Whacked

Yesterday I apparently wasted 801 words explaining what happens next to real estate. So I give up. You figure it out.

As I explained, a drop of 15% or so in national prices would be seismic. Some markets where prices have swelled slowly and houses are still cheap (relative to income) would see nothing. Others, where real estate greed has replaced sex, would be whacked. Overall, a drop of this size would shrink the national entire economy, boost unemployment and send deflowered property virgins screaming home to mama.

I patiently pointed out that the 50% drop most misfits on this pathetic blog cheer for would plunge us into a recession deep enough to make house prices irrelevant. Like they are in the States. But that disaster ain’t happening. I didn’t forecast it. You made it up. So live with it.

A major part of our collective problem is that cheap rates, HGTV and your MIL have turned housing into an entitlement. Since everybody expects a house (and a perfect one with beautiful faucets and crown moulding), there’s a massive sense of injustice when real estate turns unaffordable. Suddenly it’s the fault of the 1% or the Baby Boomers. So we have pissy little posters coming here to foment revolution, root for societal collapse and cheer for a crash in housing prices, just so they can get one.

Ironically, when the inevitable real estate reckoning comes, it will be more about GenXers and GenYers buying condos and towns with record levels of debt, than Boomers and their obese particleboard McMansions. And were it not for government-sanctioned 5% downpayments and engineered interest rates, neither the bubble nor the bust would occur.

After all, how many wrinkly 50somethings have you seen lined up outside a Mattamy Homes sales trailer overnight, sucking Starbucks and peeing in the planters? Is it a wave of tweeting Boomers snared by social media campaigns, flooding pre-registrations for the 400-square-foot condos to be built in cool neighbourhoods like former stockyards? And who, exactly, do cash-back mortgages and minimal downpayments target? Right. Young people without money. Who think they deserve a house.

This might seem, like, weird. But there’s a reason stuff costs money. Some things should be earned. Our debt today, and the housing reversal it’s about to cause, is the direct result of unbridled consumptive lust, usually by those virgins. Home ownership without equity is called renting, but without the freedom or mobility tenants enjoy. Those who will suffer the most from the coming correction – whether it’s 5% or 30% – will be the ones who couldn’t wait to buy, and traded their hormones for indenture.

Meanwhile, it grows closer. Look at the news.

RBC, maybe to atone for its idiot affordability surveys, now warns of a coming real estate chill. Even a 10% drop in prices, the bank warns, will shave 1% off the GDP – enough to bring on recession. The bank joins TD chairman Ed Clarke in suggesting the feds ban 30-year amortizations – which virtually every virgin now grabs.

And here’s the Canadian economists for Bank of American Merrill Lynch saying our market shows “classic signs of over-valuation, speculation and over supply.” Says they: “We estimate the housing market nationwide is about 10% 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% overvalued based on current prices.”

Most at risk, according to Merrill, and the Bank of Canada, is (as this blog as pointed out for some time) the insane condo market. “Anecdotal evidence suggests the vast majority of pre-construction sales are to investors who intend to sell the units on completion or rent them out. As these condos in the construction pipeline are completed, this inventory of units will be dumped on to the rental and/or re-sale market just as sales momentum and housing demand ebbs. Our estimates indicate there will not be enough renters in Toronto to occupy these units as they are completed. As a result, some investors will be left holding vacant units. Since most investors are unlikely to hold onto negative-carry investments without a reasonable prospect of price appreciation; this will put downward pressure on home prices. We have already seen this dynamic play out in some smaller markets on Canada’s west coast where prices have corrected 15%.”

Not to be outdone, Canadian Real Estate Wealth (guess what it pumps?) just published survey results showing that 53% of its audience of speckers and flippers now believe the market is about to fall.

See what I mean? The correction’s inevitable. Worse, it’ll be followed by years of miserable markets in which a generation of naive recent buyers, drugged by their own desires, learn a property can be a prison. Fortunately, some will discover there are fools left.

And I know where they are.

(I can even recommend an agent…)

 .

Breaking news: US housing starts surge 9.3%. More here.

200 comments ↓

#1 NorthOf49 on 12.19.11 at 11:25 pm

Last!!!

#2 anon on 12.19.11 at 11:28 pm

Guys at my highschool used to post first on web blogs all the time.

It’s not big deal.

#3 TurnerNation on 12.19.11 at 11:29 pm

Another Alberta real estate victim: legandary chocolatier Bernard Callebaut lost everything – including rights to his own name – over a plot of land.

I’d boycott the eponymous brand name now as he’s no longer behind it; in his stead are those who vultched. He has a new company to support.

http://albertaventure.com/2011/10/bittersweet/

“Losing control of his name was a bad business decision, but it wasn’t the only problem Callebaut had in recent years. He insists that it was an ill-timed decision to buy a large plot of land near the Petro-Canada station on the TransCanada Highway just west of Highway 22 for $5 million, and his bank’s unwillingness to exercise patience, that really did him in. “The idea was we would sell 30 acres for development, and we would keep the back part, which is actually the less-expensive part,” Callebaut says. He planned to build a manufacturing and warehousing facility there, and he even held out hope that the project would serve as a tourist attraction. “People love to see chocolate factories,” he says.

That never happened. Instead, the value of the land plummeted, and his bank decided to pull the plug. “They cut our credit in half,” he says, “and that was a killer. That didn’t make it possible to operate anymore.” His bank also called in a $4-million loan, he says.
“If the bank had waited until January of this year, everybody would have been paid out. If they had some patience, we could have put a plan in place so the business would have been paid in full.”

#4 FTP - First Time Poster on 12.19.11 at 11:31 pm

2nd Last!

#5 T.O. Bubble Boy on 12.19.11 at 11:33 pm

Apparently we’re in a race to the bottom with China:
http://www.ritholtz.com/blog/2011/12/the-2012-blind-side-china%e2%80%99s-housing-bust/

#6 vatoDETH on 12.19.11 at 11:36 pm

LAST!!! to purchase RE….. ;-)

#7 Expat on 12.19.11 at 11:39 pm

Cue Sarah and her hubby?

#8 Pat on 12.19.11 at 11:40 pm

Second

#9 Canuck Down Under on 12.19.11 at 11:42 pm

Carney hits the big time – quoted by Professor Steve Keen!

http://www.debtdeflation.com/blogs/2011/12/19/movement-at-the-station-canadian-central-bank-governor-carney-on-the-age-of-deleveraging/

#10 george on 12.19.11 at 11:43 pm

“Well, we’re another day older and another day deeper in debt,” Douglas Porter, deputy chief economist at BMO Capital Markets, said Tuesday. “Interest rates will stay low and households have been induced to take on more debt and save less. While it may be concerning, it’s hardly surprising.”

Mark Carney, governor of the Bank of Canada warned in an interview on CBC Radio Tuesday morning, “The greatest risk to the domestic economy is household debt,” again sounding the alarm bell on excess borrowing.

However, Mr. Porter said Mr. Carney should not be criticizing households for stretching their credit when the central bank is encouraging this behaviour in the first place through extended low interest rates.

“The bank can’t have it both ways. They set a price and people will respond to it, no matter what kind of lectures we hear from policymakers. It’s a reality the bank and many others have to accept,” he said. “If we set the interest rate at 1% then no one can be surprised when consumers take on more debt and save less.”

http://business.financialpost.com/2011/12/13/canadian-debt-climbs-to-new-highs-statcan/

“Like crack cocaine, credit offers an amazingly satisfying and thus addictive high. As with coke, the consequences are safely in the future–until the future arrives.

Mainstream economists and econobloggers refer to credit as a financial phenomenon which can be quantified. The most important aspect in the human experience of credit– its great emotional power–is rarely mentioned.

Like crack cocaine, credit–the ability to buy something for which you don’t have the cash–offers immediate gratification: you get the item of your desire (new house, new car, new apparel, iPad, iPhone, iPod, cheeseburger and fries, etc.,) without having to make the sacrifices necessary to pay with accumulated cash.

Like crack cocaine, credit offers the beguilement of living a larger fantasy life without having to do the work required to achieve mastery or make steady progress toward goals. As soon as the coke hits the brain, the the rush of euphoria is akin to the rush of buying new stuff: novelty and acquiring status symbols one’s peers desire triggers chemical cascades which mimic the effects of cocaine.

The coke high offers the illusion of power, mastery and euphoric control: all things seem possible. The same euphoria is triggered by access to credit: all things become possible without the arduous “effort shock” of gaining mastery and accomplishment via grindingly hard work, endless sacrifice and dogged perseverance.

Buying stuff on credit triggers the same reward and euphoria centers of the brain as cocaine. This is why credit is so addictive: the rewards are instantaneous– hand the clerk the plastic, walk away with the goodies a moment later–while the consequence of the “high” are safely in the (apparently) distant future.”

http://www.oftwominds.com/blogaug10/credit-crack-cocaine08-10.html

#11 Crazy on 12.19.11 at 11:51 pm

IMHO, Folks are upset at you Garth because they spent the past few years renting, geting measley returns on the little they have (they may not have invested as well as you), waiting for your prophesies to come true, and now you say the average drop is only going to be 15%– They feel duped by your advice, and want the last four years back.

They will soon be happy they rent. — Garth

#12 Renting with my in laws on 12.19.11 at 11:51 pm

Mark Carney: The man who speaks the truth

http://canadabubble.com/bubble-watch/2283-mark-carney-the-man-who-speaks-the-truth.html

#13 East Van on 12.19.11 at 11:51 pm

A contrarian view:

Perhaps condos, which tend to be in the core, will fare better than SFHs in the burbs as the costs of fuel for heating and transportation begin to rise. Also, won’t the wrinkly boomers move out of their SFHs in the burbs into smaller places in the core?

#14 NewWorldPartyDotOrg on 12.19.11 at 11:53 pm

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

“There are two possible scenarios after a bubble hits a peak:

– Flat line or soft landing: In this scenario, the younger generation spends the majority of their lives, paying the majority of their income towards their house. In essence, they will be much poorer than the previous generation. The older generation, if they sell near the peak of the bubble, will be much wealthier at the expense of the younger generation. This simply exacerbates the massive stealing from children that is already going on through inter-generational transfer of deficits and debts. Also, some of this stolen money was directly used to fuel the bubble. Read “Housing, the most manipulated market in the world”.

– Collapse or hard landing: The older generation may lose their capital gains. However, the young homeowners will be crushed and will face financial ruin. Ask the tens of millions of Americans who are underwater with negative net-worth.

Therefore, even if the bubble does not collapse, it creates huge injustices for the younger generation. If it collapses, it creates an even larger injustice for the younger generation. Also, a collapse can potentially ruin the country as well.

Therefore, the government should do everything it can to prevent and/or suppress bubbles. If a government does not do this, then it is extremely irresponsible and reckless. It is bad enough that the government does not do this, it is even worse and self-serving of politicians to create and fuel these bubbles, which is what they have done (read more).”

#15 GTA Girl on 12.19.11 at 11:57 pm

That video could be a Toronto condo developer… Just needs soccer hair, Zegna blazer, AstonMartin….and a bag of coke on the passenger seat..

And video would be shot in the parking lot of Harbour 60

#16 Dave on 12.19.11 at 11:58 pm

When the correction gets into full swing it’s going to be ugly. I was in Buffalo at Target, Walmart and passed a few large malls yesterday – the Sunday before Xmas – and all of them seemed relatively deserted.

You cross the border back into Canada and every mall we passed on the way to Toronto was packed – people spending money they probably don’t have.

#17 syd on 12.19.11 at 11:59 pm

Garth,

since you first opened this blog started selling your book you have been predicting a bubble. since then prices have increased 10-15% annually. if you go buy just a 15% decline that will take us to 2010. pricing. Are you saying saying that the pre 2010 there was no bubble. if no, they what were you warning people for at that time. pls if you can answer this.

confused..

Then you confuse easily. — Garth

#18 Victor on 12.20.11 at 12:00 am

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

Dec 19, 2011

Canadian home prices are likely to drop 5% in the first half of 2012 as the economy slows and could slide as much as 10% if the unemployment rate rises above 8%, economists at Bank of America Merrill Lynch said.

Ryan Bohren and Sheryl King warn the market is overvalued and flooded with supply.

The economists have taken a bearish stance on the real estate market before, warning of a possible 15% correction to the Toronto condominium market in an October report.

In their 2012 outlook for housing released Friday, Mr. Bohren and Ms. King noted that while Canada is somewhat shielded from the situation overseas it is not immune to the European turmoil and the economic fallout here could worsen if unemployment creeps up to 8%.

“In our view, the housing market is one of the most vulnerable sectors to this weakening economic environment, showing classic signs of overvaluation, speculation and oversupply,” they said in the report.

“We are not calling for an all-out rout in the market, but caution is now decidedly warranted,” they said.

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

#19 April on 12.20.11 at 12:01 am

Every now and than a blogger will comment on the amount of building still going on in their city and what can these developers be thinking, they write.It looks as if the demand is still high but as I understand it from someone who works at City Hall here in the Lowermainland the process of building a housing complex takes about two yrs from the time of application to digging a hole in the ground. Once the land has been rezoned the developer must proceed.

#20 Victor on 12.20.11 at 12:03 am

Variable rate mortgage discounts disappearing

Dec 17, 2011

The days of getting any sort of discount on a variable rate mortgage are over — again.

Those mortgages, tied to prime, have become a mainstay of the housing market. And, why not? While prime has stood at 3% at most major financial institutions, the discount has meant a rate as low as 2.1% at times this year.

However, in the last 10 days what was left of that discount — it had already been shrinking for weeks — has disappeared at all of the major banks.

You have to head back to the credit crisis of 2008 to find a similar period where the discount disappeared. At the time, consumers were paying a 100 basis point premium above prime for the privilege of a floating rate.

The new reality is expected to reshape the mortgage market in the coming months, reversing a strong trend that had seen consumers roll the dice on interest rates, confident in the belief they were not going up.

http://business.financialpost.com/2011/12/17/variable-rate-mortgage-discounts-disappearing/

#21 Rosebery on 12.20.11 at 12:04 am

`If mortgage rules were reverted back to where they were in 2000 and the maximum amortization for an insured mortgage was 25 years, instead of the current 30 years, we believe home prices would be almost 20 per cent overvalued,” the authors said.

http://www.canada.com/business/Canadian+housing+market+overvalued+over+supplied+analysts/5884033/story.html

#22 Jan Etter on 12.20.11 at 12:06 am

While I share the observation that lineups for new builds tend to be Gen X or Yers, I know of a few fifty-somethings who up-sized into new build suburban mcmansions. Assuming they had some equity from the sale of their previous homes, they won’t be in the same trouble as those 5%-or-less-down young ‘uns, but are they not equally complicit in inflating house values?

Everyone I know in my parents’ generation who grew up in the depression, almost to a person, have been in the same house for 40+years or passed away without up (or down) sizing.

As history tends to repeat itself, it’s looking more and more like the boomers of the 80’s and 90’s mimicked the excess and irrational exuberance of the roaring 20’s generation. Their children were, and will be, forever scarred by the memories of the hard times that were and are to come.

#23 whiteshoes on 12.20.11 at 12:11 am

Was out in the ’65 Corvair today- it’s reassuring to know some things never change.

I understand Garth’s affection for the HD, gotta love air-cooled engines.

Man, this is going to be a hot mess, I am going to have to have Smokinman over for drinks, Sweet Caps, and sympathy…

whiteshoes

#24 poco on 12.20.11 at 12:12 am

#221DonDWest on 12.19.11 at 9:46 pm (last post)
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.

from your website:

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!
______________________________________________
without stating the fact the money withdrawn from an RRSP for a down payment by first time home buyers must be paid back—over a 15 year period–or sooner –the article would seem to be somewhat misleading for the unknowing
you have a two year grace period–the year of withdrawl and the following year–if monies are not paid back (no tax relief) it then becomes income and is taxed at your going rate for each year you don’t pay it back
unfortunately, when reading an article (anyones) on a web site and the entire information is not presented, readers tend to ignore the web site in the future, even though there may be relevant facts to be obtained form other parts of the article……..my 2bits …..

#25 Canadian Watchdog on 12.20.11 at 12:22 am

This will play out like every other time i) economy goes into technical recession ii) everyone panics iii) politicians fear the loss of their careers iv) printing press goes on.

Repeat.

#26 Crazy on 12.20.11 at 12:31 am

They will soon be happy they rent. — Garth

Maybe, then again, maybe not. Prices might go up again next year, and then the year after that again, or stabilize.

The US bubble burst because of rate resets…. That will not happen here. BOC will be careful not to trigger the drop.

In the meantime, renting is burning money, with no equity at the e nd. A waste of time.

#27 Mel on 12.20.11 at 12:32 am

I could not dissagree more! You say ” the average price drop will be -15%. In my humble opinion, that would occur only under normal recession, and only if prices would not be so out of whack.

Make it at least -25-30%. More in other areas.

No, I am not looking for a ‘renters revenge’. But, I can tell you, I will enjoy every moment of it!

#28 Min in Mission on 12.20.11 at 12:33 am

“Since everybody expects a house” – Garth.

And there, in just a few words, is the essence of the problem!! And the way that the “financial institutions” handled themselves didn’t help either.

#29 Curious! on 12.20.11 at 12:37 am

I dont want to be a pissy little poster…so I will fight, fight, fight!….that’s it, first person I see at work gets it in the face tomorrow morning….:facepalm

#30 Axehead on 12.20.11 at 12:41 am

Thanks for the insightful blog post Garth. Alberta has been slowly getting whacked for the last few years while REIN preaches that Edmonton, Calgary, and Red Deer (hey, where’s the hooters) are some of the best places to bet your real estate investment dollars. Are these guys a cult or just plain stupid? Yesterdays blog = sobering, todays blog = go ahead, ignore the signs.

#31 Ian on 12.20.11 at 12:43 am

Hi Garth, I understand that property decline will be different in each city, with cities such as Windsor, not declining as much as say Toronto or Vancouver. My question if you know is what happens to those young property virgins or those declaring bankruptcy due to higher interest, or an underwater mortgage who hold lines of credit. As I understand in the states, if you declare bankruptcy the principle mortgage is forgiven in full, but the 2nd or line of credit is forgiven except though I’m told those amounts will be now be declared income and you’d owe the equivalent tax to the Feds/State which is not forgiven. Anything like this here to prevent people from walking away?

#32 nonplused on 12.20.11 at 12:52 am

#22 whiteshoes,

Air cooled engines? Seriously? I suppose you feel vacuum tube radios are superior too?

The only thing still air cooled these days is a lawn mower.

#33 April on 12.20.11 at 12:57 am

Check out – This Week in Money – Talk Digital Network –
Ben Rubindoux talks bout BC Real Estate Myths.

East Van #12 – yes I suppose some boomers who want to downsize might move into condos as long as they can sell their houses first.

#34 Dodged-A-Bullit-In-Alberta on 12.20.11 at 1:02 am

Greetings: At the time my wife and I walked from a condo purchase in Calgary, we had been preapproved for a 280 K mortage on a paid for house here in “The Hat”. Each day I sit at the computer and read this blog, I never fail to be grateful that some power was looking after us. We now fully realize that the politicans who dictate monetary policy in Canada do not give a shit! about joe public. Debt enslaves, and they want slaves!! Bend over Canada!!

#35 City Slicker on 12.20.11 at 1:06 am

I know you Garth, I know you think the drop will be a greater magnitude than 15%.
You’ve always been conservative with things to avoid tin foil hats. Canada will get so rocked when Europe, than the US fall on their knees.
And get ready when in 2012 a gold standard once again plays a part in backing currencies. $4500/oz here we come.

#36 bps on 12.20.11 at 1:12 am

Do all economic bubbles not revert to mean and fair economic value however that is measured with property (wages, rental income). Ireland’s property values have reverted to half their highs.

#37 MixedBag on 12.20.11 at 1:17 am

“Since everybody expects a house (and a perfect one with beautiful faucets and crown moulding), there’s a massive sense of injustice when real estate turns unaffordable.”

This is so true. I physically reacted when I read this, as I remember feeling this ten or so years ago, dutifully working and saving aggressively, with prices going out of grasp with each passing year.

“But there’s a reason stuff costs money. Some things should be earned.”

This one too. From my perspective, I couldn’t believe people would pay so much for so little, in Toronto, even back then when prices were less crazy. Call me thrifty, but I was not in a rush to buy, and move to Bolton or parts unknown, to be able to buy in my price range, nor did I have family to help with the deposit. Like some relatives of relatives, these kids in their twenties, just married, buying new builds in Burlington with parents help, because Mississauga and Oakville are out of their price range. Guess people just need to own a house. Because that’s the kool-aid we all drank – or were force fed intravenously.

The stigma over renting has got to be cleared up.

#38 Peter B on 12.20.11 at 1:20 am

The biggest danger for the Canadian economy is four more years of the that Keystone killing Kenyan in the White House. I’d much rather have an honest politically moderate Mormon or even a slightly slippery right wing Newt then that two faced long legged freak who won’t even admit he is a Muslim in the White House.

That long legged freak just killed Canada’s economy because he lets a bunch of washed out actors (aka the botox crowd) make continental energy policy.

#39 sluggo on 12.20.11 at 1:22 am

I guess the massive misallocation of capital employed during the rollout of Canada’s Economic Action Plan targeting GDP growth directly and indirectly through putting hammers in the hands of every guy with a pick up truck and a Home Depot card is about to contract.

So not only is there going to be less money chasing an expansion of inventory, there’s going to be more guys out of work and more trucks parked. The exact opposite of what The Plan was supposed to accomplish.

Post credit bubble contractions are a bitch. Mix in the current debt saturation level and the current interest rate environment and the demand for pain killers could be quite high.

#40 not 1st on 12.20.11 at 1:22 am

If you subscribe to the law of means, then bubbles and similar spikes will inevitable return to their mean. Happened to the Nasdaq in 2000, some soft commodities too.

Applied to housing that means most major centers are about 30% overvalued. Calgary homes doubled since about 2003 so a 30% correction back to mean is well within possibility. An average house there should be about 250k, not 450k.

#41 604 on 12.20.11 at 1:25 am

your funny when you get upset Garth.

I am surprised that you are surprised people don’t want to hear the truth. Many homeowners don’t want to hear that prices will drop or correct and those who rent don’t want to hear that it will “only” be a 15% correction all depending where you live.
People need to be saved from themselves- thats why there are seatbelt laws and other stupid things in place to help those people who just cant seem to get it.
I am sure you have been doing this for years- you should be happy that you will pretty much have never ending business as people never really learn from others and even their own mistakes. This goes for pretty much many aspects of life.

#42 The Real Jimbo on 12.20.11 at 1:37 am

Amongst my circle of friends and associates, I’ve noticed that often it’s the Baby Boomer parents who are pressuring the GenYers to buy real estate. And in many cases, the Baby Boomer parent either provides a significant portion of the downpayment and/or co-signs the mortgage for these young people. The Boomers have taught their kids that real estate is the only sure thing.

So although GenYers are the ones lining up for condos, the Baby Boomers seem to be the puppet-masters who are helping to perpetuate this bubble.

#43 Karl Hungus on 12.20.11 at 1:50 am

#10 Crazy is right, and what people here dont understand is that every market is different. Thats why Garth continues to buy in some markets and sell in others. But for some reason he preaches for everyone in Canada to sell now, and you are all eating it up. I have no idea why.

#44 Angela on 12.20.11 at 1:52 am

Why is that car shaking and what’s with the crazy look in his eyes? Ooooooh boy.

#45 Blog Dog Carney on 12.20.11 at 1:53 am

Mr. L – Cripes, I dont even remember the pile of manure! How did I do in the debate? Could I even talk? And what are these red puffy things on my hands? They really hurt.
I cant find my Rolex. I hope it got to the rightful winner.
Hey, that beat the snot outta any GS party I’ve been to.
But there was that time I partied with the ex IMF guy…..

Anyways it looks like some people are listening – look at
that great post from 11 – Renting with my ILs. And rates? Like I said – soon! And just a little. Cuz I said so.

Looking forward to the SASTPGFBDCP!

#46 The Thing in the Basement on 12.20.11 at 1:55 am

23 Poco/DonDW – where is this website?

#47 Dorothy on 12.20.11 at 2:05 am

For all those of you who are waiting for the “wrinkly boomers” to sell their Mcmansions and move into smaller digs in the city, I think I should point out that the first wave of boomers to hit 65 is about now. So, assuming they won’t want to downsize until they’re in their 70’s (at the earliest) you’ll have to wait at least 10 years before the process even begins.
But I’m not so sure that all those Boomers ARE going to downsize, at least not until their deteriorating health renders it absolutely necessary. I’m a Boomer, and I don’t plan on downsizing until either my spouse or I can no longer look after our home, OR my spouse dies before I do (at which time I’d probably move closer to one of my kids). But as I’m only 56 and my spouse and I are in very good health, it’ll probably be close to 20 years before I put my house on the market. And there are many more just like me. So if falling RE prices are dependent on folks like me, you’d better settle in for a very long wait.

#48 TOC on 12.20.11 at 2:06 am

If Texas is full of guys like the “loser” in the amped car…..
No wonder they’re financially defunked.

#49 DonDWest on 12.20.11 at 2:10 am

#23 poco

It’s a “pot-pourri” blog. Various topics with general information. The topics themselves tend to be broad and not specialized. I don’t consider it misleading that there’s a limit to how much information an article in a “pot-pourri” blog can reasonably store. Obviously if people wanted information of greater detail; they would turn to a site that’s specialized and detailed on that topic.

On a more personal note; there’s a limit to how much I can research. I work two jobs for 60 hours a week. I write because I enjoy writing, although I’ll be the first to admit I wish I had more time to conduct more thorough research.

#50 Richard Licker on 12.20.11 at 2:10 am

As a huge fan of AC/DC, that video offends me. That idiot offends me. Oi Oi Oi
Fight fight fight? WTF?

#51 The Thing in the Basement on 12.20.11 at 2:40 am

I bet someones posted this already but:

http://www.cbc.ca/news/canada/british-columbia/story/2011/12/19/bc-tiny-apartments.html

Check the comments. People complaining about being gouged on rent.

#52 earlymidlifecrisis on 12.20.11 at 2:40 am

You didn’t waste words yesterday, that was a great post. I ‘scored’ 5/12, not bad! That guy in that video has the most lifeless, slimy eyes I’ve seen in a long time. Shivers. OMG! Vancouver captive- you nailed it.

#53 Devore on 12.20.11 at 2:42 am

#18 April

Developers develop. That’s how they make money. If condo prices crater 50%, they will continue developing. Meaningless. If they have projects in flight, they will finish them, finances permitting. If they stop developing, they close up shop, and sit home watching Oprah, so they will keep developing, no matter what the prices are. They will adjust their costs (land, materials, labor) so they can make money. I don’t think people understand this.

#54 Utopia on 12.20.11 at 2:44 am

Christ, that Austin Texas guy is so gay. Is he a Reaturd?

#55 DonDWest on 12.20.11 at 2:59 am

What Garth has overlooked is that unlike previous generations; we’re a diverse bunch with different values. These different values affects where we place our money. Dependant on your values, renting can make a lot of sense. Unfortunately it doesn’t make a lot of sense based on who I am:

A) Some young people love traveling. This group should be renting. They see value in spending their money on experiences. My philosophy is spending money on traveling and experiences is silly – once you experience it – it’s gone.

B) Some young people spend their cash on image. They like the clothes, jewels, and cars. This group should be renting. From my perspective this group comes across as superficial and fake. And once they get older – it’s definitely gone.

C) Some are “socialites.” They want to spend their money on the silly stuff Garth has previously discussed. Electronic gizmos to talk to each other, Starbucks coffee, always eating out, etc. I hate this group with a passion – they need to learn how to communicate face to face – it’s cheaper. This group should rent, but it wouldn’t surprise me if they would be willing to “buy” (indebt themselves to the hilt) if it meant getting their “target social area.”

D) Then we have the morons who believe they’re becoming the next King Solomon by spilling all their funds (and government loans) into “education.” They become perpetual students and rack up debt. My philosophy is why spend 100K on something that you can get for free? Just because Solomon stated knowledge is wealth doesn’t mean you should spend all your wealth on the acquisition of knowledge. This group should rent.

E) Next we have the people who believe how much digital fiat they have stored up in their bank accounts truly matters. My philosophy is that if you don’t cash the stuff in; it’s only numbers. This group should either rent or buy depending on their region and the situation (renting right now is probably the best option).

F) Finally we have the asset builders. Those who believe they should spend their money on tangible material that’s lasting and improves their net worth. Renting makes little sense for this group, but thanks to the bubble we’re relegated to renting and being a part of groups who we see as just throwing away their money on glam, bing, chatter, experiences, etc. Eventually we become a disgruntled E-type. Storing fiat that’s getting less and less valuable due to inflation as time passes by.

You see, some of us don’t care about the benefits rent offers. As hard as it is to believe; some young people do have values that more likely mirror their grandparents. We believe in spending our money on REAL stuff. Unfortunately, these values are now out of reach.

I get it. You’re a unique mix of individuals. Boomers are all the same. Right? — Garth

#56 Michelle on 12.20.11 at 3:01 am

Is that guy “amped up” or coked up?

That’s sadly kind-of pathetic at his age…

#57 Peter NYC on 12.20.11 at 3:06 am

Garth are you up to a challenge?

Review the posting #8 by Canuck Down Under. Review the prof Steve Keen article which is Minsky critique of Carney’s recent treatise. Do your views on the impossibility of a serious currency debasement and hyperinflation take these facts into account?

Yes. Will not happen. — Garth

#58 Utopia on 12.20.11 at 3:09 am

#153disciple 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?”
————————
Maybe. Who knows. I have no explanation for why Hoof-Hearted would return the same day as me. Complete coincidence I think.

But I am back Baby! Rock and Roll.

I come in peace this time though.

Decided my past bad attitude was not working. I might have had an aversion in prior times to some of the lunatics that populate this site (gold-huggers and dollar doomers)…but I will try to be more humble this time around and easier to get along with.

If Garth tolerates me then I will post. So lets just stick to the business of real estate and the outcomes for the economy. There is plenty to say.

#59 Josef on 12.20.11 at 3:11 am

24th!!!!!!!!! OH YEAH BABY!!!!!!!!!!!!

#60 Devore on 12.20.11 at 3:13 am

#23 poco

Don is giving out confusing and misleading information. The RRSP first time home buyers money is NOT tax free. It has to be repaid over 15 years, using after-tax money (you do not get the tax refund from HBP repayment). Not only is it not tax free, it is very tax inefficient, and no one should be doing this.

Bottom line is, if you have no money, and lack the ability to save it up, you should not be buying a house.

#61 michael francis on 12.20.11 at 3:14 am

A 15% fall in house prices will bring house costs back to 2010 levels.
I think Garth was preaching how over-valued houses were back then.

#62 stage1dave on 12.20.11 at 3:48 am

#9 george…great analogy; I’ve often thought the corner dope dealer was somewhat more intellectually honest than our current banking consortium: they’re not blaming the addicts they’re selling to for their addiction! Or the unfortunate afteraffects to themselves or society at large…

I remember back in the 80’s the same simplistic BS pouring forth from the mouths of the banking fraternity…if people would just quit borrowing money, we (at that time) wouldn’t have such high interest rates. All the while they were increasing their loan portfolios (& CC’s) by almost 40%…gee, I wonder where all that extra cash inflating the money supply was coming from? Even Volcker played dumb on that one…publicly.

(Seeing as how most western banks had loaned a bunch of cash to more than a few countries who weren’t EVER going to be able to pay it back, guess that principal had to get replaced somehow!)

Why is it that banking is the only business in the world that gets RICHER while putting customers into the poorhouse; & then blames those same customers for using the products the bank itself was selling?

Walter Stewart wrote a rollicking chronicle of this in ’82; at the height of the interest rate idiocy. (Towers of Gold-Feet of Clay; I think the title sux but it’s a great read)

Anyway, it is to puke (as my mum used to say) & the hypocrisy on full display by C, F, & the rest of the self-righteous coterie is putting even Jack Selody, Crowe, & the “deficit mania” & “price stabilization” & “free trade” fantasies of the 90’s to shame.

Holy Cow, Batman: wonder what financial bogeyman is going to threaten us next decade?

#63 YouCantMakeThisStuffUp on 12.20.11 at 3:48 am

In the spirit of Christmas, I couldn’t help but notice the price of certain childrens toys in Vancouver BC are also going straight up.
Searching for toys for my kids, I noticed the price of this Little Einsteins rocket, keeps going up every day. This is went from $15 in the fall, to $30, to $100, to $200 now. I am not making this up!

To all the “realtor lovers” out there, here is a holiday classic:

http://vancouver.en.craigslist.ca/van/tag/2761951540.html

What have we become.

#64 P & T S on 12.20.11 at 3:57 am

Sounds like a potential buying opportunity is coming round the corner. Prices are not reflective of value right now, but they soon will, and that’s when “us Oldies” start to flex the chequebook (a little like our esteemed Blogmeister I seem to remember!)

#65 TheRealTruth on 12.20.11 at 3:58 am

#210 Genius er Junius previous post.

If you say Garth’s wrong then i got to believe what you write… after all, I trust realtors, developers, lawyers, and mortgage brokers.

You’ve been wrong until now. A broken clock will be correct twice a day…well…

Again son, a high LSAT score does not make one an expert in all areas! Take a walk on the street and observe/learn.

#66 Jody on 12.20.11 at 4:10 am

“So we have pissy little posters coming here to foment revolution, root for societal collapse and cheer for a crash in housing prices, just so they can get one.”

I don’t want a crash to happen but I see it happening as a forgone conclusion to the orgy of stupidity we have all been taking part in.

The idea that a business like a bank can be to big to fail is utter BS, they need to fail, they need to go bye bye because they have been, and continue, to take the piss. Take the small farm I have started, I have decided to take a risk, financial and emotional, if it fails then it’s up to me to pick up the bits and move on, I don’t get a billion dollars from the government and continue to pay some asshat like myself a $4 million dollar salary with a $33 million dollar bonus.

I would even argue that my farm is more vital to the fabric of society than some bank. I provide some single parents with some flexible employment, in one case allowing someone to stop going to the food bank because they can now afford good food throughout the month. I also provide low cost fresh veg to locals who buy from me instead of some no name multinational, again, some locals are now commenting about being able to actually afford good local food. I give fresh produce to the local food bank, again creating something of value for the local community.

Now tell me the last time the buttheads at BMO, CIBC or any of the other vampire scum sucking major banks did that much for the community, they haven’t and they won’t, but yet here we are using tax dollars to back them, for some reason they are more important than a local farm, bullocks. Yea, fine, the local community will continue to function if my business goes bust but the same can be said about the big banks, life will go on, fire and brimstone will not fall from the sky if Scotia Bank goes under. Sure some people will lose out but would they really lose out if the government stopped kissing the arse of every bankster and people and the banks they used had to become more fiscally responsible?

You know, it’s like a driving license, we want everyone to have one, the government regulates them, but for some strange reason people still get into car accidents, even though they have the government/thug approved piece of silly paper that says they are okay to drive. Human nature is human nature, using the government to backstop something to temper human nature might be okay for law and order but anything else, no, not a good idea. I would not say I want banks to fall, no, I want people to start taking responsibility for their actions, as we all learnt in kindergarten:

Play fair.
Don’t hit people.
Put things back where you found them.
Clean up your own mess.
Don’t take things that aren’t yours.
Say you’re sorry when you hurt somebody.

#67 Waterloo Resident on 12.20.11 at 4:14 am

That guy on the video and the 20 to 30 calls a day I get from retarded telemarketers is WHY I have an answering machine attached to my telephone; its because it allows me to simply ignore these annoying little people who I don’t want to waste time with.

(Note: one with call screening so I can hear BOTH sides of the conversation going on, not useless Call-Display or some other half-working service that is useless by comparison.)

If people want to see why we are in for a LOAD OF TROUBLE in the next few months, just look at this info about how China is using MASSIVE DEBT to build an “EXACT DUPLICATE” of Manhattan’s business district, all the way down to the bronze statues and everything! It is totally whacked ! When their bubble pops it will blow up the world and the worry now is that their bubble IS POPPING, right now its popping.

( http://www.bloomberg.com/news/2011-12-18/china-debts-dwarf-official-data-with-too-big-to-complete-alarms.html

And to #22 ‘whiteshoes’: I really like the simplicity of air cooled engines and I wondered why they went away. Found out that they are good up until about 100 to 120 hp, no more, because the air can only cool off so much and then the cooling fins need to get massively huge, or oil-cooling rads need to be used, that is why cars eventually went to water cooling.

#68 Peter Goesinya on 12.20.11 at 4:17 am

I kinda feel like fighting now.

or…..

Maybe I’ll just say home and fap.

#69 Scott in Gibsons on 12.20.11 at 4:24 am

Garth says that a drop of 15% would be seismic therefore it isn’t happening. That’s like a 2-pack a day smoker saying that getting lung cancer is really serious so he is only going to get a bad cough. Sorry Garth, but you don’t get to tell the market what it will do. If you drink a 40 pounder on Friday night, you will probably feel really bad on Saturday. The Canadian real estate market has chugged a 40 pounder, two cases of beer, and a dozen Tequila shooters to get to this frothy state so your prediction of a 15% reduction in “feeling OK” followed by a few “slow days” is wrong.

And your pathetic attempt to blame GenX and Yers for the bubble is typical Boomer lack of responsibility. The “Me Generation” is never responsible for anything is it? How many Genx/yers were making policy at the BOC, CMHC, Finance Ministry, and Canadian banks while all this excessive credit was being doled out? That’s right, zero. They were a bunch of selfish Boomers feathering their own beds with no regard for the consequences to others or their country. Pathetic.

#70 TheRealTruth on 12.20.11 at 4:29 am

Here is my forecast for the housing market in Vancouver and Toronto for the next 12 months. Please read as it takes a contrarian view.

I believe housing will hold up in Vancouver and Toronto. One reason is the new supervisa for Grandparents and Parents of immigrants. There is currently a backlog of 165,000. About 40,000 more parents will be eligible to come here in 2012. Total of 205,000 parents/grandparents.

Of these, about 20,000 will come in as permanent residents like before. However, approximately 50,000-100,000 more will come in via the new Supervisa. These temporary visitors need their own health coverage so they dont use medicare. Well guess what? They only need $100,000 coverage; this costs $1200 per year with a $1000 deductible. The seniors will visit medical walk in clinics on other peoples names. They will work under the table to make the $1200 required for insurance.

Can’t believe kenney wouldnt think things through!

Impact?

Roughly in 2012:

280,000 Permanent Residents
50-100,000 Supervisa Parents/GrandParents
???,000 Temp workers/students

Equals:

Huge demand on rental housing that feeds speculators. Will keep vacancy rates ultra low. So sign a lease if you are renting. If you are thinking of buying, only do so if necessary. Prices won’t go up. Nor will they go down.

Sad times for the younger generation.

#71 Canuck Abroad on 12.20.11 at 4:51 am

Totally agree with 10/Crazy – measly 15% decline? Hmmpft, barely worth logging onto mls.ca for. It will take a much bigger decline than 15% to entice me to buy.

12/East Van – why do you think wrinkly boomers want to move out of their homes and into ugly concrete boxes? Sure some might want to when they can’t do stairs anymore, but the average boomer is many years away from that. If boomers have to “downsize” for financial reasons they might look at moving to a smaller house in a small town before they would look at a condo. How many young people out there have parents who just can’t wait to move to a condo? Anybody?

For heaven’s sake people, if you really must live in a small box in the sky, RENT the space, don’t buy it.

#72 Canuck Abroad on 12.20.11 at 5:24 am

I will add my own situation as an example. I am a young boomer (50). I would not consider living in a condo because the new built condos are all obscenely small. They are also very poorly constructed and ghettos waiting to happen. I need a minimum 1500 square feet /3 bedrooms for myself and 2 teenagers. Most other boomers around my age are in the same situation – the children may have moved out but they still want to provide them with their own “room”.

My 80 year old mum would like to move to a retirement village with lots of seniors’ amenities and other old ladies to hang out with, but has not considered a condo. However, my 80 year old father absolutely refuses to leave their home. So they continue to live in their house, where they have lived for decades.

Condo buyers out there who are hoping to fill your boxes with old-age renters, I don’t think you have really studied the demographics. (Granted, I am only one example…)

#73 Kip on 12.20.11 at 6:41 am

Interest rates will not move in this country until the US election is over, at least a year away. That may cause your doomsday crash to be harder butI have Ryan and Mike here with Ricardo and Phil on the 1200. O.B. Is in Jamaica. It’s like get ready for another year growth in the GTA.

#74 Kip on 12.20.11 at 6:49 am

Interest rates will not rise in this country until US elections are over at least a year away. Get ready for another year of it.

Please disregard my previous post, obviously it was a screwed up typo.

#75 James is back on 12.20.11 at 6:53 am

It is tough writing a daily forecast on something that is long term. I have read this blog for a long time and I agree with many of Garth’s foundation analysis. But you cannot predict something all the time. I believe Garth had predicted a housing decline on this blog similar to that of the US.
I have maintained for over two years that a 15%, 20% or 30% decline will not hurt us. The ones it will hurt are the speculators and the young investor who cannot wait out the storm.
It was the same in the 80’s and 90’s nothing has changed as far a people believes that R/E goes up and you always win.
I personally like Garth’s comments a few months ago when he was predicting a decline and then posted pictures of R/E he wanted to buy, people where so confused.
Its all about value and buying when everyone sells.

My house has gone up 50% in three years any decline up to 50% what do I care?
Good luck

#76 Johann on 12.20.11 at 7:50 am

And I can recommend another agent:

http://www.realtor.ca/propertyDetails.aspx?propertyId=11035519&PidKey=1790486014

She is so careful…

I always wanted to live on a Cal de Sac. — Garth

#77 whiteshoes on 12.20.11 at 8:05 am

noplused-

funny you should mention it- I have a DuMont TV- made in Montreal (1954)! And yes, a vacuum tube radio from 1949.

That old stuff works pretty good suprisingly enuf- Seen a Corvair Corsa lately?

whiteshoes

#78 Aussie Roy on 12.20.11 at 8:12 am

Aussie Update

Prof Steve Keen – Canadian Central Bank Governor Carney on the Age of Deleveraging

http://www.debtdeflation.com/blogs/2011/12/19/movement-at-the-station-canadian-central-bank-governor-carney-on-the-age-of-deleveraging/

Oldie but goodie

Building the Great Pyramid: The Global Financial Crisis Explained

This essay was accepted as evidence and published by the British Parliament, House of Commons, Treasury Committee.

http://gregpytel.blogspot.com/2009/04/largest-heist-in-history.html

USA

Data on sales of previously owned U.S. homes from 2007 through October this year will be revised down next week because of double counting, indicating a much weaker housing market than previously thought.

http://www.cnbc.com/id/45659547/Realtors_We_Overcounted_Home_Sales_for_Five_Years

#79 Smoking Man on 12.20.11 at 8:20 am

Bloody Hilarious how dumb people are

Heck the headlines dragged “laughingCON” back to the globe and mail. Biggest Re doomer in the world.

It like this Fixed rate mortgages and soon floating rates will go to the basement.

All the gloom is a counter measure to make sure enough people are scared to buy which will have a balancing effect.

The banks, Govt and media, don’t want a crash, but they don’t want prices heading higher either

I’m I the only one that can read between the lines………….

#80 Bottoms_Up on 12.20.11 at 8:35 am

Was that video straight out of The Office? lol hilarious

#81 sue on 12.20.11 at 8:40 am

I am actually never planning to own a home again. I have a plan to double my money twice in 20-25yrs and retire in my 60’s (thanks Garth).

I LOVE renting bc of all the freedom and drastically reduced workload but I still am annoyed by the sense of entitlement I see…not gonna lie. I believe in Karma so I don’t wish ill on anyone (hits you like a boomerang). I just hope that I manage to do OK for my family.

I’ve already checked out of the economy, so to speak. I work part-time hours, pay little tax, buy only the essentials, save, and therefore, pay little HST etc If everyone did this, the country would tank. When I think of it that way, I hope SOMEBODY keeps on spending…just not me.

#82 T.O. Bubble Boy on 12.20.11 at 8:41 am

The guy in the video must be one of those millions of “employed” people that make up Rick Perry’s job creation miracle in Texas.

#83 House on 12.20.11 at 8:41 am

Have you heard the bigger they come the harder they fall? I know that in 1999 Ford, for one, was financing vehicles at .3 of 1%. That’s a long time to be pumping an economy. Next year it will be 5 years since the fiscally-responsible(?) Conservatives have been pumping the economy with house price increases. The longer they go before taking real action the harder the fall.

#84 househornyhousewife on 12.20.11 at 8:41 am

Ha ha ha ha !

Garth, you made me spill my morning coffee with that hilarious video. Wherever did you find that one ? That nerd looks way too old to be sixteen. What’s he “amping” himself up for … the insane asylum or what ?

But seriously, perhaps all of those empty condos will mean cheaper rent for others. There are plenty of people who cannot afford to even rent a nice place. All of these empty condos may mean new homes for others (hopefully they won’t turn into ghettos).

I have always said that condos are crappy boxes that are a bad investment and I have never understood why people keep buying them. You have to shell out a wad of capital in order to have the right to own no land and pay a monthly rent. Repairs and taxes are still yours to pay for AND you have (perhaps noisy and annoying) neighbours one wall or ceiling over from you. You get all of the negatives of renting an apartment PLUS the negatives of owning a house … what the … ?!

Now you are telling us that condos will no longer be the flavour of the month and that their value will descend like a mafia victim with cement overshoes ? Well of course they will because they never had any value to begin with. When value comes from fashion and hype, then this would go under the heading of risky investment in my book. Remember cabbage patch dolls, the hoola hoop and pet rocks ? Condos are just like that, only much more expensive.

Who do you suppose goes for hyped up fashionable things ? Yup, the young and foolish. What you tell us is really of no surprise to me and reality will hit soon and hit hard. I am actually surprised that it has taken this long.

HHHW

#85 Echo on 12.20.11 at 9:04 am

#36:

“The stigma over renting has got to be cleared up”

…..or people could two things:

GROW UP and GROW A PAIR. The stigma would have a shot at dropping off then. Most importantly, it doesn’t actually MATTER.. It will always be about those “two things”.

#86 James on 12.20.11 at 9:21 am

“But that disaster ain’t happening. I didn’t forecast it.”

Your self-confidence is admirable. In reality, I think you are full of hot air. Your last three posts are offensive and demeaning. There was absolutely no need to call anyone a moron even if that was deserved. Who the hell do you think you are?

The guy you can’t stop reading. — Garth

#87 Sky on 12.20.11 at 9:22 am

@ DonDWest ( #54 ) A homebody without a home. How sad. Are you a Virgo by any chance? Because if you are, there will be no end to your suffering until you get a house of your own. All other signs – there is hope for you.

Here’s the deal. We’re in the Quickening now. Things are going to come at us fast and furious. As the Jewish prophet, Leonard Cohen, put it – ” Things are going to slide, slide in all directions. Won’t be nothing you can measure anymore.”

Don’t put your life on hold waiting for RE values to drop . Get out there and have some fun NOW ! These times are still relatively good.

If you’re philosophically opposed to having fun then go treat yourself to a few luxury items. I recommend soft as silk bamboo sheets and goosedown duvets. They’re worth every penny .

Thinking about how things used to be or SHOULD be is hitting your head against a brick wall. Those times are gone, baby, gone. Stop looking for stability in the world around you and try to find it inside yourself instead. Because the name of the game now is survival. Without getting into debt, do it in style! Carpe diem.

Did you hear? They’ve aerosolized H5N1 (bird flu). Another black swan circling like a vulture and looking for a place to land. It better not be on my bamboo sheets!

http://www.independent.co.uk/news/science/alarm-as-dutch-lab-creates-highly-contagious-killer-flu-6279474.html

#88 what he said on 12.20.11 at 9:49 am

totally agree with you #68 Scott in Gibsons on 12.20.11 at 4:24 am

Garth is way off-base blaming the Gen X and Y’s. Boomers have ridden the RE wave up to ridiculous levels. That is, Boomers who have RE. All my friends in that category have done amazingly well, live a high life and have cottages etc in fact many of them have made far more on their properties than they do from working.

The rest of us Boomers who missed out and are renting are in worse shape cause we only have so many working years left…like a 15% correction is going to make it possible to enter the market. right. ain’t gonna happen

until housing reverts to 2.5-3.0 times average income nothing will be solved. Which means a lot more than 15% needs to be shed, it’s got to be 50% in Vancouver and prob 40% in Toronto. Which are the two biggest markets…therefore they will drive the national average, not Regina or Truro.

15%??? seriously? whoop de doo prices will revert to last year’s levels.

just an opinion. but I am kind of tired of Garth going on and on about how the Gen’ers are acting entitled and the Boomers are flawless.

Well, you’re not. — Garth

#89 DonDWest on 12.20.11 at 9:54 am

“I get it. You’re a unique mix of individuals. Boomers are all the same. Right? — Garth”

Sure, you’re individuals, but you’re all on the same page in one area. You all seem to take pleasure in pulling the ladder up from under you, crossing your arms, and stating, “kids, I’ve got mine, I’ll be damned if you get yours.”

So a 15% haircut? It’s nice to know that success depends on DATE OF BIRTH rather than merit. It’s nice to know that the only way anyone born at latter years can afford a house is unless they become a “captain of industry,” then he can afford the privilege of living next to the baby boomer who’s a janitor in his company. And apparently according to you I’m responsible for this bubble, because after all it’s so benefiting me.

But apparently I’m one of the lucky ones who should just accept my lot in life, right? Apparently I’m lucky to be renting a small concrete box because that allows me to take the odd vacation to Hawaii. Apparently, we’re the lucky generation to be a PERMENANT UNDERCLASS because hey – we’re not burdened with the middle class lifestyle. Heaven forbid we be allowed to save for a decent down payment and take – I don’t know – that concept called ADULT RESPONSIBILITY. Lucky us, we get to live like a college student forever.

And I don’t take kindly to people who seem to think Gen Y/X is crashing the economy and creating bubbles when we’re stuck with shitty service jobs (jobs that the boomers are unwilling to do) that carry no power.
It’s very easy to call someone entitled when you’ve had the PRIVILEDGE of getting affordable housing while some of us haven’t had the same opportunity. All I want is equal opportunity, but apparently it’s entitlement to ask for the same opportunities my parents’ generation had. . .

Of course there’s no boomers lining up to buy houses; they already have theirs.

An accurate comparison of the situation is this: We have a bunch of people, let’s call them the baby boomers, who live on a tropical island and thus inherit the land by virtue of coming first. The boomers then cultivate the land and create industry. Later, another group of people come to the island on a ship. Let’s call this group Gen-X/Gen-Y. Gen-X/Gen-Y too; is eager to get to work on building the islands economy, only one problem. All of the land is already claimed. The baby boomers have decreed that the only way Gen-X/Gen-Y has the freedom of movement and habitation is unless they pay outrageous toll fees. These toll fees go directly towards funding the baby boomers in allowing them to spend more time in leisure; and towards building institutions that enforce the status quo. Gen X/Gen Y is finding out they always have to work harder, harder, and harder, but they can’t see the payoff as continuing portions of their labour are being siphoned off to the baby boomers who are working less and less. This is the situation we have today; as predicted would happen by the great (and overlooked economist) Henry George, who by the way invented the game called “Monopoly” as a clever method to prove his point. All Gen-X/Y can do is collect pass/go; they can never buy any of the houses/hotels because all of the slots are already occupied by you guess who. . .

#90 Guan-Di on 12.20.11 at 10:12 am

#54 DonDWest:

So let me get this straight, everyone is stupid but you… wow, that is SO GenX! So is that pathetic self-loathing, bitter, venom filled rant, btw. You may think you are a special little snow-flake, but you know what, you aren’t, you’re just like most other GenXers out there… bitter, pissed off, and crippled to your whiney, bitchy core by first-world problems. You embarass yourself and your entire generation!

#91 TurnerNation on 12.20.11 at 10:13 am

“Sweden Cuts Interest Rate for First Time Since 2009 on Europe Debt Crisis

Sweden’s central bank cut its main interest rate for the first time since 2009 and predicted it will keep the benchmark unchanged over the next year as Europe’s debt crisis saps growth in the largest Nordic economy.”

#92 DonDWest on 12.20.11 at 10:16 am

#87

“A homebody without a home. How sad. Are you a Virgo by any chance?”

I’m a scorpio. The expression “there’s no place like home” does mean a lot to me. There’s many personal reasons for this I would rather not get into.

#93 robert james on 12.20.11 at 10:16 am

I don`t pretend to know how much real estates prices will drop across Canada in the coming years,, although I predict that they will probably retreat to the historic average or trend line.. But,,I have to tell you when it comes to scouting out super star golfers ie. Tiger Woods and Kim Jong,,I am very good !!! Back in 1993 I predicted that Kim Jong would be a great golfer but I had no idea he was this good.. It turns out that he got “11 holes in one in one round of golf ” back in 1994.. Indeed,, the golfing world mourns the death of one of the greatest golfers of all time.. http://ca.news.yahoo.com/kims-11-ace-debut-round-recalled-twitter-191948700.html

#94 Herb on 12.20.11 at 10:26 am

There is something missing to make that video truly compelling: the amper-upper should be doing his schtick in the driver’s seat doing 100 mph down some curvey road!

#95 Herb on 12.20.11 at 10:30 am

DonDWest,

you have too much free time on your hands. I blame your boomer parents for that.

#96 DonDWest on 12.20.11 at 10:41 am

#91 Guan-Di

I never said I’m a special little snow flake. By your own admission there are enough people to go around who are pissed they’re forever priced out of the market unless they become multi-millionaires.

The rant was mostly in reference to the many articles Garth wrote stating that “buying a home is what your parents did” and espouses the virtues of rent due to thrift and mobility. The thrift part I value; the gypsy lifestyle, not so much. Some of us are “nesters,” which may explain the house horniness.

Rent has its own set of rules that restrict freedom. For example, I can’t set up a workshop at home as a tenant, at least not easily. Maybe some of us don’t want to work crappy service jobs the rest of our lives or get 100K in student loan debt; and we see the workshop as a way out. My chances for success are low, but if it keeps you going. . .

I don’t take any shame in believing I’m smarter than the majority of people. In fact, I believe everyone who posts here, as much as I sometimes can’t stand the clash of personalities, are smarter than the majority. It’s the stupidity of the majority that created the housing bubble in the first place.

#97 sam.i.am on 12.20.11 at 10:45 am

#90 DonD…

http://archives.cbc.ca/society/youth/topics/1209/

“The adults on the panel tell them to get real.”

#98 DonDWest on 12.20.11 at 10:47 am

“DonDWest,

You have too much free time on your hands. I blame your boomer parents for that.”

Blame my spending habits instead. I don’t work the typical 9 to 5; and today I have the day off. Posting here is free.

After today, you can go about your business as usual bashing the young ones because I’ll be working ten straight days (including during the holidays) because I need the money. Last I heard, my parents are too busy experiencing their 5th vacation this year.

#99 disciple on 12.20.11 at 10:47 am

#90 DonDWest… you obviously are a bit of a fake character or are simply not listening to anything other than the sound of your own whining, so I’ll address this to others who may feel the same. I may be a little older than you, but I’m a Gen-X-er who felt this way many years ago. You know, the old childish refrain that everything is stacked against you. What I did was, re-discovered what success and money really mean. Play the cards you’re dealt. Life is not fair, but neither is it meaningless. There are thousands of opportunities and they begin right in your mind.

If you are anything like DonDWest, who can’t spell the word, “dependent”, then you are like millions of young Canadians who are nothing but trained monkeys. You’ve been schooled to be able to type on a computer and program some stupid algorithm for the banking cartels, but you are unable to think for yourselves and have been manipulated into desiring the same lives for yourselves as your parents. What profound foolishness!

I will tell you a story: when I was young, after my grandfather had passed on, I was helping to clear out his belongings and came upon his diary or notebook of thoughts. He had written something of this nature this concerning his own father (I don’t recall the exact words, only the effect it had on me): “I will not follow blindly in the same path you have taken, my fate will not necessarily be yours. I must and will pursue my own will and seek out my own adventure and do not ever need to compare my experiences with yours “.

Do you understand the depth of that wisdom? My grandfather understood what life is all about… like I’ve said it before on this blog, it’s about novelty. That is the purpose behind your next breath. The collective unconscious, the universal human consciousness field, yearns for you to discover or create something new today, right now. I hope I’ve helped – disciple.

#100 AlbertaGuy on 12.20.11 at 10:48 am

Garth, Im traveling to Phoenix for a month this spring to get out of the snow and start looking at properties. Can you recommend any good websites or books that would help Canadians know what to watch out for and help them purchase property?

#101 disciple on 12.20.11 at 10:52 am

Garth, what do you mean no hot stock tips? I recommended a buy on Tokyo: 6753 (Sharp) a few days ago: 3.6% in a week ain’t bad, no? Incidentally, I don’t remember my other recommendation…

#102 fancy_pants on 12.20.11 at 10:59 am

M Carney’s knowledge of the RE problem we are facing is acute, unfortunately his skill set in addressing the problem is not.

Needless to say, he will probably have Canada in the rear view mirror by the time the economy really unravels.

#103 Usuk on 12.20.11 at 11:00 am

#2 anon on 12.19.11 at 11:28 pm
Guys at my highschool used to post first on web blogs all the time.

It’s not big deal.
——————–

Right – if you’re in high school. Which apparently some of the posters are.

#104 Mister Sanity on 12.20.11 at 11:06 am

The rest of us Boomers who missed out and are renting are in worse shape cause we only have so many working years left…like a 15% correction is going to make it possible to enter the market. right. ain’t gonna happen

until housing reverts to 2.5-3.0 times average income nothing will be solved. Which means a lot more than 15% needs to be shed, it’s got to be 50% in Vancouver and prob 40% in Toronto. Which are the two biggest markets…therefore they will drive the national average, not Regina or Truro.

15%??? seriously? whoop de doo prices will revert to last year’s levels.

just an opinion. but I am kind of tired of Garth going on and on about how the Gen’ers are acting entitled and the Boomers are flawless.

Well, you’re not. — Garth
——————————

Then why’d you rent to begin with? You’re bitter because boomers rode up a wave of RE while you missed out? Boo hoo, cry me a river.

And how are you in worse shape renting into retirement? All that money you saved by not maintaining a McMansion should mean you have a nice fat savings account, whereas your RE friends have paper gains they’ll never take advantage of. And if they do they’ll likely fall prey to a reverse mortgage because they don’t want to sell their ‘home’ and ‘downgrade’ to renting. Please.. I’m no boomer – far from it, but what you ramble on about makes no sense..

#105 RT on 12.20.11 at 11:08 am

Chicken little is no longer yelling: “the sky is falling!” as the Euro is dieing and the US has hit a debt ceiling??? I guess you are tired of looking in from the outside.

#106 Van Isle Renter on 12.20.11 at 11:09 am

Therefore, even if the bubble does not collapse, it creates huge injustices for the younger generation. If it collapses, it creates an even larger injustice for the younger generation. Also, a collapse can potentially ruin the country as well.

++++++++++++++++++++++++++++++

Total BS and drivel. The purchase of some object is not a right nor an issue of justice or injustice. It’s just a material good, no more no less. By attaching emotions to it YOU create the problem, so suck it up buttercup and deal with it.

Harsh reality is it’s all about time. The younger generation has the luxury of time to recover from a train wreck. Us old farts? We’re screwed if we mess up.

I’d gladly trade places right now with a 25 year old… providing that I got to keep my present level of knowledge. If you told me that I had to go back to being as stupid as I was at 25, then forget it.

#107 debtified on 12.20.11 at 11:17 am

DonDWest, I am a GenXer myself and also renting. It’s not all bad. Your world is what you make of it.

I have observed what you have observed about the Boomers. I just don’t see any point in putting any blame on somebody else. I, and our generation in general, have our flaws also.

I’d rather focus my attention and energy on positive things. Just imagine the upside once this whole debt deleveraging finally works itself out of the system. I’d say, if you’re a GenXer, hunker down and weather the storm that is currently hitting us. Opportunities abound once the sun rises again. Things are bad now but I am very optimistic about the future.

In the meantime, live life. Life is what you make of it and there’s a lot of good living to be had without owning a nice house for the next little while.

#108 TurnerNation on 12.20.11 at 11:19 am

F again!

“The Globe and Mail reports in its Tuesday edition that Finance Minister Jim Flaherty will find out Thursday whether the federal government has the Supreme Court of Canada’s blessing to move ahead with a national securities regulator. The Globe’s Bill Curry writes the Supreme Court issued a notice Monday confirming that the much-anticipated decision will be released Thursday morning. The Conservative government has asked the court to answer a single question: Is the proposed Canadian Securities Act within the legislative authority of Parliament? The draft legislation was made public by the federal government in 2010 in an effort to replace a patchwork of provincial and territorial securities commissions with a single, national regulator. Mr. Flaherty has repeatedly said that the lack of a national securities regulator hurts Canada’s international reputation. Under the new leadership of Premier Allison Redford, the Progressive Conservative government of Alberta said this month that it would “live with” a national regulator if the court were to rule in Ottawa’s favour. The feds also argue the proposed law would increase government oversight of fund managers and credit-rating organizations.
© 2011 Canjex Publishing Ltd.”

#109 Meteor Man on 12.20.11 at 11:23 am

#90 DonDWest

You are an idiot. You have the world by the ass on a down hill pull and you don’t even realize the opportunity that you are squandering. If you are smart enough to stay out of this RE market and stay out of debt until this whole euorzone/deleveraging/RE mess blows up and ends you can get in on the ground floor of the next up tick.

Your goal should be to be the shrew that crawled across the Cretaceous -Tertiary extinction boundary, not bitching that you want to be the dumbass dinosaur just as the meteor streaks across the sky.

As to your contempt for those of us who chose to go to school, just FYI, I now make enough $$ each week to pay off ALL of the student loans that I ran up in my undergrad and Master’s.

Yeah, I was a fool for going to school.

#110 HJ on 12.20.11 at 11:24 am

The people that are upset that the housing price drop will ‘only’ be 15% are ignoring the fact that once housing corrects and hits bottom that it can sit there for years before it begins to appreciate again.

Housing prices could correct by 15% and then remain flat for 5 to 7 years before beginning to appreciate again. This means that during this flat period housing could still lose value to inflation every year and if inflation is running at 2%, this would result in another lose of over 10% in housing value relative to inflation.

I would like to see historical data on the early 80’s and early 90’s housing price corrections. I’m sure that prices did not correct, hit bottom, then immediately begin to climb resembling a V shape price recovery. If I remember correctly, housing prices remained flat for some time after hitting bottom.

This is what really causes stress in the family. If prices dropped, hit bottom, then began to recover, people would have hope. Even if they thought it would take 3 to 4 years to get their house price back to where it was. But when prices drop and then linger year after year, even losing ground to inflation, before beginning to appreciate, this is what makes people lose sleep at night. They feel trapped and financially helpless.

Seen it. Not pretty.

Does that mean they will all sell in a panic and crash the market even further? No. It means they hang on to the best of their ability. It means no more home equity lines of credit to finance home reno’s, vacations and new cars. It means they tighten their belts because they FEEL poorer and more FEEL vulnerable. It means they save more so that if there is a temporary reduction in income (ie. Layoff) they are not forced to sell the house while they scramble to find a job. It means they pay down debt. It means the multiplier effect of increasing credit/debt that drove our GDP up in the good times, works in reverse and drives our GDP down in the bad times.

Massive increasing debt does NOT matter, until it DOES matter. There is always a tipping point.

As with ALL bubbles, it’ll seems SO obvious to everyone that it was a bubble, only AFTER the bubble pops.
JMHO

#111 Ret on 12.20.11 at 11:25 am

#13 “Also, won’t the wrinkly boomers move out of their SFHs in the burbs into smaller places in the core?”

Those seniors will soon find out that they really don’t have any real friends or family. At least not family or friends willing to pay $15-20 a day to park near their condos every time that they visit them. It will be a lonely existence.

That’s what it costs to park next to the Waterclub condos on Queens Quay in T.O. I’d rather take my daughter out to lunch with the $20 than hand it over to some greedy developer to park my car.

Thankfully, she only rents one of these dumps.

#112 John saccy on 12.20.11 at 11:26 am

9.3% increases in housing stats – the surge was only due to 5+ multi family units which jumped by 25%.

http://www.census.gov/construction/nrc/pdf/newresconst.pdf

Nothing significant that determines a long-term trend, Garth.

#113 Sky on 12.20.11 at 11:30 am

DonDWest ( # 90 ) – Uh oh. Scorpios have a stinger. But let’s compare the boomers to the so-called Greatest Generation (boomers’ parents).

Greatest Generation:

– 1 parent working
– medical care BEFORE the system crumbled
– retirement that stretched on for decades and decades during a time when the economy was stable. Peace of mind.
– cost of living easily affordable on nothing more than govt pensions (and maybe a little help from their kids)
– cheap energy prices
– vehicles you could repair yourself
– appliances that lasted 5 times as long as today’s junk
– for the savers : Canada Savings Bond rates that seem like a mirage
– did I mention peace of mind ?
– non GMO foods
– blue skies ( No chemtrails)

Things have gone a little downhill since then.

Boomers :

Jobs were plentiful but both parents worked. Many worked their butts off for a pie-in-the-sky retirement that simply will not be there. Some are raising their grandchildren or still supporting gen X/Yers who are floundering in the crappy economy.

Just as the boomers are entering retirement, the PTB are bleating about the unsustainability of the pension system. There goes peace of mind.

Many boomers are ass -over -tea-kettle in debt. Basic cost of living through the roof.

Gen X/Y:

Things will go further downhill from here. Think OUTSIDE the box. Don’t become a little slave to the system.

The system promises you rewards that NEVER materialize. Remember the ” Freedom 55 ” slogan that the whores sold the boomers to get them ensnared into their investment schemes so the system could profit? Remember those ads? How’s that working out?

The system will swallow you whole if you let it. Stop chasing system dreams…. like a house. Free yourself as much as possible. And buy those sheets.

#114 coastal on 12.20.11 at 11:39 am

Garth,
I just about puked this morning when I read the local TC rag headline : “Victoria safe from bubble”. The Victoria Real Estate prez says they are “insulated” from all the worlds evils and economic uncertainties. Can overpaid salesmen actually be this blatantly deceitful and stupid at the same time to make such ridiculous comments ? I think this could be one for the archives of famous last words.

http://www.timescolonist.com/business/Victoria+safe+from+bubble+real+estate+board+says/5884554/story.html

#115 poco on 12.20.11 at 11:42 am

#46 The Thing in the Basement on 12.20.11 at 1:55 am
23 Poco/DonDW – where is this website?

i clicked on his handle (DonDWest)—–doesn’t work any more–

#116 poco on 12.20.11 at 11:46 am

#60 Devore on 12.20.11 at 3:13 am

Don is giving out confusing and misleading information…….
______________________________________________

yes i know—my response to him is pasted below the solid line in post #24

#117 Cychou on 12.20.11 at 11:53 am

Great post… When is your next book coming out? Any discount for your loyal followers?

#118 Van guy blazin kush on 12.20.11 at 11:59 am

#53 Devore on 12.20.11 at 2:42 am

And some developers projects can go into receivership. Just ask the Bowra Group. They vultch when there is opportunity

#119 disciple on 12.20.11 at 12:10 pm

‘There is not a crime, there is not a dodge,
there is not a trick, there is not a swindle,
there is not a vice which does not live by secrecy.
Get these things out in the open, describe them,
attack them, ridicule them in the press, and sooner
or later public opinion will sweep them away. – Joseph Pulitzer

“It was Einstein’s materialistic Theory of Relativity that destroyed Sir Oliver Lodge’s Theory of the Ether.” – Sam Nicholls MSc

With the benefit of hindsight we now know that a scientific disaster took place when Sir Isaac Newton’s model of the universe was discarded and replaced by Einstein’s Theory of Relativity. Einstein said on his 70th birthday:

“Now you think I am looking at my life’s work with calm satisfaction. But there is not a single concept of which I am convinced that it will stand firm. I am not sure if I was on the right track after all.”

If only our contemporary physicists had shared Einstein’s scepticism then we would not have wasted so much time and money trying to match up Niels Bohr’s quantum mechanics with relativity. Even the Einstein supporter Professor Stephen Hawking from Cambridge University admits that they are incompatible. Apart from in Russia and a few “heretics” in the West, the whole of orthodox science is locked into a largely false and hopelessly outdated scientific theory. We are being subjected to one extraordinary theory after another, ranging from us being able to go back in time and murder our grandparents and then to somehow be born in another universe, to the questionable Big Bang theory that says every galaxy in the universe started from the size of a pin head at a single point in time! This is the sort of scenario we end up with if we start our calculations from a false base. Only those of us who are outside of the university sausage machine are in a position to challenge orthodox scientific thinking. The physics students are powerless. They would not get their degrees if they told the truth. They know what happened to one of our leading scientists who had the courage to say Einstein’s Theory of Relativity is incorrect. Dr. Louis Essen D.Sc. FRS, OBE, is the inventor of the atomic clock. For trying to bring common sense back into physics he was told further such activity would place the tenure of his post in jeopardy.

#120 disciple on 12.20.11 at 12:18 pm

Sir Oliver Lodge was the first person to send a radio message, one year before Marconi! His great contribution to science has been deliberately played down solely because the powerful materialists are terrified that millions may find out he was correct in saying that we all survive death.

The same treatment has been meted out to Sir William Crookes who actually proved by repeatable experiments under laboratory conditions that the subject of survival after death is a branch of physics – natural philosophy. Crookes was a President of the Royal Society, inventor of the Cathode-ray tube. Look up x-rays in the encyclopaedia, Crookes was the pioneer of subatomic physics – proving that reality exists beyond our five physical senses.

Censorship and character assassination are the only weapons that those with a great deal to lose from the truth have in their armoury.

But disciple will reveal to you the truth through real science. Physicists have been wrong for fifty years about the make-up of the universe. They were saying that nine tenths of the universe is missing. When we look through a telescope at a galaxy we are only seeing one tenth of the mass. The motion of distant galaxies and the stars in them can only be accounted for under the laws of gravity if there is far more mass associated with each galaxy than there is in the visible stars that comprise it. One theory for this missing mass was centred around a ghostlike subatomic particle called the neutrino that was discovered in 1956. The report said a neutrino would stand a good chance of penetrating a thickness of lead stretching to the nearest star without hitting anything. Science had discovered something in the building blocks of nature that started to give a rational explanation accounting for the millions of reports from people who say they saw a “ghost” walk through a solid wall. The neutrino was the missing piece needed to make up the etheric universe. The Ghost and The Darkness.

#121 James on 12.20.11 at 12:21 pm

“But that disaster ain’t happening. I didn’t forecast it.”

Your self-confidence is admirable. In reality, I think you are full of hot air. Your last three posts are offensive and demeaning. There was absolutely no need to call anyone a moron even if that was deserved. Who the hell do you think you are?

The guy you can’t stop reading. — Garth
————————————————
Well, I am reading it because it is entertaining…
you know, like a clown in a circus. But when the clown
starts insulting spectators, one has to wonder how much longer they will be wishing to come see him…

The exit is two doors down from the Amazons’ steam room. Be careful. — Garth

#122 Mister Obvious on 12.20.11 at 12:25 pm

#109 Sky

Remember the ” Freedom 55 ” slogan that the whores sold the boomers to get them ensnared into their investment schemes so the system could profit? Remember those ads? How’s that working out?”

————————-
Actually, its not working out too bad. Freedom 55 was always possible. All you had to do was realize that the banks were not the ones who could provide it and that you’d have to engineer your own freedom.

#123 eaglebay - Parksville on 12.20.11 at 12:25 pm

#69 Scott in Gibsons on 12.20.11 at 4:24 am

Another whiner that cannot take responsibility for himself.
Of course being in Gibsons does limit your options.
Been around the eccentrics and hippies too long.
You can only blame yourself for your situation.
What are you going to do about it?
Hugging trees is not enough. Get to work Scott. Make a life for yourself. Loser. Blame, blame and more blame.

#124 Tiny Bottoms on 12.20.11 at 12:28 pm

Weaker Canadian economic growth and an oversupply of condos will lead to a 5 percent drop in home prices in the first half of next year

http://ca.finance.yahoo.com/news/canadian-home-prices-fall-5-224751382.html

#125 TurnerNation on 12.20.11 at 12:30 pm

Looks like RIM is the new Nortel. RIM is under $13.
RIM is so early 2000s. Apple is future, for now…

#126 Snowboid on 12.20.11 at 12:33 pm

#47 Dorothy on 12.20.11 at 2:05 am…

Your town must be an aberration, as the desertion of ‘McMansions’ within our circle of boomer friends and relatives started a couple of years ago. All of sound mind and body, I might add.

Only a couple of holdouts in Alberta – they seem to love the ridiculous amounts of money they pump in to maintain the facade. And far more more money (and HELOCs) than brains, I’m afraid. It is amazing how much it really costs for taxes, utilities, and maintenance on these prime ‘McMansions’.

The process of ‘down-sizing’ is an interesting experience (we went through it three times), more like a cleansing of mind and soul. We certainly don’t miss all the ‘stuff’ we had collected over the years and rather enjoy a minimalist approach to life.

Of course, the biggest plus of ‘down-sizing’ is no debt and a good selection of investments returning far more than having it rot (figuratively of course) in a ‘McMansion’.

Just because you aren’t in Kelowna where the downturn is already underway, doesn’t mean it won’t affect your town as well.

#127 Alan on 12.20.11 at 12:43 pm

Reasons why Real Estate will NOT collapse or see a severe downturn in most Canadian Cities:

1.) Now that the cat is out of the bag and everyone is predicting a downward spiral for real estate, it should be noted that this is usually a sign that it is old news and probably will not happen to the extent it’s being predicted in the news and elsewhere. Collapses in any asset class happen when no one is looking and everyone is predicting further price increases.

2.) Garth has now backed away from his doom and gloom scenario (the sky is about to fall) for real estate in Canada. A position he has held for the last 10 years.

3.) Govy’s can not afford to see any crash in real estate because it will impact the economy too severely, cost too many jobs and will take longer to recover from economically.

4.) Increased printing by nations all over the world are forcing prices for hard assets to increase proportionately. Real estate will continue to be a store of value especially in low (free) interest rate environments.

5.) Average Canadians have been lucky to be able to purchase real estate in high demand areas. What we are now witnessing is what many other people in other targeted cities worldwide already know; real estate is not a right, quality RE is reserved for those that can afford it, which usually means your in the top 10% of money earners or those that already have real estate which you have been able to “ladder” up via leveraging into higher price brackets of real estate. It’s become a market within a market. This will not revert to the mean as seen in other cities. IE, London, San Fran, Rome, Istantul, Hong Kong, NYC, Paris, Tokyo (yes Tokyo) and now you can add Sydney, Vancouver, Toronto. There will always be a market for these high powered investors regardless of what the markets are doing. -Please see increased sales of multi-million dollar yachts, private islands and second, third, forth home buying.

Another example of real estate prices not being affected; See Italy, where real estate is the countries number one investment by its citizens. Real estate has softened but prices have not decreased very much +/- 5% why? because everyone wants to own real estate. They simply do not sell if they don’t need to.

Lastly, interest rates will be low for at least until economies in general start to show significant signs of recovery. This will be the first signal of a potential reversal of real estate prices as higher interest rates. Right now your money earns you nothing in a bank.

Canadians love real estate, have their personalities and lives intimately tied to their abode. Deductible mortgage rates do not apply here. low lown to values are not the norm in Canada. This is not the USA. The world sees Canada as a generally safe place to invest and live. The rest of the world with the exception of Norway, Sweden, Brazil, Austrailia, Canada, Hong Kong and a few outliers will be problematic

Not a single valid reason, let alone truthful. — Garth

#128 arctodus on 12.20.11 at 12:53 pm

You dudes still do not get it.

The western world (and now to the eastern one) is mired in a GREAT DEPRESSION…not a recession…not a little blip in never ending upward mobility and economic expansion…..a great depression.

This contraction will not end until the reality of true economics (available energy to world society bottoms out) takes hold.

As this collapse continues we will see the rise of Medieval politics and strategy. The new feudalism is expanding. Predator drones chasing common people, starvation of the masses, vast stretches of country simply abandoned by “civilized” society. Balkanization of many countries (USA and Canada are in here) will proceed by plan or by default.

Its about the energy people……and we are now on the decline phase off the energy plateau…..

#129 Snowboid on 12.20.11 at 12:55 pm

#101 AlbertaGuy on 12.20.11 at 10:48 am…

A few sites to get you started:

http://www.city-data.com/forum/phoenix-area/

http://phoenix.about.com/

http://www.zillow.com/local-info/AZ-Phoenix-home-value/r_40326/

Plus there are any number of real estate sites, where you can find tons of information about properties – we used Zip

Keep in mind the Phoenix area is massive, when you include the ‘Valley of the Sun’ it is twice the land area of the GTA or about eight times the size of the Calgary CMA.

The population is around 4.2 million. You will have lots of Canadian company down here, more and more Alta plates in the malls recently!!

#130 eaglebay - Parksville on 12.20.11 at 12:55 pm

#93 DonDWest on 12.20.11 at 10:16 am

“I’m a scorpio. The expression “there’s no place like home” does mean a lot to me. There’s many personal reasons for this I would rather not get into.”

I know, I know, wifey wants a house or else.
50/50 loser. Get a hold of yourself and do something about it. Whiner.

#131 Long gold on 12.20.11 at 12:56 pm

So R.E wont drop 50% cuz it will put us in a deep recession! ….and that just CANT happen. Garth, selling begets selling, we just saw that with gold and gold stock, the over leveraged morons tripping over themselves to see who could sell their gold at the cheapest prices to the banksters….despite better then ever fundamentals underlying gold.

50+% drop in R.E. will come, the fundamentals support that premise….fundamentals that will produce higher unemployment, higher interest rates, and inflation in energy and food….and it is called, US$2 quadrillion OTC derivatives. Your 15% drop is not seismic at all, except for the “over-leveraged morons” the real pain comes when even those with no mortgage start to panic…and cant service their credit card and lines of credit debt.

You do not understand this crisis, there is wealth to be taken, and debts to be paid, and you can be damn sure the banksters are going to take that wealth, and enforce debt payments for decades… canadian real estate is easy pickings, and the media will be complicit in the wealth transfer as they send a tremendous negative news flow into the publics ears, causing panic selling, and forced liquidation. When?-i dont know, timing is for amateurs.

50+% is coming, 15% is almost not even worth talking about.

#132 Paul on 12.20.11 at 1:04 pm

US housing starts are 66% lower then before the bubble.

#133 Victoria on 12.20.11 at 1:08 pm

Coastal,

I read it and almost puked. I was the one that the banks would not lend any more money to for renovation because my property has already declined 10%.

Should I send this to the bank then??????

#134 UVZ on 12.20.11 at 1:21 pm

I would like to note that 10%, 25%, 50% or whatever% is a subjective number. Percent of what? Median, average, seasonally adjusted average, asking price, revised asking price, etc… Which price? Price by neighborhood, by city, by area code, by postal code, by province, for the whole country, etc…

The bottom line is the price you personally source, negotiate and transact at — be it rent out, rent for, sell for or buy at.

That said, the economic winds are in favor of those who have all the time in the world — and can act boldly.

#135 OttawaMike on 12.20.11 at 1:25 pm

I’ll repost this one again.

A unintentionally funny house tour video by an illinois realtor:
http://www.youtube.com/watch?v=F_X2Fccr-SE&feature=player_embedded

Make sure you have your sound working as the music sets it off perfectly…

#136 spaceman on 12.20.11 at 2:13 pm

Fight Fight Fight, this guy should be selling time shares in Mexico.

Amazing how the sentment has turned, in what seems to be a month or two. They all come out of the wood work to say, oh, its not so rosy.

There are no disagreements any more when the discussion of house price decline comes up, why? Because it is already happened… The local Victoria market will most likely drop a few more points at the end of this month, and the only house’s selling, are deeply discounted.

#137 coastal on 12.20.11 at 2:29 pm

Victoria,

You should send it to them and post the response. Amazing the magical powers of the VREB can overpower world economic forces and there is no such thing as a market that ever goes down. Truly La La Land.

Sad that the mainstream media can never report the real stories and rely on salesmen with 3 month courses behind them.

#138 Form Man on 12.20.11 at 2:48 pm

#137 bob’s my uncle

atta boy ! don’t let facts and evidence get in your way

#139 scared on 12.20.11 at 2:53 pm

With all due respect Garth, it isn’t that people come to this blog hoping for economic turmoil. It is that the fundamentals do not support our present economy and the thinkers are very confused.
As of now, the market in Richmond BC has already drop by 10-15% from the historic highs. Some detached lots have dropped more (from $1m to $800) and others have dropped less. Richmond was a city in Canada that saw the highest increase of prices during the boom, so it would be the best indicator of the effects of a popped bubble. The bubble has already popped here, yet many are in denial. I predict that after spring of 2012, the denial will turn to acceptance and then we will see major price adjustments.

#140 Abitibi Doug on 12.20.11 at 2:55 pm

The idea of a 15% drop across the board shouldn’t come as a big surprise to anyone. We’ve been there before, doesn’t anyone remember the correction in the early 1990’s, after the peak in 1989? It took to 2003 or 2004 for most markets to recover to 1989 prices. That’s breaking even by 1989 price, and actually a loss if you take into account inflation during that period. It can happen all over again.

#141 Jan Etter on 12.20.11 at 3:08 pm

#90 DonDWest on 12.20.11 at 9:54 am
“All I want is equal opportunity, but apparently it’s entitlement to ask for the same opportunities my parents’ generation had. . .”

Yes, it’s entitlement to suggest you are “entitled” to the same opportunities your parents’ generation had.

Be thankful for having the opportunity to live in Canada at this point in history. Life isn’t fair. Are you “entitled” not to be born into and trapped in a bottom-feeding caste in India? Are you “entitled” not to be fleeing war and starving in Somalia?

#142 45north on 12.20.11 at 3:09 pm

HJ: Massive increasing debt doesn’t matter, until it does matter. There is always a tipping point.

For the last two years, I thought the tipping point was next month but it wasn’t.

This morning was the tipping point. I was in a taxi. The driver said he was 24 and was saving to buy a house. I said when I was 24, I was a taxi driver – for 6 days. I said don’t buy because everybody is tapped out. He said “thanks”.

Tipping point.

#143 bill on 12.20.11 at 3:13 pm

Crazy
‘BOC will be careful not to trigger the drop.’
the boc couldnt care less about the folks that would be affected.
and the drop has already started.

#144 bill on 12.20.11 at 3:28 pm

gee usuk
”Right – if you’re in high school. Which apparently some of the posters are.”

you dont like high school for some reason?
or kids?
lighten up and try for first yourself.do you good.

do you think garth attracts people of all ages to his blog?
anyway if your sense of decorum is disturbed by all this ‘firsting’ ,perhaps there is another blog where this sort of thing is forbidden.

#145 Harlee on 12.20.11 at 3:52 pm

#107 Van Isle Renter
Very good post,especially that last paragraph.To use an old boomer expression (because I am an old boomer):”Right on!”

#146 Dorothy on 12.20.11 at 3:53 pm

#127 – Snowboid
I don’t live in Kelowna, but I DO live in the Okanagan, and not ALL of the Okanagan has been overbuilt with excessively large homes. When I used the term “McMansion” it was really a tongue in cheek reference to comments made by some of the younger ones on this blog about Baby Boomer excesses. Not all baby boomers live in oversized homes with stainless and granite, nor are all baby boomers leveraged to the hilt to support homes they cannot afford. Therefore, not all baby boomers will be forced, or even desire, to sell their homes just because they’re getting older, or because the price of RE is dropping.
I live in a modest 3 bedroom home that will make a perfect retirement home when that time finally rolls around. I don’t want to downsize because I like having the extra bedrooms to accommodate my children and my friends whenever they come to visit. And with Canada being such a large country where children and friends are often far flung, it’s perfectly reasonable to want somewhere to accommodate them. I know people in my parents generation who didn’t think about this when downsizing, and who now regret not having that little bit of extra space to accommodate visitors.
I don’t have a mortgage anymore, so interest rate fluctuations will not affect my decision to keep or sell my home, and as my property taxes are lower here than in any other town I’ve ever lived in (and I’ve moved around a lot), this is a great place to retire on a fixed income. If money is tight and I can’t afford to go on vacation anymore, this area provides lots of opportunity for inexpensive staycations, and because physicians like living in this area I was able to get a doctor within 6 months of moving here.
Anyone who bought a massive, ostentatious house that they couldn’t really afford deserves whatever they get when real estate prices fall. And ditto for all those speculators who bought condos as a way of making some easy money, because speculating is really a form of gambling which is always associated with “win some, lose some”. But for people such as myself (and there are more of us than many of you bloggers seem to realize) who worked hard and saved over the years to buy what we have, who never borrowed more than we could afford to pay back, didn’t run up a lot of debt, paid our bills and lived within our means, a real estate downturn is not going to force us out of our homes.

#147 Coho on 12.20.11 at 4:08 pm

How nice of Mr. C to warn us about household debt being the worst risk to the domestic economy when himself and other central bankers were instructed to crash interest rates to sustain and inflate even more a housing bubble. And this combined with making it possible for almost anyone to buy a house!

How else were people going to be encouraged to spend if not for illusory pseudo-wealth? High paying jobs were/are being outsourced. The dollar is buying less, therefore, people can afford less in real terms. So, lets create a housing bubble, they said, and get as many people as possible to become “proud homeowners” (because they deserve it) who will then use their house as an ATM thinking it is free money because the value of their house will rise at least as much as the consumption they are gorging on.

Good jobs, good wages, independence and real buying power have been replaced cheap labour, cheaper borrowing costs and unemployment with people depending on the peanuts the government hands out to them to compensate for job and opportunities lost.

But, we can be thankful for the concern of our leaders by their criticizing the public for overspending. It is always good to know they have our best interests at heart.

People are products of their generation. Our grandparents and great grandparents were spend thrifts because they had to be. They worked hard and were paid little. Our parents came of working age during the post WW2 boom and the emergence of the middle class. Presently, in the West, there is a rapidly shrinking middle class with manufacturing and tech jobs having gone to Asia.

Lifetime jobs and saving are a thing of the past. And for many people, particularly the young and up and coming, so is saving and being able to live a middle class lifestyle without going into massive debt. To try and live by yesterday’s “values” created out of either the opportunities or necessities of those times, is like swimming upstream against the current…or being a square peg fitting into a round hole. This is today. This is the new normal. People keep writing, “…when things revert to normal”. What is “normal”? We’re sitting on a bus speeding on a highway at 100 mph. And guess what? We aint driving it. We’re passengers paying the fuel and taken along for the ride.

#148 DonDWest on 12.20.11 at 4:16 pm

And here’s why we’re pissed:

http://blogs.ubc.ca/newdealforfamilies/

Baby boomers are a generation of jerks.

#149 Dorothy on 12.20.11 at 4:21 pm

#90 – DonDWest
When I first came to Canada I had nothing but a suitcase and less than $1000 in the bank. Now, 36 years later, I own my own home and have no debts. But it took all that time to go from being someone who had little money and no friends, to being what I am today. It takes a lot of time and hard work to get to where your parents are; it doesn’t happen overnight.
You sound as if you’re stuck in some sort of low paying dead end job, and lack the education to get out of it. The obvious choice would be to get a student loan and go to college, but you don’t seem to like that idea. My kids both took post secondary education, and now both have great paying jobs. So, providing you choose your course of study wisely, I think you’ll easily make back whatever it costs you to get an education. Community colleges offer one year certificate courses in some subjects (as opposed to a 2 year diploma) which would help cut down on the cost a bit, and it is possible to work part time while you study. One of my kids held down 3 separate jobs while at college, 2 of which were for the college itself. Also, there are many scholarships available (enquire at the student finance office) that some years never get claimed (hard to believe, but true). So pay a visit to your local college, and find out what’s available.
Another option would be correspondence, but that takes a lot longer to graduate, and requires extreme self discipline.
And the final option is to do what I did, and be willing to work in remote, isolated places where the pay tends to be a lot better. Not much social life (which I know is very important when you’re young), but a great way to get a financial start in life.

#150 Mr. Lahey on 12.20.11 at 4:26 pm

#45 Blog Dog Carney

“Mr. L – Cripes, I dont even remember the pile of manure! How did I do in the debate? ”

Trying to pretend you have amnesia now are you Carney? The pile of manure to refresh your memory was what our fearless leader, all knowing oracle, mystic reader of the financial tea leaves, all knowing, all wise and jolly good fellow Garth Turner stood on when he bellowed out, “I am standing on Carney’s interest rate policy!”. You then grabbed Ricky’s car and high tailed it out of Sunnyvale. What an ignominious exit cowboy!!

#151 Mr. Lahey on 12.20.11 at 4:32 pm

Disciple from yesterday.

“Can I come and speak at the FASTPGFBDCParty Mr. Lahey?”

Where, o, where have you been Disciple? The party took place last weekend and you were a no show. You may want to take better notice of when the party is being held. You don’t want to miss the SASTPGFBDCParty. You may even want to learn how to spell the acronym.

#152 DonDWest on 12.20.11 at 4:33 pm

#151Dorothy

“It takes a lot of time and hard work to get to where your parents are; it doesn’t happen overnight.”

My parents bought their first house, a 4 bedroom Victorian at ages 23 and 26 respectively. It has since increased in value by 12 times since adjusted for inflation. Thanks for playing.

#153 Humpty Dumpty on 12.20.11 at 4:33 pm

More like get read to get spanked G…

For the record, I believe in being clearly informed then prepared rather than being so foolish to argue with many of the rude, crude and shrewed pathetic bloggers.

On a positive note, here’s something worth listening to.

http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2011/12/20_Gerald_Celente.html

I love this pizzane…

#154 Bill Grable on 12.20.11 at 4:35 pm

When I was an anklebiter, my Naval Officer Dad was always trying to point out that greed kills.
The only child of a stevedore, and barely survived the Depression, so he was money concious, to a t.

Somewhere earlier on the blog, Mr. Turner mentioned only buying what you can afford. That message seems lost on many of my younger friends, and some fellow boomers, in our circle.

I feel that the whole era that we have been living through is best explained by Dire Straits – “Money for Nothing” – the lyrics are prescient.

#155 jess on 12.20.11 at 4:38 pm

BC Hydro smart meter installs violating privacy: report
BC Hydro is safeguarding personal information, privacy watchdog finds
So if Cyber Hackers shut down a utility water pump in central Illinois . Can they screw the smart meters?
Iowa GOP worried by hacker threat to caucus vote – Houston
=
banada boycotts ? why not go after those companies that use child labour like the fair trade cottonunderwear stock.
http://ca.news.yahoo.com/relief-oil-glut-cushing-okla-bad-news-u-173026230.html

#156 April on 12.20.11 at 4:46 pm

#88 Bob’s my uncle. We notice you keep pumping RE. Realtor?

#157 DonDWest on 12.20.11 at 4:46 pm

“You sound as if you’re stuck in some sort of low paying dead end job, and lack the education to get out of it. The obvious choice would be to get a student loan and go to college, but you don’t seem to like that idea.”

No I don’t, considering I tried that dance already three times. Despite studying twelve hour days; I can’t pass an exam when my life literally depends on it. I just can’t memorize the information. Memorization is the one skill that seems to trump all. Don’t have a good memory? Tough break for you, no college means no economic mobility, no matter how hard you try to break out.

There were options back at your time period when college wasn’t for you; provided you were willing to work hard. That isn’t the case today. Being ambitious, yet unable to get that coveted college degree, is a recipe for psychological disaster. It would be far easier if I didn’t give a damn.

#158 rangergord on 12.20.11 at 4:51 pm

Greater fool maverick blog. Maverick’s disagree with everyone lest they not be a maverick anymore. Housing will fall! (Cheers) but only 15% not 50% (boo!) Buy some gold but remember gold bugs are doomer scum. Buy bank stocks but not normal stocks only preferred. Banksters are your friends get in line for the ill gotten gains. Definitely buy government bonds. Countries will never default. Don’t think for one moment that the doomers could be right. The banksters and governments are your friends. No one else believes this but I am a maverick.

The plural of maverick is ‘mavericks.’ The rest is not worth correcting. — Garth

#159 Snowboid on 12.20.11 at 5:09 pm

Dorothy…

“who worked hard and saved over the years to buy what we have, who never borrowed more than we could afford to pay back, didn’t run up a lot of debt, paid our bills and lived within our means, a real estate downturn is not going to force us out of our homes”

Okay, all but the last statement about getting forced out, is the same for us.

We decided real estate in BC, especially Van Isle, Vancouver and the Okanagan, is overpriced and with the sage advice of the Professor sold our home and rent. Our rent would need to almost double before it would pay to buy instead.

So to each their own, but I still stand by my statement that your small Okanagan town isn’t immune. Your prices may not go down as much, but more than you are hoping for.

#160 martin9999 on 12.20.11 at 5:35 pm

#132 LONG GOLD —

best comment so far,

i gotta tell you garth this guy has a point!!

#161 Dorothy on 12.20.11 at 5:42 pm

#150 – DonDWest
Inter-generational disagreements over how best to allocate public funds is nothing new.
This talk about it being harder to raise a family now than in the past is just so much BS. My mother worked all her life, despite having 3 kids to raise (and she’s now 86). So having both parents working is not a new phenomenon, particularly in countries other than Canada. And although it’s true that in Canada greater prosperity resulted in more stay at home mums during the 50’s and 60’s than experienced elsewhere, even here there are many Boomer women whose mothers worked, and who also had to work themselves while raising their own families.
Housing has gone through several boom and bust cycles over the course of my adult life. I can remember people losing their homes during the 80’s due to very high interest rates making renewing mortgages unaffordable. This came after a run up in prices, which was followed by a crash. My spouse and I were in our 20’s and couldn’t afford to buy a house when prices were high, but had lost our jobs by the time the prices crashed. So we were effectively kept out of the market. Sound familiar? But we found new jobs, kept saving and eventually had a big enough downpayment to get into the market without risking losing our shirts. It’s like the old saying “slow and steady wins the race”.
Part of the problem faced by today’s young people is the type of housing they want to buy. When I was young a basic 3 bedroom with one bathroom in a working class neighborhood was the best I could aspire to, and all most ordinary young people aspired to. Nowadays they want much more square footage, with 3 bathrooms, ss and granite, plus 2 cars, a flat screen TV, internet access and a smart phone. Which is a much more expensive lifestyle. Because they can’t really afford such an expensive lifestyle they tend to buy a lot of this stuff on credit, often paying over 20% in interest charges. When I was young (and still today) with the exception of a house and a car, if I couldn’t afford to pay cash for an item, I didn’t buy it. And even when buying the two big ticket items I mentioned, I made sure I saved a sizable downpayment first. In the case of a house I saved 10% plus the cost of legal fees, house insurance, survey, etc. And in the case of a vehicle, about 25% as a down. Both my house and vehicle were not new, and definitely not top of the line. My first vehicle was a 4 year old pickup truck.
So, if young people today saved a little more and spent a little less, lowered their expectations a bit and quit buying on credit, they’d be a lot better off.

#162 Bill Grable on 12.20.11 at 5:49 pm

Here’s some figures to make Vancouver home buyers weep: in the United States home prices and mortgage rates have dropped so much that the average mortgage payment is now less than 15 per cent of median income, according to Sal Guatieri of BMO Capital Markets (see that graph as well as one on affordability and Canadian national debt here).The latest affordability study from RBC says that in Vancouver, home ownership costs for a basic detached bungalow — including mortgage payments, utilities and taxes — take up 90.6 per cent of a typical household’s pre-tax income. That number is determined by comparing the price of a standard home to average household incomes in the area, and assuming a 25-per-cent down payment and a 25 year amortization period.  Read that story here and the full report here.And according to a study out today, Vancouver is the most expensive place to rent as well (not surprising as the price of homes and what they will rent out for go hand-in-hand). According to Canada Mortgage and Housing Corporation’s fall survey, rent for a two-bedroom apartment in Vancouver is $1,237 while in Trois-Rivieres rent is $547. The Vancouver Sun’s Brian Morton will be looking at the CMHC numbers in more detail today. In the meantime check out the full CMHC press release and report here.
Link
http://tinyurl.com/72gru8e

#163 Mel on 12.20.11 at 5:49 pm

604:

You are right, people will never learn. However, it is not a question that for those ‘who knows better’ have difficulty with -15% loss. The only time I would agree with than number would be ‘IF’ we did not have such a housing bubble of all bubbles. Debt everywhere you turn, older population in the future….

Historically, bigger the bubble, bigger the eventual loss.
Today, that would not be -15%.

#164 martin9999 on 12.20.11 at 5:50 pm

i really think when panic kicks in that is the real problem

#165 Trev16 on 12.20.11 at 5:51 pm

Don D West…..

Some points you bring up are valid in regards to the Boomers….. but one thing to keep in mind is that the Boomers may have to start selling their overpriced real estate to pay for their medical. As we all know in Canada our medical system is on its last leg. Our model does not work based on our demographics(aging population) as we simply don’t have the tax base to pay for it. In addition the austerity measures which will be rolled out in the coming years by the federal government will make the matter worse.

When the boomers start cashing out of real estate to pay for their medical…… in addition to the world’s financial ponzi scheme bursting (derivatives)……I would not be surprised to see home prices at a substantially reduced priced which will enable you to get into the market.

Cheers,

Trev16

#166 jess on 12.20.11 at 5:53 pm

national regulator of course

New IRS rules demand more info on foreign holdings
http://www.reuters.com/article/2011/12/19/us-usa-tax-fatca-idUSTRE7BI1NY20111219

http://www.irs.gov/businesses/corporations/article/0,,id=236667,00.html
===========

The principles of tax policy
http://www.publications.parliament.uk/pa/cm201011/cmselect/cmtreasy/memo/taxpolicy/m46.htm

#167 Kevin on 12.20.11 at 5:59 pm

Canada’s housing boom among longest in Western world
http://www.theglobeandmail.com/report-on-business/economy/housing/canadas-housing-boom-among-longest-in-western-world/article2277801/

“Canada’s housing boom is among the most long-lived in the Western world at 13 years, but the next few years could chip away at the gains that have seen the average house increase in value by 85 per cent since 1998. ”

Using inflation adjusted house prices makes the house price boom not look so bad. If we look at nominal house prices from 1998 to 2011, we see an increase of about 132%. Which is strongly correlated with mortgage debt growth which will have increased by about 170% by the end of 2011 from 1998.

Final numbers for 2011 are yet to be determined but as of October 2011, household debt stood at $1.579 trillion and mortgage debt stood at $1.095 trillion.
http://credit.bank-banque-canada.ca/householdcredit

The average weekly wage in Canada has increased by just under 40% since 1998. So there should be no surprise to see ratios such as these:

Household debt to income in 1998 -97%
Household debt to income in 2011- 153%

Household debt to GDP in 1998- 60%
Household debt to GDP in 2011- 94%

#168 SRV ES339 on 12.20.11 at 6:00 pm

Why should we believe US R/E propaganda (Breaking news)? Oh I forgot… the US economy is healthy and this is the proof.

Too bad the internals reveal the increase was almost all multi-unit, and many are rental units for those who will never again be able to buy a home.

#169 bill on 12.20.11 at 6:04 pm

Baby boomers are a generation of jerks.
who begat a a generation of little weasels

hows that sound dondwest?
true ? false?

#170 bill on 12.20.11 at 6:19 pm

”Last I heard, my parents are too busy experiencing their 5th vacation this year.”

not to get away from you I trust?

#171 Habbit on 12.20.11 at 6:25 pm

#97 DonDWest It’s the stupidity of the majority that created the housing bubble in the first place. There is hope for you young man. Be prepared when the opportunities present themselves.

#172 zeeman1 on 12.20.11 at 6:27 pm

#90 DonDWest.

Jesus, you sound like a wee bit of a tosser. Can you even score a girl with that kind of attitude? Move outside of Toronto to find a nice affordable house. I used to live in Stratford for a while and owned a really nice Ontario Cottage with a big yard only blocks away from great theater, the river, pubs and restaurants. you won’t make as much money as you would in Toronto but your expenses and stress will be less. Some days I wish I could have settled for a simpler life but the big city has its draw and its price. You make guys a little younger than me look like losers – Shape up, kid. My parents are boomers and didn’t have it easy by any stretch, nor will I. It sucks not being born into money and having to work all the time, so try and enjoy the little things.

#173 GTA condo market crashing on 12.20.11 at 6:36 pm

from reading some realtor posts on this blog it would seem many realtors are in a panic. mortgage buddy thinks prices will fall 15% next six months and worse if buyers go on a strike. RE is a fools game and everyone in the biz wont touch RE.

#174 jess on 12.20.11 at 6:50 pm

I wonder how much of this is in chinese homes?
Tainted Drywall
by Joaquin Sapien
ProPublica, Dec. 15, 5:47 p.m.

Knauf Plasterboard Tianjin is the first manufacturer to agree to settle defective drywall cases lodged in federal court. The settlement could pay to repair more than 5,000 homes, plaintiffs’ attorneys say

#175 Devore on 12.20.11 at 7:02 pm

#128 Alan

1. Huh, “everyone is predicting a downward spiral for real estate”? Who is this “everyone”?

2. Granted, Garth has not uttered “vultching” in months. I like to see this as a contrary indicator, like hardline bears throwing in the towel. The end is near! ™

3. Irrelevant what the government wants. Could the governments of US, Ireland, Spain, Australia, China, and many others, afford to see a crash in real estate? Just flailing their arms like powerless kittens.

4. Hard assets proportionately going up in price, like houses in US, Spain, Ireland, China, Australia, and many others?

5. This is the kind of thinking that got us into this trouble to begin with. The belief that to be successful one must own their house. Sorry, but home ownership has always been the RESULT of success, not the cause of it (vast majority of millionaires and wealthy people did NOT get there on real estate). In other words, you make money first, buy things you can afford with it after.

#176 Blacksheep on 12.20.11 at 7:11 pm

Television, sports and political rivalries designed to,
distract and divide, have kept us occupied for decades.

Now, that things are going sideways, we look for A goat.

It can’t be our fault, who did this to us? The theme of the day seems to be intergenerational finger pointing.

We have a lot of us VS them between the classes and the masses.

People know something’s not right, but their not sure what.

The Problem is, due to the illusion “the system” has created for all, from birth, we have never seen behind the curtain, until now.

Ignorance is truly been bliss, until of coarse, it isn’t, but thanks to multiple new sources of information, the masses are waking from their lifelong slumber.

I don’t know who to blame, but I do know it’s not:
My father or my adult daughter or Bob down the road.
It’s not the cop or the civil worker, or the new immigrant family next door. It’s not the teacher or local business man or, my small town politician.

We need to wake the hell up, see what really going on in our lives.
It’s time to, stop, think and take responsibility for our selves.

take care,
Blacksheep

#177 Devore on 12.20.11 at 7:16 pm

#90 DonDWest

All I want is equal opportunity, but apparently it’s entitlement to ask for the same opportunities my parents’ generation had.

Funny you should say this in your rant about entitlement, because yeah, that’s entitlement. You’re not entitled to anything, except that which you create (minus a 40% cut for The Man, give or take). No two individuals have the same opportunities, because life is not equal and fair, and decades of trying to prove otherwise have not only met with dismal and predictable failure, but have made the situation worse.

#178 Dorothy on 12.20.11 at 7:20 pm

#161- Snowboid
Real Estate in the Okanagan WAS overpriced, and still is in some locations. But we bought here last year, after prices had already begun to fall, and we struck a VERY hard bargain. That said, the price of our home has still fallen a little (about 2%), but because we bought it as a place to live and not as an investment, we’re not overly concerned about price fluctuations.
I’m not opposed to renting; it’s the right move for many. Particularly those who haven’t saved a good downpayment and can’t afford to buy a home, or for those whose jobs are not secure. But for us, at this stage in our lives, we didn’t see any benefit to renting as opposed to buying, because we consider even investing money as being a bit of a risk right now. The stock market is extremely volatile and unpredictable, and inflation is still a possibility in the not too distant future. So in my view, whichever route we’d chosen, renting and investing (or saving cash), or buying a house, was a bit of a crap shoot when it came to preserving capital. But at least with a house we have a roof over our head that we can also get some pleasure out of. Just my personal choice, I realize it’s not for everybody.
I do have some investments as well, and frankly when I balance the winners with the losers, I’ve lost about the same amount as I have on my house. But I don’t plan on selling them either. I’m going to hold on in the hope they bounce back, although they may sink down to nothing as well. But what’s the alternative? Go live on Mars?

#179 Marc on 12.20.11 at 7:23 pm

Homes set to fall…

http://ca.finance.yahoo.com/news/canadian-home-prices-fall-5-224751382.html

#180 DonDWest on 12.20.11 at 7:28 pm

#163 Dorothy

The classic argument that young people can’t afford to get in because they’re spendaholics. Now where have I heard this before? Do you have any idea how aggravating this comes across to a guy who has a 1999 Samsung in his pocket?

People need to do the math. The only way the young would be “pricing themselves out of the market by spending too much” is unless they bought thousands of I-Pods and electronic appliances. Frankly that’s the only stuff that’s much cheaper today than in the past.
So very backwards were the necessities are so expensive; and the junk is so cheap.

And besides, you have no idea what houses I’m looking at; so don’t make any assumptions. Let’s just say, based on many of the houses that I’m looking at; I wouldn’t be buying a house at all, but land.

#181 Timing is Everything on 12.20.11 at 7:39 pm

#101 AlbertaGuy

Check out Chandler, AZ. Bro bought in Sept.
I’m heading down in January. Meeting up with Dad. Good times….

http://tinyurl.com/ykuoenc

BTW, get a recommended realtor via trusted family member, friend or colleague. Good luck and happy hunting.

#182 Dorothy on 12.20.11 at 7:40 pm

#154 – DonDWest
We bought our first home in Timmins in 1983 for $65,000. And I just looked on MLS and found something comparable for $229,900. Assuming this home sells for around $218,000 that is an increase of $153,000 or 42% over 28 years. As our family income had more than doubled over that same time period, I would say, relatively speaking, that the cost to buy a home in Timmins is about the same today as it was back then, with the only difference being that interest rates are much lower today (I think we paid about 12% in 1983).
Here’s the link: http://www.realtor.ca/propertyDetails.aspx?propertyId=11202113&PidKey=-299356848
Naturally, as affordability depends on the local real estate market where you happen to live, if you live in Toronto or Vancouver then homes there ARE now much more unaffordable than they were in the past. But my point is that it’s not the same all across Canada. So if you live in an area where house prices are out of your reach, maybe you should consider moving.
I realize the example I gave is more house than you can probably afford, but I was trying to compare apples to apples, and this house compared well to what we bought back then. But there are more affordable homes out there than this one, particularly in other locations. Timmins has always been a bit on the high side, due to all the high paying jobs in the mines around there.

#183 DonDWest on 12.20.11 at 7:43 pm

#171 bill

“who begat a a generation of little weasels”

Weasels are efficient little animals.

#184 Hoof-Hearted on 12.20.11 at 7:44 pm

Sure good the see the video of NBA Owner Mark Cuban out there trying to earn an honest living selling RE

#185 Dorothy on 12.20.11 at 7:48 pm

Regarding my last post (#180) I just realized my math was wrong (not surprising considering I failed math in high school).
Ok, so having recalculated the houses in Timmins appear to have gone up 235% (or thereabouts) since 1983. But as our household income has increased about 190% in the same period, plus interest rates are a lot lower, my main argument remains the same. Homes in SOME areas are not that much more unaffordable now than they were back then.

#186 Nostradamus Le Mad Vlad on 12.20.11 at 7:50 pm


#83 House — “. . . the fiscally-responsible(?) Conservatives . . .” — Thanks for the joke of the day! The CPC can hardly run a Mac’s Milk without screwing it up.

#90 DonDWest — Have to say that you sure get some posters’ backs up, but that’s good as it stimulates discussion.

Keep the opinions coming! Whether others agree / disagree doesn’t matter, it certainly wakes everyone up!

#121 disciple — “. . . the powerful materialists are terrified that millions may find out he was correct in saying that we all survive death.” — Of course we do.

A person is either alive on this or the other side. It’s these temporary clay temples, sacks of clothes or physical bodies we leave behind. There is a reason why the spiritual beings now this planet as the ashcan of the universe. Good post.
*
Silver rush at MF Global; Merill Lynch Read it and weep; Fed embraces global banking rules; Tremors “When all else fails, they take you to war….They’re going to do it again.”; 8:59 clip Jim Grant says central banks are insolvent; Awareness Does the Crown exist? US$1 Tri. “As long as we have paper and ink and American slaves to redeem those freshly-printed notes, we will do all we can to save the bankers from the consequences of their mortgage-backed securities fraud!” — Lord Ben Voldemort (wrh.com).
*
1:16 clip Here is the clip which 60 Minutes edited out. Vanity, thy name Egobama; 2:32 clip Even if Ron Paul, it won’t matter. TPTB don’t want him in; Extinction When WW3 rises for a few years, 2/3 of us will be enjoying life in the next worlds; Private Property now subject to seizure (govts. are desperate); Romney is who TPTB want in, and now it’s easy to see why; 19:53 clip Libya bombed into the NWO; Pakistan don’t care too much for the US; Mitt Romney’s Dream World In glorious teknikolor.

#187 Steve on 12.20.11 at 8:08 pm

Hi Garth,
Great blog and posts, like your sense of humour, I often laugh out loud reading your posts.
You often talk about RE in Toronto and Vancouver areas. I’m from Montreal, owner of 2 rental properties (total of 9 units). I wonder if you have any opinion on Montreal’s RE market. Reading your posts about the condo fever, I don’t recognised the Montreal Market. New owners of condos in Mtl’s area want to live in it, not rent it or resale it.
Tks,
Steve

#188 Daisy Mae on 12.20.11 at 8:38 pm

The ship deployed for a 7-week exercise but wound up being away for 7 months. This video was made when they were not sure if they were coming home or not – but they arrived back today.

http://www.youtube.com/watch?v=SDZcGz4vmJc

#189 Onemorething on 12.20.11 at 8:50 pm

I just have to laugh Garth at all the comments coming in from your 15% drop predictions who have no understanding of the reference and, second, BOOMERS who actually think they will stay in their homes for the next decade or more.

The flock clearly exposes themselves as needing more of your help! I used to think us Canadians a sharp group but this just adds to my belief we have not learned a damn thing!

#190 Smoking Man on 12.20.11 at 8:54 pm

Well at xmass dinner going to show the family this…

Christopher Hitchens

http://www.liveleak.com/view?i=616_1324015039

#191 tkid on 12.20.11 at 9:02 pm

DonDWest, I hear what you are saying and agree with the vast majority of it. About all I can suggest to you is you may have some sort of learning disability (my father couldn’t pass written exams to save his life but would pass oral exams with flying colours). The local colleges should be able to offer assistance in determining what your disability is (it isn’t memory – your posts are far too well thought out and rational for this to be a memory issue) and then get help on dealing with it. You need the college degree, but I’m preaching to the choir on that.

Good luck!

#192 Nostradamus Le Mad Vlad on 12.20.11 at 9:19 pm


Growing hunger and homelessness in America (doesn’t matter what the dollar does now); Duped “Buckle Up – This is a serious ass-whooping of the Associated Press and their endless lies about the bailouts, as they attempt to correct Ron Paul from last Saturday’s debate. The only problem for the AP is that THEY got it wrong, and Ron Paul was, in fact, 100% correct.”; 6:09 clip Members of Euro Parliament are paid to stay away (German with English subtitles); 5:40 clip Niall Ferguson; As Iran doesn’t have nukes, the US is shooting itself in the foot; Jailed for not paying bills; Slavery in Poland; Unpaid Spies in the fiscal system.

Commercial RE is being bailed out very quietly; Eleven Companies on the edge in 2012; Money Power rules world. Who has the most money? The IMF; GS Up to their old trix; Legal Looting from Scotland; Income Inequality Highest level for a long time.
*
Okillingmachine That’s what he says; Ron Paul probably won’t be prez. but he is causing the Rethuglicans to self-destruct; Billary and Obummer All is fair in love and war (consider the source); US Military Disobeying the WH? CC “It Started Snowing in Russia way ahead of time according to a source I know very well.” and CC1 and CC2; 2011 WH Lies “And #13: We got Osama Bin Laden in May, 2011. Honest! Really! No kidding!” wrh.com, and Real Lies.

Backfiring The globalist’s agenda; CIA’s Soldiers “The Free Syrian Army is trying to topple Syria’s President Assad. The ‘Free Syrian Army’ works for the CIA. The Free Syrian Army is commanded by the CIA’s Abdel Hakim Belhaj.”; Fukushima 14K deaths (so far); Not The Sound of Silence New police weapon; Oblivious because of the m$m; TSA has expanded into subways and buses.

#193 Nic renting in Van on 12.20.11 at 9:24 pm

This blog is so entertaining.. Garth, your writing makes me chuckle everyday (or so)…

#194 Junius on 12.20.11 at 9:37 pm

#128 Alan,

Just think of how long it took you to write that long post and not a single new thought or anything that makes sense.

#195 Junius on 12.20.11 at 9:40 pm

#70. trt,

And I predict you will continue to post endless diatribes about immigration keeping prices high long after it is clear that will not happen.

#196 Habbit on 12.20.11 at 9:40 pm

#163 Dorothy Good post. Thanks. We have to be aware that this is the instant generation. Click,click. It’s the ME NOW thing.

#197 The Thing in the Basement on 12.20.11 at 10:53 pm

134 Victoria – can you elaborate on your financing requirements? No, I can’t help you, but my experience tells me banks won’t lend you money for two reasons 1)
The total owed exceeds 75% of value and 2) they fear you can’t pay it back.

#198 Snowboid on 12.20.11 at 10:54 pm

#180 Dorothy on 12.20.11 at 7:20 pm…

Not to belabour the point, but real estate in the Okanagan is still over-priced — and that includes the small towns.

I have gone over the buy vs. rent scenario before in this illuminating blog, and in our case we would pay almost twice as much to own and maintain the place we currently rent.

We have enough liquid investments and cash to pay a bit over $ 500K for a home, but after following the sage advice of Prof. Turner (except for some RRSPs maturing in the spring) the income generated from the home sale and previous investments is becoming addictive.

We may never buy again as long as this keeps up. We used to think like you, that real estate was more than an investment, and that we would keep our mini-McMansion on Vancouver Island (relatives sure liked visiting). But we rolled the dice and decided that selling was better than sitting there until we didn’t know who we were anymore.

I must admit we do own a home, and like you didn’t buy it as an investment – however, it is in the Valley of the Sun. 1500+ sq ft bungalow on a 1/4 acre corner lot, vaulted ceilings, open concept, typical southwest style (tile roof, etc) new Seer 14 heat pump. Even after putting new tiles and carpet in, painting inside and out, new appliances, plantation shutters, epoxy in the garage – yada, yada good quality stuff too – we are into the place for less than this listing in Vernon:

http://www.mls.ca/propertyDetails.aspx?propertyId=10918801&PidKey=1285394435

Plus our monthly community fees are $ 45 a month and taxes $ 100 a month – the pad fee in Vernon is $ 288. It has a carport and we have a 550 sq ft garage.

Great neighbours, good community, safe and secure – we have met about 10 Canadian couples so far – just in our immediate area.

Less than 20% of our net worth is in real estate.

So there you have it – we have a modest, but nice home for six months of the year – fully paid for, no debt – and an older (1989) rented place in the Okanagan that happens to be bigger and more luxurious than the winter home.

Maybe we will end up breaking even, but who cares – even a bad day here beats the best winter day up north!! 19 C forecast for Xmas day, and 22 C next week! If we want a white Christmas it’s only a 2 hr drive away – but we don’t ski anymore – but Flagstaff area is nice as well.

We still love the summers in the Okanagan – but wouldn’t trade the desert winters for anything.

Sorry for the rant, I get carried away – too much cheap booze here…

#199 bill on 12.21.11 at 12:09 am

”Weasels are efficient little animals”
you forgot the ”d” and there is only one ”f”….

#200 Abitibi Doug on 12.21.11 at 12:10 pm

@Dorothy, post #184:
In response to your comments on the Timmins housing market. I lived there for many years and my observation is prices have gone up in the last 6 years due to high metal prices, especially gold. When I first moved there in 1986, I recall many people complaining about the high prices. They compared the prices to nearby towns like Kapuskasing, New Liskeard, or Cochrane. Typically regional centers have higher prices than surrounding areas. I compared prices to larger centres (especially Toronto or Ottawa) and thought Timmins was quite cheap! It’s all relative.