

I get the fact that a “reset” to 15 or 50% of current “values” would have devastating effects….but hey when an average house is 10x average income that will have devastating effects too.

All the flippers and renovators and speccers did great on the way up while the rest of us stood by and said “wtf” and held out….so why should it be our problem if they get burned?

Garth I am really disappointed that you have moderated your views, and have started chastising people who have called you on it.

I would like to live in a Canada where the average family can afford the average house. Is that too much to ask?

Apparently, according to the school of Garth.

you are sounding more and more like “the man”, all comfy and ensconced with his harley and his digs and his preferred.

and yeah, I’m a boomer. just an appalled one.

#3 Mike on 12.18.11 at 4:36 pm
So not only is saving prudently for a good downpayment a fool’s game, but expecting a 30% correction on a market which has risen 100% in the past 10 years is considered unrealistic.

#128 BC Boy on 12.19.11 at 4:14 am

Off 2 Vegas! 4 nights break from this pathetic blog. Good Times…

#129 Beach Girl on 12.19.11 at 4:34 am

#16 diharv on 12.18.11 at 5:15 pm

I hate our stainless steel upright fridge and freezer pair but thay came with the 495k house we vultched for 375k because everything , I mean even a mildly greasy fingerprint shows up . Constantly having to wipe it. Black is just as bad. I miss my nice white appliances and arborite countertops in my old house. Also when I watch house porn and I see a young couple with no clue lament in a perfectly good kitchen that there is no stainless and granite and it will all have to be ripped out , I want to reach in the TV and bitchslap them silly. Not bacause they’re better , but because the Jones have them.

Put the keyboard down. Slowly. Now step away. — Garth

____

I have friends like that, but they won’t admit it drives them nuts. LOL.

Anyway dragged a few sober friends to volunteer today. One is a huge successful First Nation man. I introduced him to a recipient, he said you are a First Haitian? Also fed one young man who said he used to be a stay a home son. All these people are wonderful, I have more fun here than anywhere.

Yes we slide people a few bucks. My idiot who should know better, says Mom they are going to spend it on booze. I said you have been high all weekend. This poor bastard needs it more than you. People are stupid. Family included.

Just got up to let Daisy out. I think her IQ is soaring compared with what I put with. Happy Holidays.

#130 Dorothy on 12.19.11 at 5:30 am

In my neighbourhood sales are down, and prices have softened. However, the percentage drop depends on the type and price of the property. Condo’s (if you can sell them) have dropped by a huge amount, as have homes that were listed over $500,000. But more modestly priced homes appear to have only fallen by about 2.5% (3% tops). Also, I’ve noticed that in the month of December there have been several sales in that modest price range in my town, which is odd considering December is usually a slow month for real estate. One house on my street just sold in less than a week. So why, after several months of virtually no sales, we are suddenly seeing a bit of an uptick in sales is a bit of a mystery. It’s going to be interesting to see if this is just a temporary blip, or the begining of a turn around.

#131 plain_janey on 12.19.11 at 6:21 am

http://www.bbc.co.uk/news/business-16215629

Shouldn’t lenders have been doing this in the first place? Assume they’re not doing anything like this in Canda any time soon…

#132 gtrz4peace on 12.19.11 at 6:42 am

Sue #46 – You are all correct, granite can release radon but it is not the only solid surface material. I was merely making reference to the fact that “granite and stainless” seem to have become code words for excess.

#133 big T on 12.19.11 at 7:43 am

it is wishfull thinking that a decline in prices will stop
at a convenient =30%, its possible thats just a point
in an economic death spiral, just as few could see the
peak of house prices, who will have the courage to
catch the falling knife on the way down?

#134 debtified on 12.19.11 at 8:10 am

It doesn’t matter what I want. What’s ought to happen will. Thanks to you, I am ready. Sadly, most people I know aren’t. In any case, it will be painful for everyone; including myself but, hopefully, to a lesser extent.

#135 Aussie Roy on 12.19.11 at 8:14 am

Aussie Update

House prices bubble bursts

TASMANIAN real estate vendors are slashing asking prices to meet buyer expectations, latest figures reveal.

Real estate price analyst RP Data says that in some cases the cuts are more than twice what vendors would normally accept.

The biggest drops are on the West Coast, where asking prices between a vendor’s first listing and the contract sale have slipped, on average, by 22.9 per cent in Zeehan and by 20 per cent in Rosebery.

The biggest fall in Hobart was in Sandy Bay, where the asking price has dropped on average by almost 10 per cent.

http://www.themercury.com.au/article/2011/12/18/285441_real-estate-news.html

So it’s different here, there or anywhere ?

Is the property boom over?

Markets across Asia are falling or flattening, the Wall Street Journal reports. Numbers out of Beijing, Hong Kong, Sidney and Singapore reflect property value declines, while markets such as Bangkok and Kuala Lumpur are stagnent.

This comes after many Asian markets have experienced growth in the past few years, some up as much as 70 per cent since 2009.

http://www.property-report.com/site/property-market-across-asia-is-cooling-17831

BEIJING — Falling home values. Debt-strapped borrowers. Real estate woes dogging the economy. It’s old news in the United States, but now the air has started to leak from another great housing bubble — in China.

Home prices nationwide declined in November for the third consecutive month

http://m.triblive.com/triblive/db_/contentdetail.htm?contentguid=dxnG5HAp&full=true#display

PLEASE – Don’t listen to property doomsayers

Another swing at Prof Steve Keen, comments on this story are better than this RE propaganda.

Free sub rqd http://www.businessspectator.com.au/bs.nsf/Article/Dont-listen-to-property-doomsters-pd20111219-PP2UW?OpenDocument

Prices and credit go hand in hand.

Beneath the housing finance headlines

http://blog.lvrg.org.au/2011/12/beneath-housing-finance-headlines.html

Youth stuck in debt anxiety trap according to the Galaxy Australian Debt Study

YOUNG adults are more stressed about repaying debt than any other generation.

People aged between 24 and 35 topped the debt anxiety list, with nine in 10 concerned about making debt repayments.

http://www.dailytelegraph.com.au/news/youth-stuck-in-debt-anxiety-trap-according-to-the-galaxy-australian-debt-study/story-e6freuy9-1226224638136

So what helped push the US bubble to its breaking point?

http://www.washingtonpost.com/business/markets/federal-reserve-report-home-flipping-drove-housing-bubble-in-nevada-california-other-states/2011/12/12/gIQA1W8HqO_story.html

#136 househornyhousewife on 12.19.11 at 8:40 am

Garth,

The reason I read your blog is to reassure myself of reality. I already own a home that’s paid off and after almost a decade of living here, I am looking to move to another location that is more in keeping with my encroaching age and desire for peace and quiet. The city I live in has gotten busier and busier and I don’t like it (our continuously growing population has truly doomed us earthlings to oblivion … but I digress).

The market I am in is a miniscule lakefront housing market and all owners who are selling have overpriced listings. For example, a home that is worth around 1 million will have an asking price of 2 million. Agents don’t care (they have realistic listings in other markets in the region) and buyers like me sit and wait while this market stagnates. The more sellers put out overpriced listings, the more other sellers think that they can do the same and this breeds more overpriced listings until you have a ton of listings sitting on the market with no visits. Prices don’t come down because sellers don’t mind waiting 2 or 3 years before reality hits and they have to descend. Oh and forget trying to get these people to back up their asking price with a professional evaluation because they are greedy, fickle and completely out of touch with reality .. they will simply not do it. Usually a sale will occur after several years and price cuts. A property in this market will usually sell at around 50% of the original asking price and after around 4-5 years .. one place has been on the market for around 10 years and the original owner who was selling is now dead and it is her offspring who are selling (they do not live there and the place is falling apart .. they won’t descend in price). One of the most ridiculous situations I have EVER seen.

Buyers who want into this area are hoping that a market correction with lots of press will finally bring reality on the radar screen for these sellers (since the stagnant housing market and total lack of visits is obviously not doing that). The more doomsdaying they hear on the news, the more they will realize that if they truly want to sell, they will have to start facing facts.

Yeah, I know, I am a dreamer and if I want in I will have to wait like the rest of them. However, even if one out of the 100 or so sellers in this area sees the light and brings their asking price down to reality within a more reasonable amount of time (like say 1 year), then the others will follow suite, like a wonderful domino effect until perhaps in future, listings will come on the market at actual market prices (dare I dream). You know how people follow what they see and not what they know.

I am not hoping for a 30-50% drop in house values. I am hoping for the properties in my target area to simply come on the market with current market value asking prices, that’s all. Prices in my overall area of the Eastern Townships will not adjust by much because they are not overinflated to begin with. An average single family bungalow in a nice neighbourhood will cost you around $200,000.00 so there is not much room to come down. It is only the stupid Ontarians who own property on this particular lake (Lake Massawippi in North Hatley) and that think this is Toronto, that are trying to sell for twice or sometimes three times the value (and not succeeding fortunately). They never do manage to do so but we buyers have to wait years until an attractive property finally gets a realistic price tag. Ridiculous.

Anyway, this is the reason why I follow your blog .. you are helping me to patiently wait out this totally ridiculous local market. I am not quite sure to which group I belong .. I guess it would be a house horny whaco with feminist tendencies (I’d have to be a whaco to still be looking at this crazy local market .. I should have moved on by now but the mind says one thing and the heart says something else) … but what’s in a name after all ?

You know the saying, “Good things come to those who wait” .. who’s the idiot who came up with that one ?

HHHW

#137 Ret on 12.19.11 at 9:01 am

There Goes the Neighbourhood, video link from last night on 60 minutes. Thousands of homes just being torn down. What a complete and utter shame.

http://www.cbsnews.com/video/watch/?id=7392090n

US “foreign” students at McMaster get Permanent Resident status and OHIP cards giving them access to all the free Canadian medical care that they want. Give us a good story, we give you an OHIP card.

If the US gave me the same medical coverage deal, they wouldn’t need to be tearing down thousands of homes and property values would be on the way up, especially in the sand states. I would gladly re-locate permanently.

Why would I stay in Canada? Send my pension checks Stateside thank you. Outside of medical care, I would need nothing from the US or state governments. No welfare check. No school system for my kid(s). No US pension checks. Nothing except US medical care would be needed.

I’d be gone. The flow of wealthy immigrants to Canada would drop like a stone. Many immigrants that are here now and have any skills or resources, would be outta here as well. Chaos at the truck rental centers across the land.

There, I’ve fixed the US housing problem and I haven’t even had breakfast. It was easier than fixing a tap washer.

#138 TurnerNation on 12.19.11 at 9:31 am

Let me be the first to say: Real men eat meat!! ;-)

And, it’s funny how people become instant experts in historical economic schools of thought after reading a few Zerohedge articles. Those types of sites are junk sites. Unless you have Masters in Economics degreee do not even think about spouting your “solution”, imo.

#139 Mr. Lahey on 12.19.11 at 9:34 am

#111 Bailing in BC

Mr. Lahey

“Thanks for hosting the FASTPGBDCParty. My head hurts today but I will be at the SASTPGBDCParty with bells on. Next year though I will double the recipe for the pine needle casserole. Did you see how fast it went? A very merry Christmas to you and yours sir.

Yes, even triple the pine needle casserole next year! They were delicious. Thanks for coming to the bash and and we will see you at the SASTRPGFBDCParty! A very merry Christmas to you and yours as well.

#140 OttawaRenter on 12.19.11 at 9:50 am

@#9 Usuk on 12.18.11 at 4:58 pm

Check this out: http://en.wikipedia.org/wiki/Manners

@#134 househornyhousewife on 12.19.11 at 8:40 am

I think you read my diary! I have been watching the real estate market for years now, looking for a house. Because I want some land, renting is not a long term option for me. I don’t mind paying $300,000 for a house, IF that is what the house is worth. However, what I have seen is a complete dump, that needs extensive remodeling, tacky wallpaper removed, and all walls painted, floors redone, etc. listed at an unaffordable price, just because it has the same number of bedrooms and bathrooms as the guy down the street, who had–you guessed it–granite and stainless steel. But I weary of waiting, and am sick of the greed.

Like you, I have also seen numerous houses on the market, listed by children whose parents have passed away. Whether its greed, or an inabitly to admit your childhoom home is worth less to everyone else than to you, they sit there, unoccupied for years on end, rotting. When will it end?

#141 Daisy Mae on 12.19.11 at 10:02 am

“Economic forces (and all of history) tell us real estate values will eventually fall back to a level consistent with inflation, wages gains and GDP growth.”

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

This makes sense. Really, here in the Okanagan I have not seen or heard of bidding wars, wildly inflated prices. Granted, there are exceptions — condos 50% off — but that’s the result of extenuating circumstances. I’ve been following the Real Estate Review and real estate IS dead….there are numerous ‘new prices’ and some foreclosures. But by and large, it appears to be just a slow decline….”to a level consistent with inflation”.

#142 Tom from Mississauga on 12.19.11 at 10:06 am

Hey Garth, I’m a whiny GenXer, take that back!

#143 Daisy Mae on 12.19.11 at 10:14 am

NFN_NFN: “Will you also let us know when a good time to buy them back on the cheap is?”

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

You’re asking for free financial advice…and you’re not likely to get it.

#144 Daisy Mae on 12.19.11 at 10:19 am

RENTERS RULE: “WFT has happened to us all? It is all just so sad and vapid and empty.”

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

The pendulum is already swinging back the other way, and we’re thinking about austerity measures.

#145 disciple on 12.19.11 at 10:45 am

#267 Cato from yesterday… “The US will survive as the bastion of capitalism. For all its ills capitalism is the only economic system that moved the human race forward out of the dark ages.”
—————————–
Cato, your posts make me cringe, because there is much truth to what you post, but you insert these types of false assumptions and the whole pot you brew becomes one messy stew. I just have to ask one question to defeat your entire love song to capitalism: What caused the dark ages in the first place?

#146 jess on 12.19.11 at 10:56 am

Waste

Massive Spanish desalination plant lies idle
April 27, 2011 | by Caelainn Barr and Victor Mallet An award-winning £265m Spanish desalination facility, backed by EU Funds, has never been used.
========================
No Pipe Solutions

Get a porta-potty for 14 bucks /mo to remove your toliet waste and buy drums of water from a gas station
or you could pay the combined sewer and water rate bill, which some months can reach $300.

monthly sewerage rate bills
increased 4x’s over 15 years.
current $150 month, out of her $600 social security cheque for food and electricity.

14 December 2011
The scandal of the Alabama poor cut off from water By Brian Wheeler
BBC News, Alabama

——————————————
UK news. Revealed: how City fees are eating into our pensions
http://m.guardian.co.uk/ms/p/gnm/op/sxGx4g-mbORn9CuuCukyCgg/view.m?id=15&gid=business/2011/dec/17/treasury-warned-over-traders-fees&cat=top-stories

“dividend washing” – dividend arbitrage
City banks ‘cheat’ Europe in €600m tax avoidance trading scheme
December 17th, 2011 | by Nick Mathiason

#147 eaglebay - Parksville on 12.19.11 at 11:23 am

#90 Utopia on 12.18.11 at 11:29 pm

Being obsessed with China will get you nowhere.
The RE correction in China is limited to a few cities and sub-divisions of large cities.
1.3 billion Chinese have to be fed, lodged and employed.
The Chinese are building infrastructure all over their country. The next super power.
China has a command economy and large concentration of capital from all over the world.
Therefore China can develop their economy any way they want. The Chinese need Canadian commodities and they will buy them.
That’s why they invest and buy Canadian oil and mining companies.

#148 detalumis on 12.19.11 at 11:26 am

#139 OttawaRenter if all you can afford is an estate sale you really can get a good deal. I sincerely doubt these dumps are all priced the same as a granite palace. I had the same problem here in Oakville but the estate sales or “granny palaces” have some advantages; if you look closely they usually have good furnaces, roofs and windows and the prices are much lower. I found the sellers didn’t hold out on price too much, they just wanted their inheritance ASAP.

What I did was find one that had a decent floor plan and then just waited 10 years to renovate in phases. In a small place a kitchen, floors and bathroom aren’t as expensive as you think. You just need to be able to live with “ugly” for a few years, it’s not like the TV shows where you buy something and then renovate before you move in. It took me 20 years to completely renovate it as my priority was also to pay down the mortage first. I found that I got quite used to my Elvis Presley styled 1960 kitchen and bathroom with the pink, blue, and black decor.

#149 TJ on 12.19.11 at 11:37 am

Sounds like Garth feels bad for the weak zebra who gets eaten by a lion. While we’ve evolved from cave men running from lions, the world has evolved its ways of letting natural selection reward and punish us accordingly. Now economic decisions are what matters in separating the wheat from the chaff. Don’t feel bad for all the zebras out there Garth, I won’t. Besides, poverty these days ain’t what it used to be, they’ll still have their big TVs to watch their Dancing with the Stars and play Xbox on.

My best year financially was 2008. 5% drop in GDP? Bring it on!

#150 robert james on 12.19.11 at 11:47 am

#146 Eaglebay Maybe there will come a time when it will be “Show me the money,China” .. What do you think ?? http://globaleconomicanalysis.blogspot.com/

#151 NewWorldPartyDotOrg on 12.19.11 at 11:48 am

Actually, it can worse than what you described.

Spain and Ireland are now worse off than the U.S.:

http://www.newworldparty.org/2011/11/housing-after-bubble-bursts.html

#152 Kilby on 12.19.11 at 12:03 pm

Some sales out west. Still booming!

Summerland, 4 new sales in last 7 days (310 listings)
Mobile, $35,000.
Condo, $68,500 (court ordered sale)
SFH, $170,000
SFH, $230,000

Penticton, 6 new sales in last 7 days (653 listings)
Condo, $164,000
Condo, $190,000
SFH, $190,000
Townhouse $230,000
Condo, $276,000 (new 1,009 sq. ft.)
SFH $465,000 (6 bedrooms, 4 baths with suite) Wiltse

Parksville, 1 new sale in last 7 days. (290 listings)
Condo, $163,000

#153 disciple on 12.19.11 at 12:10 pm

The return of Hoof-Hearted and Utopia coincide. Interesting development… early X-mas gift to this blog?

I think what attracted me initially was the “Disaster waiting to happen” pic last year. Pure awesomeness… now I find that I rarely even glance at the pic and get right to the meat and potatoes, which would be the wacky craziness of the ideas presented both by the author and his respondent posters.

It’s because I am “an ideas man”, as they say, I charge money in exchange for ideas. But my ideas don’t come picked from a money tree, they come from an idea tree. I have laboured to grow that tree with saintly patience enduring the drive-by ridicule of pretentious intellectual snobs that fancy themselves scientists because they’ve got a degree or read a textbook or two, and envious poor lost souls like DonDWest who are still in the process of finding themselves. I’ve also had to turn my back on the establishment heroes like Junius and Cato who believe that greed is good as long as it is regulated, and plug my ears with my two pearls of wisdom I found in the Ocean of Dreams, so as not to be tempted by the childish folly of the many “right-wing-nuts” on this forum.

I believe we all want RE to cease being a capital gains vehicle. We’re done with the insanity. But we know that the mind-trip we were on has much to do with everything else besides real estate: consumerism, entitlement, off-shoring, lack of economic diversification as a nation, lack of financial education, unpreparedness for the future, and the social issues inherent in a multicultural newbie like Canada. The banking monopoly families have had it made here and for a very long time, and the only solution is to kick them out. How can an equities or bond market be sustainable if most of the funds are in Financials, Energy, Materials. Which do you think is the one which does not fit? Especially with a population so low and resources so high? Figure it out, what is causing our country to stall?

I think we cherish this blog as not only a forum for our rants, but also to float some ideas, to reflect upon ourselves, to gauge the general anger, to modify our own, and to formulate our opinions on our future plans. I will tell you one thing, with all the hidden costs associated with RE, apart from a REIT, I wouldn’t put any money in this de-leveraging industry with or without a mortgage any time soon, unless valuations fall by 50%. Violent mean reversal suggests up to 80% would occur. But there are those, like the author of this blog, that think because up to 25% of the national economy is in bed with RE, that commercial bank failure will affect the other two big players mentioned previously…I’m not so sure about that. Can anyone explain this?

#154 disciple on 12.19.11 at 12:22 pm

This is a MUST SEE… trust me… The biggest company you’ve never heard of:

http://www.youtube.com/watch?v=szNLMtgI7hU

SERCO… even if you’ve never heard the name, you’re caught in their web…

#155 BPOE on 12.19.11 at 12:24 pm

Canada’s biggest bank stating no worries when it comes to housing. Another BPOE stalwart. You can believe in The American and Junius or RBC and the growing number or Economists saying the exact same thing as BPOE. You choose
****************************************
..OTTAWA – The Royal Bank is issuing a cautionary alert about Canada’s over-extended households and the hot housing market.

Economists with the large bank note that domestic consumption, including housing, has sustained Canada’s recovery since the recession.

But they warn that segment of the economy is likely played out with household credit market debt reaching a record high 150.8 per cent of disposable income.

That makes Canada’s economy even more exposed to outside factors, such as slower global growth and a European financial crisis.

Even a soft landing for housing — a 10 per cent drop in prices — could subtract up to one percentage point from economic growth going forward, the bank says.

Still, the RBC says a steep drop home prices is not the most likely outcome, since the Bank of Canada will almost certainly keep interest rates low next year. The bank says if none of the risks come to fruition, next year will look pretty much like this one with a modest 2.5 per cent growth rate.

#156 Homer on 12.19.11 at 12:26 pm

#89 Math is Fun (But Calendars are Tricky)

Obama was inaugurated on Jan 20,2009.

S&P 500 low 666

WTI Oil low $30

Aside from that, not sure what your point was.

#157 Mister Obvious on 12.19.11 at 12:28 pm

#147 detalumis

Very Smart. Smarter still is get used to “ugly but functional” permanently. That will put you miles ahead of the game.

I spent 25 years owning a crummy little house with great location. But it was fully functional and I fixed only what was absolutely necessary (usually by myself). Then I sold for 8 times its original cost, invested the cash, and now rent pretty nice digs right downtown.

Someone else fixes things now.

#158 BPOE on 12.19.11 at 12:29 pm

History changes Garth. Welcome to the digital age. The world has exploded in population since those “historical trends” were put pen to paper. When trends were being put together “International Investors” wasn’t a term and Richmond wasn’t known as Richman. While neighbourhoods weren’t bein bulldozed either for monster homes. Stay tuned for front paper news in the near future which will debunk all this “historical norms” talk about Real Estate. The banks don’t see this happening (the same ones you recommend as part of a diversified portfolio)
*********************************************
Economic forces (and all of history) tell us real estate values will eventually fall back to a level consistent with inflation, wages gains and GDP growth.

#159 BPOE on 12.19.11 at 12:33 pm

More proof how wrong The American and Junius continue to be. Even with a haircut in prices the owner wins.
Scib on 12.19.11 at 12:41 am
Why shouldn’t us renters be pissed off!
The house I was renting in Burnaby in 05 went up $15000.00 a month for 2.5 years while I paid 2100 a month.

#160 eaglebay - Parksville on 12.19.11 at 12:34 pm

#122 Blacksheep on 12.19.11 at 3:05 am

“As we accept that the end of “cheap oil” is upon us, we must realize the increased cost of energy inputs, will lead to reduced profits margins.”

Don’t you think that due to high oil prices, more so in China and the rest of South Asia, that the cost of transportation alone will make our industries more competitive.
This will provide many jobs and other positive economic activities to North America.

#161 pdub on 12.19.11 at 12:47 pm

I said recently (for a variety of reasons) the average house price could decline 15%, then enter a long comatose period.

We’re currently renting but would like to get a house. Looking at buying because we’re just not seeing rental listings we’re interested in (wrong area, too far from services and transit). Wife and I are 30, no dependents. No debt. Family income $60k/yr. $40k to remain in other investments (dividends, REIT, etc).

I’ve been looking at buying a house ~$300,000. Plan to put down 40%, then pay the mortgage off in 15 years. (Make the most of interest rates.) But I’m still nervous to make a decision, fearing a US style slump.

Should we buy now or should we wait for that 15% drop in prices? Are there other financial risks to consider?

#162 Okanagan Renter on 12.19.11 at 12:48 pm

#87 look Out says:

“Garth,

You have been preaching 10 – 30% since 2008 and earlier! Since then prices have raged further ahead.”

Guess you don’t like in Kelowna, Victoria or SW Ontario. — Garth

look Out, I live in Kelowna and I can tell you that it’s a wasteland for RE here. Listings languish for months and are then pulled off the market. The few homes that are selling here are to deluded flippers, who do a crappy reno job and then expect war time bungalows to sell for more than 1/2 a mil. Here is a perfect example of what I’m talking about, not far from where I live:

http://www.realtor.ca/propertyDetails.aspx?propertyId=11302648&PidKey=-340530024

#163 stats for dummies on 12.19.11 at 12:51 pm

crap garth,

i don’t know how you stand it: most of your “dogs” need a crash course in grade school statistics.

sigh.

#164 Canada housing crash well on its way! on 12.19.11 at 12:55 pm

Merrill: ‘classic bubble’ signs in Canadian housing market

http://www.theglobeandmail.com/report-on-business/economy/economy-lab/daily-mix/merrill-classic-bubble-signs-in-canadian-housing-market/article2276241/

#165 disciple on 12.19.11 at 12:59 pm

The history of EMR weapons and mind control: read the part about Barney the purple dinosaur… and don’t forget your tinfoil hats!

http://mindjustice.org/06-12-romero-book.htm

#166 GPC on 12.19.11 at 1:02 pm

When the house prices started to go up, I almost fell for the hype, but thankfully my wife reeled me in before I could jump in.

What is most odious to us on the sidelines Garth, are lines like this:

“The toughest part of my job when the boom hit was convincing homeowners that their $150,000 house was now worth $300,000.” From a recent radio interview by the CEO of SellerInvite.

So, in a very brief period house prices essentially doubled, a whole bunch of people got greedy and 5 years later if the economy wobbles even a little, than it puts all of us at risk.

I’m not speaking for anyone but myself, and my take on this, is that my dream of home ownership was pretty much killed when the bubble began to inflate(thanks to a sensible wife), Now we have to accept the very real risk to our financial futures created by a bunch of knuckleheads who thought they knew better than everyone else.

So for those of us who have watched this train wreck for so long, it’s easy to be critical of everyone involved, expecially the RE industry. I don’t want a collapse, I want a better economic future, one that make sense fundamentally, and for this to happen, unfortunately a lot of people are going to take it on the chin.

#167 MyName on 12.19.11 at 1:04 pm

I expect 37% correction.

My expectation is based on: monthly payment after correction will remain the same, interest will go up, mortgage rules will be tighten.

500k-mortgage 3.5%-35 years amortization-0% down payment=310k-mortgage 6.5%-20 years amortization-10% down payment

500k before, 310k after

Who cannot afford RE today, will not be able to afford it after correction.

#168 Daisy Mae on 12.19.11 at 1:06 pm

TUSCANY VILLAS, West Kelowna — Remember people were issued wrist bands, these units were auctioned one weekend awhile ago, 50% off?

Well, they sold out in one day. However, some of the units will be available soon….obviously snapped up by speculators.

#169 Pat on 12.19.11 at 1:12 pm

#40 Pat on 12.18.11 at 7:07 pm:

“Garth, I’m having some trouble figuring you out buddy. You a kenesian or an austrien?”

And that’s why you shouldn’t use my handle, buddy. The original Pat has already figured him out. You are confusing the old ladies here.

#170 OttawaRenter on 12.19.11 at 1:13 pm

#146 eaglebay – Parksville

China might not be quite what you think it is. This news piece is actually a little scary and sad. They might be building infrastrucures everywhere, but it seems they remain unoccupied. (And they are tearing down the only affordable housing in order to build new unafordable units.)

http://www.youtube.com/watch?v=rPILhiTJv7E

#147 detalumis on 12.19.11 at 11:26 am

I hope you didn’t change that kitchen! Sounds awesome. BTW, do you have any resources for finding estate sales? I am fairly new to Canada, so my resources are all US. I’m looking for some websites, etc to find some really good deals. (like HUD in the states)

#171 Future Expatriate on 12.19.11 at 1:14 pm

#40 – Contrarian

#172 T.O condo's sit empty on 12.19.11 at 1:14 pm

Looks like the game is over for condo filipper. Reading the news of condo buyer trying to back out of deal and seeing first hand with by buddy who has had his lake front T.O condo for sell for over a years and has yet to find a buyer or renter. I told him 1 bedroom 1 baths will not rent for cash flow positive or sell for his asking. Now he is in trouble and I am sure how he is even making his payments.

I picked a condo near my buddies to show you how desperate the sellers are in T.O . look at how delusional some continue to be in the face of a crashing market. This condo is… “Priced To Sell, Priced To Sell” = very desperate many will just walk away and go bankrupt. Look at the condo and see

http://www.realtor.ca/propertyDetails.aspx?propertyId=11257348&PidKey=-1460100772

#173 45north on 12.19.11 at 1:15 pm

disciple: referring to Cato’s post: The US will survive as the bastion of capitalism. Disciple made the comment: you insert these types of false assumptions

What caused the dark ages in the first place?

Disciple, what do you know about the dark ages? When did they start? When did they end? Compare and contrast the dark ages in England, France, Italy. Can you?

I especially liked Cato’s comment: Government leadership is an oxymoron. Government doesn’t lead, it simply reacts lead by emotion of the mob.

#174 B on 12.19.11 at 1:25 pm

The rubicon factor is outside Canada.

If Syria falls and Saudi falls into internal unrest/revolution then oil jumps to $150-$200/bbl.

Daily consumables double in price.

With Canadians holding the highest household debt on record, and, more debt than Americans during their housing collapse, easily 50% of those with a mortgage have to choose between food or mortgage payments.

Foreclosures then abound, what happens to house prices?

And if anything significant happens between USA/Israel/Iran then overnight $200-$350/bbl oil.

Some or all of the above could easily come to fore in the next 12 months…

#175 disciple on 12.19.11 at 2:04 pm

Canada is nothing but a collection of small variously themed ghettos that wallow in deprivation whilst under the oppressive control of a sick brood of vipers – disciple.

The vast majority of the towns workers and other slave residents spend a lifetime (usually shortened by 10 years or more) through (a) being proud and surviving on poverty wages in soul destroying jobs or (b) not being proud and allowing themselves to live a life of misery on state handouts. Both (a) and (b) groups, if that way inclined, will also duck and dive through the proceeds of petty crime. These pathetic oppressed blind slaves are, at the same time, totally controlled by the policies of local gangsters posing as honest professional executives and their puppets within the local authorities and/or worse by hardened criminals, wheeling and dealing, usually in drug or property scams, whilst posing as academically gifted professional pillars of society. In reality all would have you knee capped for ten large and murder your grandmother for less. If nothing is done soon, Canada will remain a cesspit that is literally on a par with Sodom and on a course like Gomorrah.

I will assume you agree with me to varying degrees, if not, I don’t care, why don’t you grab another beer? So then, what can we do? Continue to widen the gap between rich and poor? Continue to celebrate the marriage of corporations with government and extend the pretend? Something’s gotta give sometime. And some people do nothing but give all the time.

#176 fancy_pants on 12.19.11 at 2:05 pm

build it and they will come? think again
http://www.bloomberg.com/video/82991554/

#177 604 on 12.19.11 at 2:21 pm

What am I selling in this post? Better explain that. — Garth

What I am saying is that to keep interested in what you have to say (your books, articles, etc.) you need to provide information in different ways to keep people seeking you out- its like marketing.
This blog although free to us does contribute to you overall marketing strategies- therefore making you money. I am not saying its a bad thing- we all need to make money to live- some are better at it than others.
And trust me I appreciate that you do provide this information.

#178 GregW, Oakville on 12.19.11 at 2:39 pm

Hi #109 Nastra, re: ‘stock market is plunging on news of Kim Jong Il 2′s death’.
Could someone explain the logic as to why this would be used in the news, to explain why the markets are falling now? There must be more issues besides one man passing away to cause markets to ‘plung’??

#179 disciple on 12.19.11 at 2:55 pm

45north… I’ll be easy on you since I know you take yourself very seriously… obviously Cato’s statement was amateurish. Capitalism has nothing to do with scientific advancement (e.g. who were the first in space?). As usual, the kaleidoscope of conspiracy is MIA in his/her analysis and in yours. Pity. You could attain much more wisdom, but your fear prevents you, or is it your apathy? The dark ages never ended, my friend.

#180 Kilby on 12.19.11 at 3:06 pm

#152. Bobs my uncle.
Which small areas will be affected? Victoria and Vancouver Island? Okanagan? Fraser Valley? Ha! Ha! Ha!

#181 disciple on 12.19.11 at 3:08 pm

Mr. Lahey! How am I doing today? Let me know what you want me to do a verbal spiel on for the upcoming STGADUTYBCXWKDHRTG thing a ma jingy what’ch ma call it…

#182 triplenet on 12.19.11 at 3:09 pm

#151 Kilby

Parksville / Qualicum – single family housing sales

2009 – 824 sales
2010 – 825 sales
2011 – 819 sales (to date)

What’s my point ?
Read the sermon at the top of the page.

#183 disciple on 12.19.11 at 3:20 pm

Technology killed Steve Jobs?

http://emfguy.wordpress.com/2011/10/07/technology-killed-steve-jobs/

#184 TheRealTruth on 12.19.11 at 3:21 pm

Junius,

Care to comment on the 15% national decline forecast? …to put prices back to 2010 levels.

oh, I hear a Van law firm is going to be defending parents/grandparents right to health care costs once they set foot on Cnd soil. is this rumour true?

#185 Lookinin on 12.19.11 at 3:41 pm

Thanks for ‘splaining to some of the doomers why it’s not in their, or Canada’s advantage to have a wholesale slaughter in the real estate just so they can “snap up” a deal. I think addicts, err, readers of this blog believe after awhile that you’re dreaming of the day when people will start “ridin’ the rails” again. Now, how could that be good for anyone?

#186 Junius on 12.19.11 at 3:51 pm

#155 BPOE,

Are you able to read your own postings? Look at what the RBC says:

“Economists with the large bank note that domestic consumption, including housing, has sustained Canada’s recovery since the recession.

But they warn that segment of the economy is likely played out with household credit market debt reaching a record high 150.8 per cent of disposable income.”

That is the key take-away. The economy was pushed forward by consumption that was based on borrowing. Now the borrowing has reached unsustainable levels.

Their conclusions are embarrassing but clearly they got the issues right. The consumer is tapped which means the economy will slow. 2.5% growth is not happening.

#187 Kilby on 12.19.11 at 3:59 pm

#182. Triplenet..
Just numbers.
Parksville and Qualicum by the month.
Already been a 15% cut here. Thats the point.

June. 113 sales
July. 107
Aug. 118
Sept. 108
Oct. 101
Nov. 72
Dec. 58

#188 An Cat Dubh on 12.19.11 at 4:07 pm

Lots of homes for sale in Vernon and Penticton and yet some are saying prices will go up or flatlined. Even though the population is declining slightly. I hear that people are saying our young people are leaving to find work in Alberta-re:our supply of cheap labour is drying up.

#189 Habs 76-79 on 12.19.11 at 4:13 pm

Again it does not matter what any of us want in regard to RE. You can want a 50% reduction nationally or you can want to bubble to keep going up forever. REALITY will win no matter what. It may be a 15% bust or a 50%+ bust, time and circumstance will tell.

Some here will rejoice a bust in RE, others will cry the blues and claim “I’m a victim!” In the end reality wins.

My spidy senses tell me a bust is going to happen if not happening already. In the USA it took what almost 1 yr before the RE bust was really noticed and talked about. Will we bust as fast as the USA? Maybe, maybe be not. Will we slowly deflate RE prices, maybe, maybe not. But a bubble is what we see in Cdn. RE pricing today and history is clear as to what happens to bubbles.

Reality won’t give damn if and who gets hurt and if a bust screws a nation’s economy or not.

REALITY WINS over fantasy or delusions 100% of the time folks!

Merry Christmas :-)

#190 DonDWest on 12.19.11 at 4:30 pm

This article strikes me as a tad on the old fashioned side. A person must weight in the costs and benefits in every situation. Is a 50% cut in house prices worth the risk of possibly losing your job? I would say yes.
Reason being is jobs are not what they used to be; jobs come and go.

Now if I grew up in the era Garth is accustomed to; where a job lasts twenty to thirty years with steady raises, obviously my opinion would be different. Today, jobs are nothing more than mere two to three year contracts.

So in a sense, our hypothetical person under the age of 40 isn’t losing a job, but a contract, in exchange for a 50% drop in housing prices. You can always get another contract, but a housing decline of 50% would be a great deal more permanent. Losing a job of today (that is merely a contract that will soon expire anyways) in the hope of affordable housing tomorrow strikes me as a person of reason; rather than the foolish. A reasonable person understands the value of sacrifice and weighted in risks.

Garth just made the mistake of assuming we actually have jobs/careers rather than contracts. Maybe you have a job if you’re working for the government. . .

#191 David on 12.19.11 at 4:35 pm

Hi, Garth:

Vancouver real estate dropped in price by 50% during the recession of 1981 – 1985, after a run-up during the seemingly runaway inflation of the late 1970′s and early 1980′s. Unemployment hit 13% in BC in early 1986. It can happen.

I remember it vividly as my start as a young lawyer was doing foreclosure applications for lenders during the period.

It wasn’t pretty but it wasn’t a catastrophe either. As you have noted so many times, Vancouver is nuts. My take is that a severe real estate recession is exactly the right medicine to prompt the rebuilding of economic productivity here. We need to ditch, once and for all, the phony Vancouver economy of real estate, lifestyle and entertainment.

Keep going. Regards

#192 DonDWest on 12.19.11 at 4:42 pm

#83 eaglebay – Parksville on 12.18.11 at 10:30 pm

‘Technology is much more than the Internet. All you’re probably using is the “web”. The Internet is much more encompassing. Get up to speed and get a real job, whiner.’

If you visit my blog you would have found out I’ve attempted a few different ventures rather than just the Internet.

You arguments yesterday, like many of your arguments today touting the Chinese horn, don’t hold much water. You basically suggested that my generation could be better off if we all just invented the next rocket ship to Pluto. Do you have any idea how stupid that sounds?

#193 Amy on 12.19.11 at 4:55 pm

Hi Gman :

I just sold my house for above my asking price in TO. Should I buy Gold or Nortel ??

Thanks

#194 brainsail on 12.19.11 at 4:55 pm

“Merrill: ‘classic bubble’ signs in Canadian housing market”

“We estimate the housing market nationwide is about 10 per cent over valued. Even so, the only way these valuations can be explained is by the record low mortgage rates. Under more normalized interest rates, home prices would actually look 25 per cent overvalued based on current prices.”

http://www.theglobeandmail.com/report-on-business/economy/economy-lab/daily-mix/merrill-classic-bubble-signs-in-canadian-housing-market/article2276241/

#195 Kilby on 12.19.11 at 4:57 pm

Parksville/Qualicum November asking and sold prices. I fed all the information into Univac and did surprise myself…..Average completion price was 89.6% just 10.4% off asking. Will have to do this again in May for comparison.

#196 jess on 12.19.11 at 5:01 pm

176 fancy_pants
and that city is home to the fastest computer hooked to “the city of london”

#197 Grimbot on 12.19.11 at 5:10 pm

wow….even the Royal Bank is issuing warnings about consumer debt and the Canadian housing market….things have to be in serious trouble for Canada’s largest bank to take this route….

http://finance.sympatico.ca/home/royal_bank_warns_on_debt_loads/b11a13dd

#198 Gary on 12.19.11 at 5:16 pm

Below is an interesting link to an article on Real Estate and what is happening in the China market. This could cause a contagion effect throughout the entire world and wreak havic in the total global financial system.

http://www.businessinsider.com/chinas-housing-bust-a-potentially-devastating-blind-side-in-2012-2011-12

#199 harden on 12.19.11 at 5:20 pm

apologies if this article has already been posted

“renting gets glamorous”

http://www.thedailybeast.com/articles/2011/12/16/real-estate-trends-renting-gets-glamorous.html

#200 insane rental prices on 12.19.11 at 5:20 pm

i just have to say…that rental prices in toronto are beyond insane.

that’s it.

#201 Blacksheep on 12.19.11 at 5:27 pm

Eaglebay #160,

“Don’t you think that due to high oil prices, more so in China and the rest of South Asia, that the cost of transportation alone will make our industries more competitive.

This will provide many jobs and other positive economic activities to North America.”

Jeff Rubin supports this thinking.

If labour was forced back to North America, I think, it’s headed straight for Mexico, as we already have
NAFTA in place.

I also think that business models, globally, are just not designed to handle $ 150 + a barrel oil, as seen in 2008.

The fat, that dirt cheap oil provided, allowed for high wages in the past, will just not be there, in the future.

China’s economy slowing may temporally postpone the eventual day of reckoning, but we all know its coming.

The supply and demand relationship, will not be denied.

take care,
Blacksheep

#202 Usuk on 12.19.11 at 5:40 pm

@usuk did you know there are more than one time zone on the planet ?
———-
I stand humbled, but also confused at the Christian comment. Are Christians the only one who go live it up on the weekends?

——–
@#9 Usuk on 12.18.11 at 4:58 pm

Check this out: http://en.wikipedia.org/wiki/Manners
——–
Oh, that hurts. I’m a nice fella, really – just like to point out that those classy citizens who never post anything but moronic ‘first’ comments don’t deserve the privilege of social niceties; ie. we need to speak to them at their own level. Do I help by stooping to their own level? Nope, I’m making the problem worse. But it sure is fun, innit?

#203 Brad in Calgary on 12.19.11 at 5:54 pm

Labels are the refuge of fuzzy thinkers. — Garth

Let me get this straight…
I’m a fuzzy thinker for labelling you a Keynesian. Even though you obviously are one. Nor is it an insult to refer to you as one.
But you aren’t a fuzzy thinker for labelling me a fuzzy thinker?
Hopefully you will let that one sink in for a moment.
Didn’t think so.

And what about the labels like “metalhead” that you throw around here every day?

Boy, it must be nice to have zero accountability.

#204 poco on 12.19.11 at 5:59 pm

new 18 unit complex at 2191 Shaughnessy St Pt Coq.

http://www.realtor.ca/propertyDetails.aspx?propertyId=11376765&PidKey=-1539844611

listed in early Aug–498k—-removed in early Nov–back on last week –price change to 409k
_____________________________________
http://www.realtor.ca/propertyDetails.aspx?propertyId=11376762&PidKey=-297140658

listed at 338.9k now down to 309.k

i viewed the show suite yesterday–(#306) it is shown in the photos–2bdr 2 bath– 1000sq ft.–asking 346.8k–it is way over priced relative to resale properties in the area –2 1/2 year old suites 1000 sq ft selling for 270k to 300k

the agent said most of the 18 are still for sale–
no waser/dryer installed in suite–agent said it was negotiable—haven’t seen any new condos that didn’t include at least a cheap set where you could upgrade to better
builders web site lists a cell number–watch for further downward price changes or worse for the developer–condo market has been screwed for many months

#205 GTA Girl on 12.19.11 at 6:08 pm

To Toronto-Condo-Sits-Empty…

The condo you used as a example is just why the new build condo market is insane. 1bedroom, on the lake, where you have towalk under the Gardiner in freezing cold is insane. All glass monstrosity, how you can keep the damned unit warm in winter or cool in summer must be a nightmare.

The price of almost $500k is indeed NO bargain.

I’m in line with the recent Globe article that states with all the new condos in the pipeline, owned by speculators, Toronto does not have that many renters available to
rent them.

I’ve been tuning into the new episodes of Holmes on Homes. He has been focusing on new builds. It is frightening to see the absolute fraud builders are perpetuating.

#206 P & T S on 12.19.11 at 6:23 pm

Meanwhile in the rest of the World – looks like the “Massive Overcapacity” in PV Panels and associated hardware might finally mean “affordable” PV power for the masses.

http://www.climatespectator.com.au/news/renesola-pulls-fy-outlook-wafer-prices-crash

http://www.reuters.com/article/2011/08/08/us-jasolar-idUSTRE7772FP20110808

and, in particular, –

http://www.dailyenergyreport.com/2011/01/photovoltaic-market-crash-predicted-in-two-years/

Should allow a reasonable ROI even in the higher latitudes, assuming some defree of Govt. subsidy (well, “they” subsidise the existing Generators with your Tax dollars right now, so there’s a clear precedent!)

#207 Habbit on 12.19.11 at 6:58 pm

I came to this pathetyic blog after having read the Garthmiesters books. Enjoyed the books and look forward to reading the blog and comments daily. To those that say Mr Turner has cost them $ by keeping them out of the market waiting for THE correction, timing the market in anything is not so easy. Nor I understand is waiting for it. I think the point is that he has explained in detail why the current prices are not sustainable. What is being learnt here is this realization. What, if anything, individuals do is of course their choice. Another great post Gath. Thanks

#208 Van guy blazin kush on 12.19.11 at 7:00 pm

Garth,

I’ve read many blogs including here that the CMHC has insured loans of 200 billion or 500 billion. While they have built capital of 15 billion. Any idea if these numbers are accurate? And link out there to support these numbers?

Thanks,

#209 GregW, Oakville on 12.19.11 at 7:17 pm

Hi Garth, Someone may be interested in this option? 5min. Looking out to 2012 by Larry Berman on BNN.
http://www.bnn.ca/Blogs/2011/12/19/Looking-out-to-2012.aspx

#210 Junius on 12.19.11 at 7:45 pm

#184 TheReelTooth,

You asked, “Care to comment on the 15% national decline forecast? …to put prices back to 2010 levels.”

I did. I think it will be higher. However Garth has pointed out that means some locations will have low to no drops and others much higher. Like the US.

We can and will have places at more than double that. Vancouver will certainly be one of those.

#211 Smoking Man on 12.19.11 at 8:03 pm

Coincidence ?

Tones of Real estate Gloom in media today and last week.

Bond yields in Canada Lowest ever today….Meaning pressure to drop the paints of fix rate mortgages coming.

Do ya finally see how media and govt and banks work together to keep the market stable.

Fixed rates mortgages are going to drop like LEAD ON JUPITER.

So the gloom is a pre emptive strike

#212 Herb on 12.19.11 at 8:04 pm

#193 Amy,

[inserts tongue in cheek too] Buy Nortel. It’s safer because it does not have as far to fall as gold. [Retrieves tongue from cheek.]

#213 Onemorething on 12.19.11 at 8:06 pm

“Vancouver is the riskiest real estate market in Canada with an average home price of $712,000. ”

This quote is from Garth Turner from March 2008.

Even if Garth is prediciting a 15-30% drop from today’s prices adjusted for inflation and GDP growth, it was obviously a great time to buy real estate in Vancouver in March of 2008, especially if you were buying for the long term (a life long home).

I sure wish I did. I would be even happier if I bought in the Fall of 2008. Now it seems, we may never reach that point again.

I chose not to buy then without having read Garth Turner, so I do not blame him for my mistake, but Garth should acknowledge that his gloomy prediction for real estate in 2008 was wrong, just like I was.

More risk now. But don’t let me stop you. — Garth

Dont be bitter, be thankful! Put it this way, you should have been saving the difference during this whole period which is also the advice given ready to meet the strict demands of the bands when the drop comes!

Not only will you have the upper hand at the banks but where you would like to live which in 2008 was not an option for you likely. You were priced out then in that perfect hood werent you?

The only pressure to buy was based on the WHO was around you. Wife, children, relatives and friends.

You took the contrarian view, stick with it!

#214 TheRealTruth on 12.19.11 at 8:08 pm

Healthcare funding in future tied to GDP.

If Healthcare goes, so does Canada. Many droves of people will start to leave.

If Old age pensions go, everyone senior that came here in last 20 years will leave.

#215 Herb on 12.19.11 at 8:13 pm

#172 T.O condo’s sit empty,

thanks for the link to that waterfront condo. I’ve added it to ‘My Favourites’ as a litmus test of the acidity of the TO and national markets.

If that puppy sells for $470 K, we must abandon hope. If it does not, there is hope because either shoppers have retained some sense in evaluating property values, or banks have in insisting on some viability in mortgage loans.

#216 Devore on 12.19.11 at 8:47 pm

#191 David

As you’ve learned a long time ago, no matter what happens, tomorrow is another day, people go back to work, stores open, news is on TV, post office sends letters, ATMs dispense cash, gas stations pump gas and life goes on. In general, people greatly overstate the risks of various institutions failing. The quicker acting the medicine, the better, it is the dragging out that makes it impossible for people to resume their lives and move on, but unfortunately it is the much more politically palatable course of action.

#217 Ex-Cowtown on 12.19.11 at 8:52 pm

All this talk about how big the haircut will be is mindless speculation. Now that the MSM has picked it up it is now officially news so it will become a self-fulfilling prophecy.

GT is also correct about cautioning on being careful what you wish for. In economics, soft landings are often wished for , but crashes more often ensue. The big driver for Canada will be what happens in China. In past recessions, we always followed the U.S. into the $hitter 6 months later. This recession, China picked up the slack for us, but it now looks like their smoke and mirrors miracle was about as real as Kim Jong Il’s golf score.

Don’t look south, look west, waaaayy to the west. That’s where the real threat to Canada’s economy is brewing.

#218 eaglebay - Parksville on 12.19.11 at 9:17 pm

#192 DonDWest
From your “web” site.

“The Harper government recently has introduced further inflationary measures targeting first time buyers. First time home buyers are now permitted to accrue up to $25,000 in capital gains through their RRSP’s, subject to without taxation, provided all of this money is used as a down payment for your first house. Name me any country in the world where they would allow you to get up to $25,000 without being taxed? Only in Canada!”

The home buyer’s plan means that you can borrow $25,000 from your RRSP account. It could be capital gains or the original capital invested. This money has to be paid back into your RRSP account.
You are misleading people with your BS.
Most everything else in your “article” is more BS.
Bad attitude and I think you’re a fake.
No wonder your wife will leave you. Whiner.

#219 Sams Mango on 12.19.11 at 9:30 pm

So how does one profit for a housing down turn in Canada using the stock market?

#220 DonDWest on 12.19.11 at 9:46 pm

#218 eaglebay – Parksville

I stated the $25000 is tax evasive in the event you were to use it towards a down payment of a home. Now if the money were used for anything else, you would have to pay tax. Clearly this is a bias demonstrated by the government to prop up the housing market. Taxation in regards to RRSP’s should be universal. So nothing that I wrote there was neither inaccurate nor misleading.

Now, are you going to contribute something useful? Or are you instead going to continue making uneducated assumptions about my marital affairs?

For the most part; I’m finished with you. Your remarks are getting more and more outlandish by the second and you’re only capable of resorting to ad hominems. I seriously doubt you would be able to pull this off beyond the cloak of anonymity that’s the Internet. Be gone you pathetic little man. . .

#221 DonDWest on 12.19.11 at 9:58 pm

By the way, people haven’t seen anything yet.

I can’t wait until the biggest scam in the world: The Tar Sands; is revealed to the Canadian general public. There’s a global depression going on that will reduce the demand for oil; meaning the price for a barrel of oil will go down. Presently it costs $100 just to produce a single barrel of oil from the tar sands.

The tar sands will have proven to be a mostly unprofitable and dirty adventure. People will soon discover that “Emperor Harper” has no clothes. Edmonton and Calgary will become the next Detroit and Flint. The arrogance of the Canadian west will finally be given it’s just due. The religion of big Canadian petrol will end; along with real estate.

The Westernman’s of the world will cry a river that will sustain this site for millennia to come.

#222 Bill Grable on 12.19.11 at 9:58 pm

Little bit late to add tag to this thred – but the Chinese and other Asian Markets are opening lower. Singapore looking over a cliff. Less expats coming to Hong Kong, according to CNBC, rents dropping in HK – the next shoe to drop – the grey market lending in China will add to a major RE collapse.
Mr. Turner has been stressing diversity and now would be a great time to be very cautious.
Before I go – despite my gloom and doom call above – I would like to extend a hearty Merry Christmas to our patient and brilliant host – and thanks to so many of you smart fellow dawgs. You have taught me a lot.

#223 Larry Gillas - MSM Article now published on 12.19.11 at 10:04 pm

Look for 5% to 10% drop in home prices in first half of 2012

http://business.financialpost.com/2011/12/19/look-for-5-to-10-drop-in-home-prices-in-first-half-of-2012/

#224 DonDWest on 12.19.11 at 10:32 pm

#199 harden

“Now what they think of as assets are their Facebook platforms, the far-off countries where they’ve vacationed lately, their clothes, and their tattoos.”

How sad. . .

#225 Smoking Man on 12.19.11 at 11:24 pm

#224 Larry Gillas – MSM Article now published on 12.19.11 at

Such a grasshopper

#226 earlymidlifecrisis on 12.20.11 at 2:23 am

5/12! Not too bad……

#227 “For it to make sense for me to buy, prices would have to drop a lot more than 15%.” | Vancouver Real Estate Anecdote Archive on 12.20.11 at 9:47 am

[…] it will leak (like so many others), prices would have to drop a lot more than 15%.” – Tim at greaterfool.ca 18 Dec 2011 at 9:40 pm Share:TwitterFacebookRedditStumbleUponDigg This entry was posted in 09. Delaying Buying, 10. […]