Media

Eighty people just emailed me a column from Canadian Business. Damn. I was finally forced to read it, and immediately needed an Amazon.

As the point of no return nears for all those people who foolishly whacked the bulk of their net worth into a house (or worse, a condo), the wails of denial grow louder. Even from folks who get paid to be smart, except when they’re stupid. Like Larry MacDonald. He’s a former economist, apparently, who’s turned into a financial journalist and probably has cats.

This column is about why the Canadian real estate market won’t crash (five reasons). Here’s his assertion: “Canadians aren’t going to wake up one morning a year or two from now and discover their houses are worth 15% to 25% less.” That’s a throwaway line, natch, using exaggeration and hyperbole, which means he’d make a damn fine realtor. Housing markets seldom crash or collapse, and even when they do it takes months or years. Just pray you found out about it early enough.

Anyway, let’s go visit Susan for a dose of reality. Five years ago, whipped into a condo-horny frenzy by her Boomer parents, she bought one in a big Alberta city which will go mercifully unnamed, but lies north of Red Deer. In fact, her delusional parents even gave her a wad of down payment money, so Sue chunked 20% against the $215,000 one-bedroom unit. “Everyone,” she wrote on this blog a few hours ago, “parents, co-workers, friends were cheering me along the way…”

The mortgage rate was sweet. A prime less three-quarters variable that actually dropped after a while. So, being a good girl from a house-lusty family, she threw more cash into her equity. After all, real estate just goes up. Like Mr. MacDonald says, nobody wakes up one day and finds a 15% or 25% drop.

Except Susie.

“Out of interest (or perhaps a desire to cause myself anguish) I often check to see the MLS listing for condos in my building. The similar condo (layout wise) down the hall is currently on the market for 168,000 and has been that way for a few months. Who knows, it may be a hell hole inside, but doesn’t give me much confidence. Seeing “my” place worth so much less is blow. Plus, given what I read here I wonder how much more will it drop.

“I like my place, don’t want or need to move, but it does make me feel trapped. When I do need or want to sell it will be at a loss.. it sucks. But the bed is made, and I am in it for the long haul I guess. My advice to those who are looking to buy… don’t.”

So a $168,000 unit on the market for months might sell for $160,000, or $152,000 after commission. That’s a $63,000 drop in valuation for these condos, or a decline of 29% from 2007. And during this time (a) mortgage rates plunged, making real estate more affordable and (b) oil prices basically tripled from post-crash lows, supposedly greasing Alberta real estate.

So ya see, economist Larry, life’s messy. Real estate is emotional, the most human of financial assets. When people eschew it, property grows cold and illiquid. As Susan’s discovered, it can be a wealth trap. But equally irrational is the mania land can engender, which takes us briefly to the west side of Vancouver and Dr. Jake, who sent this moments ago:

“An old junkie tear down two doors down from my urologist buddy goes on the market yesterday for 2.9M. Forty offshore families show up at the open and 15 offers later it sells for 3.7M in less than twenty four freekin’ hours. No wonder my younger colleagues are leaving and taking jobs elsewhere.”

So, Canadian real estate is a teetering, volatile and explosive commodity. The fact buyers are shut out in most markets, while others erupt in excess should warn us of precipitous change in the wind. This is Nortel cresting. It’s RIM and Bre-X and LinkedIn. And soon, FB. There’s no safety net under this asset, no matter how many arguments are made.

Speaking of which, Larry MacDonald’s don’t amount to much. The Bank of Canada will only raise rates when the economy is growing vigorously, he says. Then people will make more money and houses will be safe. But, of course, Brother Carney will smite that in the coming months, as he moves to contain our greatest economic threat – a credit bubble. (Did you notice this?)

Housing is fine, the author says, cuz we have froth in but a few markets and “many other places, like New Brunswick and Prince Edward Island—where average house prices are under $200,000—don’t appear to be overly frothy.” So what? Over a third of the country lives in just three cities – Vancouver, Calgary and Toronto. Do we care about Lobsterville?

Don’t worry, we’re told, because this real estate crash talk is overly inspired by looking at the US experience. Okay, so we’ll look at Britain, Spain, Ireland and China.

And it’s okay here because unlike the Americans, MacDonald claims, lenders can go after people who walk from their mortgages. Besides we don’t have subprimes. In reality, US states with exactly the same system as ours have seen housing swoon. And no subprimes? I guess not, if you don’t count Canadian banks slipping down payments to home-buying kids who have no money. Yes, it’s different here.

Owning real estate is okay. I do. You need someplace to keep the ammo and the Hummer. But this isn’t the time to jump in. Nor should you have too much exposure (remember my Rule of 90). Liquidity’s still king.

Above all, remember that the media is not your friend. The only oracle of truth and miraculous guidance – omniscient, omnipotent and omnivorous – is this pathetic blog. Did anyone write “PHHIRRRRRRST! Oh yeah, BABY!” after Mr. MacDonald’s column?

Pfft. I rest my case.

188 comments ↓

#1 Chris on 02.08.12 at 10:34 pm

Last!

#2 Raj on 02.08.12 at 10:35 pm

Is this real?

“Mississauga passes 7.4% tax hike, but rejects pay increase”

http://www.thestar.com/news/article/1128281–mississauga-passes-7-4-tax-hike-but-rejects-pay-increase?bn=1

#3 AlexanderTheGreat on 02.08.12 at 10:35 pm

The world is coming to an end and we get to watch it happen. Nice.

#4 Randy on 02.08.12 at 10:41 pm

Top Ten…

#5 Dylan on 02.08.12 at 10:42 pm

Still looking for the beginning to the end.

#6 Van guy on 02.08.12 at 10:45 pm

Isn’t Facebook projected to double its value after 1 year of going public?

That’s a good one. — Garth

#7 jim on 02.08.12 at 10:50 pm

looks like the banks are pulling back on cheap rates and easy credit. The housing and credit bubble is OVER. Very hard landing is coming. Sorry realtors looks like many of you high school educated fools will be working for $10 an hour.

#8 Rafinator on 02.08.12 at 10:52 pm

Good article explaining what how real estate bubbles are formed:

http://www.cashmoneyinvesting.com/article/2012/02/what-creates-real-estate-bubble

#9 Corban on 02.08.12 at 10:56 pm

Walmart is expanding in Canada. At least the wrinkled boomers can get a job as a greeter if this whole real-estate thing doesn’t pan out for them. Remember folks, you need at least 15 pieces of flair. Brian has 37.

http://ca.finance.yahoo.com/news/walmart-canada-spend-750-million-121325616.html

#10 Mark on 02.08.12 at 11:02 pm

A 25% reduction in prices would be extremely conservative.

#11 DUI on Money Road on 02.08.12 at 11:09 pm

Sue could have bought a $215,000 condo in just about any other Canadian city in 2007 and she’d likely be sitting here today with a gain. It shows that every market is different….people in Alberta may be more tentative now with respect to real estate than other Canadians because they’ve seen their market come down quite a bit?

#12 MJG on 02.08.12 at 11:16 pm

Garth wrote: “Owning real estate is okay. I do.”. Glad to hear it, I do too. Paid for and everything. It (supposedly) doubled in value over the twelve years or so it took to pay off the bank. This week I had one hand-written request from someone to sell it to them and one enquiry from a realtor asking if we would entertain an unsolicited offer. “NO” to both (neither actually made an offer). My home is my castle and I don’t give a rat’s patoot if the “value” drops by 50%, its where I live and it’s paid for (did I mention that?).

And how much equity is in there providing no income? — Garth

#13 bigrider on 02.08.12 at 11:21 pm

No play button Garth on Larry Macdonald.

#14 Min in Mission on 02.08.12 at 11:24 pm

“omniscient, omnipotent and omnivorous – is this pathetic blog. Did anyone write “PHHIRRRRRRST! Oh yeah, BABY!” after Mr. MacDonald’s column?

Pfft. I rest my case.” – Garth

Awesome!! and correct.

#15 Qazmer on 02.08.12 at 11:26 pm

“Over a third of the country lives in just three cities – Vancouver, Calgary and Toronto. ”

Metropolitan areas. Maybe.(2006 cencus = 25%) But the point is still made.

I live in BC pop 4,510,858. Vancouver’s(Metro) pop 2,313,328 . So 51% of people live in the Metropolitan area of Vancouver. If Some thing happens to realeaste in Van i’m damn sure it will effect the other 49%.

#16 mid-Ontario on 02.08.12 at 11:26 pm

Dr. Jake is bang on:
“An old junkie tear down two doors down from my urologist buddy goes on the market yesterday for 2.9M. Forty offshore families show up at the open and 15 offers later it sells for 3.7M in less than twenty four freekin’ hours…”

That is clearly why it remains different in Vancouver.

I fully expect HAM activity to show soon to keep the RE prices robust in central Ontario soon. Goodness knows, with the rise in taxes, services, hydro and interest rates going up, we will need every HAM and HAM look-a-like to keep our steady RE values in place at a solid 22% of Vancouver RE.

#17 Jay Currie on 02.08.12 at 11:27 pm

Another day, another for sale sign on my leafy street which makes 7 and two rentals (one mine) which were on the market but pulled.

We are at about 1/3 of the street for sale. Not that there is any danger at all here in Victoria. None!

#18 Timing is Everything on 02.08.12 at 11:34 pm

#222 Daisy Mae – History repeating?

No repeat. A continuation…

http://tinyurl.com/72s38sx

;)

#19 mad vancouver on 02.08.12 at 11:36 pm

Don’t dream too much of HAM.
The Chinese New Year did not bring buyers to Vancouver: the numbers are down, especially in HAM-speculation-land, a.k.a. Richmond, West Van and Vancouver West.

People here in Vancouver are delusional. They think “everyone wants to live here.” Well, no, “everyone wants to speculate here,” but the party will be over, HAM will play locust somewhere else. BTW, prices do not appreciate any more, and inflation is eating up equity.

How does that man know there were 40 foreign buyers? Was he there the whole day? Did he ask for passports? Or is it another urban legend? There are tons of houses sitting on the market in that price range and at that location, so I am wondering why those buyers allegedly engaged in a bidding war… strange.

#20 Mel on 02.08.12 at 11:36 pm

Sometime ago, I read a good article about Ireland real-estate and what went wrong.

I would like to remind anyone who wants to believe anything that is dished out by ‘ experts’, as a proxy to your financial health, be forewarned! You will for sure loose money!

These are real- estate rules that will NEVER GOING TO BE BROKEN.

Rule # 1. Real-estate bubbles never end with a soft landings. NEVER!

Rule # 2. A bubble is inflated by nothing more than the ‘EXPECTATIONS’ of higher future prices.

Rule # 3. The moment people cease to believe that house prices will rise forever, THE MARKET WILL CRASH!

Rule #4. There is an IRON LAW of house prices. The more house price rise relative to income and rents, the more they subsequently FALL.

What more evidence do you need? Only time is needed for things to unravel.

#21 mad vancouver on 02.08.12 at 11:38 pm

PS: there are 300 houses in that price range to choose from in Van West… so why the bidding war? Surely because the realtor low balled to attract attention. No miracle under the sun.

#22 Burrard and Leaving on 02.08.12 at 11:39 pm

I don’t even care anymore. I’m moving to Florida.

#23 Junius on 02.08.12 at 11:39 pm

Smoking Man,

I love your posts, very interesting. I enjoy them very much.

One piece of advice for you, if you don’t mind….get yourself a pet Monkey, there is honestly nothing like it!

There is no better way to fall asleep than in the arms of your pet Monkey!

Yours Truly,

Junius

#24 coastal on 02.08.12 at 11:40 pm

“Isn’t Facebook projected to double its value after 1 year of going public?

That’s a good one. — Garth”

Especially when a third of the existing members decide this new Facebook design they are ramming down people’s throats is garbage and sign off the site for good. Revenues from advertisers will plummet.

#25 Mini-Garth on 02.08.12 at 11:43 pm

And how much equity is in there providing no income? — Garth
+++++++++++++++++++++++++++++++++++

That may or may not be an issue. If the person has sufficiently diversified portfoilio outside of the primary residence and that portfolio is providing a rate of return that can forseeably fund retirement, I see no reason to bet the house using an LOC to juice the portfolio.

Sometimes the biggest part of investing is knowing what to take off the table. And keep off.

#26 Puzni on 02.08.12 at 11:44 pm

According to this article housing stats were up sharply in BC:
http://www.vancouversun.com/life/Housing+starts+urban+areas+sharply+January/6119726/story.html

Where is this money coming from? Yes BC had the biggest population growth according to census data but does that justify the growth in housing?

#27 Thomas on 02.08.12 at 11:45 pm

I build up equity the old fashioned way, by investing! I can sell with a mouse click and liquidity is king when things get bearish. A house is more illiquid than a hockey card collection.

#28 Ex-Cowtown on 02.08.12 at 11:47 pm

#16 mid-Ontario on 02.08.12 at 11:26 pm

Dr. Jake is bang on:

“An old junkie tear down two doors down from my urologist buddy goes on the market yesterday for 2.9M. Forty offshore families show up at the open and 15 offers later it sells for 3.7M in less than twenty four freekin’ hours…”

That is clearly why it remains different in Vancouver.

I fully expect HAM activity to show soon to keep the RE prices robust in central Ontario soon. Goodness knows, with the rise in taxes, services, hydro and interest rates going up, we will need every HAM and HAM look-a-like to keep our steady RE values in place at a solid 22% of Vancouver RE.
++++++++++++++++++++++++++++++++++

Guess you missed today’s article that China is having inflation problems, so Chinese interest rates will be going up.

That means that HAM will be staying at home, not chasing returns in some land of long nosed white devils.

And that means that HAM will become JAM (Just Another Memory).

#29 nonplused on 02.08.12 at 11:51 pm

My wife has a cat, Garth, what are you trying to say? Oh well, she’s cute. And she keeps the mice out of the house, too. The cat, not the wife. She’s cute too, but not much of a mouser.

She does have a girlfriend that likes to come over and sit it the hot tub with us though. The wife, not the cat. Yep, just working on my own little Amazon security detail! I want to be a smaller version of Garth in every way, except maybe not quite as snarky.

#30 Mr Buyer on 02.08.12 at 11:56 pm

The Bubble Has Topped
Has anyone else noticed that the same justifications are wheeled out and repeated over and over again all over the MSM by the bubble cultivators…
Buy now before everyone can afford to…
and they landed softly ever after…

#31 Golden Stu on 02.09.12 at 12:02 am

” MacDonald claims, lenders can go after people who walk from their mortgages. Besides we don’t have subprimes.”

Sorry MacDonald… wrong.

Try Canmore, AB, Canadas most bubbliscious town. The last development (Palliser) built by the town as “affordable” housing. ~$350k for a 1000ft apartment where you can hear the Quebecois snowboarders bouncing upstairs.

The price “included” a fund created by the developer of about $50k for each unit to “subsidise” the owners mortgage. Allowed everyone to buy the units for about $5k deposit.

Similar sized units now being given away by another developer (The Lodges) for $215k. Canmores own subprime crisis in the making.

Prices and sales significantly down over the last 3 years and this is when people still think the town is going back to the 15%-20% house price growth per year the town hit before the crash.

This is a town of 9000 people, where the idiot council decide to spend $40 million on a new Rec Center, when the landfill is full and the town is trucking 3000 tons of sewage per year all over Alberta for disposal.

The madness extends beyond houses…..

#32 Ozy - these are the last flares before market crash on 02.09.12 at 12:08 am

What you see going up in this “hot” market are the last flares, build on agents misleading their pray (obviously illegally, immoral and unethical) it’s a solemn snapshot in time.
A keen eye sees the many cracks in the market while desperate ‘smarties’ compete on 18 offers on who is going to suck it more after prices drop sharply.
Boy, some make easy money, but these are smart and do not swim with the crowd. Literally.
It’s going to be a desperate awakening tomorrow, guys, just don’t commit suicide, really!
Is not worth it, regardless you’ll become homeless and everyones’ laughink stock.
Again, don’t commit suicide, go to any church of any religion (they do not ask if $$$ was your God or if you are atheist) and ask for a slice of warm bread. My donation is already there, waiting for you. Ameno

#33 Party on Garth on 02.09.12 at 12:09 am

I know housing is done. What I can’t quite figure out as I fine tune my portfolio, is where we are in the market and economic cycles…

#34 TRT on 02.09.12 at 12:18 am

Census data out…but underestimated population growth because:

1) Temporary Foreign Workers and Students here indefinitely. Hundreds of thousands not counted. plus there is no exit monitoring system once a temp visa expires.

2) Basement suites residents in cities (Surrey) not counted because that would give away the location of the multiple illegal suites in each megahouse. Landlords cant have that now can they? when census staff knocked on the door, the landlord just states no suites. Surrey probably undersestimated population by 40’000 people.

This population growth feeds speculators,etc!!!!!

#35 Peter on 02.09.12 at 12:20 am

Ham Scam

#36 Van guy on 02.09.12 at 12:32 am

“An old junkie tear down two doors down from my urologist buddy goes on the market yesterday for 2.9M. Forty offshore families show up at the open and 15 offers later it sells for 3.7M in less than twenty four freekin’ hours. No wonder my younger colleagues are leaving and taking jobs elsewhere.”
——————————————————

This is 2725 w 30 ave in Mackenzie heights West side.
V928326

#37 Shane on 02.09.12 at 12:34 am

Do a google search on “Canadian housing bubble”…..if it’s not about to burst, why are there so many articles being written about it??? And why are so many Canadians in the denial??? I’m getting tired of arguing w/ idiots who begin their sentences with: “Canada is not like the US, interests are low, house pricing is never going to drop here…”. Garth, how do we get you on Global News or Globe and Mail to tell the truth?

#38 Marco from vancouver on 02.09.12 at 12:37 am

Well the hidden article shows how interest rates are set by the bond market and not by Carney (BPOE read that).

My personal trainer bough an apartment in a local development. A year old property. Says as soon as it was finished some large number of apartments went for sale (speckers, flippers and realtors). A year later there are 2 for sale, which have been there for over 3 months at $25k more than he paid for his 2 years ago when he bought off plan.

I got him to see his carrying costs are too high to warrant owning (he could rent one down the hall for $300 less per month).

Now he’s crapping himself when between sit-ups and biceps curls I gave him a mental workout with “say you sell yours at the price the others are selling at, how much money would you make after all closing costs”… He came up with “hardly any”.

I suggested he low balls one of them by $30k below asking to see if the seller bites. I also told him to ask a realtor to give him a realistic market price. That price was $25k lower, meaning his purchase price of 2 years ago.

So I suggested selling now… He said it would be at a loss of part of his deposit… I suggested to look at that loss as rent for two years, then make it back by moving down the hall and saving the difference…

This IS in Vancouver folks…

I live on arbutus and king Ed. I drive on 4th to friends in point grey all the time. Tons of homes for sale, not many “sold” signs. I also don’t see crowds at showings (and I go to a good few to check things out).

Some silly money will always change hands at any stage of market cycles (Bugatti Veyrons were still sold during the market crash) so using an arbitrary one as an example basis for general market assumptions is not right.

What brings markets down is the lack of consumer supply. That consumer is not 10000 HAM families, but the average Canadian leveraged to the hilt by cheap lending criteria (no risk to banks with CHMC backing virtually all lending). When that cheap supply is slows down, so does liquidity, confidence and values.

Look at he cost of HELOCs when CHMC stopped backing them earlier this year. Have you noticed the almost immediate rise of the unsecured LOCs at a higher costs and the impact on consumer spending (even luxury car dealerships started to hurt and do “deals”)…

It will all find equilibrium. If money supplies are tightened, values will fall. With that confidence will fall, and speculation will disappear.

This (Canada in general and Vancouver in particular) is a great place to live, but if it comes with the price of lost money, then many other places become much nicer to live in…

My $ 0.02 worth…
PS. Sorry about any typos – written on my iPhone…

#39 Bubble Shooter on 02.09.12 at 12:40 am

Here’s a thought – Next year is a reassessment year for property taxes in Ontario. What is going to happen to all these supposed million dollar crack shacks and their loony owners when they realize that because their house is worth more, their taxes will go up?
Couple that with a 2.5% property tax increase in Toronto next year and WHAMMO.
Big whammo.

#40 Alan on 02.09.12 at 12:43 am

Spent an hour this afternoon at Starbucks on Oak St. in Vancouver. There were two different real estate agents with two different sets of buyers signing paperwork. Say what you want or wish what you want, but the buyers are still here and writing checks.

#41 Keith in Calgary on 02.09.12 at 12:48 am

Watching a US TV station tonight and a commerical comes on…….it went exactly like this…….

“The American dream of home ownership is in danger”……..”now more than ever”…….”licensed realtors and the National Association of Realtors are here to protect it”

I threw up in my mouth.

#42 Terra No-more on 02.09.12 at 12:48 am

Harpo’s busy blowing kisses at Chinese marines while back home its igloo meltdown.

#43 45north on 02.09.12 at 12:49 am

Larry MacDonald: The Bank of Canada will only raise rates when the economy is growing vigorously

this doesn’t make sense to me that the B of C can arbitrarily keep interest rates down. I have the quaint notion that someone has to save money for someone to borrow it. Here’s my hero Greg:

don’t let anyone tell you the government can control lower rates for an extended period of time.

http://www.theeconomicanalyst.com/content/treb-taking-page-nar

Jim: Sorry realtors looks like many of you will be working for $10 an hour.

or not

Qazmar: I live in BC pop 4,510,858. Vancouver’s(Metro) pop 2,313,328 . So 51% of people live in the Metropolitan area of Vancouver. If some thing happens to Van I’m damn sure it will affect the other 49%.

Demographia put four cities in BC as “severely unaffordable: Vancouver, Victoria, Abottsford and Kelowna. Severely. Fort St. John is not going to pull the rest of BC up.

http://www.demographia.com/dhi.pdf

#44 When I come to this blog and it says "0 comments", I know that 25 bloggers are typing their 1st comment on 02.09.12 at 12:55 am

26th !!!! oh yeah baby !! YEAH !!!!

#45 poco on 02.09.12 at 12:57 am

#216 Doug on 02.08.12 at 8:51 pm –from last post–

It’s interesting to see the flyers from the Real Estate agents that show their “Sold” listings, but they only show the asking price, not the selling price. They used to be very proud of showing how much more than asking the homes were getting. Now the reverse seems to be happening.
____________________________________________
Sotrue –i have many condos on my list of properties that i’ve found that are presently listed at a price that is so close or below what the seller paid—in the last week i received two of those flyers –the pumper type—here are the solds –both in Pt Coquitlam

v918903–203-2432 Welcher–bought sept 2006–279k—-listed nov2011 299.9k—reduced jan2012–285k—haven’t got the sale price yet but the link below is the twin–also at 285k –you can see that 285k will buy you the same today as it did over 5yrs ago
http://www.realtor.ca/propertyDetails.aspx?propertyId=11290318&PidKey=375166606

this second one is more in line with our story for the day(or did i read that yesterday)
v919803–#112-2484 Wilson–bought in feb 08–349.9k–listed june2011–339k–recently sold for 298k

again you have to look at the year of the purchase and price to see where this market has come from and where it is now (CREA pumping doesn’t help at all)

#46 harden on 02.09.12 at 12:59 am

thanks Van Guy. i see 2725 w 30 was listed below assessed value of $3,171,200.. and based on the bidding war that strategy evidently worked, wow… must be a big lot? these types of bidding wars have become a rarity round here in recent months – congrats to the seller, and pity the greater fool!

#47 ADoseofReality on 02.09.12 at 1:01 am

blah, blah, blah,

wake me up when the crash is here.

#48 Ronaldo on 02.09.12 at 1:03 am

http://www.investorvillage.com/groups.asp?mb=6966&mn=37021&pt=msg&mid=11435396

Abbott and Costello discussing unemployment rates in America.

#49 Van guy on 02.09.12 at 1:04 am

PS: there are 300 houses in that price range to choose from in Van West… so why the bidding war? Surely because the realtor low balled to attract attention. No miracle under the sun.
——————————————————————
This one is in prime location of Mackenzie Heights. Fabulous panoramic views and A HAM favorite facing south. (good feng shui) They sure did over pay. This home is on a 7400 sq/ft lot which is the larger ones in the area. I think the buyer did not care too much about the price as that home is possibly o the best street for the area. Here check out this dump.

This link will be removed very soon as it has been sold.

http://www.realtor.ca/PropertyDetails.aspx?propertyID=11512807&PidKey=1181804118

#50 City Slicker on 02.09.12 at 1:07 am

Here is an interesting, but nothing new, comment from your second favorite website Garth, “The Economic Collapse” Blog regarding US housing:

“It’s all deja vu. In 2006, I was all over the blogosphere screaming about the ridiculous house prices and house bubbles. No one cared because everyone was making so much money from flipping houses, riding high from refinancing and seeing their the value of their houses increasing each month. Those of us who decried the zero down, fog in the mirror loan approval process, were ridiculed and were called sour grapes, called jealous of those making money “hands over fists” in the real estate market.”

Does sounds eerie familiar to Canada, no?

BTW Garth you make a good point about FB. They’re doing an IPO possibly at it’s peak, so where is the share price going to go from here. Just a thought.

#51 City Slicker on 02.09.12 at 1:09 am

BTW folks get ready for the banks to take your houses when they jack up interest rates and foreclosure season begins. While the tax payers will front the bill. Great system, eh?
Who didn’t see this coming.

#52 When I come to this blog and it says "0 comments", I know that 25 bloggers are typing their 1st comment on 02.09.12 at 1:10 am

Did the US RE market go through this much denial?
Anyone?
I don’t think so…but I’ve been wrong before, well not often..

#53 Peter Goesinya on 02.09.12 at 1:15 am

Just got my PAL in the mail today.
Time to get some guns and ammo.
As for Amazons, already got em locked in my dark, creepy basement waiting for there master.

#54 Ronaldo on 02.09.12 at 1:21 am

http://uncommonsensecanada.blogspot.com/2010/06/abbott-and-costello-meet-economy.html

European crisis explained.

#55 Robert Copeland on 02.09.12 at 1:21 am

What’s his rule of 90?

#56 Nostradamus Le Mad Vlad on 02.09.12 at 1:26 am

-
Lanny MacDonald and Sarah Daniels sound as if they are equals and opposites, with Sarah promoting giant mosquitoes in the backwoods of Hinterland, and Larry (sorry, Lanny) huckstering vast gobs of oil. #229 Bill Gable on 02.08.12 at 10:05 pm spoke eloquently of Sarah. Glad to see Lanny suiting up again!

“Okay, so we’ll look at Britain, Spain, Ireland and China.” — See first link about 4Closures heading north in the UK.

“Real estate is emotional, to err is human.” — Put the two of them together and this is where we are.

“. . . this real estate crash talk . . .” — Hmmm. More like trash talk from what I see, which ain’t much.
*
45K a year First American foreclosures, now UK; Sarkozy is one of the main reasons Greece is in trouble. F’ing neocons — first, forcing Ireland to re-vote on EU membership after it was rejected, now Greece; Greece’s Crewcut, abd Ordinary Greeks get diddly squat; Become debt free (either win a lottery or use proceeds from TFSA); History of OAS; Public Transport is far cheaper than driving; Chinese Inflation heating up; Hedge Fund managers are happy; 11:25 clip MK Ultra and the Cdn. Connection; Further to links re: BDI — Why is shipping slowing? China Electricity use drops, and further; Bernanke making sense? Nah.

Knackered Housing, that is; ECB Debt forgiveness for everyone? Distressed Property in Dubai; Walmart in the oil business; Two Bln. jobs gone by 2030; 18:19 clip Jared Diamond on why societies collapse (all good things must come to an end); 12:53 clip Did bailouts help or worsen housing? Further reading Lotsa links; Royalty Stocks for mining; Tech. Stocks Avoid these.
*
disciple – Life is electrical; Lost World Found Further to last night’s link, Russia has won the race; Straits of Hormuz What will China and / or Russia do? So the US is setting itself up for a showdown with Russia, and Fake Terror is being used to justify the west’s crusades; No Money, no problem Iran can use its oil-for-rice exchange with India, and India could even out payments with gold; Tsunami of Clouds Somewhere off Florida; The heartland of NAmerica at night, pix taken from the Space Station; Vermont vs. Monsanto; Rogue Wave No pix, but it must have been a helluva wave; Ditch iTunes and use Spotify.

#57 toro on 02.09.12 at 1:26 am

What a pathetic blog this is , you MR Turner are a damm fool i live in the gta and i don,t see anything going down only up there was a 11 % percent increase in building permits just announced what the hell are you talking about that things will drop ?I don,t see anybody buying your crap, average house in toronto is 700g,s cumon give it up …

#58 Chris scott on 02.09.12 at 1:29 am

For those interested in the FB IPO, it’s interesting to contrast it with that of Google’s.
http://www.tnl.net/blog/2012/02/05/facebook-ipo-vs-google-ipo/

#59 Michelle on 02.09.12 at 1:33 am

Heh, heh, heh… “Lobsterville”.

My girlfriend who grew up in Newfoundland used to be embarrassed taking lobster sandwiches to school because “that’s what the poor people ate”.

My, how times have changed :)

#60 mad vancouver on 02.09.12 at 1:36 am

@Alan

Whaaaa, this is solid data! You should find a job in statistics.

#61 NFN_NLN on 02.09.12 at 1:36 am

#83 Freedom 55 on 02.04.12 at 1:56 am

I made $92,000 U.S in 9 months last year working in Dallas and I got $260 back when filing my W2

Hey Freedom 55, a couple of posts back you mentioned you were doing telco work in Dallas, is that correct? What kind of work are you doing for $140k/yr?

I work at a Telco but most of the services are now applications running on AIX, SPARC and some X86 so it feels like generic sysadmin work to me. Are you working on legacy telco specific systems or is this work a compsci should be equipped to handle.

Just curious about the job opportunities down there as Canada just doesn’t seem worth it anymore.

#62 Devore on 02.09.12 at 1:49 am

#40 Alan

There were two different real estate agents with two different sets of buyers signing paperwork. Say what you want or wish what you want, but the buyers are still here and writing checks.

Wow, all TWO of them?!

Newsflash: buyers are always here and writing checks.

#63 Devore on 02.09.12 at 1:50 am

#40 Alan

You and Van Guy should get together and buy some bridges.

#64 The Thing in the Basement on 02.09.12 at 1:54 am

12 MJG – no harm in receiving an offer. Maybe its $200k
more than what you think its worth. Only one way to find out.

#65 Sgip on 02.09.12 at 1:55 am

When Irish Eyes Are Crying
First Iceland. Then Greece. Now Ireland, which headed for bankruptcy with its own mysterious logic. In 2000, suddenly among the richest people in Europe, the Irish decided to buy their country—from one another. After which their banks and government really screwed them. So where’s the rage?

http://www.vanityfair.com/business/features/2011/03/michael-lewis-ireland-201103

.
.

#66 Mel on 02.09.12 at 2:00 am

Party on Garth:

Concerning where we are in terms of cycles etc….

In my humble opinion.

We have turned the corner to the dark side. Be it for housing, or, economy.

As I have said many times to my friends,” you will know when you are close to the bottom in housing when income, rent will reflect prices”. And that my friend, will be a long road especially now that incomes are falling in the world economy. May patience be your friend. While you wait, find another opportunities for your savings.

#67 Puzni on 02.09.12 at 2:14 am

Article fro msn investors warning about dangers in condominiums:

http://money.ca.msn.com/investing/deirdre-mcmurdy/danger-signs-in-the-housing-market

#68 Jody on 02.09.12 at 2:25 am

Facebook is so 2009. Twitter is going good now but just take off the last 3 letters and that’s what you are if you use it. No, the next big thing hasn’t come up yet who knows what it might be. Maybe it will be the Chinese version of Farcebook, RenRen, who knows. I get a kick out of the Alberta governments quest to get the pipeline built to Kitimat, hey, there ya go, real estate in Kitimat, only place to go is up! 20 years from now when every enviromoron has had their say about the proposed pipeline China and India will have burnt out and the pipeline will be useless. Now the hippie morons in BC want stuff from us. Why did we have to build that stupid railroad, we should have told them to go ahead and join the yanks back then. Canada, bribing provinces since before confederation.

#69 Comrade-Conrad on 02.09.12 at 2:30 am

Thank you for not naming names, this must be Leduc. NOT EDMONTON! OR St. Albert. It will never effect us here, the boom is coming or so says my RE agent mother.

Using Garth’s math we, have scored a wonderful rental home, saving anywhere from $250-$400 a month if we could somehow purchase this or a similar home.

Geeze I have been so house horny for years, this website is like salt peter for my house horniness!

Our TFSA will get fat with REITs and other money spewing investments that are quick to dump. ME so Horny for TFSA and getting stacks of cash.

Thank you for this blog and informative articles and links shared by others.

#70 DonDWest on 02.09.12 at 2:44 am

People who are buying Facebook stock are forgeting the .com bubble.

#71 SafetyBear on 02.09.12 at 3:00 am

A typical example of what happens after 1 year of declines (2011) is punctuated by a (seasonally adjusted) 0.02% gain

http://www.smh.com.au/business/a-property-crash-dont-bet-on-it-20120201-1qthh.html

Never trust the mainstream media. Not anywhere.

#72 Nate dee o double on 02.09.12 at 3:29 am

Food for thought….marijuana growers alone bring in anywhere from $3-7 billion to the BC economy. What do you think all those big black F-150s and Escalades were paid for with? Housing could be partially fueled by this

#73 Don on 02.09.12 at 3:35 am

#40 Alan on 02.09.12 at 12:43 am

Spent an hour this afternoon at Starbucks on Oak St. in Vancouver. There were two different real estate agents with two different sets of buyers signing paperwork. Say what you want or wish what you want, but the buyers are still here and writing checks.
********************************************

Say what you want but wouldn’t these buyers be greater fools? What weblog have you come to? Just because it doesn’t happen on your timeline doesn’t mean it’s not about to. The longer it inflates the bigger the pop. One thing is for sure “ignorance is bliss”.

#74 Freedom first on 02.09.12 at 3:43 am

I have no idea what it is like to sink all of ones’ money into one asset, and to also have this asset leveraged as well. Reminds me of one of Warren Buffets’ quotes: “Leverage is fun on the way up, on the way down…..not so much.”

For myself, I have always liked: cash, cash flow, diversified assets-minimum of 8-but I prefer more, income streams, financial knowledge from financially successful people/books, and no debt. Also, as well, good health care plan, plus little talked about asset that is of extreme importance……looking after my health…..prevention is the best cure…..for everything. I love reading Garth’s blog, for the wise info, as well as from the “What not to do reinforcement”……..that shows me I am on the right track. Listening to Garth will keep anyone from financially destroying themselves. Forget anything else……you can’t afford it:)

#75 Ex-Cowtown on 02.09.12 at 3:52 am

#40 Alan on 02.09.12 at 12:43 am

Spent an hour this afternoon at Starbucks on Oak St. in Vancouver. There were two different real estate agents with two different sets of buyers signing paperwork. Say what you want or wish what you want, but the buyers are still here and writing checks.
++++++++++++++++++++++++++++++++++

Nobody says that all buying and selling stops. It’s just at different prices. Did you look at the paperwork and see the deal?

Maybe the buyers stink bidded the property and got it.

#76 Mike on 02.09.12 at 3:55 am

Garth: “Waaaah! Waaaah! Real estate is gonna crash! You’re all sheep! Waaah waaah I’ve been saying this for years! Waaaah look at my blog and how smart I sound waaaaaahhhhh waaaaaahhhhh!”

Thanks to Re/Max for that commercial message. Now back to regular programming. — Garth

#77 T.O. Bubble Boy on 02.09.12 at 4:03 am

BMO’s quote in the G&M article is ‘interesting':

Frank Techar, head of personal and commercial banking in Canada for BMO. said BMO began offering the 2.99-per-cent rate as a way to promote its 25-year mortgages, rather than 30-year amortizations. “We went to 2.99 per cent to draw attention to the benefits of having a mortgage with a maximum amortization of 25 years,” he said.

What percentage of media outlets reported on the “benefits of a 25-yr mortgage” when the 2.99% rate came out? I’m pretty sure every single headline read something along the lines of “YAY HOUSING BUBBLE! RATES ARE LOWER THAN EVER!”.

#78 shanks on 02.09.12 at 4:15 am

Garth, if i may ask another question… What do you think happens to rural land values when a housing correction occurs? do they drop as well, or maintain value?
i know that that is two questions, I appreciated your advise regarding the cheapness of this land investment i am considering. And noting the ratios of %net worth in illiquid assets. the land is not all that cheap, there is just a lot of it… $1k per acre, is that a lot or a little?

#79 Pr on 02.09.12 at 4:44 am

…No wonder my younger colleagues are leaving and taking jobs elsewhere.”
What about , taking, this out of control, Government, back to place. Its sad your younger colleagues should not have to leave, this is 100%, because we, let the government inflate real estate to this point. Start complain with letters to you PM and Flaherty, will see later the result.

#80 I'm stupid on 02.09.12 at 6:36 am

Money is a product to banks, just like a flat screen tv to best but. The only reason it goes on sale is because they are unable to sell it at regular price. The 2.99 special should scare the crap out of everyone because it’s a clear indicator that most can’t afford it at regular price.

#81 Taipan on 02.09.12 at 6:39 am

I’ve been a developer for over 20 years. I don’t fit the normal mould, nor do I fit into cartel mentality. I’ve always been a lone wolf and it probably makes me a nasty snitch because ill call it as I see it.

Everywhere in the world got a real estate bubble. Not just the USA or Ireland or Spain. We all got the same bubble.

Nobody was smart and was rewarded by an increase in their property values. The values increased because of reasons beyond your control. Too much easily available credit, funnelled into real estate, through the banking system.

The flood of money that went out is now being rewound, which means a credit crunch worldwide.

Every bubble will be smashed, including Canada and especially Vancouver which will see 50% reductions (some areas more). And even then Vancouver will still be expensive. That shows how ridiculous this has all become.

Personally as I realised the situation I’ve been unloading every bit of property I’ve got. (Last 3 years).

My net worth? $20m+. If you don’t believe – fine. That’s what it is, and I’ve worked a lifetime for it in the development game.

Big thankyou to Garth for this blog. I read it every day. I read it for the anecdotes. Garths observations put flesh on economic reality.

I’m totally sickened worldwide by the corruption of economic statistics in favour of their political masters.

If you want to know what is happening, forget about mainstream media, and more than likely you will need to VERY carefully select reliable sources of data, who will often tell you things the broad public are uncomfortable with but which as a business person you must deal with.

#82 Young Old Fart on 02.09.12 at 7:08 am

#7 jim on 02.08.12 at 10:50 pm
… looks like many of you high school educated fools will be working for $10 an hour.

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

Careful with judgements Amigo, this high school dropout has a portfolio of close to 4 million (over 50% liquid).

“What’s in YOUR wallet?”

#83 I'm stupid on 02.09.12 at 7:26 am

Facebook is a dog. Stay away or lose your shirt. Facebook will be pumped based on nothing. A 100 billion value for a company that can probably generate 1 billion in profit at best that’s a joke. This is the second dot com boom bust.

#84 Peter NYC on 02.09.12 at 7:29 am

I’ve done a bit of traveling lately outside my NYC stomping grounds. Toronto over the holidays, Orlando, Portland OR, now I am sitting in Seattle, will be off to phoenix tonight. Summation: real estate is a four letter word down here compared to up in Canada

If you bought your home more than ten years ago you probably have some equity. If you bought in the last 10- however smart you are you are underwater to the bank

Nobody thinks realestate is a good long term investment anymore – not even the financial advisers who are my clients and should know better

On my way home I will check out 3 4plexes for sale that nobody wants. Each for around $180,000 each generating at least $2400 per month rentals. Buying them may have been a tough call back in 2006 when they were selling for close to $400,000 less of a challenge for me today

I wouldn’t touch real estate in Canada if you paid me right now!!!!!

#85 T.O. Bubble Boy on 02.09.12 at 7:47 am

An extra note from #56 Nostradamus Le Mad Vlad’s link on Distressed Property in Dubai:

One of the failed projects in Dubai is The Trump Towers… Sound familiar Toronto???

(how many failed investments before he goes broke again?)

#86 househornyhousewife on 02.09.12 at 8:04 am

Garth,

Why should Susan care about a loss in the value of her condo ? If her parents gave her the money for the 20% downpayment then it is their money that went in the garbage heap. If she can afford her mortgage payments, the condo fees, municipal taxes and any repairs that need doing, and she is very happy living there and does not need to move, then what the heck is she freaking out about ?

$215,000.00 less the 20% downpayment leaves her with a $172,000.00 mortgage which is right around the current market value of her place. In the future, if she does decide to sell it, she can stage the place to look like an HGTV renovation and I am sure that she would get at least the full value of her mortgage (never underestimate how superficial people really are ’cause they’re even worse than that).

Susan, thank your parents for the money, work out a good budget so that you can manage your life in the financial sense and enjoy your new place.

Now if you said that Susan had bought the place with only 5% down (that she borrowed from ‘five fisted Guido’) and she was barely able to make the mortgage payments much less the condo fees and taxes so she would likely have to sell the place just to stay alive … well then that would be very unfortunate indeed.

Oh, and I personally am glad to be the resident of a ‘lobsterville-like’ town (and I also own TWO cats) as opposed to one of the more important, centre-of-the-universe big cities in the great white north. Over here, houses are still selling at normal prices and at the moment I have at least two separate clients banging down the door to bid on my house (and it isn’t even on the market yet ! agents simply know we are looking to move). Outside of the big bubble, life goes on as before.

I only hope that the big cities don’t end up screwing things up for the rest of us as their downfall in real estate will undoubtedly have an effect on government policy, interest rates, the financial and job markets and who knows what else ? Whatever you guys do though, just stay in the city and don’t come here.

HHHW

She is young, and has lost her mobility. Do you remember young? — Garth

#87 Shane on 02.09.12 at 8:06 am

Hats off to Taipan.. #80 I totaly agree.

Shane

#88 nickolaos vlittas on 02.09.12 at 8:11 am

Garth, why do you continually try to help people and warn them about what lies ahead? Losers fund winners lifestyles. Have you ever read a history book? Why don’t take a break for a little bit. Chill out in Monaco or Turks and Caicos for a few months, maybe a year, while you’re still young and watch things unfold. One of the top 5 regrets people have when they’re near death is that they worked too hard. Then, when you come back, You’ll be like the buffed version Hey-Zeus and you will be worshiped! Harper will be that nasty lion in Disney’s Lion King banished to live with the hyenas.

http://www.youtube.com/watch?v=Z1iqvYo9KSA&feature=related

#89 worried realtors on 02.09.12 at 8:12 am

Please worried realtors spare us your lies of bidding wars or a healthy market. The fact is you are here and worried about the current economic realities of a crashing market. Vancouver is leading the housing crash in canada and that’s the word being told by realtors here in Toronto. Was at a coffee shop and a group of people talking about the housing downturn and how obvious is it to see. They even talked about a friend who can’t rent or sell their investment condo. Look at HELOC and loc interest rates going higher since government won’t cover those losses. There is no HAM that juiced the market . It was CHMC and its limit is almost reached. Take away CHMC and the housing market crashes 50% over night and you uneducated high-school realtors know it.

#90 bigrider on 02.09.12 at 8:27 am

Another explanation for the condo boom.

http://www.moneyville.ca/article/1127883–2011-census-young-professionals-baby-boomers-fuelling-canada-s-condo-boom

#91 neo on 02.09.12 at 8:40 am

The hits just keep on coming. Deleveraging anyone?

http://www.theglobeandmail.com/report-on-business/economy/optimism-over-economy-drops-as-canadians-struggle-to-save/article2331733/

#92 whiny on 02.09.12 at 8:47 am

“He’s a former economist, apparently, who’s turned into a financial journalist and probably has cats.”

Ha! Zinnnnngggggg!

#93 Steve on 02.09.12 at 8:58 am

Hey, what have you got against Lobsterville? Real estate is cheap, there are no traffic jams, and very little pollution (except what blows in from Toronto). And there are lots of jobs, assuming that you are willing to commute to Fort Mac.

#94 Alan on 02.09.12 at 9:09 am

Response:

Growth rate in Vancouver just published states we are seeing growth in outlining areas and moderate growth in central Vancouver.

Building permits up and I see houses getting built everywhere in addition to multi-family.

Are we seeing some softening of prices? Yes, but as ya’ll like to say, prices don’t go up forever. This does not mean prices are tumbling.

http://www.vancouversun.com/business/Housing+starts+urban+areas+sharply+January/6119726/story.html

#95 a prairie dawg on 02.09.12 at 9:20 am

Here’s an interesting trend I never thought I’d see in my lifetime. Commodity driven, sure, but still…

– — –

“The most telling statistic to emerge from the new census was the revelation that for the first time in Canadian history the proportion of the population living west of Ontario is greater than that living to the east.”
http://fullcomment.nationalpost.com/2012/02/08/john-ivison-outdated-federal-policies-killing-jobs-in-western-canada/

#96 Q on 02.09.12 at 9:25 am

To all defending the Vancouver real estate market;

For some reason Vancouverites have short and selective memories when it comes to both politics and real estate. Politically “Gregor the green” has managed to screw up all thet he interferes with, costing the city a fortune….and we won’t even start with the liberal disaster provincially. But nthis blog is about real estate, so anyone over 50 has no excuse to get caught in the Utopian trap. I remember 1980-81 very well and the 50%+ collapse in realestate values there. You couldn’t help but see it coming, but the granola crowd just kept buying, because Funcouver is different…right? Wrong…Vancouver, the worlds largest granola bar (take away all the fruits and nuts and all your left with are the flakes) will once again collapse faster than the first tower….leaving its’ hedonistic residents scratching their heads and looking like deer caught in headlights….saying “wow, didn’t see that coming”. Then the whining will begin….again, all the way to the black hole of real estate…Whistler.

#97 neo on 02.09.12 at 9:26 am

at #79 I’m stupid

Correction. Debt is the product of a bank. Money is something I earn interest on.

#98 jess on 02.09.12 at 9:28 am

payday plastic

http://money.cnn.com/2012/02/09/pf/first_premier_credit_card/index.htm?source=cnn_bin

“Credit Limit Increase Fee.”
claiming to be helping people with bad credit. How are you helping them by charging these outrageous costs of your products?” he said.

#99 a prairie dawg on 02.09.12 at 9:30 am

#80 Taipan

I think you meant “mold”.

Unless you’re on the west coast, then never mind. lmao

#100 Ronaldo on 02.09.12 at 9:39 am

#80 Taipan – good post. I agree with your assessment of the Vancouver RE situation. 50% is not unrealistic over the next 3 years.

#101 Ronaldo on 02.09.12 at 9:45 am

#79 I’m Stupid –

“Money is a product to banks, just like a flat screen tv to best but. The only reason it goes on sale is because they are unable to sell it at regular price. The 2.99 special should scare the crap out of everyone because it’s a clear indicator that most can’t afford it at regular price.”

Yet depositors lend/give it to them for 1% so they can lend it back to us for 6 and 7% for our LOC’s. Makes sense to me. That’s why you invest in bank stocks.

#102 debtified on 02.09.12 at 9:48 am

#95 Devil’s Advocate on 02.08.12 at 9:13 am

Oh man I wish I had the opportunity to wager against the lot of you. Please tell me of a way. There must be some way I can lay my money down in wager against the mindset and predictions of the pups and poodles cooped up here like a bunch of clucking chicken littles. Such an easy target… There must be a way.

DA, you must have missed this:

#139 debtified on 10.07.11 at 11:57 am

#89 Devil’s Advocate on 10.07.11 at 9:02 am

“The Bet”
*************************************

Can I be in on this bet?

DA, you buy a house (or houses) of your choice that is (are) listed on the MLS now. I will buy stocks of my choice that are listed on the TSE at the same time. We hold both “investments” for a pre-defined period of time.

I will match the total cash that you put in including transaction costs.

We track carrying costs, to be subtracted from the proceeds upon liquidation. This includes, among other things, maintenance costs, utilities costs, taxes, interest costs, etc…

Upon liquidation, we subtract from the gross proceeds the initial purchase cost, transaction costs and carrying costs. Who ends up with higher net proceeds wins.

The difference in net proceeds (absolute value) is the price, with the lower net proceeds as the minimum.

Should one party fails (or refuses) to liquidate by the predefined time, such party is deemed to have lost the bet on default. The price will be equal to the total of all invested amount by the party that defaults, including transaction and carrying costs.

I give you credit for proposing the bet and I will understand if you’d just rather do it with Garth. Goodluck!

Good comment on #87, btw.

#103 Ronaldo on 02.09.12 at 9:52 am

#77 Shanks – back in the early 80’s, rural land dropped like a rock. A 5 acre parcel that I had purchased in 74 for 12,500 rose to 45,000 by 1979 only to drop back to 12,500 by 1989. When inflation started to rear its head as it did in the 70’s there was this idea that people would return to the land (they were called the “New Rustics”). So, they bought rural properties then realized how expensive it was to live this lifestyle with having to drill wells, supply power, etc. Not to mention the cost of fuel to run back and forth to the towns and cities. Was a good idea til it wasn’t.

#104 GTA Girl on 02.09.12 at 9:54 am

Dearest Toro,

Loved your post. It made me laugh. Hopefully it was a parody. Otherwise your bad spelling, type errors only show that it’s rather difficult to type on your blackberry while driving your Aston Martin to the condo sales office after a night of clubbing with your 20yrold sales girls on a coke bender…..

It’s so hard to be a developer god in a city of sheep

#105 truth hammer on 02.09.12 at 10:11 am

BTW……The Thai government allows no foriegn ownership of land…….hence no HAM….no foriegners ….period…….including Canadians hence speculation is strictly limited to the local market and almost non existent. Rates are the same ..5yr….3.25%……25. There is a lot of product. They give condo’s away so cheap that it seems like a consolation prize…..taxes…near zero……hydro and power…around $40 p/m…..double that with kids who use the aircon all the time…still cheap as borsht though compared to tax killing Canada eh?

You can buy a very nice new house ……2600 -3000 sq ft…..3 level…4 bedroom…2 kitchem…..double garage……50 x 200 lot in the city for $100,000.00 with trimmings Canadians would drool over. Most products in new subdivisions come fully decorated and furnished included in the ask.

BTW …do you know what the taxes are on the development of a single family prop in the Shitty of Vandumpster? I’ll let you get mad enough to look it up. Ever wonder why the government people can afford such fine chattels and appurtenances?

The pimply mayor was going to set up a task force to look into the lack of affordability..Bwahahahahahahahahaha…why doesn’t he just walk downstairs to permits and planning and ask at the counter. Of course he knows that taxation is the biggest single input cost……he just won’t say it publicly because he knows the public would get very upset.

#106 Stevenson on 02.09.12 at 10:34 am

The media is fooling you? It’s a conspiracy! You guys are too much…. You visit UFO blogs too?

Remember the last time we were told to avoid real estate investments? Spring is coming soon and we WILL SEE weather it was a good investment or not for the major cities when we compare prices to last year.

It’s spelled ‘whether.’ — Garth

#107 Realitybytes on 02.09.12 at 10:40 am

Facebook, Google, LinkedIn, etc.. aren’t like the .com shams of 1998-2000.
They’re simple about genrating eyeballs and selling ads.
They’re the NBC, ABC, CBS of this generation.

Except for revenues and multiples. — Garth

#108 Halifornia on 02.09.12 at 10:42 am

When prices correct, say 10-15%, won’t that have a significant negative affect on Canadian GDP, since real estate is a large percentage of GDP?

If so, won’t the BoC be forced to keep interest rates low to address a stagnant economy?

If this is true, then the time to buy will be when interest rates are low AND a bottom in prices forms, as is arguably happening in the US now. Agree?

People who thought like that in the US were subsequently spanked. — Garth

#109 TonyMontoya on 02.09.12 at 10:48 am

@toro

Before the the giant sunami hit the beaches of Thailand, there were old locals, running up and down the beach warning people of the imminent danger.( They knew from experience what all the warning signs were.) Very few people took notice, and ignored these crazy doomsayers. When the 40ft wave crashed into their cozy vacation dreams it was to late.

Just because the wave hasnt reached shore yet, dont for a minute believe it wont. The warning signs are there, and your are fore warned. GET OFF THE FKN BEACH OR DIE!

#110 OneMoreThing on 02.09.12 at 11:08 am

#23 Junius on 02.08.12 at 11:39 pm

Smoking Man,

I love your posts, very interesting. I enjoy them very much.

One piece of advice for you, if you don’t mind….get yourself a pet Monkey, there is honestly nothing like it!

There is no better way to fall asleep than in the arms of your pet Monkey!

NOW HOW DOES SMOKING MAN RECOVER FROM THAT!

Garth, great post btw!

#111 sam.i.am on 02.09.12 at 11:16 am

@84 Peter NYC I’ll add a data point, I bought in 02 and am back to even now so your 10 year assessment is about right. I’m in the northeast though, not nearly as hard hit as many states.

(aside: the Toronto-based hgtv house hunting shows are comical now, common financial sense is completely gone)

It’s a pretty bad feeling to be underwater, even by 10% or less, when the market turns cold. It’s bearable as long as employment holds out.

I think the catalyst for a housing correction will be an increase in unemployment. De-leveraging of consumer debt will take much longer than it has in the US, because higher .ca tax rates leave less disposable income to put towards servicing debt, even though average incomes are approx the same.

Census data confirms the de-population of rural areas continues. I don’t see any good solution to this problem.

#112 Kilby on 02.09.12 at 11:21 am

#57 Toro.

Realtor or contractor? Out of work?

#113 GTA on 02.09.12 at 11:23 am

@tony.. Completely agree with you, but this generation seems to think they are smarter and more entitled… I’m young, paid off my house, work hard and I always say…. If I’m worried about climbing the next level in the property ladder at our income levels… What the heck are all these people doing. A wise old bay street investors advise, pay off your debts, max out your retirement savings and then you can afford to take chances… Conservative yes, but we will see in the end whether the gambling paid off for the risk takers.

#114 Devil's Advocate on 02.09.12 at 11:44 am

#106Stevenson on 02.09.12 at 10:34 am
The media is fooling you? It’s a conspiracy! You guys are too much…. You visit UFO blogs too?

Remember the last time we were told to avoid real estate investments? Spring is coming soon and we WILL SEE weather it was a good investment or not for the major cities when we compare prices to last year.

It’s spelled ‘whether.’ — Garth

I will extend the benefit of the doubt to you Stevenson and consider it an intentional crafty play on words; “spring is coming…” and “weather it was…”.

};-)

You guys went to realtor school together, right? — Garth

#115 Kris on 02.09.12 at 11:49 am

Here outside the GTA (Oakville/Burlington) listings are few and far between for avg SFHs. No signs of a correction, yet.

The Spring market will speak volumes, folks – Till then all we have are predictions. In about 4 weeks the fun should start. Let’s wait & watch, if 2012 is the year RE turns around in the GTA, or continues to overheat.

#116 Van guy on 02.09.12 at 11:51 am

#99 a prairie dawg on 02.09.12 at 9:30 am
#80 Taipan

I think you meant “mold”.

Unless you’re on the west coast, then never mind. lmao
——————————————————————-

Taipan is a Australian Property Developer. He made big $ off greater kangaros.

#117 Snowboid on 02.09.12 at 11:58 am

Banks cancel 2.99% early…

http://tinyurl.com/76n5rfp

#118 Bill Gable on 02.09.12 at 11:58 am

No more Greeters at Wal Mart. Boomers will have to stock and do regular stuff. This is the new Wal Mart – looks like Freedom 95 is the future.
Bleak? Try putting a CV anywhere – and if you are a certain age, tough job search.
My Doctor said he has been swamped by sleepless and scared patients. Tranquilizers are the new Molsons. So many of my cohorts are struggling – especially older Media types. There have been a lot of “restructuring”.
Most will never get another gig in media.

#119 Q on 02.09.12 at 12:17 pm

From the Washington Posts Mensa Invitational:

Cashtration (n.): The act of buying a house, which renders the subject financially impotent for an indefinite period of time.

#120 45north on 02.09.12 at 12:25 pm

TonyMontoya: Just because the wave hasn’t reached shore yet, don’t believe it won’t.

we’re going to discover the government doesn’t control house prices, it doesn’t control interest rates and it doesn’t control employment.

Year of the dragon, doesn’t mean the dragon is on your side.

#121 Herb on 02.09.12 at 12:26 pm

#80 I’m Stupid,

no you’re not. You’ve done cracked that code.

#122 Herb on 02.09.12 at 12:40 pm

#85 T.O. Bubble Boy,

I’m sure that The Donald pays himself first in all of his investments. If your liability is limited and you make enough for your advice, direction and persona, does it matter if investments fail?

#123 Van guy on 02.09.12 at 12:44 pm

#63 Devore on 02.09.12 at 1:50 am
#40 Alan

You and Van Guy should get together and buy some bridges.
————————————————————
Only if you and poco hold hands and jump of our bridges.

#124 Herb on 02.09.12 at 12:53 pm

#105 Truth Hammerer and idem. #235 yesterday,

if I had any reason to suspect that you knew anything about how to govern at any level, I might be interested in your views. But, since all you’re doing is repeating the “public service evil” mantra to prepare the ground for the right wing attack on effective government, there is no point to a discussion.

I’ve asked you before about the functions of government and the personnel resources required to carry them out. Your silence has spoken eloquently.

#125 Bailing in BC on 02.09.12 at 1:07 pm

Tee Hee.

So many realtors here today. Did CREA send out a edict? So little substance to their posts. It reeks of FEAR.

…and yet our friendly neighbourhood realtor Devil’s Advocate is nowhere to be see. Really the guy has been extremely patient with us in explaining why we are wrong. You gotta give him credit for that. At least he strung some sense into his argument, not like these new guys.

I guess it’s a case of BETTER THE DEVIL YOU KNOW

#126 Huuk on 02.09.12 at 1:12 pm

I live south of the 401 in North Toronto in a rental. I want to buy so that I can expand my family and have a place to call my own for the next decade…not trying to make a quick buck on a flip, it in for the long haul. Prices are going crazy in my area. I think and hope a 15%-25% decrease occurs, but it sure does not look like it! A 40ft lot with virtually anything on it is going for over a million.
Garth, is the cooling going to happen in Toronto single family homes, or am I stuck trying to find a fixer upper in the burbs?!?

#127 Arshes on 02.09.12 at 1:21 pm

@ #69 Comrade-Conrad

LOL it is actually Edmonton Garth is talking about. If you go back to his last blog entry, or the one before? You can see the original posting, the person who purchased the condo, purchased it in Edmonton.

#128 DUI on Money Road on 02.09.12 at 1:29 pm

#78 shanks on 02.09.12 at 4:15 am
———————————————-
What do you plan on doing with the property?

Think about what you will get from the property….if you buy 100 acres for $100,000, you are losing opportunity cost on that money (~$8,000/yr).

What is the 100 acres of land in the middle of nowhere providing you that is worth $8,000/yr?

Are you going to grow coffee beans on it?

#129 Chuck on 02.09.12 at 1:51 pm

Great post. Great comments.

But what does HAM stand for? From the comments I gather you’re talking about house horny asians keeping the vancouver market afloat. Horny Asian Money?

Google just gives me recipes…

#130 M----+ on 02.09.12 at 2:06 pm

A house is not an asset unless if it is sold or if it is rented for profit. If you live in it then it is a liability, because you are paying the bills, taxes, maintenance etc.
Assets put money in you pocket, liabilities take it away.
The sooner people understand this the better it will be for the new generation that the banks want to trap.
And for the people that say the house prices will keep going up, ask this: Do you have a crystal ball?

#131 jess on 02.09.12 at 2:11 pm

gaga’s 1b. twitter fans created her own social networking site…next gaga bonds?

#132 Sebee on 02.09.12 at 2:27 pm

As you already likely know, yet another example of US efforts to absolve banks of liability for chump change.

When will everyone wake up to the fact that so many backs are against the wall they will do everything on this side of the 49 to keep this bubble as-is in the very least.

http://money.cnn.com/2012/02/09/real_estate/mortgage_settlement/index.htm?iid=Lead

#133 Daisy Mae on 02.09.12 at 2:30 pm

CAPITAL NEWS, Feb 9/12: Letter to Editor:

“Paying for my bargain $8.77 replacement toaster, I was astounded to find the total price was $12.35. As of October 1, 2011, anything that is plugged in, in addition to the regular 12% HST, is subject to a provincial Environmental Fee of $2.25, which is also HST-taxed. So the total tax…is a whopping 41%!”

(Her OAS/CPP increased 1.6% last July, she states)

#134 eagle eyes on 02.09.12 at 2:43 pm

In 2022, for every 2 working canadian there will be 1 retiree. Currently it is 4 working to 1 retiree. I have told my kids to look for jobs elsewhere and move out of Canada when they start their careers. Does this mean that I don’t care about my country and fellow seniors? No it doesn’t. I contributed to the system and will either reap the benefits or suffer the losses. But I don’t want my kids to start their working lives paying for 1/3 of the population.

#135 jess on 02.09.12 at 2:48 pm

49-State Foreclosure Fraud Settlement Will Be Finalized Thursday
By: David Dayen Wednesday February 8, 2012 8:15 pm

States Negotiate
By NELSON D. SCHWARTZ and SHAILA DEWAN
Published: February 8, 2012

http://www.nytimes.com/2012/02/09/business/states-negotiate-25-billion-deal-for-homeowners.html?pagewanted=2&_r=1

The prosecutors and regulators still have the right to investigate
California’s attorney general, Kamala Harris, also pushed for her state to be able to use the state’s False Claims Act

#136 C on 02.09.12 at 2:50 pm

Speaking of TD, here’s the gist of the letter I received from them yesterday regarding the small safety deposit box I’ve had with them for around 17 years:

-The annual fee will be increasing from $42.50 to $60.00

This one’s a beauty!

-The fee to replace a single key will increase from $4.95 to $50.00!?! (quite the increase)

-The drilling fee will increase from $104 to $200.00.

From all the noise about TD raising the rates on their Unsecured LOC’s, looks like they are searching everywhere to raise revenues. Question is do they see something that is making them say S*&%, we better raise revenue pronto any way we can?

“Who knew banking could be this comfortable”? Yes soo comfy TD thanks.

#137 Brad in Calgary on 02.09.12 at 2:54 pm

#52When I come to this blog and it says “0 comments”, I know that 25 bloggers are typing their 1st comment on 02.09.12 at 1:10 am
Did the US RE market go through this much denial?
Anyone?
I don’t think so…but I’ve been wrong before, well not often..

Sure they did. Go to youtube and watch all the videos of TV interviews with realtors and economists mocking Peter Schiff when he was calling for the housing collapse months before it actually happened. And Mr. Schiff wasn’t the only one who tried warning Americans.

Having said that, the denial up here is not entirely misplaced. It’s actually quite logical.
U.S. housing collapsed mostly because of greed and speculation, not because of young people absorbing too much debt to buy their first dream home (like in Canada). Real estate here will rest for awhile, maintaining its value but not rising. Reason? There is simply no imminent catalyst to cause a severe correction.
It certainly won’t be interest rate spikes – Garth has been crying wolf on that issue for so long – it’s beyond comical now.
Employment remains strong. So with no layoffs, people will have no urgency to relocate or sell.
Boomers? Please. If they have poor cash flow, they will mooch off their kids for income or rent out their basements.
Debt levels are high, yes. But more importantly… they are serviceable and will continue to be.
That’s the key.

Show me a catalyst for a crash. A realistic catalyst that makes sense and could get momentum behind it. Not anecdotal stories like this blog is famous for. Put them all together, and what have you got? A slightly larger sample size that is still too small to mean anything.

#138 Harlee on 02.09.12 at 3:00 pm

Good post: #74 Freedom first.
A good post,because you kept it short but said a lot in it. (And things I too believe in ).

Stupid post: #76 Mike
How old are you? A baby of 3 or a 33-something that acts like a baby ? Just pathetic….(Good response from Garth!)

#139 First to last on 02.09.12 at 3:06 pm

Remember Garth imitation is flattery : http://www.cashmoneyinvesting.com/article/2012/02/what-creates-real-estate-bubble

#140 AlexanderTheGreat on 02.09.12 at 3:17 pm

Housing prices in Metro Vancouver have risen 128% since 2000. A house which cost $300,000 in 2000 now costs $684,000 in 2012. The inflation adjusted price on that $300,000 is roughly $390,000 in 2012, and it will be roughly $435,000 in 2016. So the market only needs to drop around 35% over the next 4 years and it will square up with inflation, just as Garth is predicting. Anyone who thinks a 35% drop (or more) is out of the question need only look down south. In fact, we will likely surpass that 35% and drop below the cost of inflation. Of course, if this happens, idiots who bought their homes in 2000 will still claim victory. “I paid $300,000 for my house in 2000, and today, 2016, it is worth $400,000 – I’m still up $100k!”. Actually, you’re down about 60k after realtor fees, due to a little thing called INFLATION. By 2016, this whole bubble will be wiped off the face of the earth and Vancouver will be brought back to reality.

#141 Daisy Mae on 02.09.12 at 3:18 pm

#62Devore on 02.09.12 at 1:49 am
#40 Alan

“There were two different real estate agents with two different sets of buyers signing paperwork. Say what you want or wish what you want, but the buyers are still here and writing checks.

Wow, all TWO of them?! Newsflash: buyers are always here and writing checks.”

**********************
Who knows? Maybe these ‘buyers’ were merely signing BRAs…

#142 MoneyMyHoney on 02.09.12 at 3:19 pm

“.. Brother Carney will smite that in the coming months, as he moves to contain our greatest economic threat..”
Garth, please don’t mention Carney anymore. In the past Carney was barking about rate increases, but now not that much now. As a short term fix, Carney and F engineered the current situation. I guess Carney got castrated in that process. He may not have the b—- to raise it anymore. He is finding himself in the same situation as Bernanke.
Yes, US created a lot of jobs. But Bernanke is not going to raise the rates anytime soon because of the underlying issues which are not solid enough.
If increasing rates was the solution for a government to have more income, Japan would have done that long back (and their story may be different).

#143 I work at a bank on 02.09.12 at 3:29 pm

An executive friend of mine works at one of the big 5 banks in the mortgage business. On average over the last few years would get about 1 foreclosure a month in the West Vancouver area. Recently the volume has increased to about 6 per month.

You won’t hear this in the news but the cracks are starting to show.

#144 Smoking Man on 02.09.12 at 3:31 pm

Junius tanks for ur suport, I’ve been chugging down some blu lable and it has been givin me the blus fo shore. A pet monky would be fantastik as my friends are quikly pulling away from me, i guess my drinking and crac smoking gave dem a scare. What kynd shuld i get?

#145 Realitybytes on 02.09.12 at 3:57 pm

[Facebook, Google, LinkedIn, etc.. aren’t like the .com shams of 1998-2000.
They’re simple about genrating eyeballs and selling ads.
They’re the NBC, ABC, CBS of this generation.

Except for revenues and multiples. — Garth]

P/E Ratio:

Google – 20
CBS – 16.7
Disney – 15.6
GE – 15.5

Not crazy out of whack.

LinkedIn is a bet on it’s current growth rate, and I’m sure I could find similar IPO examples over the years, some that paid off (like Apple), some that didn’t (like Apple if we were talking in 1996).

#146 Kip on 02.09.12 at 4:11 pm

“In fact, her delusional parents even gave her a wad of down payment money, so Sue chunked 20% against the $215,000 one-bedroom unit.”

So, if Sue got 20% from her parents then that would ne 45k. That means any loss is pretty much the parents loss so, who cares! Let the good times roll and let’s hear it for delusional parents!

#147 GTA on 02.09.12 at 4:14 pm

#115 Kris… There are tonnes of listings in oakville/Burlington for SFH… In fact the number is frightening when you drive through and see the signs. Just look at the red dots on mls.

#148 pbrasseur on 02.09.12 at 4:21 pm

Rates about to go up?

This guy is no slouch and seems to think so…

http://scottgrannis.blogspot.com/2012/02/upward-pressure-on-bond-yields-is.html

#149 Realtors in a Panic on 02.09.12 at 4:25 pm

Danger signs in the housing market
As a housing market correction looms large, Canadians ignore the signs — again

Average house prices, after all, have grown more than twice as fast as family incomes since 2001. Nationally, they are almost five times higher than the average household income, while just a decade ago that ratio was at 3.2. (Some cities are hotter than others: Vancouver’s ratio currently sits at 10 times higher than average household income, Toronto’s is at 6.7, Montreal’s is at 4.5, while Halifax’s is at 3.8.)

http://money.ca.msn.com/investing/deirdre-mcmurdy/danger-signs-in-the-housing-market
—————————————————————–

The average norm for household income ratio is 3-3.5 and so Toronto would have to CRASH 47.8% and Van would have to CRASH 65% just to get back to historical norms. WOW.. No wonder stupid uneducated high school realtors can not explain the numbers away. No wonder Canada average home cost TWO TIMES MORE then in the US. Stay away from RE and do not believe high school uneducated realtors.

#150 Kip on 02.09.12 at 4:27 pm

She would have bought that place no matter what anyone said. Why? She got the downpayment free!

#151 Bill Gable on 02.09.12 at 4:30 pm

Mr. Turner – you must be getting to the Pumpers, and Realtors, because there is some very uptight RE types hanging around today.

I would LOVE to see GARTH and YOUR MONEY on one of these House porn channels and watch some of the other hosts gag on their Mercedes leases.

#152 Smokin' Jane on 02.09.12 at 4:40 pm

#137 Brad in Calgary
“U.S. housing collapsed mostly because of greed and speculation, not because of young people absorbing too much debt to buy their first dream home (like in Canada).”

bahahaha !! yeah Brad, nothing to do with greed and speculation in Canada… specially in Toronto or Vancouver… no sir, no flippin’ or speckin’ there. People here just wanna have a roof over their heads… Nobody in Canada sees a house as a mean for getting rich overnight… Employment remains strong??? Boomers mooching off their kids income? What income ? After servicing the “very serviceable debt” there’s barely enough for food. Logical denial… hahaha, Brad… that was beyond comical!

#153 GTA Girl on 02.09.12 at 4:43 pm

Brad in Calgary; economic failure doesn’t require a catalyst. Sure a tsunami can bring about economic downturn, failure and low recovery…and horrors.

Debt to income is the reason your struggling to grasp. People can start feeling the stress and have no confidence in the economy or a fear of job loss.

Your thoughts on Seniors is very naive. Many seniors will not have options as simple as renting out their basements or ‘mooching’ off the kids. Many are one serious illness away from pure economic collapse. With no savings, investments or retirement funds other than a house.

Their children may be too in debt to offer much help.

But I’m certain Brad in Calgary, you can advise them properly. Like buy a condo and use their back issues of Readers Digest for cooking fuel. And well, ‘Hey’ Grandpa doesn’t need a new hip, his wheelchair fits in the condo elevator!

#154 Increasing that 1% on 02.09.12 at 4:50 pm

Garth, and other animal appreciators; enjoy a few minutes’ evidence of how humans have underestimated those frik’n cee-yute rabbits
OT, but since sheep and rabbits are often mentioned on this blog, I’m sure an analogy can be made–
a rabbit herding sheep, omg, http://dailybunny.org/post/16822864798/rabbit-herds-sheep-video
(ending is dumb but a-h’s would appreciate it ;)

“The only oracle of truth and miraculous guidance – [cough,cough]….is this pathetic blog” –Garth
Yeah, right, from some of the repeat posts on here—I don’t think so.
Westside of GTA is still booming, some signs just popped up last weekend with open houses, as the spring market is beginning early, since there’s been hardly any winter. Looks like spring today, clear skies for miles/km. Hmm reminds one of Sask/NE Alb. But jobwise, not similarities there. Yep, need to be mobile, but will suck for some having to leave ‘home’

#155 zeeman1 on 02.09.12 at 4:57 pm

Garth, I just had a funny conversation with my girlfriend who I have exposed to this blog before. She tells me that if she won 1 million in the lottery she would buy a nice house worth most of that and never worry about a mortgage payment again. I told her I would invest it with someone like you, she could quit her job while I continued to work, we would continue to live in our current 2 bedroom condo in downtown TO (fully paid off) and we could spend lots of time taking luxury vacations until the day one of us died. She gave me a nasty look and we haven’t had relations in almost a week.

Thanks a lot, man.

#156 Herb on 02.09.12 at 5:02 pm

The wife picked up a good one from a Cologne Carnival show on the internet. Comedian laments the passing of the good old days in a series of “Remember when’s” :

“… and when the bank robbers were on our side of the counter?”

#157 Preciousss on 02.09.12 at 5:32 pm

Are you a bull, bear or sheep? (hint: we are all sheep. Be prudent and limit the amount sheared off your back).

For your consideration.

http://www.marketwatch.com/story/the-insiders-are-selling-heavily-2012-02-09?link=home_carousel

#158 shanks on 02.09.12 at 5:33 pm

#103 Ronaldo on 02.09.12 at 9:52 am
thanks for the input, it is a difficult decision.

#128 DUI on Money Road on 02.09.12 at 1:29 pm
yeah coffee beans… seriously tho it will be for camping until we can build a cottage. its going to be divided and shared amongst 4 people, with a large common land area to develop collectively.

the loss of potential revenue is one thing, also the recurring costs (taxes, lake access fees, snow clearing) will add up. for my share of the costs, I would only be losing out on 2k potential dividends and any capital gains.

Its funny, my wife was not into the idea at all until the word cottage came up :)

#159 ralph tieleman on 02.09.12 at 5:37 pm

Garth, my assessment here in Tofino BC dropped 100k..that’s a 20% drop….the real estate market here is stagnant. Ralph

#160 Lee on 02.09.12 at 5:40 pm

Heard a great argument the other day from a co-worker advising another one on his plan to sell his condo and buy a house,

“So what if you lose 24,000 on the condo, just pretend you’ve been paying 1,000/mth for rent for two years.”

Owning, it’s just like renting with none of the perks.

#161 Ohmygosh on 02.09.12 at 5:52 pm

#53 Peter. Amazons have no masters. They’re warriors. If you want an obedient servant to wait for you in the basement, get a dog.

#162 Two-thirds on 02.09.12 at 5:56 pm

Don’t look now, but CIBC is forecasting increased personal bankruptcies in Canada in 2012:

“Bankruptcies to rise
Personal bankruptcies among Canadians are expected to begin rising again this year after falling from the peak of the recession, though the toll will be much milder, Canadian Imperial Bank of Commerce said today.

“The likelihood is that the share of low-paying jobs in the Canadian economy will rise during the course of the year,” said Benjamin Tal of CIBC World Markets.

“The soft economic environment suggests that growth rates in forced self-employment and part-time jobs are likely to accelerate in the coming quarters,” he said in a new report.

“As well, a projected net decline in public sector employment in 2012 and a much weaker hiring pace in the construction sector will act as a negative for overall income growth in the economy. Accordingly, we project that the insolvency rate in Canada will start trending upward, if only mildly, over the course of the year.”

Differentiating between bankruptcies and so-called proposals, a means by which debtors negotiate new terms with their creditors, Mr. Tal noted the decline in personal bankruptcies, based on the latest data. Indeed, the rate of bankruptcy, estimated at 2.8 per 1,000 people, is at its lowest since 1993.

“However, the speed of the decline in the bankruptcy rate since its peak of 2009 exaggerates the real progress in household credit performance,” he said.

“Note that in recent years, the number of proposals … has risen dramatically, with the proposal rate reaching an all-time high in 2011. That’s largely due to changes to the Bankruptcy Insolvency Act (BIA) in 2008 with the most significant being the increase in the limit of the size of non-mortgage debt for qualifying for a proposal from $75,000 to $250,000 – making proposals more attractive relative to the bankruptcy route.”

The overall insolvency rate, which includes both bankruptcies and proposals, has improved markedly since the slump, but remains a bit above the pre-recession level.

It’s not unemployment so much, he said, but rather “the ongoing increase in the share of low-paying jobs” that’s a better indicator. ”

http://www.theglobeandmail.com/report-on-business/top-business-stories/personal-bankruptcies-set-to-start-rising-again-cibc-says/article2332382/

Low paying jobs are the key here.

#163 Harlee on 02.09.12 at 5:57 pm

Hahaha…Okay everyone,what kind of monkey should Smoking Man adopt as a pet ? My suggestion: Caesar from The Rise of the Planet of the Apes. Did you see that movie SM ? That ape was cool….:-)

#164 TRT on 02.09.12 at 5:58 pm

#133 Daisy Mae,

i tried to secure rights to one of those new electronic recycling sites. In BC, there are 99 of them and each has a protected area. The sites were given to ‘friends’ of the program. it was kept low key for a reason.

now when you buy shaving blades, a small fee goes to the 99 owners…whether or not you actually go to the site to recycle them. Wishing i had one of these new businesses….

#165 TRT on 02.09.12 at 6:07 pm

#134 Eagle Eyes

This is where immigrants have an advantage. most have a fall back place to go to if things get bad here. Being of south asian descent, i have seen much money leave canada for india. many families have built nice homesand bought farmland in india. it is like an insurance i am told.

Immigrants that came over 25 years ago and native born boomers are at a big disadvantage in this way. No way out for them.

#166 When I come to this blog and it says "0 comments", I know that 25 blogdogs are typing their 1st comment on 02.09.12 at 6:25 pm

#137 Brad in Calgary
” Sure they did. Go to youtube and watch all the videos of TV interviews with realtors and economists mocking Peter Schiff when he was calling for the housing collapse months before it actually happened. And Mr. Schiff wasn’t the only one who tried warning Americans”.
++++++++++++++++++++++++++++++++++
thanks B in C
I agree, but I think that was more in the beginning, but once it was melting, which it has been doing for awhile up here (except godless 416 and downtown Hongcouver), it hit the MSM much more quickly stateside.
I could be wrong…..the timelines are difficult to compare. I’m too tired right now to figure it out. That’s why I asked for help :)

#167 VICTORIA TEA PARTY on 02.09.12 at 6:26 pm

AHEM, EVERYONE…A LITTLE HISTORY LESSON:

This is the latest headline from the London Telegraph’s main heavy on matters-European-finance these days, Ambrose Evans-Pritchard.

“GREEK DEATH SPIRAL ACCELERATES

Another normal day at the Hellenic Statistical Authority.

We learn that:

Greece’s manufacturing output contracted by 15.5pc in December from a year earlier.

Industrial output fell 11.3pc, compared to minus 7.8pc in November.

Unemployment jumped to 20.9pc in November, up from 18.2pc a month earlier.

I have little further to add. This is what a death spiral looks like.

It is what can happen if you join a fixed exchange system, then take out very large debts in what amounts to a foreign currency, and then have simultaneous monetary and fiscal contraction imposed upon you.

Germany discovered this on the Gold Standard when it racked up external debt from 1925 to 1929 (owed to American bankers) in much the same way as Greece has done.

When the music stopped – ie, when the Fed raised rates from 1928 onwards – Germany blew apart in much the same way as Greece is blowing apart. This is not a cultural or anthropological issue. It is the mechanical consequence of capital flows into a country that cannot handle it, as Germany could not handle it in the late 1920s.

By the way, Greeks work an average 42 hours a week, one of the highest in Europe. Just want to put the record straight on that.”

WHAT’S NEXT?

Now, the chance of something bordering on establishment of a new Third Reich in Greece seems highly unlikely.

Instead what looks MORE likely to happen soon is the “word from the Streets.”

And that could get mighty messy. Greeks “do” street demos very well, just as the military also does coups: to wit 1967. And wars with Turkey, but that’s another yarn.

The Greek parliament must now wrestle with a series of distracting austerities imposed from mainly Germany just when that country’s finance minister says the Greeks will have to suffer a lot more because what’s been agreed to so far isn’t cutting and hacking enough!

AND THIS AFFECTS WEST POINT GREY REAL ESTATE, JUST HOW?

So why am I writing this Greek financial stuff and what does it have to do with HAMmers stompin’ around West Point Grey looking for $2 million hovels to replace with gaudy stucco-ized palaces splattered all about with disgusting “Oriental” kitch?

Well, a lot, actually.

Greece and the Rest of Europe dwell in the same euro currency “bed”.

So, it’s difficult to tell whose getting, um, “burned” more right now: the Greeks, the other PIIGS, or Northern Europeans.

If this dangerous nonsense continues China, whose economy is now markedly slowing amidst increasing inflation and less foreign trade with Europe, will be hobbled even further and so will the HAMmer People.

So, the long-time locals should not be too sanguine about giant profit possibilities going forward.

Things tend to turn on a dime these days, even if priced in yuan, euros, and, eventually, dracmas.

#168 jess on 02.09.12 at 6:26 pm

Egyptian Government Charges 19 U.S. NGO Workers
Will the Obama administration suspend the $1.3 billion in annual aid to Egypt’s military?

lions and tigers!
Future Warfare…Automated Planes and Bullets that Change Course..
X-47B, built by Northrop Grumman, can fly using only its onboard computers that guide the plane to its targets.
New Drone Has No Pilot Anywhere, So Who’s Accountable? (by W.J. Hennigan, Los Angeles Times)
Sandia’s Self-Guided Bullet Prototype Can Hit Target A Mile Away (Sandia National Laboratories)

North Carolina Town Plagued by Crimes by War Veterans
When War Comes Home: Crime Surge Among Veterans Suggest Some Didn’t Leave Horrors Behind (by Greg Barnes, Fayetteville Observer)

#169 I'm stupid on 02.09.12 at 7:05 pm

#97 Neo. I stand corrected.

#101 Rononldo
They are the greatest fools.

#121 Herb
Now I just have to figure out how they put the caramel in the carimilk bar.

#170 Canadian Watchdog on 02.09.12 at 7:09 pm

Even fine wine prices are deleveraging. Liv-Ex Fine Wine Index https://p.twimg.com/AlPztreCIAABEhr.png:large

#171 I'm stupid on 02.09.12 at 7:30 pm

#145 realitybytes

Let me ask you this:
Facebook had over 1 billion users, and it can generate 1 billion $ profit if they are lucky. How the hell will they be able to increase that to a level that will give them a p/e ratio of 20. There are only so many ad dollars to go around and we only have 7billion people? Not to mention the fact that everyone knows about Facebook already. Sure every analyst is cheering it on because it’s going to grease the pockets of every broker. It’s the same thing crea does.

#172 Nostradamus Le Mad Vlad on 02.09.12 at 7:41 pm

-
AAhhhh, the joys of parenting . . .
*
Being Vanilla Fudge

Four expectant fathers were in a Minneapolis hospital waiting room, while their wives were in labor.

The nurse arrived and announced to the first man, “Congratulations sir, you’re the father of twins.”

“What a coincidence!” the man said with some obvious pride. “I work for the Minnesota Twins baseball team.”

The nurse returned in a little while and turned to the second man, “You, sir, are the father of triplets.”

“Wow, that’s really an incredible coincidence,” he answered. “I work for the 3M Corporation. My buddies at work will never let me live this one down.”

An hour later, while the other two men were passing cigars around, the nurse came back. This time, she turned to the third man, who had been quiet in the corner.

She announced that his wife had just given birth to quadruplets. Stunned, he barely could reply.

“Don’t tell me another coincidence?” asked the nurse.

After finally regaining his composure, he said, “I don’t believe it, I work for the Four Seasons Hotel.”

After hearing this, everybody’s attention turned to the fourth guy, who had just fainted.

The nurse rushed to his side and, after some time, he slowly gained back his consciousness.

The nurse asked, “Sir, are you all right?”

“Yes” says the man, “I’m o.k. now. I just had a shocking thought. I work at the 7-11 Store.”
*
#66 Mel — “We have turned the corner to the dark side. Be it for housing, or, economy.” — S’right, which goes with #91 neo, #117 Snowboid, #148 pbrasseur and #157 Preciousss — Great links, as all are hand in hand.

#85 T.O. Bubble Boy — Thanks for the update! Had no idea Trump was polluting the MEast with his wigs.

#173 SaggyBottomBoomer on 02.09.12 at 7:50 pm

#40 Alan on 02.09.12 at 12:43 am

Spent an hour this afternoon at Starbucks on Oak St. in Vancouver. There were two different real estate agents with two different sets of buyers signing paperwork. Say what you want or wish what you want, but the buyers are still here and writing checks.
********************************************

Let’s consider the possibility they were signing leases on rental properties. I signed my lease in a coffee shop . Unless you were reading it over my shoulder , how would you possibly know what was being signed.
Anecdotal evidence eh?

#174 sellers close to going bankrupt on 02.09.12 at 8:03 pm

CIBC is looking into the future of 2012. people are close to going bankrupt. ever since government wont cover HELOC people can not borrow even more cheap money so they will go bankrupt. The house of credit is crashing and bankers and realtors know it.

#175 maxx on 02.09.12 at 8:22 pm

#119 Q on 02.09.12 at 12:17 pm
“From the Washington Posts Mensa Invitational:
Cashtration (n.): The act of buying a house, which renders the subject financially impotent for an indefinite period of time.”

What a brilliant gem!

#176 Nostradamus Le Mad Vlad on 02.09.12 at 9:13 pm

-
Maximum Wage Good idea. US$250K / Yr., no extra benefits or perks? Barton Biggs Any relation to Ronald Biggs, one of the Great Train Robbers in the early ’60s? Coalition This may be the west’s last kick of the ball in the current cycle, which is drawing to a close shortly; Greece Bailout will keep them afloat for a few weeks, but the underlying problems remain; Austerity Greece, Romania, Ireland, etc. Anyone see a pattern? Only the wealthy get wealthier; Self-Reliance Expo in Mesquite, TX. Interesting; Wall St. whining “More indignant grunting from the pigs.” wrh.com; Bank Bailout Another one?
*
1:32 clip Blast happens at approx. 0:24; EZone and Russia “These maniacs actually want a war with Russia!” wrh.com. That frees the US and China to fight; Brazil Having its own problems; Af’stan Symbol of the past in pic; Ron Paul and CPAC CPAC going all electric (no paper) ballots, to stop Paul from winning; Iran Nuke scientists taken out; Mother Nature sends greetings to Al Gorgonzola; NDAA Trojan Horse “The National Defense Authorization Act of 2012 has provisions in it so illegal, so unconstitutional that any moron could see it.”; 6:51 clip Pentagon polluter; Wannabee Dictator Change is good, not more power for one; Independence Western view on Syria incorrect; Agent Orange and Monsanto Going back to ‘Nam?

‘Quakes increasing all over; Laser Hard Drives New stuff; Being Prepared Further stages; Jesus Santorum Self-delusion at its worst; Pravda Russian media reports truth about the US.

#177 Devore on 02.09.12 at 9:15 pm

#123 Van guy

Only if you and poco hold hands and jump of our bridges.

You’ve got your metaphors mixed up. Jumping off a bridge implies terrible decision-making and lemming-like herd-following. Like, oh, buying FB shares on IPO and holding them until they double.

#178 Sh on 02.09.12 at 9:15 pm

Objective journalism is dead:

Vancouver home prices to fizzle, not pop

By Nicole Mordant, ReutersFebruary 9, 2012

Read more: http://www.vancouversun.com/business/Vancouver+home+prices+fizzle/6127676/story.html#ixzz1lwAplDhV

#179 Devore on 02.09.12 at 9:26 pm

#168 jess

North Carolina Town Plagued by Crimes by War Veterans
When War Comes Home: Crime Surge Among Veterans Suggest Some Didn’t Leave Horrors Behind (by Greg Barnes, Fayetteville Observer)

Just last night (which is to say today) they played an episode of The Shadow on CKNW about just this very thing. The message was entirely lacking rah rah! america! blow them away in battle for glory of motherland! like I was expecting. It was about a war vet who committed a murder after coming home. The message was very loud and clear: while it does not excuse the crime, we, the society, the country, are just as guilty and responsible, for creating this man, training him to kill without remorse, then expecting him to forget everything he learned and experienced in the last 10 years and be a good little suburban dweller with 2.5 children and 0.9 dogs.

#180 Kilby on 02.09.12 at 9:33 pm

Just talked to a guy in the gym, he owns a 2 bedroom condo by the water in North Vancouver, bought in 2006 for $439,000 (now asking $700ish) He isn’t worried as he likes it and will be staying. He also bought a house in Squamish and did a big reno on it thinking to resell but says he would probably lose about $50,000 on it now( if it would sell) so has renters covering the mortgage but doesn’t feel good about it. I too still own a condo in Victoria and due to circumstances can’t sell it until next year, I bought 9 years ago so won’t lose money but will make very little when and if it sells.

It was refreshing talking to somebody that has real estate they would like to part with but realize that the market is done and that they would lose if they sold but they aren’t in denial about it….Just life.

#181 eaglebay - Parksville on 02.09.12 at 9:51 pm

#167 VICTORIA TEA PARTY on 02.09.12 at 6:26 pm

Greece’s economy is about the size of Toronto’s economy.
Who gives a hoot.

#182 The Thing in the Basement on 02.09.12 at 10:15 pm

181 E-Bay – here’s the wiki list of gdp for cities of the
world. There are some real surprises.

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

#183 Westernman on 02.09.12 at 11:16 pm

Herbie @ # 124,
You are so passe’ Herbie, this infestation of overpaid, underperforming fat cat government employee’s is coming to a big nosedive as fewer and fewer producers are getting more and more pissed off at paying for these anchors… just a matter of time.
Oh, and by the way Herbie, there is no such thing as ” effective ” government – just bad and worse government.
Why don’t you get off the public dole and get a job, Sir?

#184 bboomer on 02.09.12 at 11:25 pm

Harlee, I believe Smoking Man has turned the tables on you, he is monkeying you along. Unless you have been reading this blog for a few years, you know him not.

#185 Lorne on 02.10.12 at 2:34 am

Fugitive Banker returned to China

http://www.asianpacificpost.com/article/flight-fugitives-0

Nice description of how they laundered money….into Richmond real estate

#186 Josh on 02.10.12 at 12:48 pm

@ #1 Chris.

Now your getting it! (sort of)

The first shall be last, and the last first.

#187 jess on 02.10.12 at 2:48 pm

Uncompleted trades in the $5 trillion market for agency mortgage securities remain elevated

http://www.businessweek.com/news/2011-06-28/industry-group-cuts-mbs-fail-charges-pimco-says-still-high.html

lookback
http://ftalphaville.ft.com/blog/2011/07/25/631676/settlement-failure-is-an-option/

Fails to deliver in MBS surged to a record last year, after the fails charge for repos using US Treasuries came into effect in the spring. The TMPG has since recommended a fails charge for MBS, to take place from February 2012.

Keywords: TMPG fails charge, U.S. Treasury securities
Garbade, Kenneth, Keane, Frank, Logan, Lorie, Stokes, Amanda and Wolgemuth, Jennifer, The Introduction of the TMPG Fails Charge for U.S. Treasury Securities (October 2010). Economic Policy Review, Vol. 16, No. 2, October 2010. Available at SSRN: http://ssrn.com/abstract=1692900 or http://dx.doi.org/10.2139/ssrn.1692900
=================================
Definition of ‘Kiting’
http://www.investopedia.com/terms/k/kited.asp#axzz1m0MCqL5H

#188 HHR on 02.10.12 at 3:18 pm

Shelter everyone needs it.

You would think that housing would be a commodity now days and not cost an arm and two legs. Even ancient people (cavepeople) had free caves for housing. Here we are thousands of years later and worse in terms of housing affordability. Why do we still want to go to Mars when we cant secure a simple home ownership?