Guidance

Brad and Melissa are 26, no kids, three years out of school and would be doing great if they’d ignored their damn parents. “Upon graduation (saddled with tons of student loans for my Mechanical Engineering degree), both of our sets of parents pushed us to buy a condo because ‘It’s a great investment!’  Three years later” Brad says, “the condo that we bought with no money down (genius, I know), is worth 10% less than it was then.”

By the way, this is in Calgary where rising oil prices were supposed to bring cowboys, engineers and the house-horny a real estate windfall. Oil in 2009 was $56 and today it’s a hundred. So much for that theory.

“We just listed our condo for 10k less than what we bought it for, and expect to end up paying at least 15k out of our own pocket to get out of it and pay off the bank.  We’re currently paying about $2,400 a month to carry our condo – a lot more than people told us we’d be paying (cheaper than rent!).”

In fact, B&M could have leased the same place for half what they now pay monthly in financing, condo fees and taxes, plus no $15,000 loss. Let’s see… umm… that’s about $60,000 more to live over three years in the same place. Thanks, mom. Thanks, dad. Remind us not to ask you about birth control.

It’s not just poor deluded Calgary. Add in Edmonton, Victoria, Brampton, Kelowna, London and now Vancouver. January numbers will be ugly, as sales and prices slide while listings pop. “We are starting to see losses on most apartment sale transactions for buyers within the past four years,” says an industry insider in Canada’s fantasy city. “Sellers first deny they are in a loss which creates a standoff and volume slows.  Then they have to chase what buyers there are out there.”

The past twenty-four hours have been a bubblethon in the mainstream media. Did you notice? Almost like investigative reporters snuck into the Bunker and lifted tomorrow’s pathetic blog post from the moistened, sensuous fingers of my Amazonian typist as we slept on the tiles, sated, in a Bacchian swirl of oiled limbs and clothing fragments. Do these people have no morals?

Why here’s Maclean’s magazine, panting. “Yes, Canada’s in a housing bubble, and it could pop soon. The signs of a bubble are unequivocal. At 13 years and counting, Canada’s current housing boom is one of the longest lasting in the world…the real price of Canadian homes has increased 85%… household debt set a new record… The Economist figures the market is overvalued by over 70%… no wonder a recent international survey of housing affordability found Vancouver to be the second-least affordable city in the world!”

And here’s CTV, and the Globe, even the pumpsters at Global reporting on the release of docs yesterday by the country’s bank regulator. As Bloomberg put it in a headline: “Canada’s sub-prime crisis seen with US-styled loans, mortgages.

Here’s all you need to know:

Canadian lenders are loosening standards, offering mortgages similar to U.S. subprime loans that pose an “emerging risk” to financial institutions, according to the country’s banking regulator.
Banks and other lenders are becoming “increasingly liberal” with mortgages and home-equity credit lines that don’t require individuals to prove their income, according to 152 pages of documents obtained by Bloomberg News under freedom of information law from the Office of the Superintendent of Financial Institutions. The mortgages, typically granted to the self-employed and recent immigrants, “have some similarities to non-prime loans in the U.S. retail lending market,” the documents show.

  And looking all the world like a woman with a $3 million house still for sale in Toronto, BMO economist Sherry Cooper tried valiantly to tank this talk of real estate danger. “With the exception of a few regions, valuations remain only moderately high across the country, especially when low interest rates, demographics, construction costs, land-use regulations and foreign capital inflows are considered,” she wrote in a media salvo. “A dramatic correction is unlikely… the national housing market is more like a balloon than a bubble.”

What to make of all this angst?

Well, I’m sticking with my forecast. Nationally, prices will correct – gently in some areas and violently in others – until the average is 15% lower, followed by a number of years in which prices will just… drift… away. It no longer matters how cheap mortgage rates become. There’s no quick fix for the economy, jobs, incomes or debts. Houses which are stupid inflated will cost less in a year and a lot less in three. Newbie buyers, along with house-heavy Boomers, will wish they’d found this over-sexed site in 2010.

Before then, probably more market silliness, especially in Toronto. Condo  marketers are preparing some desperate pitches, while SFH inventories are low. Sellers will be ecstatic they found that last, great rush of greater fools.

There’s little doubt the growing chorus of media warnings, however, will have an effect. Real estate is the most emotional of assets, bought for the worst of reasons – like pressure from your Boomer parents or sheer house horniness. But when the meme spreads that real estate’s teetering and likely to tumble, that it’s all about danger, sentiment spins. When the buyers take off, prices cascade lower. It can take years to rebuild confidence.

Proof? Look south. Prices have dropped by a third, mortgages sit at historic lows, owning’s cheaper than renting, yet houses linger unwanted and unloved, declining daily.

There are way better places for your money. Just don’t ask your dad.

234 comments ↓

#1 TurnerNation on 01.30.12 at 9:54 pm

1st?

#2 anon on 01.30.12 at 9:56 pm

Guys in my high school used to be first on blogs all the time. It was no big deal.

#3 Putacapinit on 01.30.12 at 10:00 pm

Wow, CMHC just announced its capping mortgages!

#4 Chaddywack on 01.30.12 at 10:01 pm

If 15% is the average predicted correction Garth, do I want to know what Vancouver will do?

Figure it out. Not pretty. — Garth

#5 Jamaican_Gal on 01.30.12 at 10:03 pm

F5 (Refresh)

Where is that “First” script when I need it!!!

#6 Freedom first on 01.30.12 at 10:11 pm

I am so happy to be me. Garth, love your blog. I have been on the same page as you for a long time. Thank God!

#7 American Property on 01.30.12 at 10:15 pm

Hey,

Just wondering if you have any “southern” property? If so, whereabouts?

#8 Simon on 01.30.12 at 10:16 pm

Given that south of the border average prices are half of here ( and still dropping ), your 15% decline seems far too low. Especially taking into account The fact that in the US they Get better mortgage deals and tax treatment.

Get ready for a 50% crash!!!

#9 AG Sage on 01.30.12 at 10:16 pm

“. . . sensuous fingers of my Amazonian typist as we slept on the tiles, sated, in a Bacchian swirl of oiled limbs and clothing fragments. Do these people have no morals?”

This is seriously funny. Or I’ve had too much wine and fine food tonight. One or the other. Or both.

#10 Smoking Man on 01.30.12 at 10:19 pm

Sherry Cooper

I so do remember her back in 2008 Gloom Gloom Gloom. Her and my other favorite idiot Economist David Wolf worked for ML. Calling for a massive Re correction in 2008.

They got it so wrong but still have Jobs, in fact David is a hot shot at the BOC.

The moral of the story, Arrogances, Bravado, Confidence based on nothing but self love will get you a lot further in life than, say being really good and humble about it.

This being good and humble about it is a characteristic embedded in the tax farm slaves all thorough public school.
Know your place slave

Now you know why the rich send their kids to private schools, so they can learn arrogance.

It goes a long way, it gives you value. It’s code you should all live by.

#11 Puzni on 01.30.12 at 10:20 pm

I agree with Garth, you guys should read this story from BMO chief economist and see his delusional thinking:

http://www.theglobeandmail.com/report-on-business/low-interest-rates-may-shield-housing-market-from-bubble/article2320221/?utm_medium=Feeds%3A%20RSS%2FAtom&utm_source=Home&utm_content=2320221

#12 TurnerNation on 01.30.12 at 10:20 pm

You think I sit around refreshing an internet weblog? I have better use of my time. Reality is, I just sit back and concentrate on a good time. And more often then not it is the correct time. For the weekend 7:10pm came to mind which was bang on. Tonight it was 8:40. Turns out I was within 10 minutes.

Seriously. Maybe a bit psychic, or a creature of habit, but I work 9-6 on Bay St. and I like my down time.

You are creeping me out. — Garth

#13 NoName on 01.30.12 at 10:23 pm

“All truth passes through three stages. First, it is ridiculed. Second, it is violently opposed. Third, it is accepted as being self-evident”
Arthur Schopenhauer
I guess we are in 3rd stage now…

#14 Dad on 01.30.12 at 10:25 pm

Thank the maker you’ve clued in on the biggest nutfarm in the country. Calgary real estate is absolutely doomed

#15 Priced Out in Toronto on 01.30.12 at 10:25 pm

Almost like investigative reporters snuck into the Bunker and lifted tomorrow’s pathetic blog post from the moistened, sensuous fingers of my Amazonian typist as we slept on the tiles, sated, in a Bacchian swirl of oiled limbs and clothing fragments. Do these people have no morals?

Garth, you seriously should consider writing a trashy novel. You have the gift. Maybe you missed your other calling.

You mean this isn’t a trashy novel? — Garth

#16 CrowdedElevatorfartz on 01.30.12 at 10:26 pm

“……moistened, sensuous fingers of my Amazonian typist as we slept on the tiles, sated, in a Bacchian swirl of oiled limbs and clothing fragments. Do these people have no morals?….”

i need a shower

#17 Mr. Lee on 01.30.12 at 10:26 pm

Just remember who and what pays the saleries of all of these bank economists. Does anyone really think that they will tell us what they think………no a chance. Remeber how the tobacco industry lied to the public for years……you think these guys are differnt……think again.

#18 Ex-Cowtown on 01.30.12 at 10:27 pm

Fundamentally, Calgary is natural gas town, and Alberta a natural gas province. High oil prices are nice, but natural gas is the show. In 2008, natural gas was at $12/mcf and the province was swimming in cash. Now NG is below $2. Yeah….. do the math. Why do you think Harper wants to build apipeline to export gas? Gas sells for $12-$16 in Japan. Do some more math.

And oil may fetch $100/bbl, but it costs $80 to produce. Good margin but no barn burner. Calgary’s OK, but people blew their brains out over the past few years thinking that the boom was still on.

And that’s why BC vacation/retirement RE is hooped; Albertans giveth, and Albertans taketh away. Albertans aren’t looking at retring in BC anymore. A lot aren’t sure they’ll be retiring at all.

#19 Mr. Lee on 01.30.12 at 10:29 pm

First they ignore you

Then they ridicule you

Then they fight you

And then you win

Mahatma Gandhi

#20 Waterloo Resident on 01.30.12 at 10:29 pm

Let me explain how people react to houses:

– If houses are cheap and not rising in price, then they stay cheap, people see them as a place to live, that’s all, its not an ‘investment’.

– Once those cheap houses start to rise in value, more and more people see them as ‘INVESTMENTS’ and they buy more and more regardless of the price, all in anticipation that prices will go higher still.

Now this is where it gets painful:
– Once prices have hit a high enough point, no more new entrants into the market can afford to buy, so prices plateau for around 6 to 9 months. That is about where we are entering right now. 2012 will be our ‘plateau’ year. America entered this phase in around 2006 – 2007.

– The investors who had bought in hopes of seeing prices going up and up, they sell because there’s no point to holding these ‘DEAD FISH’ any longer. American Investors started selling their houses in 2007.

– As the investors sell, the prices begin to fall, that is when ordinary people now begin to panic and they too start to sell, this normally happens about 2 to 3 years after prices had levelled off. The average American started to sell their houses in 2008 / 2009 and prices have been crashing ever since.

So as you can see, we do not need higher interest rates to kill our housing market, all we need is for house prices to stop rising for a few months, that is all that it will take to make everything come crashing down.

#21 DonDWest on 01.30.12 at 10:29 pm

Sadly, it will be a rather slow decline until houses come back down to Earth. A hard crash would have been better for the economy in the long run. Reason being is there’s limited urban centres in Canada and Canadians who own a home don’t truly have a method of fleeing. This will result in a very sticky and slow decline as people stubbornly peg their home prices a fraction of a percentage downward year after year.

In the end houses in Canada will be priced what they’re truly worth, but it may take up to ten years, and it will only be worth buying then.

There are always exceptions of course depending on what happens to the rental market after this prolonged correction. Rental properties may sink much faster and hit rock bottom quicker than a SFH.

#22 Jim Jim on 01.30.12 at 10:29 pm

Can’t CMHC just go back to the Fed Goverment and have them increase the limit?

#23 Smoking Man on 01.30.12 at 10:29 pm

#12 TurnerNation on 01.30.12 at 10:20 pm

Bay street, beers at the duke next thurs

#24 Yuus bin Haad on 01.30.12 at 10:30 pm

From the horse’s mouth:

http://watch.bnn.ca/#clip609859

#25 TurnerNation on 01.30.12 at 10:33 pm

Convening an emergency blog dog meeting re. tonight’s CMHC changes….breaking…

What change? CMHC is just nearing its allowable $600B loan ceiling and slowing down approvals. — Garth

#26 in calgary on 01.30.12 at 10:36 pm

Where is this couple’s condo located? The one I bought for 448K in feb 2009 went for 590K five weeks ago (three weeks on the market, was rented for 2K/month from april 2009 until jan 1st this year). Here in Calgary good properties are still profitable (it is slowing down though) and that will not change until interest rates go up (2014?).

#27 City Slicker on 01.30.12 at 10:38 pm

#18 Ex-Cowtown
And that’s why BC vacation/retirement RE is hooped; Albertans giveth, and Albertans taketh away. Albertans aren’t looking at retring in BC anymore. A lot aren’t sure they’ll be retiring at all.
————————————————————
Agreed. That’s why my prediction for sharpest correction will be Calgary. Things got carried away on the oil myth, the light sweet crude is mostly gone, but those expensive to produce, polluting oil sands remain.
Just look at the stock prices of the major oil kings, Suncor, Huskey, Nexen (gas), almost down to 2008 crash levels some of them, and certainly nowhere near their highs pre 2008. And with oil at $100 barrel.
Remember that Millennium fund the province use to have where the government sent you a prosperity cheque in the mail? Well Alberta joins the other provinces now in debt.
Will be interesting…..

#28 Nick on 01.30.12 at 10:40 pm

@Punzi (#11).

WOW, sentence in your article:

“Indeed, the pace of delinquencies is low, she said, shy of 0.5 per cent, compared to 8 per cent in the United States.”

What a wrong comparison!!!

Making a comparison between delinquencies in USA (after the crisis) VS delinquencies in Canada (before the crisis) doesn’t make any sens because high ratio of delinquencies appears after the beginning of this kind of crisis.

Delinquencies in USA at the beginning of the crisis were under 1% (Q1 2007):

“In the first quarter of 2007, the U.S. arrears rate stood at 0.98%.”:

http://business.financialpost.com/2012/01/30/canada-facing-subprime-mortgage-risk/

So, this comparison means NOTHING!!

#29 Wayne on 01.30.12 at 10:43 pm

I’m thinking about starting a blog. Every day I’m going to write in great deal about how much I love peanut butter sandwiches, and how everyone who doesn’t love them is an idiot. Then, if all goes well, people will comment and tell me how right I am about peanut butter sandwiches, and how they WISH they had read my blog earlier so that they could have enjoyed more of them in their life. Moreover, they will recount how utterly stupid other people are for not realizing how amazing PB sandwiches are (my neighbour just bought half a pound of roast turkey, can you even believe it??) It will make me feel really smart, which is very important to me. Maybe if I wrote a book on the subject, I could even convince people to buy it…

I think you meant to visit GreaterDrool.ca. It’s down the hall. — Garth

#30 Smoking Man on 01.30.12 at 10:46 pm

#17 Mr. Lee on 01.30.12 at 10:26 pm

Thank you for discovering people lie, your tone and anger make me think you just discovered this prized human trait.

In fact I have mastered it into an art form, people read my stuff and they know I lie about stuff, but they don’t know what I’m lying about.

That’s where the skill comes in.

I am a proud liar. I practice every day

Like you were lying about spelling and syntax? — Garth

#31 Snowboid on 01.30.12 at 10:49 pm

#18 Ex-Cowtown on 01.30.12 at 10:27 pm…

If I had to make an educated guess on first and second for out-of-state plates we see here in Phoenix…

First – Minnesota
Second – Alberta

Makes one wonder…

#32 rosie on 01.30.12 at 10:51 pm

Beware real estate and you parents.

#33 TO Girl on 01.30.12 at 10:56 pm

To give you the full Sherry Cooper quote:

In our view, the [market] is more like a balloon than a bubble. While bubbles always burst, a balloon often deflates slowly in the absence of a ‘pin’.”

http://www.theglobeandmail.com/report-on-business/economy/housing/no-housing-crash-for-canada-bmo/article2319474/

Talk about spin. Unbelievable.

#34 CrowdedElevatorfartz on 01.30.12 at 10:58 pm

@#17 Mr Lee
excellent comparison Mr Lee.
Cigarette Companies and Banks

Misery wrapped in promises

#35 coastal on 01.30.12 at 11:00 pm

To think Obama just created an agency to dig into what happened when the sub-prime drug was slipped into the US public’s kool aid 8 years ago while Harper still allows the spigots to open wide. When Bloomberg gets involved you know they will not let it go. Just another one of the final nails in the coffin for this scam job.

#36 JC on 01.30.12 at 11:07 pm

I knew I should’ve gotten into economics. Getting paid six figures to write all that sycophantic tripe in the hopes of “holding the line” on the greatest transfer of wealth in history. You don’t even need original material.

Helicopter Ben to Sherry Cooper “Get your own material!”

#37 Something on 01.30.12 at 11:09 pm

What lots of people don’t know is
Mortgage terms are also typically shorter in Canada than the U.S., and lenders can pursue defaulting borrowers for full reimbursement even after foreclosure.
So… you can’t default in Canada.

#38 coastal on 01.30.12 at 11:14 pm

“So… you can’t default in Canada.”

You just go bankrupt instead. Can’t get blood from a stone.

#39 worried sellers and realtors and bankers in a Panic on 01.30.12 at 11:14 pm

Many maxed out homes owners are looking to sell as they struggle to make monthly payments. bankers and realtors are in a major panic I haven’t seen my realtor or banker buddy more worried then I have now. Banker buddy tells me 2008-09 crash was mild compared to what 2012 canadian housing market will see. My realtor buddy is uneducated and hoping for only a 10% drop in prices in the GTA. There are no buyers left and only an idiot would buy today. Watch for listings to go through the roof as seller fight each other as they have a selling war ( lower and lower prices) . Looks like a nasty crash ahead.

#40 Tim on 01.30.12 at 11:16 pm

You can thank that buffoon Ralph Clown for causing the mess Alberta is in. He basically opened the flood gates to the oil companies with no long term strategy for development, as a result, Albertans sold sold their oil for a song, by giving incredibly cheap lease rates. The massive development during the boom drove up all costs and now the province is in debt. At least Danny Williams had the guts to stand up to the oil companies and hold out for a better deal.

#41 Cory on 01.30.12 at 11:17 pm

Calgary is building again full speed ahead. An unbuilt condo just sold for a record 8.3MM. Buildings sit almost empty, many unsold units from years ago, yet they build and build and build more more more.

It is just crazy man….crazzzzyyyy….don’t know how long they can keep the charadfe going but hry, as long as there are dummies to rent money, it will continue.

#42 East Van on 01.30.12 at 11:17 pm

Just in: BMO says there is no housing bubble in Canada, just a housing balloon. That sounds nice. I like balloons.

We can all rest easy now. No bubble. Just a pretty balloon. Garth can retire. Banks never lie.

#43 Concessionman on 01.30.12 at 11:20 pm

Garth, get that picture down! She’s going to sue you again! lol

#44 Guy in GTA on 01.30.12 at 11:21 pm

Ok, folks, here’s how it’s going to play out for the next couple years:

-in the first year post peak, prices fall up to 5% in individual cities. no big deal, right? 5% is a rounding error
-the globe and mail, the big 5 and other establishment players, while raising the word on bubbles today, say the market has corrected, and housing is now a bargain
-some buyers get in, but the 5% down was just a pitstop
-real pain takes place in years 2 and 3 when prices drop 10-15% annually

That’s what happened in US, Ireland, Spain. Australia is one year ahead of us. Oz is down at the 5% mark today.

#45 Otto Doppelganger on 01.30.12 at 11:33 pm

Need we remind the blog dogs of Sherry Cooper’s, ahem, prescient call on the death of the loonie in 2001, when it stood at 63 cents of a USD

http://www.canspiracy.8m.com/loonie.htm

“…the (Canadian) currency will not retrace its full loss…”

#46 Mr Buyer on 01.30.12 at 11:37 pm

The bubble has topped. Is there an example in history where a bubble of any kind deflated slowly. Is this purported soft landing as mythic as a unicorn or what. Lets see now, houses are decreasing in value and will continue to do so for many years to come so I should buy one now before they decrease too much…Am I just being stubborn or does that rational seem a little strange even for different bubble drunk Canada…

#47 Smoking Man on 01.30.12 at 11:37 pm

Like you were lying about spelling and syntax? — Garth

LMAO The Bad spelling and syntax Dyslexia is actully true. :)

Do you see how good I am at this art form, I do so naturaly bad that one would naturaly assume it’s a Faux.

Hounest

#48 Canadian Watchdog on 01.30.12 at 11:38 pm

“What change? CMHC is just nearing its allowable $600B loan ceiling and slowing down approvals. — Garth”

I’m afraid the damage is already done as this announcement clearly indicates an imminent hike for a $600 billion limit increase. Without it, they will be bankrupt.

“The Crown corporation would be going to the government looking for an increase in its limit at a time when both Bank of Canada Governor Mark Carney and Finance Minister Jim Flaherty have been casting a wary eye at the housing market.”

Of course, this is the first step in opening a dialog until the real risk numbers start to unfold. There is absolutely no possible way CMHC can backstop a 10-15% correction on its insured portfolio when they only have, wait for it….. $12 billion in equity to cover $541-billion in insured mortgages (it’s actually more). This puts CMHC at a 25+:1 leverage ratio.

What about the banks?

“However, the banks have been seeking insurance on loans with even high downpayments — something not required by law — so they can securitize those bulk lending loans, thereby getting them off their balance sheets and reducing their capital requirements.”

As I noted in the last post, the banks are shorting the market and dumping their holdings ASAP. http://i44.tinypic.com/73h5af.jpg http://i40.tinypic.com/ri66gl.jpg Who would buy non-peforming junk bonds? i) any international sucker who is willing to pay for it. ii) The Federal Reserve Bank of New York.

You see, once the banks securitize and illegally transfer the titles of your mortgages into a mortgage backed security (regardless if you have title insurance), they then send it across the border (where no OSFI rules apply) to their US branch and either i) sell them on the international market, or if that fails, ii) engage in repo agreements with the NY Fed as primary dealers. http://www.newyorkfed.org/markets/pridealers_current.html

So like Goldman Sachs and the boys, they dump their bad debt (junk), clear their books of impaired loans and then insure themselves with Credit Default Swaps (CDS) so they can profit when the market implodes.

And that’s how Canadian banks remain the safest in the world…

#49 Phil on 01.30.12 at 11:40 pm

Unless it happens in the spring/summer it wont happen until at least another year. Too little action in the fall/winter. So if you are expecting more market silliness coming up that means nothing will happen until 2013.

#50 Uh Oh Canada on 01.30.12 at 11:43 pm

Wow! Garth is now on twitter. This blog is evolving fast!

#51 Ralph Cramdown on 01.30.12 at 11:45 pm

This is the biggest new stinkbomb of late:
http://business.financialpost.com/2012/01/30/cmhc-backing-fewer-loans/

“CMHC has recently received an unexpected level of requests for large amounts of CMHC portfolio insurance.” said Charles Sauriol, a spokesman for the Crown corporation

“On the surface, insuring conventional loans may not appear as risky as traditional mortgage default insurance because it comes with more equity. The banks have been demanding ultra low fees on the conventional mortgages, arguing the equity position makes them a lower risk. However, lenders are skimming their portfolio to load up mortgages that are 70% to 80% debt to equity and may also have other problems, said a source.”

#52 Mr Buyer on 01.30.12 at 11:46 pm

It will be interesting to see how the population will be motivated to spennd huge sums of money on a house that will decrease in value. Would you spend huge sums of money on something that is going to decrease in value year in year out for who knows how many years, maybe even decades (yes decades, if people can supose Japanese style interest rates then they better suppose Japanese style bubble fallout as well). I am guessing the government will have to resort to a new tax on renters or some other nonsense. Sociatolism (where capitolists can reap the profits while passing the risks and losses on the the masses). After all the masses can handle it (the cannot handle providing their own services to one another, only profiteering enteties can do that properly).

#53 Mr Buyer on 01.30.12 at 11:49 pm

God I wish the spell check was working. Why can I not see these errors BEFORE I click on the submit button. Just ignore any further posts from me until I finally learn how to spell. POOP

#54 Boombust on 01.30.12 at 11:53 pm

Sherry Cooper.

Spare me.

#55 Aussie Roy on 01.30.12 at 11:55 pm

Aussie Update

Confusion, apprehension, maybe even optimism. There are plenty of reasons for punters to greet the start of the 2012 property market with a mix of emotions.

Especially when it comes on the heels of a year like 2011, which proved to be one of the weakest for Melbourne’s real estate sector in more than a decade.

http://theage.domain.com.au/where-to-from-here-who-knows-20120128-1qn6h.html

Financial adviser and breakfast TV presenter David Koch stands firmly behind his assessment that the Sunshine and Gold coasts are “catastrophes” and says investors should not trust the views of local estate agents and journalists.

http://www.propertyobserver.com.au/residential/kochie-sets-his-sights-on-estate-agents-and-journalists-in-queensland-property-catastrophe-stoush/2012013053183

In a move that will probably take the markets a little by surprise, Fitch has just announced it’s placing the big four Aussie Banks on negative ratings watch owing to funding pressures and commodity exposure.

http://www.macrobusiness.com.au/2012/01/fitch-dumps-major-banks-onto-negative-watch/

Why jobs could be going, going, gone

http://www.smh.com.au/business/why-jobs-could-be-going-going-gone-20120128-1qn39.html

Shanghai New Home Prices Tumble 41% In Past Week

http://www.zerohedge.com/news/shanghai-new-home-prices-tumble-41-past-week

Conversations: Satyajit Das

Derivatives expert and global risk analyst Satyajit Das isn’t afraid to speak his mind about the messy world of finance.

http://www.abc.net.au/local/stories/2012/01/30/3418519.htm?site=conversations%20http://

#56 longterm on 01.30.12 at 11:57 pm

#26 In Calgary, I doubt any property in Cowtown is profitable. Show me a property with a yield north of 5% and I’ll buy you a beer in March when I’m back from Mexico.

My last positive Calgary investment was a Bowness duplex in 2001. At 200k it was hardly a stellar investment at $750 a side back then before the boom. Now it rents for $1100 and $950 per side with a tiny mortgage. I’ve seen the City assess it up to $440k in 2007 and now down to $360k. At that sort of sale price the raw yield [excluding costs] would be $24,600 annual rent / $360,000= 6.83%. I’d never buy this place at that price and yield [my yield is of course 12.3% before taking out property tax, insurance and maintenance] as it is way too low and way too illiquid with too much hassle and with no capital gain upside at this point to compensate

Calgary is a one way bet down at this point and really in yield terms has been since the early 2000s when rent price growth slowed and prices too off. If you think a condo at $448k in Calgary is a good investment then I have a couple of three bed townhouses I bought in Marlborough in 199 for $106k and $108k to sell you for half a million.

#57 Chris scott on 01.31.12 at 12:00 am

I hope some of you blog-dogs’ll move some if the action to @garthturner on Twitter.

Btw firsters, your psychic powers are useless now since Garth’s blog auto-tweets whenever he posts a new article.

#58 Mr Buyer on 01.31.12 at 12:01 am

The Bubble has topped. I just recieved and email from this nice fellow I do not know inviting me to make around 20% off this huge bank account some place in Africa. All I have to do is send him my banking info and he will transfer the funds to me directly. I forgot to ask him how soft the Canadian Bubble deflation landing will be. I’ll ask him how much I should pay for a house that will decrease in value for many years to come. Buy now before too many people can afford to buy it…

#59 dd on 01.31.12 at 12:04 am

Oil in 2009 was $56 and today it’s a hundred. So much for that theory

True housing is still going down but the recovery has been great on the job front. Lots of people got their jobs back. There are more jobs in the oil patch now compared to 2007.

#60 45north on 01.31.12 at 12:05 am

And looking all the world like a woman with a $3 million house still for sale in Toronto, BMO economist Sherry Cooper tried valiantly to tank this talk of real estate danger.

the more she says the worse off she is

we’re going to know soon enough

according to guava.ca, from January to March sales double from 4000 to 8000.

my sisters and I sold the family home in Toronto three years ago. I’m glad to be out.

#61 stage1dave on 01.31.12 at 12:08 am

Can’t remember where I read this, but it’s been said that if you laid all the economists in the world end to end, they would still be pointing the wrong way…

Trying to square out rational numbers with irrational people is a formula for failure…period. Human beings have never acted rationally, & the recent housing orgy is yet another sign of our collective social idiocy.

Hey, I was gonna pay the cable bill tonite, but my car lost oil pressure on the Whitemud, so I nursed it to the shop & walked home. Ooops, so much for economics; guess I’ll pay them tomorrow. After I plate the Suburban…maybe I won’t have the money to pay the cable after taking care of the insurance…hmmm…

Gee, change a few zeros & extend some timelines & maybe I could be “Greece” with a few more days like this!

“stuff didn’t work out like I thought it would ’cause other stuff happened…I didn’t have control over the other stuff”

But at least I can put the car on Kijiji! Can’t do that with countries…

#62 Shameless on 01.31.12 at 12:08 am

I think the only thing saving housing is people are so conflicted about investing their money because the markets have been so unstable that the only tangable assest they feel secure about it homes. In reality, they will be sucker punched when the reality of those homes comes true and times change. Why don’t people see it.

#63 Bubble Shooter on 01.31.12 at 12:09 am

Garth,
I love this blog. I’ve been reading it for a while and it has put into words my exact feelings about RE in Canada.
Keep it up.
:)

#64 Peter on 01.31.12 at 12:11 am

Does Turnernation realize we don’t read any of his comments except his firssssst one???well no probably not.poor guy.

#65 Canadian Watchdog on 01.31.12 at 12:26 am

#59 dd

Actually stats show oil & mining jobs barely increased since 2008 while most of the newly created jobs were in the government sector funded by Canada Action Plan (taxpayer money). It’s just another illusion of a recovery.

Oil/Mining Employment http://i43.tinypic.com/24g7xtx.png
Healthcare Employment http://i42.tinypic.com/fxz0cm.png

#66 Mr Buyer on 01.31.12 at 12:27 am

The Bubble has topped…
Tammy: Is it going to hurt?
Bill:No not at all, just close your eyes. Prime Minister Reaper, Mark Carnage and all their friends at the bank and on TV say it will not turn out to be the largest economic disaster in Canadian history and we have become rich listening to them up to now so how can we lose?
Tammy:But why will people buy our new house with a whale of a zero down .0002% 10 year mortgage if they know it is going to be worth less next year and for years to come?
Bill:How do I know? Maybe they will keep asking their friends on TV to tell everyone to buy now befroe everyone can afford to buy it…
And they landed softly ever after
Tell me another bedtime story….

#67 West Coast Woman on 01.31.12 at 12:32 am

Perhaps I’m just not “with it”, but I have never believed that purchasing a condo is a good investment. Virtually every person I’ve known that purchased a condo to live in has been faced with expenses that are far greater than I’ve ever experienced owning houses. In addition to the mortgage and taxes, condo fees, assessments and special assessments make the costs of owning a condo much greater than owning and maintaining a SFH.

So, Garth, here’s my question – why are condos considered “affordable housing”? by various levels of government when they know that people who purchase them are really signing up for a lifetime of ever rising costs?

#68 Mr Buyer on 01.31.12 at 12:43 am

The Bubble has topped…
Tammy:Bill why are there poor people
Bill:I don’t know. Maybe they are just to stupid to shave take a shower eat a breath mint and go down to the bank and get a mortgage on a house and sell it like the rest of us rich people.
Tammy:Don’t you think we should give them some money or something.
Bill:Are you serious? I had to cash in all the empties just to scratch together enough cash for a dozen eggs for breakfast. Handouts for the poor, give me a break. Besides handouts are just for guaranteeing bank loans and thank good for that. Now eat upu or we will be late for our appointment at the bank for another home equity loan so we can eat tonight.
Tammy:Aren’t we upside down already?
Bill:Yeah but the new program by the government guarantees 400 year 0.0001% home negative equity loans….
Buy now before everyone can afford to.
And they landed softly ever after

#69 michael smith on 01.31.12 at 12:46 am

this blog has been talking about a correction for couple of years, and it hasn’t happened. and I dont think its going to.

there are a couple of obvious things about the Canadian Real Estate market that are unique and not mentioned enough here.

1. Canada is an attractive country for foreigners, because of its liberal policies on religion, etc.

2. Many of these foreigners come in with boat loads of $$$ – I think Garth calls them ‘horny asians’ which is quite racist and offensive – but whatever.

3. Canadian real estate markets will remain at these levels and much higher in the years to come because of them. Sure there may be a 10% correction in Regina or some smaller city in BC – but Vancouver and Toronto will remain high for many years – thanks to the continual influx of ‘horny asians’.

Asia is a place, not a race. And you’re wrong. — Garth

#70 Ronaldo on 01.31.12 at 12:48 am

#10 Smoking Man – “Now you know why the rich send their kids to private schools, so they can learn arrogance.”

A very wise young man, a high school dropout, once said to me: “You can have all the paper you want on your wall, but if you don’t have the tobacco to put in it, it ain’t worth nuttin’. ”

Same goes for Sherry.

#71 Rantanplan007 on 01.31.12 at 12:49 am

Garth, please say something about Montreal. I think Montreal is worst than many places, including Edmonton and Calgary. The economy sucks there, taxes are high, and affordability is very low.

You should have said:

“It’s not just poor deluded Calgary. Add in Edmonton, Victoria, Brampton, Kelowna, London, Montreal, Laval, Longueuil and now Vancouver.”

#72 dd on 01.31.12 at 12:52 am

#65 Canadian Watchdog,

Well, my “stats” are from the hiring managers and business owners in Fort Mac and in Calgary. I like to rely on first hand information.

#73 Corban on 01.31.12 at 12:52 am

Calgary homes suck period!

People are piling into the McMansions in the new developments. Try having a conversation with someone living in one of these particle board dream homes without turning to the inevitable design mistakes the builders made throwing these things up with so much (un)skilled labour. My favourite is a co-worker who bought a new townhouse in panorama. The cold water pipes froze this, his first, winter so the builder suggested people run space heaters in the garage to keep them from freezing.

My front walkway has sunk 5 inches and separated from the front steps (which are now seemingly floating in the air), and god knows I’ve cracked a shin or two trying to get into the house drunk. Thank the flying spaghetti monster we’re renting!

#74 Cowpoke on 01.31.12 at 12:54 am

Way to many fingers in our drawers dudes!

Can somebody check the facts on CMHC backing development outside this countries borders?

This article is a good read “Banking Wasn’t Meant to Be Like This” and the banks’ privilege of credit creation. http://michael-hudson.com/2012/01/banking-wasnt-meant-to-be-like-this/.

WTF is wrong with you “clowns” in Ottawa. Canadians cannot support the weight of this world you ‘fn’ idiots.

#75 Expat on 01.31.12 at 12:56 am

#10 Smoking Man

Dude, good one on private schools teaching arrogance! I had to laugh when I recalled being out with the muckety mucks at a former company, all private school Brits. If a newcomer Brit showed up they circled each other like dogs sniffing asses until they worked out who had the higher class accent and went to the “better” school. Of course all us colonists were riff-raff. Gotta hand it to you, they are some gems in those badly spelled drunken rambles.

#76 Sherry Cooper on 01.31.12 at 12:57 am

Garth,
I resent your misusing the facts (don’t you remember a lawsuit…). I have my facts straight–houses are still selling, there have been a few minor adjustments, but this simply shows the underlying strengths of market demand are becoming reinforced. When buyers realize what a great time it is in Canadian history (what part of “record low interest rates” do you not get?) it will encourage reluctant buyers to buy what they need. My house is besides the point and does not factor in to my professional, sound judgement (but, while we’re on the topic, are you interested? I have a few offers on the table so you might want to hurry:)

#77 Fifty Percent Correction Predictor on 01.31.12 at 1:01 am

Pre-construction condos in GTA are marketing for $500-600/sf now. Two to three years ago, it was $400/sf. Five years ago, it was less than $300/sf.

So what’s wrong with a 50% correction prediction? Nothing. The price just corrects back to pre-2008 level. This is so normal. In the stock world, it happens all the time. As a matter of fact, S&P 500 has corrected back to 10 years ago level.

#78 betamax on 01.31.12 at 1:01 am

Sherry Cooper: “more like a balloon than a bubble. While bubbles always burst, a balloon often deflates slowly in the absence of a ‘pin’.”

Where have I heard that before? Oh yah, from David Lereah in 2005:

DAVID LEREAH: “Balloons don’t burst. You can put air in a balloon and it can expand or you can deflate a balloon, where air comes out….But now air can come out of the balloon rather than the balloon popping.”

http://www.pbs.org/newshour/bb/business/july-dec05/housing_11-29.html

We all know how well that worked out.

#79 Mr Buyer on 01.31.12 at 1:02 am

The Bubble has topped…(repetion works David, repetition works David)
Tammy:Bill it is still a dissaster in the States after their bubble burst. Why do you think it will be different here.
Bill:Don’t worry Tammy it is different here. The States had too many whiny arses getting on TV blabbing about the so called “TRUE” state of affairs. Prime Minister Reaper has his friends at the Bank in Real Estate and on TV on a very tight leash. It is way easier to co-opt the national dialoge here than down south. They can even cover their arses by publishing one or two softpedalling bubble danger stories for every hundred real estate sunshine stories. After all smart people know everyone is stupid and you have to repeat things fifty times before it registers.

#80 Mr Buyer on 01.31.12 at 1:03 am

PS. Buy now before everyone can afford to

#81 betamax on 01.31.12 at 1:05 am

#21 DonDWest: “it will be a rather slow decline until houses come back down to Earth….a very sticky and slow decline as people stubbornly peg their home prices a fraction of a percentage downward year after year.”

I heard this fallacy often in the US, before the crash. But prices are set by houses that actually sell, not by those that don’t.

#82 Mr Buyer on 01.31.12 at 1:11 am

The Bubble Has Topped
What this country needs is more entrepreneurs. I do not know what everybody’s problem is. In the era of Sociatalism you can crash and burn and walk away rich cause the masses cover the losses (they can handle it, but they cannot handle providing their own services, only profiteering entities can)…
Buy now before everyone can afford to…
And they landed softly ever after

#83 Fifty Percent Correction Predictor on 01.31.12 at 1:14 am

Fed Members Laughed As Housing Bubble Grew

http://www.cnbc.com/id/46194541

#84 Alberta Ed on 01.31.12 at 1:21 am

“A dramatic correction is unlikely… the national housing market is more like a balloon than a bubble.” Ah,yes… when I read that, my ultra-sensitive global temperature and methane (a.k.a. BS) detector took a sudden leap upwards. When a balloon pops, it is louder than a bubble. Here in spring-like Canmore, FOR SALE signs are sprouting like April mushrooms.

#85 Joseph R on 01.31.12 at 1:25 am

http://www.theglobeandmail.com/report-on-business/low-interest-rates-may-shield-housing-market-from-bubble/article2320221/?utm_medium=Feeds%3A%20RSS%2FAtom&utm_source=Home&utm_content=2320221

“Low interest rates may shield housing market from bubble”

War is Peace!
Freedom is Slavery!
Ignorance is Strength!
Low Interests shields from Bubbles!

#86 Zamphir on 01.31.12 at 1:27 am

Garth, have you seen this? I doubt there is a bubble in the Fraser Valley:

http://abbotsford.en.craigslist.ca/apa/2821618137.html

#87 P & T S on 01.31.12 at 1:30 am

- Like you were lying about spelling and syntax? — Garth –

Funny, I always thought syntax was a supplementary levy on “Naughty People”! Maybe Garth’s Amazons qualify??!

Things are looking less than happy in the US –

http://www.xdtalk.com/forums/shtf-survival-disaster-preparedness/181412-2012-violent-welfare-riots-looting-spread-across-america-gun-confiscation-leaves-m.html

and

http://www.commodityonline.com/news/revolution-food-riots-in-america-by-2012-13062-3-1.html

and

http://www.sott.net/articles/show/233583-US-Tax-the-super-rich-or-riots-will-rage-in-2012

So maybe the time to think of “relocation”? If “The Authorities” decide to close airports, and overland transport links (thanks TSA), the only way out might be on foot or by water. Cue “World Crisis” and the GPS Network is closed down to Civilian access “to protect everyone from Terrorist action”.

Without this “Easy Push-Button Navigation” system that everyone uses (and has been carefully made dependent on) well, the marine “border” might as well be closed too, and the US Authorities know this full well. It IS possible to navigate using traditional techniques, but you’d (probably NOT) be surprised just how many people do not know what a Sextant looks like, let alone how to use one.

Not looking good for your Southern Neighbours right now . . . . . .

#88 molsson on 01.31.12 at 1:32 am

Hi Garth,

Took your advice and sold my house close to Main Street in Vancouver for $980,000. Bought it in 2005 for $370,000. Taking the money and renting.

#89 Mr Buyer on 01.31.12 at 1:34 am

The Bubble has Topped
It has finally come to this. How anyone can say anything with a straight face about our economy (and economic system), our financial institutions and our government is beyond belief. We are suffering from some kind of mass hysteria (myself included). We are through the looking glass. Truely. Why people have not come to the realization that they (yes the beer swilling popcorn eating watchers of hockey) can hardly do a worse job of servicing the needs of a population a small as Canada’s is beyond me. Sociatalism, I mean really, how did the masses swallow that one?
Buy now before everyone can afford to…
And they landed softly ever after…

#90 Humpty Dumpty on 01.31.12 at 1:38 am

G….This even has the potential to cause a second financial crisis that would require significant financial intervention. If you have time to spare, listen to this interview. If you don’t have time to spare, listen to it anyway.

http://www.jsmineset.com/2012/01/30/the-impending-undeclared-default-of-5-major-us-banks/

#91 Mr Buyer on 01.31.12 at 1:41 am

The Bubble has Topped
There was something about a truth passing through 3 stages. Lets check this truth out.. There will be a soft landing…hmm
Stage 1. Violent Opposition (been there, done that)
Stage 2. Ridicule (doing that now)
Stage 3.Self Evident (thus employing Ocham’s electric toothbrush maybe everthing is going to be okay)
Buy now before everyone can afford to…
And they landed softly ever after…

#92 Jane24 on 01.31.12 at 1:41 am

Garth

The only thing I disagree with is the speed of the expected decline. 15 years ago the market leaked slowly as we had no web/facebook/twitter to spread the word. Today communications are so instant, that everything happens so much faster and the price decline of RE in Canada will be no exception to this new norm.

It will be a fast spin down, not a slow one.

Cheers

#93 Ozy - be prepared to sell all canadian bonds funds quickly if needed on 01.31.12 at 1:42 am

Be prepared to sell all canadian bonds funds quickly if needed, if you checked the allocations, they massively go to Housing Corp (CHMC) – and once CHMC gets failing, all smart $ will bail out. Keep an eye open and do not hesitate to move to cash on a mouse’s click.

http://business.financialpost.com/2012/01/30/cmhc-backing-fewer-loans/

#94 dave in calgary on 01.31.12 at 1:47 am

Hi Garth,

As a counter point, I’m 34, a mechanical engineer, living in Calgary, and my Mom, in 2007 pointed me to your blog and told me not to buy. My g/f and I make $165K (+OT and benefits) per year, and rent a 1200 sq.ft house adjacent to down-town (Sunnyside) for $1500/month (owners asking 575,000 to buy), and we pocket say $50,000 a year (after the vacation to Hawaii).

I have to say thanks (even though you told me I didn’t have enough money for you to bother with being our f/a)

Regardless. Thanks. Living the dream in Calgary. You’ve got a lot to do with it!

Dave

#95 Zoronqueen on 01.31.12 at 1:53 am

Planning to sell this year….

Is this optomistic or realistic?
http://edmontonrealestateblog.com/files/2012/01/Year-In-Review-and-2012-Forecast1.pdf

#96 Nostradamus Le Mad Vlad on 01.31.12 at 1:56 am

-
“Did you notice? Do these people have no morals?” — We don’t need no stinkin’ morals! We’re a bunch of renegade yahooters anyway, rejects!

“Why here’s Maclean’s magazine, panting. And here’s Sherry Cooper, CTV, and the Globe, even the pumpsters (dumpsters) at Global Bloomberg reporting . . .” — All sighing, panting and heavy breathing plus winded for having held their collective breath for too long. Got a pin? Prick that balloon! They’re m$m, not equal to a piece of used toilet paper.

For further info., see #194 DonDWest’s excellent post from the prior column.
*
#190 The Dividend Yield Investor on 01.30.12 at 9:06 pm — “The real number should be 1.7% and that spells my friend “recession”.”

Combined with the link posted in #188 re: Europe heading into a depression, it is fairly obvious the west is sinking.

#194 DonDWest on 01.30.12 at 10:01 pm — Great and accurate post.

#196 The Thing in the Basement on 01.30.12 at 10:24 pm — “As you noted, astrologers may do better…..” — Certainly can’t do any worse than The Incredible Bulks running the show now!

“I think you meant to visit GreaterDrool.ca. It’s down the hall. — Garth” — Isn’t GreaterDrool.ca for the bloodthirsty, bloodsucking European vampires, of which I am one? That’s whut I’ve been reading!
*
P&G layoffs; 2008 – 2012 Same chart, different years; N. Ferguson and P. Krugman Who is right> Jawbusting Chart (EU); Japan 4% up; Fear “. . . on fiscal policy and the looming 2013 fiscal contraction.”; 4:51 clip BoA takes it on the chin; 1:59 clip It took Gordo one announcement to introduce the HST without any public consultation. Now it’s going to take 18 months, more or less, to remove it. Politicos and banxters don’t lie, do they? Bonus Time! Hold out yer grubby lil’ paws; Tuition rises, attendance falls.

Frugality from RBC; Cdn. banks 1, Oz banks 0; Rome burning; Brussels Sprouts Strike; Holy Canneloni; Portugal restructured and reshaped; Chinese Landing; 4:28 clip Saudi oil reserves overstated, but 9:08 clip Brit. industry blowing the whistle on peak oil; ChIndia not cutting back on Iran oil imports; Gold ETFs heading up.
*
Two Strategic Islands “If this turns out to be true, it means the US is getting ready to seize control of both the Straight of Hormuz and the Gulf of Aden, to hold the rest of the world hostage with a threat to cut off the flow of Mideast oil unless the rest of the world goes along with the US agenda, which is really the Israeli agenda.” wrh.com; 3:45 clip China hiding 3,000 nukes underground; Illinois nuke reactor shutdown, same as Iran has; Stretched Too Thin, or why all empires die; David Cameron Got Me Under Pressure; Morality Pill Take two and don’t call me in the evening; Math and dates of being nuked 12K years ago; Cigarettes Someone is funding the protestors in Syria; 0:17 clip We’re moving in space and no one told us! Nine min. clip 1958 speech telling of insider’s plans to destroy US.

#97 Andy on 01.31.12 at 2:22 am

A recent email to Mr. Flaherty, feel free to do the same.

http://www.jimflahertymp.ca/contact_us.html#contactform

Dear Mr. Flaherty,

This comment is with respect to the amount of insurance CMHC is permitted to issue, currently capped at $600,000,000. As you know the banking sector relies on this insurance to offload banking risk transferring that risk in effect to taxpayers. Banks profit, taxpayers are on the hook for potential losses.

Please do not raise the current cap of $600,000,000. We will already suffer immense losses if, as predicted by The Economist, Macleans, and others, we experience a large decline in home prices.

Your legacy, and that of others in the PC government should be of fiscal prudence for which the PC party stands, not of unlimited risk taking in the face of significant economic headwinds.

If you could kindly respond with your intentions it will help me confirm whether to vote for the PCs or for the Wildrose Party in our upcoming provincial elections.

Yours sincerely,

Andy E

#98 Peter Goesinya on 01.31.12 at 2:29 am

Alberta’s in trouble.
I’m a member on an Alberta hunting forum, look at this thread one member started….

It’s title:
So anyone else get the heart stopping power bill in the mail today?

http://www.outdoorsmenforum.ca/showthread.php?t=120120

#99 Karis in kooky YVR on 01.31.12 at 2:45 am

If you mention that the market will ever go down in Vancouver people go nuts. My friend sent me this short video, made me laugh, sums up the city: http://www.youtube.com/watch?v=1-4nJsmdZQw

Why would someone pay a million dollars to buy a house in a gray city, with moss growing on their roof. Why not sell up and move to Panama. Lots of greater fools in YVR.

#100 The Dividend Yield Investor on 01.31.12 at 2:54 am

It appears that Dividend man is going to have to spend a night in Canada; by the morning he will turned Sherry’s frown upside down and into a smile.

Whether her professional ethics improves, that is to be seen – my mission will be complete.

Dividend Man
Studdville USA

#101 chubster on 01.31.12 at 2:56 am

so depressing. i’m giving up on ron paul – he’s just too folksy nice. with all that material, he should be whipping the anti-establishment, anti-crony outrage into a frenzied lather. the cause needs a lady thatcher. can only hope one eventually shows before it’s too late.

#102 Freedom 55 on 01.31.12 at 3:21 am

#46 The bubble has topped. Is there an example in history where a bubble of any kind deflated slowly.

Ya… the kids air inflated tobogan tubes just slowly melt down to wrinkled plastic in the garage after you open the valve stem.

#103 Student on 01.31.12 at 3:50 am

My business prof (who used to work in government finance dept) says that in contrast to what the government tells us, our economy has actually been contracting the last few years. He is a bright guy and not a doomer and says that we will have many tough years ahead of us.

#104 T.O. Bubble Boy on 01.31.12 at 4:06 am

Sherry = a type of booze
Cooper = a person who makes barrels

Sherry Cooper = someone who’s economic predictions will lead you to drink booze and possibly wear a barrel for clothes

(kind of like #1 on this odd list: http://www.infobarrel.com/101_Things_to_do_with_a_Barrel)

#105 Bacchus on 01.31.12 at 4:31 am

“Almost like investigative reporters snuck into the Bunker and lifted tomorrow’s pathetic blog post from the moistened, sensuous fingers of my Amazonian typist as we slept on the tiles, sated, in a Bacchian swirl of oiled limbs and clothing fragments. Do these people have no morals?”

Hah, you cracked me up with that. Hilarious.

#106 NormallySilentJeff on 01.31.12 at 4:55 am

I can’t resist describing (with artistic license of course) my interpretation of the “Housing Balloon”. Imagine a balloon inside a sphere that has spikes pointed from all directions toward a small space in the middle. The balloon is in the middle. There is a high tech valve on the balloon that will attempt to release air and keep a fine balance between helium and air inside the balloon so that it remains stationary in the middle and does not touch a spike. Stephen Harper is at the controls.

Can I get an estimate from a betting person what the chances are that he will not mess it up? Oh, and of course the construction of the valve and control system was outsourced to a Foxconn factory in China, where the designer is perched on a ledge threatening to jump….

What could go wrong?

#107 Square Ninja on 01.31.12 at 5:05 am

Garth… you always make fun of Sherry Cooper… but, I recall that she initially was the only one on your side in the first Post interview. But by the second interview (after the dead-cat bounce of 2009), she was back on The Lamb’s side.

#108 Tony on 01.31.12 at 5:11 am

They’ll likely drop about 50 grand maybe more on the sale of their condo. If they don’t price it thirty percent below market value it could languish on mls for several years or never sell. Many townhouses and apartments dropped over 50 percent in Edmonton from the peak. It hasn’t been as bad in Calgary but when they see Vancouver and Victoria likely drop 60-plus percent over the next 5 to 7 years then Calgary will see the big plunge along with the plunge in oil and commodity prices.

#109 nickolaos vlittas on 01.31.12 at 5:45 am

Sherry Cooper is the Canadian equivalent of Joan Rivers.

I saw her on BNN and the way her jewellery clanged around her mic made her come across like the Crypt Keeper in a pant suit.

#110 new-era on 01.31.12 at 6:48 am

First the condo market, then mass panic,

Garth 15% will be way off. It will erode to 2008 prices (where the correction should of began with government intervention) Then will erode the 15% + up to 10% panic rate.

Credit will freeze , followed by years of flatlining and slow decline, approxiately 5% each year.

That is my prediction!!

#111 Onemorething on 01.31.12 at 7:21 am

I just read a recent article which showed that young adults age 17-25 in the EUROZONE are unemployed at a rate of 23.3%. Greece Portugal Spain upwards of 50%.

While I can imagine what this will do for consumer spending, what about fighting to survive!

#112 House on 01.31.12 at 7:23 am

Is Sherry stealing Sal’s material now? The new phrase is a Balloon eh.

#113 Thaya Nadarajah on 01.31.12 at 7:51 am

Hi Garth,
Last week I applied for a Visa card with Royal Bank of Canada and upon final stage the credit specialist informed me that I would not be qualified for the visa and it should be decided by higher authority. I make 100,000 annually and savings around 50,000 I owe 75,000 in line of credit due to stock market crash in 2008. Never had any late payment and has an excellent credit history. Equity in our condominium 125,000. I did question the credit specialist how are these big Banks giving liar loans to the people who are making 10.50 an hour and who are able to buy houses for 700,000 in multiple offers. The credit specialist informed me that RBC has strict credit evaluation policy when it comes to lending. Could you explain to your readers what that means.

That you didn’t promise to buy RBC mutual funds with it. — Garth

#114 T.O. Bubble Boy on 01.31.12 at 8:15 am

Sherry’s 2011 predictions weren’t all that bad (compared to some in the past):
http://www.bmonesbittburns.com/economics/bottomline/20101209/bottomline.pdf

#115 Kip on 01.31.12 at 8:38 am

“Newbie buyers, along with house-heavy Boomers, will wish they’d found this over-sexed site in 2010.”

I’m a Boomer and I could care less about your theory on housing and so what if a couple of DINKs in Calgary are might lose 20K to 30K on a condo. It’s not even enough to buy a new Benz!

The Boomer anthem. Nicely done, dude. — Garth

#116 Victor on 01.31.12 at 8:49 am

Insight: Borrowing spree pushes Canada to edge of debt cliff

ReutersReuters – 7 hours ago

Debt counselor Taylor – the one with the scissors – has heard horror stories about unmanageable mortgage debt.

“I’ve seen people whose mortgage and property tax payments, together, eat up more than 70 percent of their net pay. It should never be more than 35 percent,” he said.

With housing eating up income, borrowers turn to credit cards or home-equity line of credit – the Canadian version of the U.S. refinance game – to pay for food and living expenses.

“They are borrowing from Peter to pay Paul,” Taylor said.

Credit cards are not hard to get. Just ask Michael Dynes, a seasonal concrete worker who found himself with C$140,000 in debt spread across 15 credit cards, plus a mortgage on his home in the resort town of Collingwood, 160 km (100 miles) north of Toronto.

“I always had a decent job, and credit was always easy, a little too easy, to get. And it compounds and compounds until you find you are paying more interest than you’re actually earning,” Dynes, 63, recalls of his debt crisis, which came to a head about seven years ago after he bought a boat, upgraded his house and added furniture.

“I think greed takes over, the want to be like everyone else, to have toys and bells and whistles,” he said. “I’m not a drinking man either, nothing like that. I’m just an average person who got way over their head.”

http://ca.finance.yahoo.com/news/insight-borrowing-spree-pushes-canada-050338838.html

#117 Shane on 01.31.12 at 8:57 am

Garth, so your bascially saying that its going to be another crazy spring 2012 a repeat of last year?? I give up!!!

Shane

Where did I say that? — Garth

#118 bigrider on 01.31.12 at 8:59 am

I’m as bearish as you can get on housing prices moving forward but just wanted to throw a question out there.

Any chance the specialty, high end condo market, like four seasons, trump towers continue an upward price march. I mean there are a lot of wealthy people in T.O looking to downsize homes in Rosedale etc. Any chance that this end of the market holds up?

#119 JC on 01.31.12 at 9:06 am

#69

Those horny Asians will not be your white knights. They are caught in their own nightmare as 3 generations of family savings (their 30% down payments) have in many cases instantly evaporated on mortgages that their current salaries have no hope in hell of servicing.

It’s like mistaking a moving combine for a public urinal. It will be @ least another generation before they “grow a set” and bid up real estate again.

#120 househornyhousewife on 01.31.12 at 9:07 am

Garth,

If I had listened to my mother at that age, I would now be a forty something accounting clerk living in a Mississauga back-split with three children and a 9-5 working husband from my own ethnic background.

The very idea of this lifestyle makes me want to curl up and die (to anyone who is indeed living this lifestyle, please don’t take insult .. it’s just DEFINITELY NOT for me).

Who the hell ever listens to their parents ?!

HHHW

#121 Mr Buyer on 01.31.12 at 9:14 am

What a great time to buy, intrest rates are never going to be this low until they are lowered again to stave of a mass panic. People understand how could it can get outside so they are motivated by mother nature and everyone is starting to realise homes will likely go down in value for decades but the media is softpedelling that to stave off another stampede…
Buy now before everyone can afford to…
And they landed softly ever after….

#122 Mr Buyer on 01.31.12 at 9:33 am

Bubblepedia….
Softpedal…a form of social inoculation in which mass media at the behest of a head of state mentions the obvious but minimizes and dismisses it. A Jan 31st article by a Canadian national magazine minimizing the later to be seen ecoconomic destruction of Canada, one of the few truely rich countries in the world at that time, by means of a horrific collapse of a truely painfully obvious bubble that was elevated to never before seen heights through the complicity of mass media. As scholars later determined western seperatists had managed to gain high office in Canada at the time and set the country on a course towards economic dissaster so as to minimise available resources available to the nation when they the seperatists eventually declared independence. While the western seperatists did indeed depart the Canadian Union with their oil reserves in tact it was done so through agreements with America that became progressively more egregious especially when it became aparent that the now nation state of Alberta was land locked. It has been estimated that the citizens of Alberta ended up realizing a small fraction of the worth of their natural resources and would have been much better off within the Canadian Union.

#123 Arse on 01.31.12 at 9:48 am

Real gross domestic product edged down 0.1% in November, following no growth in October and monthly increases from June to September. Most of the November decline was accounted for by lower output in the energy sector. Decreases were also recorded in wholesale trade, finance and insurance, and construction. Gains were posted in manufacturing, retail trade, accommodation and food services, professional services and real estate agents and brokers.

#124 Mr Buyer on 01.31.12 at 9:51 am

The bubble has topped…
Tammy:What was it the woman said about buying now?
Bill:She says interest rates have never been this low and we should take advantage of them. I think that makes sense.
Tammy:I don’t know Bill. If it is so great why has our house been on the market for over 6 months now and we have gotten 3 negative home equity loans now.
Bill:Yes but she said there are more grim numbers coming out next week that Prime minister Reaper and Mark Carnge want to softpedal dismiss and sweep under the table so they are going to allow everyone to refinance again at half the interest rate with up to 1000 years to repay to stave off mass panic once again.
Tammy:Isn’t the interest rate .000000000001% now.
Bill:I know, isn’t it great!!!
Tammy:Maybe it doesn’t matter when our house sells after all. To hell with lowering our price and lets pick up another place while were at it.
Buy now before everyone can afford to…
And they landed softly ever after….

#125 Pr on 01.31.12 at 9:56 am

…a woman with a $3 million house still for sale in Toronto, BMO economist Sherry Cooper..

Ahhh! That is why BMO is comming with this crap about a staple and strong Canadian real estate for the futur. 3 MILLIONS melting to 1 millions is not fun, not fun at all.

#126 disciple on 01.31.12 at 9:56 am

Sherry Cooper has the same speech pattern as Bonnie Brooks. Slowed down speech at the end of sentences, fluctuating pitch on stretched-out vowels, nasally “n’s”, etc… It makes me think that either high-level women like them go to the same school or are part of the same social hierarchy, or ethno-linguistic group.

But I could be wrong…

#127 Mr Buyer on 01.31.12 at 10:02 am

The Bubble has Topped…
Its a great time to buy. With interest rates as low as they are and houses spiralling down in value everyone is going to be able to afford one. You really should put an offer in now without an inspection. The price will likely drop over the next few days and you will have to get all the paperwork done over again, not to mention more people will likely put offers in at the new lower price.
Buy now before everyone can afford to…
And they landed softly ever after…

#128 Work & Tumbel on 01.31.12 at 10:04 am

#10 Smoking Man

A wise man once told me a private school education for your children an investment .
I did not go to such a privileged school, but I have benefited from my childrens education It was the best investment I have made.
As for arrogance children learn that from there parents not school.

#129 Devil's Advocate on 01.31.12 at 10:14 am

#117bigrider on 01.31.12 at 8:59 am
I’m as bearish as you can get on housing prices moving forward but just wanted to throw a question out there.

Any chance the specialty, high end condo market, like four seasons, trump towers continue an upward price march. I mean there are a lot of wealthy people in T.O looking to downsize homes in Rosedale etc. Any chance that this end of the market holds up?

BINGO!!! Give that man a gold star!

I see that happening right now here in Kelowna bigrider. Babyboomer waterfront homeowners are selling to downsize just so. They are not so affraid of those lofty loft prices having seen huge easy gains in their waterfront home. They want a nice place they can lock and leave to travel the world with much of the remaining proceeds of their sale.

Of course the high end housing market here is a tough sell with 371 $1,000,000 plus listings and just 87 sales last year. Kick it up a notch to $2,000,000 plus, which would be a more representative floor price for the range of waterfront homes, and there are currently 132 listings where just 17 sold last year.

No gold star. The Trump project is suffering through a series of buyer defections, unsold units and legal issues as sober second thought prevails on the part of purchasers. — Garth

#130 GTA Girl on 01.31.12 at 10:18 am

The OSFI probably already know of the investor clusters that Condo Developers have formed. Jumping from project to project, expanding the pot. It’s become a ponzi scheme. It will collapse.

It will be the condo market that deservedly will collapse to 50% haircuts, with untouchable projects/buildings. Poorly built, mismanaged funding. With Tarion overworked and pressured, and small /big Developers bankrupting their companies to escape the mess.

Think this won’t happen? Look back to late 80’s , it did, and will.

Today’s Globe & Mail Business section with headline “Watchdog targets condo speculators, risky lending”, just sent a chill thru the industry.

#131 Jamaican_Gal on 01.31.12 at 10:27 am

The sweaty thing in the night.

Insight: Borrowing spree pushes Canada to edge of debt cliff – Reuters

["I tell them this card is the reason they are here. This card is the reason they haven't been able to sleep."

The growth of household debt in Canada to levels approaching those seen in the United States before the 2008-2009 crash seems to be keeping a lot of people awake - from central bankers to economists, lenders, real estate agents and the indebted consumers.]

http://ca.finance.yahoo.com/news/insight-borrowing-spree-pushes-canada-050338838.html

#132 fancy_pants on 01.31.12 at 10:31 am

#52 Mr Buyer on 01.30.12 at 11:46 pm
Would you spend huge sums of money on something that is going to decrease in value year in year out for who knows how many years

Investments – no, consumables – yes. Not all RE can be considered an investment, it can also be considered a consumable to some degree.

People buy fancy cars only to see them decline in value. Why would they buy such fancy cars? Because they receive the pleasure and satisfaction of driving a fancy car during the consumption of the item.

Same can be applied to RE to some degree. We have a nice average home with no mortgage yet we might sell and buy a fancier home even if RE prices are falling should we wish to “consume” the pleasures of a nicer home. RE prices are relative in that I sell mine for less buy one for less – same difference give or take.

You can’t always view RE as an investment; especially principal residences. The problem lies in most people buy it with the investment mentality “I can sell it for more down the road”. If people buy RE as an affordable place to hang their hat then we wouldn’t have such skewed prices.

The Cons are largely responsible for not protecting people from themselves. 40 yr mortgages and give away rates fueled the fire. For the most part people indulge when given the opportunity – is this not taught in politics 101? Carney and Flaherty are society’s parents who allowed an open cookie jar. Evidence speaks for itself how that has turned out. Good job dads. Best advice yet Garth – don’t listen to dad.

#133 Sky on 01.31.12 at 10:34 am

Mr Buyer – the bubble has topped…the bubble has topped…the bubble has topped….

We get it already ! Please….enough.

#134 Mr Buyer on 01.31.12 at 10:42 am

Bubblepedia…
It’s a good time to buy…A phrase used extensively throughout the course of the largest real estate bubble ever seen on the planet earth. Historians have now determined that the frequency of use of the phrase in the privately controlled Canadian mass media of the time increased repeatedly and dramatically after data indicating either the existence and/or end to or of said bubble. Historians have also correlated the increase in frequency of appearance of phrase in the historical record with various unprecedented cuts in interest rates and modifications in lending practices of the time. Some scholars have gone as far as to state that the apparent coordination between heads of state, supposedly independent financial institutions and real estate sales interests suggests the existence of a shadow entity likely siphoning off huge sums of public money for some yet to be apparent end. For reasons stated above present popular culture has adopted the phrase as an instrument of ridicule used when a person has been caught in a bare faced lie. A contemporary listener replys to an outlandish statement with the phrase “It’s a good time to buy.”

#135 SJ on 01.31.12 at 10:43 am

I think this should make a difference:

http://business.financialpost.com/2012/01/30/cmhc-backing-fewer-loans/

#136 fancy_pants on 01.31.12 at 10:43 am

The problem is many wish to start off with the best and not work/earn their way up. The catch 22 is many have successfully done just that with RE.

The the ball starts rolling. “Hey, they made a lot of $ on RE”. Monkey see, monkey do – so others join the frenzy. Soon you end up where we are now – near the end of the song … and when the music stops and those last in will be hurt the most.

Live within your means is a good rule to live by. Tried and true – it works.

#137 Ex-Cowtown on 01.31.12 at 10:43 am

#40 Tim on 01.30.12 at 11:16 pm

You can thank that buffoon Ralph Clown for causing the mess Alberta is in. He basically opened the flood gates to the oil companies with no long term strategy for development, as a result, Albertans sold sold their oil for a song, by giving incredibly cheap lease rates. The massive development during the boom drove up all costs and now the province is in debt. At least Danny Williams had the guts to stand up to the oil companies and hold out for a better deal.
+++++++++++++++++++++++++++++++++++

Only the misinformed are so positive of things.

Oil sands projects cost billions of dollars, with payouts over many many years. They are not at all like oil wells, which instant gratification. An oil sands plant is more like a factory, but instead of building a Ford Taurus or a Chyrsler minivan, the product is oil.

Your Danny Williams example is wrong. Danny was looking for $$ from conventional oil wells. Very different cat from oil sands. The product might be similar, but they are really separate and distinct industries.

#138 Canadian Watchdog on 01.31.12 at 10:51 am

#129 GTA Girl

The government is trying to address self-employed home buyers who they see as the most vulnerable class taking on mortgages they can’t afford. Recent stats show self-employed workers carry more mortgage costs then paid-employees. http://i39.tinypic.com/35lusux.png Of those self-employed, are mainly woman who have been growing at double the rate over men http://www40.statcan.gc.ca/l01/cst01/labor64-eng.htm

Over many years the government and banks have eased income reporting (by absurdly allowing no income reporting) for self-employed workers—this is one of many factors that has driven the housing market.

#72 dd

Oil and mining will continue to flourish however these sectors will not be sufficient to offset Canada’s unemployment output gap.

#139 maxx on 01.31.12 at 10:52 am

#11 Puzni on 01.30.12 at 10:20 pm

Good point.
This is the same mindset we’ve all witnessed over the past 4 years and counting….this delusional and extremely harmful groupthink springs from the false hope that TPTB and Big Finance can “drive” the economy back to health. In the meantime, because of the gargantuan quantities of taxpayer money being shoveled into backing this tragic and internationally concerted mindset, we are forced to contend with “austerity”, such as the prospect of reduced/backed off CPP, OAS and healthcare. Government is propping up this fiscal Frankenstein with our future well-being.
Find your voice Canada and think carefully about future elections!

#140 Ronaldo on 01.31.12 at 10:53 am

#67 West Coast Woman –
“So, Garth, here’s my question – why are condos considered “affordable housing”? by various levels of government when they know that people who purchase them are really signing up for a lifetime of ever rising costs?”

Well my dear, I totally agree with you. My first home at age 23 was brand new condo in North Vancouver which I purchased a bit over two years after I was married. This was November of 1969. Anyway, this is what we could afford. It was our starter home and it cost 2.7 times (my) annual income which was average at the time, about $8000 and cost to own was about .3 of (my) monthly salary. Very affordable.

Part of the reason that condos started became popular was mainly because the government decided to impose rent controls. So developers decided if this is what they were going to do, the heck with building rental apartments. So, they built townhouse condos, townhome condos, and apartment condos and even condomized existing rental apartments. The result being that all the headaches and costs associated with rental units was passed on to the owners. (including leaky condos). No more incentive to build rentals. That simple.

After owning that condo I too decided like many other people that I would not own another one. You have condo boards who are owners and many instances where not enough money is collected in condo fees to cover future expenses like roof repairs, window repairs, etc. The future owners end up picking these costs up. Also, there is always that condo secretary who thinks he/she run the show and that individual (generally a geezer) who elects her/himself the condo cop. Total pains in the butt. Many other problems. So, how condos got to be so famous is beyond me. To me they are just cheap (for the most part) starter homes. That’s my take on it. Hope this helps.

#141 KingBubbles on 01.31.12 at 10:54 am

Benjamin Tal and the good news story in Winnipeg:

http://www.winnipegfreepress.com/business/good-news-for-homes-market-138108703.html?device=mobile

The dry cold here also keeps prices rising forever ;-)

#142 Houman on 01.31.12 at 10:59 am

Hi Garth,
Do you think prices in Toronto will drop by 15% also?
I am talking about north york richmondhill and etc the popular areas?

Thanks

#143 Devil's Advocate on 01.31.12 at 11:01 am

No gold star. The Trump project is suffering through a series of buyer defections, unsold units and legal issues as sober second thought prevails on the part of purchasers. — Garth

You miss my point. And as I pointed out, even here, there are such weaknesses that undermine that “specialty, high end condo market”. So it is not to argue with you that I reply but to point out that there is, all-be-it sputtering, a demonstrated demand by that end of the income spectrum which continues to grow richer while the middle class is eroded toward extinction.

#144 Ian - Ottawa on 01.31.12 at 11:12 am

I’ll add that the cover of Canadian Business for Feb 20,2012 is Titled “CRASH!” I think they copied your blog. Sue them!

#145 Mr Buyer on 01.31.12 at 11:15 am

Bubblepedia
consumables…A catagory Realestate was assigned to when the largest bubble ever to materialise on earth topped. Previous to the topping of the bubble Realestate was in another catagory labelled investment. Digital archeologist recently established the first digital record of said reassignment took place on 01.31.12 on a non-descript blog in response to an even more non-descript comment. While the response was ment to earnestly explain the rational behind purchasing a shelter falling in value it in fact became a watershed moment in financial theory in which all investors fled realestate upon its reclassification thus leading the the most devastating economic catastrophe in all of Canadian history. Hence the term “consumable” in present popular culture is used to describe and well meaning attemp to enlighten that leads to horrific consequences. A good example of modern usage the term would be when one teenager tells a story to another in which one highschool kid tells his friend that asprins really help with hangovers and upon hearing this a classmate eats ten asprins drink a huge amount of his mom’s vodka and pukes all over his father’s computer while looking at porn and wakes to both his parents standing over him. Upon hearing such a story a contemporary listener would respond simply “consumable”.

#146 DonDWest on 01.31.12 at 11:23 am

Uh oh, I just got a mail from CIBC that they’re upping my banking fees by 40% this year. 40% in one year; short notice. Time to bail? What does this all mean? Are our banks truly as safe as people believe?

#147 maxx on 01.31.12 at 11:33 am

#42 East Van on 01.30.12 at 11:17 pm

Remains to be seen whether Canada can avoid being a global laughing stock after bragging ad nauseum and then wagging the fiscal finger at the rest of the world…..

#148 JIM on 01.31.12 at 11:56 am

Garth:
My question: how many SFH are in default here in Canada and are being papered over. ie. They are either not paying and nobody wants to foreclose, or they have ahd their mortgages modified to reduce poayments ie intrest only , or skip a moth a year etc,?

#149 Froggy on 01.31.12 at 11:57 am

Hi Garth,

You are predicting a 15% average decline. Could you extrapolate and make some predictions for the 11 cities covered by the Teranet National Bank index ? This is what most people are interested in and curious about…

cheers,

Froggy

Only eleven? You don’t want to know about Trois Rivieres? — Garth

#150 Froggy on 01.31.12 at 12:28 pm

Haha exactly… Well you could reduce the list from 11 to 1 (Montreal) but Trois-Rivieres, although much more affordable, is out of the question :)

Also, for someone who already have 25K in RRSP that can be put on a downpayment and looking to buy in about 5 years, should he still contribute to the RRSP or rather keep the money in an outside investment and add it to the downpayment ?

Thanks again for all your good work bringing more financial litteracy to Canadians !

Froggy

#151 bill on 01.31.12 at 12:28 pm

sherry I think its frankie on the telephone……

http://www.youtube.com/watch?v=Y1UYclfndBY&feature=related

#152 Ogopogo on 01.31.12 at 12:31 pm

“Almost like investigative reporters snuck into the Bunker and lifted tomorrow’s pathetic blog post from the moistened, sensuous fingers of my Amazonian typist as we slept on the tiles, sated, in a Bacchian swirl of oiled limbs and clothing fragments. Do these people have no morals?”

Oh, Garth, this is gold of the purest Amazonian vein. I come for the $ talk, I stay for the mellifluous prose.

#153 Fady on 01.31.12 at 12:31 pm

In 1929, Joe Kennedy, father of John F. Kennedy and multimillion-dollar investor, famously pulled out all of his earnings from the market after his shoeshine boy gave him a stock tip. Kennedy said if shoeshine boys were giving out stock tips, it was time to pull out of the market because it was at max capacity. Sure enough, the stock market crashed in 1929.
Here we have 70% of ownership by occupiers, significant of speculation in the Condo market. and,
BMO Chief Economist Cooper encouraging more to join the masses of ownership and probably more will and…
Well…. I guess it won’t happen here.

#154 Brad in Van on 01.31.12 at 12:33 pm

This post from Garth, coupled with the inside information The American has been providing for months should not come as a surprise to anyone. He actually has told us this stuff well in advance even from what Mcclean’s and The Economist have given so my gut check is to believe his input. We all have to know er are in a bubble and it has prompted my wife and I to list our house six weeks ago… Still no takers and our realtor assures us it is because of the time of year. She says our house is fairly priced for our neighbourhood. I think we will be lucky to break even when we are done. As for Richmond they are totally screwed. Anyone driven throug it lately? For Sale signs are everywhere and reminds me of Florida back in 05.

#155 Mr Buyer on 01.31.12 at 12:37 pm

Bubblepedia
protecting people from themselves…A phrase that in itself was not directly employed as often as other vernacular associated with participants in the largest real estate bubble on earth. While there have been few correlations with other events found by academics studying this dark period in Canadian history it has been clearly associated with a larger body of rational that was used to place the responsibility for the real estate bubble squarely and solely upon the thought to be contemptible masses of the time. Anthropologists have pointed out that historical documents outline that the supporters of the government responsible for requisite changes in established laws and financial practices leading to the greatest real estate bubble in history see no causality between the actions of their political party and the resulting economic disaster. Rather said pundits attribute the horrendous events that transpired to greedy individual members of the society and decry the historical perspective of desperate people in a failing economy stripped of a manufacturing base and in the face of rising waves of unemployment playing the only game left in town so to speak as mere leftist revisionism. Some post modern ultra cons go so far as to state even those that were simply seeking to purchase shelter were primarily responsible for the greatest economic catastrophe in Canadian history and not historical elements of their party in power at the time. Some less informed modern day ultra-conservatives also assert that it is unreasonable to expect a well meaning politician to be so familiar with economic complexities as to be able to anticipate economic eventualities usually reserved only for the most highly tuned awareness of proper professionals. This assertion has been called into question with the recent discovery in the historical record that the head of state at the time was in fact a trained economist. These reasons have led to the term “protecting people from themselves” to be equated with the term “let them eat cake” thought to be mis-attributed to an earlier historical figure Marie Antoinette. While meant to be a scathing criticism of present day ultra cons the victimization of Marie Antoinette by the masses has been seized upon by the ultra-cons as an accurate approximation of history’s treatment of the head of state at the time of the bubble. While at the time it was expected that no conservative party or philosophy would attain office for decades after the fruition of the catastrophe it has in fact been several centuries since conservative ideology has even been the official opposition let alone formed a government.

#156 Form Man on 01.31.12 at 12:47 pm

#142 DA

some scary numbers you are posting for Kelowna real estate. I agree the worst declines are to be seen in condo prices, but looks like higher priced homes as well. I have a friend who has just built a new spec home below mission hill winery. Total cost including lot…$900,000. He is hoping it will fetch 1.2 million when he lists this spring. I think he will be lucky to get $800,000……ouch !

#157 dd on 01.31.12 at 12:57 pm

# 137Canadian Watchdog on 01.31.12 at 10:51 am

Oil and mining will continue to flourish however these sectors will not be sufficient to offset Canada’s unemployment output gap.
”””””””””””””””””””””””””””””””””””””””””””””””
Alberta buddy. That was the org comment made. Alberta.

#158 Fred on 01.31.12 at 12:58 pm

Garth, how do you and your Amazonian fantasy friend feel about the possible pension changes i.e. effect of pushing most people to a later retirement age? Any effect on housing market (something a lot of your readers are obsessed about)? Will people stop spending and try to redouble their desperate saving efforts? A blog post would be very interesting. Thanks.

I’ll ask her. — Garth

#159 Canadian Watchdog on 01.31.12 at 12:58 pm

#148 Froggy

This chart from a Bank of Canada report shows why Teranet and other indexes are not good indicators. http://i39.tinypic.com/6jokkw.png

#147 JIM

In 2008 the average price for GTA’s detached homes fell 28% from 416k to 300k http://i40.tinypic.com/11he787.png making it the most vulnerable of all home types. Keep in mind the only reason why the market recovered was a massive stimulus package along with lower rates. This time there is no stimulus and rates have a limited buffer.

In regards to defaults, foreclosure information should be made public by CMHC or CREA like the US does. I believe once the market turns corporate interest will file a FOIA to obtain foreclosure stats. I’ve always been suspicious as to why Canadian institutions are more secretive then the US, but then again, withholding information from the public kept their heads buried in the sand, until now.

#160 disciple on 01.31.12 at 1:03 pm

I see that Mr. Buyer is losing his mind… it’s amusing that I can’t follow his meaning… but it’s a great thing to witness… when we disrobe from the fabric of our cultures, we come face-to-face with our true selves. It’s not always pretty, but at least the healing process can begin, and to paraphrase the current mind-control doublespeak, “we will emerge out of it stronger than ever before”…

Many of those cell phone towers you see around your towns are put in curious places, most of them not spread out too well, clusters of them in specific locales not corresponding to population density. I call them DEATH TOWERS.

They are not supposed to need more power than a typical large home to relay their EM info, but if you look closely at them, most of them have bundles of python-thick cables feeding them power… for what? Let me explain what these are for: while HAARP broadcasts a death signal out to the atmosphere, the DEATH TOWERS disguised as cell phone towers broadcast frequencies causing sickness and death DOWN among the populace.

It’s true, we are being used in their experiments again… look closely again at these towers: There are the typical drum and antennae at the top, but then what are those ornaments at the BOTTOM? You guessed it. You are looking at the cause of much of the deathly sickness you are feeling right now. Power lines just aren’t doing the trick any more, they needed something even more powerful I assume… it would be interesting to graphically determine life or critical insurance rates versus number of cell phone towers in a given town…

#161 City Slicker on 01.31.12 at 1:08 pm

CANADA’S SOARING HOUSEHOLD DEBT IS GOING TO END IN TEARS:

http://www.thestar.com/business/article/1124059–borrowing-spree-pushes-canada-to-edge-of-debt-cliff?bn=1

#162 Bill Gable on 01.31.12 at 1:14 pm

Here in rainy, moss covered, Dumbcouver – there are a huge number of apt. Buildings all thrown up in the late 80’s – and they are all starting to have problems. Big problems. That is the trouble when you pass California building codes in a City where it rains 361 days a year.
Big assessments are arriving and just as smart meters push the price of once cheap BC Hydro through the roof.

The building I am in is 65% occupied, and at Open Houses, not a soul even walks by.

Someone is taking a huge bath, and as Buffett says, when the tide goes out, we’ll find out who has been swimming naked.

#163 Ret on 01.31.12 at 1:18 pm

Why would banks be choosing to pay CMHC insurance on mortgages of less than 80% loan to value? Why are the banks wanting to securitize these relatively “safe” mortgages to get them off their books?

Could the true RE values be declining or were they totally bogus from day 1? My neighbour keeps blowing that his $325,000 pile has been assessed by the bank at $450,000. Is this what the banksters are up to?

#164 Cookie Monster not Fred Flintstone on 01.31.12 at 1:18 pm

I think our bubble is more like a condom, a used condom!
or no, no a barf bag
no, no a zeppelin
no, a blow fish
a blood clot
a derailed train
a dogs breakfast
a high wire act
a pregnant tree
a sea monkey, it’s like sea monkeys!

#165 Devil's Advocate on 01.31.12 at 1:22 pm

};-)

#166 Devil's Advocate on 01.31.12 at 1:27 pm

#155Form Man on 01.31.12 at 12:47 pm
#142 DA

some scary numbers you are posting for Kelowna real estate. I agree the worst declines are to be seen in condo prices, but looks like higher priced homes as well. I have a friend who has just built a new spec home below mission hill winery. Total cost including lot…$900,000. He is hoping it will fetch 1.2 million when he lists this spring. I think he will be lucky to get $800,000……ouch !

Well wonders never cease to amaze. I do believe Form Man and D. A. have reached a concurrence.

#167 The American on 01.31.12 at 1:33 pm

At #39: Heres’s the most counterintuitive and best advice you will receive all year – LISTEN TO YOUR BANKER BUDDY. You’ll live to thank him.

At #145: DonDWest, no, Canadian banks are not as safe as you’ve been told to believe. In a year’s time a lot will be disclosed that hasn’t yet to the general public. Just ask the IMF. It’s going to be ugly.

At #146: Maxx, Canadian banks already are the laughing stock inside of many non-Canadian, global banks (BTMU, JPM, Deutsche) We know exactly where its headed, and everyday is looking worse and worse for Canada. So much will be told, and it really isn’t going to fare well for the Canadian banking system. Ask Scary Dooper, oops, I mean Sherry ;-) Your government and the banks are struggling hard to avoid the inevitable “about face” that’s just around the corner. And yes, the Canadian correction will exceed the U.S.’s., unfortunately.

Additional food for thought -CMHC is so underfunded for even a 10% orrection that only one of two things will happen. 1) Taxes will increase substantially. 2) New legislation will pass, forcing Canadian banks to cough it up. Only the greater problem is the correction is going to far exceed 10% Guarantee it. Don’t ask.

By the way, thank you Canada for taking American-born whack job Scary Dooper on your side oWether border. We ALL owe you a great debt gratitude. Now, will you please take back Beiber, Pam Anderson, Buble, Reeves, Fraser, and Dion? UGH! We will keep Carey, Reynolds, and McAdams.

#168 John G. Young on 01.31.12 at 1:54 pm

#142 Devil’s Advocate

“…all-be-it sputtering…”

It’s ‘ableit’, you poseur (look it up).

#169 down and out on 01.31.12 at 1:57 pm

I seem to sense looking around most people are tapped out money wise .Even the local Canadian Tire store is slow .Maybe joe public is finally running out of credit room.Some strip malls losing many stores and this is in SOUTHERN ONTARIO where we have been bouncing off the bottom of the economic cycle for a few years now.One more economic shock like oil spike ,credit crunch,soaring loonie and WOW I am pounding on Garth’s bunker door to let me in.

#170 americanadian on 01.31.12 at 2:02 pm

Private equity is buying foreclosed homes in the U.S.

“I’m buying for 30 cents on the dollar to a 12 percent yield,” he said. ”

http://finance.yahoo.com/news/foreclosures-draw-private-equity-u-150127753.html

#171 Van guy on 01.31.12 at 2:09 pm

Sherry finally discovered this blog. And when she finally sells her mansion, she will announced that the balloon has popped.

#172 fancy_pants on 01.31.12 at 2:19 pm

#166 The American on 01.31.12 at 1:33 pm
will you please take back Beiber, Pam Anderson, Buble, Reeves, Fraser, and Dion? UGH! We will keep Carey, Reynolds, and McAdams.

Can’t have McAdams + she lives in Toronto. Oh, and let’s add an n to Carey – take Carney back. he sucks

#173 Linda Pearson on 01.31.12 at 2:20 pm

#167John G. Young on 01.31.12 at 1:54 pm
#142 Devil’s Advocate

“…all-be-it sputtering…”

It’s ‘ableit’, you poseur (look it up).
……………………………………………………..

I invite you to do the same.

#174 villain? on 01.31.12 at 2:31 pm

From a R.E. listing I read yesterday, an unfinished basement is now –UNSPOILED ! WoW!

Vote Canada Party!
This is funny… http://ca.news.yahoo.com/blogs/dailybrew/canada-party-offers-viable-candidate-u-presidential-race-204828868.html

#175 T.O. Bubble Boy on 01.31.12 at 2:37 pm

There’s a GROUPON for Sherry Cooper today:
Hot Air Balloon Excursion for One or Two People (Up to 46% Off).

(Does this fly over homes for sale in Lawrence Park?)

#176 Devil's Advocate on 01.31.12 at 2:39 pm

#167John G. Young on 01.31.12 at 1:54 pm
#142 Devil’s Advocate

“…all-be-it sputtering…”

It’s ‘ableit’, you poseur (look it up).

Ableit or poseur? LOL

Thank you for the English lesson. Would you like me to rethink my thoughts, reconstruct the post and repost in a form that doesn’t offend the grammar police so much that they miss the point?

Seriously Dude get over it. Ok you have better grammar than I. Although the syntax of your own post leaves room for misinterpretation where I think mine does not so much despite it poor grammar. Is grammatical critique the basis upon which you endeavor to win all your arguments?

But seriously thank you. I’ll not make that mistake again. Are you as equally open to critique?

#177 Canuck Abroad on 01.31.12 at 2:49 pm

26 / in calgary – …The one I bought for 448K in feb 2009 went for 590K five weeks ago (three weeks on the market, was rented for 2K/month from april 2009 until jan 1st this year…

And there you have it, the utter lunacy of this market. Do the math people. This apartment is crazy cheaper to rent. With closing costs, some idiot just spent more than $600k to buy a place they could rent for $2000 a month. The renter has no monthly maintenance fee or property taxes as well. The buyer has these costs plus mortgage interest. Then, to top it off, when the price falls 25% (it will) the buyer will be looking at a $150k loss.

Most condo owners won’t be taking losses this size, they’ll just declare bankruptcy if they have to sell.

#178 Form Man on 01.31.12 at 2:52 pm

#165 DA

Agreed. You have finally reached the same conclusion many of the rest of us reached a long time ago. Stay with me grasshopper, and continue your education. There is hope for you after all.

#179 Kevin on 01.31.12 at 2:57 pm

@Coastal:

“So… you can’t default in Canada.”

You just go bankrupt instead. Can’t get blood from a stone.

You know you can’t just “declare” that you’re bankrupt, right? You have to actually be bankrupt. If you have assets, they will be confiscated and used to pay your debts.

There is not such thing as a “strategic default” in Canada. Bankruptcy is not some consequence-free escape hatch out of an underwater mortgage.

#180 pjwlk (click for glossary) on 01.31.12 at 2:57 pm

#53 Mr Buyer: “God I wish the spell check was working.”

Firefox has a built in spell checker. You can even get yourself a Canadian dictionary for it to eh…

#181 Kevin on 01.31.12 at 3:03 pm

@Mr Buyer:

“Would you spend huge sums of money on something that is going to decrease in value year in year out for who knows how many years”

You mean like a luxury SUV?

No? What’s the difference? Last I checked, there was no shortage of them on the roads, so maybe we need to consider the possibility that people just plain don’t care.

#182 John G. Young on 01.31.12 at 3:23 pm

#172 Linda Pearson

Look what up? Please clarify

#Devil’s Advocate

Ableit or poseur? LOL

Both. ROFLOL

Thank you for the English lesson. Would you like me to rethink my thoughts, reconstruct the post and repost in a form that doesn’t offend the grammar police so much that they miss the point?

Don’t know who the ‘grammar police’ are, I’m just one of the “pups and poodles”. And I think you missed the point — which I expected (and don’t ask me to explain, because that’s the point, if you get my point).

Seriously Dude get over it.

The name is John, not Dude.

Ok you have better grammar than I. Although the syntax of your own post leaves room for misinterpretation where I think mine does not so much despite it poor grammar. Is grammatical critique the basis upon which you endeavor to win all your arguments?

What argument? I made a statement.

But seriously thank you. I’ll not make that mistake again. Are you as equally open to critique?

Do you mean is it a level playing field? But how could it ever be with you?

#183 Herb on 01.31.12 at 3:27 pm

Another modest proposal …

The Conservative government moved Tuesday to limit debate on a pension reform bill that will create new Pooled Retirement Pension Plans.
Government House Leader Peter Van Loan argued the move to invoke a process called “time allocation” was justified because the Conservatives won the last election by campaigning on the need for PRPPs.

(http://www.theglobeandmail.com/news/politics/citing-enthusiastic-support-tories-move-to-cap-pension-bill-debate/article2320884/)

Harper wants smaller government, having realized that he’s overdone the enlarging bit. Having unbalanced it, Harper wants to save money to balance the budget eventually. Harper does not need a bunch of whining opposition MPs. In fact, he really shouldn’t need a Peanut Gallery either. So why not save a bunch of money and a whole lot of work for the sitting government by abolishing Commons and Senate, and just having an Electoral College that meets every four years to anoint a government from its midst, then fades away?

The members of this college would be appointed by somebody (who doesn’t matter, but provinces would work), get paid nothing but transportation and maintenance while sitting in Ottawa, and perform their electoral role as a civic duty. Members of the government (cabinet) would be paid politician wages, the public service would carry on, and the rest would be superfluous.

That would be as democratic as what we have now, and would be far more honest. And the government could continue to count on the “enthusiastic support” of those special interests it serves from time to time.

#184 villain? on 01.31.12 at 3:37 pm

#76Sherry Cooper

….a great time in Canadian history… indeed!
Should we celebrate NOW –or later?

#185 Mandelbrot on 01.31.12 at 3:39 pm

Credit Unions; conjures up images of a simpler life, farmers with debt aversion, no?

Guess again:
http://www.thestarphoenix.com/news/Program+aims+help+with+down+payment/6075811/story.html

The end is nigh.

#186 Timing is Everything on 01.31.12 at 3:40 pm

#159 disciple

Just 4 U…

http://tinyurl.com/2fy4a8

#187 morry on 01.31.12 at 3:43 pm

lots of folks here looking for sub-prime like melt downs to happen in canada.

You are in for a long wait my little chickadees

#188 Kris on 01.31.12 at 3:47 pm

#60 45North.
You sold 3 yrs ago and you’re glad? Really? Your property must’ve appreciated a pretty penny in 2010-2011.
Now, I’m not saying selling was wrong (Forget timing the market)
All I’m saying, with the benifit of hindsight, surely you cannot be “glad” to have sold just before a HUGE run up in prices.

#189 Daisy Mae on 01.31.12 at 4:01 pm

#139 RONALDO: “Also, there is always that condo secretary who thinks he/she run the show and that individual (generally a geezer) who elects her/himself the condo cop.”

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

Isn’t THAT the truth? I live in a gated community and we have a self-appointed council. We endure the same crap. I stand MY ground.

Their powers are limited…they just don’t know it. They have absolutely no legal knowledge and understand even less about human rights. But they’re put in their place eventually.

#190 eagle eyes on 01.31.12 at 4:26 pm

Why aren’t we looking at the broader picture than just the local picture. US economy in the hole, china RE down 40%, Euro Crisis, jobs outsourced. Right now Canadian real estate is a doomed tale to unfold. It was supported by the foreign money in 2011. But the foreign money in 2012 has found more friendly countries welcoming them with open arms. There’s always money out there somewhere, it’s just not coming here for now. I predict a substantial drop in prices here in Vancouver summer 2012. Let’s hope that it isn’t worsened by sellers panicking.

#191 Devore on 01.31.12 at 4:37 pm

#128 Devil’s Advocate

Is it still a high end condo when the price is slashed by 50% and a free car thrown in with the deal?

#192 poco on 01.31.12 at 4:50 pm

#187 Kris on 01.31.12 at 3:47 pm
#60 45North.
You sold 3 yrs ago and you’re glad? Really? Your property must’ve appreciated a pretty penny in 2010-2011.
Now, I’m not saying selling was wrong (Forget timing the market)
All I’m saying, with the benifit of hindsight, surely you cannot be “glad” to have sold just before a HUGE run up in prices.
____________________________________________
Kris, my friend, like many others on this blog you don’t seem to comprehend that many markets did not have the HUGE run up in prices that others did since the downturn in 2008-09–suggest you read some of DAs latest posts and then do some of your own research on the various markets —or do you just take what the bank economists say as “God’s word”

I’m with 45North–sold out X2 and am sure happy i did–you figure it out

#193 worried sellers and realtors and bankers in a Panic on 01.31.12 at 5:13 pm

With prices and sales falling in the GTA you have sellers , realtors and bankers in a panic. The condo market is nothing but a ponzi scheme back by credit as people borrowed from their fake equity to buy condos they can not afford. These people can’t even afford their homes as many are using their LOC or heloc to makes mortgage payment and everyday living expenses.

#194 Devore on 01.31.12 at 5:14 pm

#78 betamax

It’s official! Sherry Cooper is Canada’s David Lereah.

#195 Devil's Advocate on 01.31.12 at 5:24 pm

#181 John G. Young on 01.31.12 at 3:23 pm

Crabby lil’ fella aren’t we?

#196 Kevin on 01.31.12 at 5:28 pm

For those (like Sherry Cooper) who think that any increase in monthly payments by an increase of interest rates will be offset by gains in wages should really crunch some numbers

This chart shows a $350,000 mortgage over 25 years and the different monthly payments with interest rates ranging from 2.5% to 7%.

http://1.bp.blogspot.com/-3CSRdsP1pzU/TyeCWvPXd6I/AAAAAAAAB-M/pwSeo82mNCI/s1600/350,000+mortgage+soft+landing.jpg

Some of those people who maxed out their affordability with the 2.9% teaser rate offered by the big banks this month could very well be renewing at 6% in 5 years. 6% is not far fetched. This would increase their monthly payment by over 35%. But I doubt the average weekly wage will increase 35% in 5 years.

It took from 1998 to 2011 for the average weekly wage to increase 35% in Canada. And this was during a dotcom bubble, a credit bubble, a housing bubble , a commodity bubble, along with baby boomers in their peak spending years.

Here is how the weekly wage has grown year over year since 1992 in Canada
http://tinyurl.com/833t3o6

On the other hand if interest rates stay low, that means we will have low inflation ( maybe fighting deflation) low wage growth and most likely parts of our economy ( especially real estate) will be going off a cliff.

#197 Van guy on 01.31.12 at 5:34 pm

#153 Brad in Van on 01.31.12 at 12:33 pm

What area of Van are you trying to sell in? There are patchy areas selling ok. Looks like you may be priced too high.

And for Richmond, you are not seeing the truth. Many sellers don’t have for sale signs up. Richmond is about to get violently raped!

#198 Abitibi Doug on 01.31.12 at 5:36 pm

On hte front page of the Globe and Mail business section it says: OFSI to monitor potential bubbles in Vancouver, Toronto and lending standards on home equity credit. To issue that statement now, isn’t that like locking the gate after all the cattle have gotten out?
Now the idea of a real estate bubble is going mainstream, and economists are trying to stop it without too many scare tactics so as to get that soft landing they predict (trying to make it a self fulfilling prophecy). We’ll see, interesting times ahead.

#199 Devil's Advocate on 01.31.12 at 5:40 pm

#187Kris on 01.31.12 at 3:47 pm
#60 45North.
You sold 3 yrs ago and you’re glad? Really? Your property must’ve appreciated a pretty penny in 2010-2011.
Now, I’m not saying selling was wrong (Forget timing the market)
All I’m saying, with the benifit of hindsight, surely you cannot be “glad” to have sold just before a HUGE run up in prices.

Ya know just today I wrote a timely post on just such a quandary. Now which number was that? Oh ya… it appears it did not meet with the moderators approval. No matter, Garths blog and I do respect that despite my pushing the bounds of acquiescence from time to time. Hey, I am the Devil’s Advocate – it’s going to happen. };-)

#200 poco on 01.31.12 at 5:41 pm

Kris –here’s a couple of those fools that jumped in several years ago when 45 North and I and many others were selling –where oh where would we be today???
bought–Apr 08–557k
http://www.realtor.ca/PropertyDetails.aspx?PropertyID=11477383&PidKey=111372383

boughtNov 09 398k
http://www.realtor.ca/PropertyDetails.aspx?PropertyID=11443663&PidKey=-948696981

bought Apr 10–237k
http://www.realtor.ca/PropertyDetails.aspx?PropertyID=11469224&PidKey=1860247096

sorry kris but you’ve got to do a little homework to know what’s going on–like i said go read DA #166 on 01-29-12—tri cities stats are worse than Kelowna
as i said before many,many owners per week that are listing –selling — or dropping their prices and will eventually be bringing that cheque to their closing–that is if they sell—believe it

#201 KingBubbles on 01.31.12 at 5:47 pm

Shiver me timbers … a Mortgage Cap ?

http://www.cbc.ca/news/business/story/2012/01/31/cmhc-mortgage-limit.html

#202 Linda Pearson on 01.31.12 at 5:50 pm

#181John G. Young on 01.31.12 at 3:23 pm
#172 Linda Pearson

Look what up? Please clarify

Ableit or poseur? LOL
……………………………………..
The correct word (or spelling, if you prefer) is ‘albeit’, not what you wrote. Clear now?

#203 I'll do anything for a listing on 01.31.12 at 6:02 pm

ATTENTION LAWN ASIANS!!!!!!!

***** WORLDS MOST EXPENSIVE FLOWERS ****

http://www.realtor.ca/propertyDetails.aspx?propertyId=11107814&PidKey=-920470676

Well what do we have here, small non-standard lot on two busy streets, your price only $750k here in Bubblecouver. Includes free slum house with 6 bedrooms and maybe some mould and bedbugs – but it’s FREE.
Awesome, won’t last long.

Notice the Realturds efforts and professionalism – no pictures of the house. No room dimensions, no neighbourhood highlights. No new furnace, or view photos.

EFFORT – Something you’d see in Winnipeg, or Halifax. Not Vancouuver – no way. Nothing. Only costs the seller $25k for this professionalism. Don’t tell me a 12 year old couldn’t do a better write up.
Imagine if your MRI came back and the Dr. filled out the chart the same way = fired.

The flower are $750k, the house is free.

“How Realturds help”

#204 Kim on 01.31.12 at 6:13 pm

Garth what is your take on CHMC hitting it’s mortgage limit? alot if what you’ve been talking about is starting to go main stream. Do you see the RE industry , bankers in some kind of panic mode? Thanks for your input Garth and great blog.

#205 Kris on 01.31.12 at 6:14 pm

#191 poco
#60 45North
Kris, my friend, like many others on this blog you don’t seem to comprehend that many markets did not have the HUGE run up in prices that others did since the downturn in 2008-09–suggest you read DAs latest posts and then do some of your own research on the various markets —or do you just take what the bank economists say as “God’s word”
——————————————————

Poco, that’s good to know, I’ll watch for DA’s recent posts. But no, I don’t take economists for their word. I have eyes & ears, I watch the mkt in my town, I talk to colleagues who live in/around the GTA, talk to relatives in Ottawa.. etc etc. All say the same thing – Prices up 15%-25% since 2009, if not a lot more.

You know the best stats – They’re from the School of Hard Knocks. When the 500k house I wanted in 2009 in the locality I desire, is going for 150k more now.. That tells me RE surged the last 2 yrs. Don’t need to hear that from an economist.

#206 Onemorething on 01.31.12 at 6:25 pm

No gold star. The Trump project is suffering through a series of buyer defections, unsold units and legal issues as sober second thought prevails on the part of purchasers. — Garth

Exactly, smart rich one’s dumping, stupid “came from money” following the smarts the only one’s feeding the high end condo market as you would expect.

What’s a 50% loss on a 1.5M condo to this group, not much!

All the savy “with money” investors are NOT in RE!

#207 Steven Rowlandson on 01.31.12 at 6:35 pm

Last great rush of greater fools?
This is clearly a warning to get out of real estate investments before everyone else gets the same idea.

#208 Devil's Advocate on 01.31.12 at 6:42 pm

#201Linda Pearson on 01.31.12 at 5:50 pm
#181John G. Young on 01.31.12 at 3:23 pm
#172 Linda Pearson

Look what up? Please clarify

Ableit or poseur? LOL
……………………………………..
The correct word (or spelling, if you prefer) is ‘albeit’, not what you wrote. Clear now?

Dang, I completely missed that! ;-/ But that should come as no big surprise seeing as my spelling and grammar suck so bad. But it would have been handy ammo to have had in my arsenal on this completely irrelevant trivial matter.

#209 John G. Young on 01.31.12 at 6:46 pm

#194 Devil’s Advocate

Crabby lil’ fella aren’t we?

Only when having to deal with people who act as if they’re better than everyone else. Sure are a lot of them around — and on blogs — these days.

BTW I’m 6’5′ — I haven’t been “li’l” (you put the apostrophe in the wrong place) for a long time.

Next insult?

#210 John G. Young on 01.31.12 at 6:54 pm

#201 Linda Pearson

It took me a few times before I finally saw that I reversed the b and l in ‘albeit’ — dyselxia maybe?

Thanks for pointing that out.

Wow, these blogs are scary places.

#211 jess on 01.31.12 at 7:13 pm

Sensitive Swiss bank data handed to US
The Swiss finance ministry has confirmed that encrypted data relating to Swiss banks’ clients in the United States has been transmitted to the US tax authorities.

==================
=
.. he should be stripped of his pension!
Forfeiture committee advises Queen to strip former RBS chief executive of honour

http://www.tackletaxhavens.com/taxcast/
January
In our inaugural TaxCast, we discuss the implications of the Vodafone vs India landmark tax case, compare Bill Gates and Mitt Romney’s attitudes to taxation and visit the Occupy camp outside St Paul’s Cathedral in London

#212 Onemorething on 01.31.12 at 7:22 pm

Was looking closely at recent Case Shiller data! When the MSM in the US talks about a bottom in RE then red flags goes up. Case Shiller states there is no evidence of a pickup in RE as all they see is RE being dragged accross the bottom at best!

I still see another 15%+ national decline to 45% over the next 5 years! No rebounds for 10 years!

Some good quotes on RE trends USA.

“It’s simple. The next twenty to thirty years will be the Boomer die off, and the selling of their overpriced (at the moment) and oversized homes too far from urban cores to a younger generation that will never experience the standard of living those Boomers experienced. You do the math.”

“House prices will fall until they are 2.4 times the yearly family income of the families buying them. This was true for about 100 years (prior to the bubble) because, if the lender loans more than this to a family, they probably won’t get paid back. More debt than this puts too much strain on the family finances and causes defaults.
Whenever the lenders want to be paid back for house loans (instead of bundling them and selling them off to the next fool), I believe this multiple will hold true.
Add this to the fact that the incomes of families that want to buy a house are generally in decline, and you can see that the future of house prices does not look good.”

#213 Ballingsford on 01.31.12 at 7:49 pm

I have some of my accounts with BMO and I’m seriously thinking about getting the hell out of there with their crazy thoughts the last few days.

Who the heck is pushing them to make their insane remarks and predictions. Looks like their 2.99% 5 year didn’t work as expected.

#214 bigrider on 01.31.12 at 7:52 pm

#129 Devils advocate to bigrider -“give him a gold star” Garths response- “no gold star”

Guys I was not looking for a gold star , I simply asked an honest question. Garth I am well aware of the ‘defections’ in confidence towards trump tower but my question earlier was geared more specifically to the four seasons on Yorkville. It does appear to be somewhat unique in it’s perspective and appeal..does it not? Could it hold up in price even in the face of a broader decline ?

#215 poco on 01.31.12 at 7:57 pm

#204 Kris
my apologies—i jumped to the conclusion, for some reason ,that you were referring to the west coast–GTA and parts of BC are totally different markets–we’re coming down and have been for a long while, it appears from many of the eastern posters, your market is still rising unfortunately.
this is sometimes a problem with postings from GTA–everything going up out there and all around me in the tri cities i find owners who are in trouble–your turn will come–hopefully

#216 TurnerNation on 01.31.12 at 7:57 pm

Ok we have GT on twitter delivering bon mots in real-time. Old dog, new tricks!!

And now this. “Video killed the radio star”?

P&G To Lay Off 1,600 After Discovering It’s Free To Advertise On Facebook

http://www.businessinsider.com/pg-ceo-to-la
y-off-1600-after-discovering-its-free-to-advertise-on-facebook-and-google-2012-1

‘He told Wall Street analysts that he would have to “moderate” his ad budget because Facebook and Google can be “more efficient” than the traditional media that usually eats the lion’s share of P&G’s ad budget.”

#217 Brad In Van on 01.31.12 at 8:14 pm

To 196… Van Guy we are located in Kits only two blocks from the beach. Priced $40,000 lower than neighbors across the street and we are slightly larger, have a better view, and much newer with nicer finishes. Scratching our heads. Did we miss the boat?

#218 John G. Young on 01.31.12 at 8:16 pm

#207 Devil’s Advocate

…it would have been handy ammo to have had in my arsenal on this completely irrelevant trivial matter.

I beg to differ. Not irrelevant or trivial because your affectations speak to your character — at least the character you choose to present on this blog.

#219 Precioussss on 01.31.12 at 8:33 pm

I have a beautiful home. I like where I live. I have a wonderful family. Our health is good. We have no debt. I have a very secure, high paying job. Bring on the RE crash. I’ll buy another.

#220 Daisy Mae on 01.31.12 at 8:41 pm

#176 CANUCK ABROAD: “Most condo owners won’t be taking losses this size, they’ll just declare bankruptcy if they have to sell.”

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

….and lose all their remaining assets in the process.

#221 Nostradamus Le Mad Vlad on 01.31.12 at 8:52 pm

-
Lotsa good posts and sniping 2day.
*
Cdn. banks and m$m continue to lie about housing; California Outta cash in 30 days. Good enough reason to have a ‘quake or war; US$1.00 Serbia buys steel plant for a buck; 30 Blocks of Squalor How times change; Wall St. and derivatives; Record High Eurozone unemployment; Merkel “Merkel’s got absolutely nothing China wants.” wrh.com, so it’s more m$m crap; Gold Big gains soon? Eurozone Superhighway of debt; Jobs about to vaporize; Have You Ever? “Have you ever noticed that a lot of countries are now quietly talking about paying for oil in something other than U.S. dollars?” Turkey defies ban on Iran’s oil.

Sicilian Revolt Well, the Mafia runs Italy; Hungary Libya Part Two? The Withdrawal Method Venezuela using it to say buh-bye to the World Bank; Walmart lets greeters go; 10:10 clip “Currently it is not legal to trade in Gold and Silver. HR 1098-Free Competition in Currency Act of 2011 is now buried by the GOP Leadership.”; Sears Going under?
*
Corporations have no use for borders “I was in Montreal on Friday and Saturday and saw the familiar and disturbing tentacles of the security and surveillance state.”; Cancer Cure Proof that a cancer cure is unwanted (there’s more money in sick people), and Depression Big pharma profiting from that; 6:06 clip GOP planning strategy to get rid of Ron Paul; FFs “Desperate for war, US prepares to blame Iran for false flag attack.”; The Sun Does anyone recall what it looks like? 2:24 clip UN resolution could speed Syria war; Knighthood Stripped He are not wurthy; Tory Times Are Hard Times “The rich don’t much like paying taxes when tax rates run high. They don’t much like paying taxes when tax rates run low either.”; How Nice A pandemic to go with WW3.

One World Colony That’s why Iran is on the chopping block, and why Harper and the CPC are taking Canada to pieces bit by bit; The Gulf? The US is the only country to have ever used nukes (Hiroshima and Nagasaki); 100K troops by March Around Iran; Monsanto or all natural snax? CChina hopping mad over Philippines – US deal.

#222 TurnerNation on 01.31.12 at 9:00 pm

#97Peter Goesinya on 01.31.12 at 2:29 am

Slowly even the “conservatives” realize they got scammed. The dogma is breaking down…
Middle class is under attack.

Miltonites in ON know Hwy 407’s tolls are rising yet again. A vulture fund was sold the highway by the formerly CONservative provincial government.
Tolls rose 4-fold.

All you have left are your bibles and guns. Surely, they will not let you down?

#223 Mister Obvious on 01.31.12 at 9:05 pm

#218 Precioussss

“I have a beautiful home. I like where I live. I have a wonderful family. Our health is good. We have no debt. I have a very secure, high paying job. Bring on the RE crash. I’ll buy another.”
————————

Man… and McLovin called me smug.

#224 Bill Gable on 01.31.12 at 9:20 pm

So, America has learned their “lesson”.

“In Honolulu, on the southern coast of the island of Oahu, there’s a four-bedroom home priced at $785,000 that has views of the sun setting over the Pacific Ocean. The beaches of Waikiki are 15 minutes away.

Starting this month, the property is available to buyers with a subprime credit score, limited cash reserves and a 3.5 percent down payment using a loan backed by the Federal Housing Administration. Without the agency, a buyer would need a 20 percent down payment and an unblemished financial history for a jumbo mortgage.

The FHA is betting housing can recover enough to expand financing and earn bigger fees to revive its record-low capital levels. The agency increased the size of mortgages it’s willing to insure to as high as $793,750 in Hawaii and $729,750 in the costly real estate markets of states including California, Florida, and Virginia. In his State of the Union address on Jan. 24, President Barack Obama proposed a new refinancing program that may expand FHA’s responsibilities, and risks, even further.

And you thought the CHMC was nuts.

#225 Kris on 01.31.12 at 9:31 pm

#214 – Poco.
No worries. It’s why I’m on this blog, to hear real people’s observations – so we understand how things are changing. More reliable than trusting some ‘expert’ in the media. Yes, I hope the GTA’s time comes.. and soon.

#226 McExpat on 01.31.12 at 10:00 pm

#205 onemorething
All the savy “with money” investors are NOT in RE!

A truer statement has never been spoken.

#227 TurnerNation on 01.31.12 at 10:05 pm

Is that really Shelly Cooter’s post earlier in today’s weblog? Writing style seems edu-macated and fancy.

#228 gladiator on 01.31.12 at 10:06 pm

my TD unsecured line of credit rate is going from 5.75% to 7.50%!!! Holy Canoly! What would that mean? I thought rates only go down…

#229 Mr Buyer on 01.31.12 at 10:14 pm

Bubblepedia
Largest Disaster in Canadian History…While the largest housing bubble in history has long held the ranking of the largest economic disaster in Canadian history it has recently replaced The 1972 Canada Russia series as the outright largest disaster in Canadian History which has held that dubious distiction since the inception of the award over 2 centuries ago. The recent unearthing of a totally unwiped hard drive belonging to the head of state at the time has lead to the elevation of the housing bubble to largest outright disaster. An investigator stated off the record that finding an totally unencrypted and unwiped hard drive speaks volumes about the owner’s command of technology and vision and the disaster should rightfully be elevated to its new status for these reasons alone. The horendous play of the Canadian National team throughout the 72 Canada Russia series was rarely transferred to digital media and was shocking to find on many levels. Canada the first Nation of Hockey has long had to tolerate skewed world competitions in which even Canada’s dominance of the sport did not accurately represent the true depth of National talent as Canada could easily outfit 10 gold medal teams and was limited to a single team in international comptetition. Upon discovery of the digital video evidence Canada’s present ambasador to Russia was asked to present the Russian national team with a plaque awarding them the win in the 72 series. The present day Canadian national ministry of technology in hockey has created simulations that show Russian National Teams composed solely of their vaunted defensemen defeating Canada in 20% of competitions with an error of plus or minus 1%. Russia is now thought to be a valiant opponent that awoke Canadian hockey out of the showing up for training camp out of shape habbit prevalent in all North American sport at the time.

#230 Rock2Rock on 01.31.12 at 10:14 pm

Will this correction happen out east as well (to NL)? Housing prices remain high for the region and I don’t get it. Will St. John’s become Calgary lite?

#231 McLovin on 02.01.12 at 3:08 am

#222 -Man… and McLovin called me smug.

Not smug. More of a pock or boil on progress that needs to be lanced.

#232 McLovin on 02.01.12 at 3:11 am

“The present day Canadian national ministry of technology in hockey has created…”

Needn’t more be said…

#233 Alistair McLaughlin on 02.01.12 at 4:54 pm

The present day Canadian national ministry of technology in hockey…

That’s got to be the worst translation I’ve ever seen. Everyone knows it’s the Candian National Ministry of Hockey in Technology!!!!

#234 a prairie dawg on 02.01.12 at 9:57 pm

#170 Van guy

Sherry finally discovered this blog. And when she finally sells her mansion, she will announced that the balloon has popped.

– — –

She also failed to mention what would stop the slow leak in the balloon.

ie: “It’s not in a bubble, it’s more like a balloon.”

But balloon leaks don’t stop by themselves. They never did. They just keep leaking until there’s nothing left.

[sarc]Much more humane than a bubble…[/asm]