The kill

Well, somebody’s lying. As a major bank flees the mortgage broker business, the feds claim real estate is stable. A new report says you might have just paid 54% too much for your house, and there’s speculation a Toronto condo tower could be ‘ground zero’ for the Canadian housing bubble. Are you sure you’re ready for this?

Events are moving faster than a speeding hormone as the real estate end game comes into view. In the last couple of weeks CHMC revealed its bottomless pit of insured mortgage money has hit bottom, and rationing may be next. The big banks snatched back their uber-cheap mortgages after calls from a pissed-off F, plus a few worried central bankers. The debt bubble is now titanic. Global watchers like The Wall Street Journal and Seeking Alpha have been spreading the news that Canada’s housing gasbag is ready to blow.

And now this.

On Friday news leaked out that CIBC is about to dump its FirstLine Mortgages division. This matters. FirstLine has a book of $47 billion (yeah, billion), is one of the largest mortgage lenders in the country and just months ago was the premier provider of funding to independent mortgage brokers. While the official bank announcement has yet to come, brokers have been talking of nothing else – wondering what this will do to real estate financing first, and house prices second.

  Why would the Bank of Commerce bail? Could be because it wants all this business funneled directly back through CIBC, at better margins. Or it could be because mortgage brokers cater far more to high-ratio, high-risk lending, and with CMHC wobbling (unless Ottawa allows it new billions) the heat’s simply too high. Whatever the reasoning, it’s a major move after the bank spent the last 17 years building the business.

But that’s not all real estate groupies need to worry about.

The negative planetary media barrage continues. For example, there’s a new list of the most undervalued and overvalued housing markets in the world, put together by Deutsche Bank Securities, and published by Business Insider. If you want to get a deal, it says, go to Japan (-37%), Germany (-26%) or the US (-9%). But it you crave buying high and being a risk-drenched greater fool, then Canada’s your baby – overvalued by a stunning 54%. Only Belgium is worse.

How’s this determined? The relative valuation of housing markets is measured in terms of prices to rents, and also prices to incomes, then compared to long-term averages. In other words, when you can rent a $600,000 Toronto condo for $1,600 a month, or the average Vancouver SFH costs ten years’ worth of salary, you know you’re screwed.

But that’s not all.

The Canadian real estate market is taking yet another drubbing in an opus piece just moved by Bloomberg, which shows up on the screens of every major bank, pension fund and large-scale investor in the world. Says the headline, “Toronto Bubble Risk topping New York in Condos.” Bubble? What bubble? Why, it was only Monday that CHMC told us it’s different here, with a stable real estate market, cheap money and free ponies for at least two years.

“With the Canadian economy set to expand at a moderate pace and mortgage rates expected to remain low, activity levels in 2012 in both new home construction and sales of existing homes will stay close to levels seen in 2011,” CMHC deputy chief comedian Mathieu Laberge said in a statement.

Meanwhile, this is what foreign investors are reading:

Toronto has more skyscrapers and high-rises under construction than any North American city — almost three times as many as New York — stoking debate on whether the condominium market in Canada’s largest city is headed for a U.S.-style correction as prices rise and household borrowing hits a record…. Canada’s housing market is about 10 percent overvalued, with inflated prices primarily in Vancouver, Montreal and Toronto…  “We would call it a bubble.”

And how can a dispassionate person, like that house-horny Guangdong industrialist, argue with the facts? Mortgage credit in Canada has exploded 53% in just five years. Canadians now owe $1.08 trillion on their homes, while salaries rot behind inflation. There are 27,509 new condos being built in Toronto, where 199,000 already stand. If the cranes stopped moving today there’d be enough new boxes in the sky for five years of demand.

In Vancouver average houses are trading for a staggering 10.6 times the income of the average family. Affordability in Toronto has deteriorated 40% in seven years. And this past weekend at an open house in Richmond – fairly priced, beautifully located, in the epicentre of HAM lust just months ago – only one person showed up. The owners wept.

Reading such things, would you fly over and invest in Canada? Would you prod your 22-year-old daughter to buy a Calgary condo with 5% down? Would you join the mob outside a developer’s sales office in Richmond Hill on Sunday? Would you buy into a new Toronto tower scheduled for 2014? Would you trust CHMC?

On this pathetic blog, we know the answers. Yes, the people cry. We believe.

I may soon be revising my forecast.

267 comments ↓

#1 northerner on 02.13.12 at 9:25 pm

first

#2 First Post on 02.13.12 at 9:30 pm

First!

#3 Denisa on 02.13.12 at 9:36 pm

Great post Garth! Now I’m forwarding this to my house horny niece in Kelowna, B.C. You are so vigilant! Be my Valentine, will yah…

Do you ride? — Garth

#4 NY Canadian on 02.13.12 at 9:37 pm

So….what does this mean for people who have mortgages with FirstLine?

No official word yet. Likely become a CIBC customer. — Garth

#5 Duke on 02.13.12 at 9:37 pm

fifth

#6 T.O. Bubble Boy on 02.13.12 at 9:40 pm

FirstLine in Canada = Countrywide in the US

Will there be a “forced” acquisition like the Bank of America purchase of a distressed Countrywide?

If a Big 6 bank is dumping this business, who on earth would by this steaming pile of dead money?

#7 NYCer on 02.13.12 at 9:48 pm

“I may soon be revising my forecast.”

A bigger nation-wide drop????

#8 City Slicker on 02.13.12 at 9:50 pm

I just forwarded a relative an article last week about the coming Canadian RE Crash, so guess what they did over the weekend, bought a house, 5% down 30 yr amort.
What can you do.
But if everyone has this mentality then housing will be stable right?

#9 Tim on 02.13.12 at 9:55 pm

All this, yet prices in Vancouver have barely budged…

#10 Shane on 02.13.12 at 10:00 pm

Garth, what do you mean by revising your forecast?

Shane

#11 Gypsy Kid on 02.13.12 at 10:11 pm

This is too upsetting. I cant even gloat anymore and wait for a crash to pick up a “bargain” real estate property. I realize there are going to be people who will make a lot of money no matter what, but as a country…we’re so screwed.
Been reading Boomerang and how Iceland came to a tragic end…people owing 1.5million on property that were worth one third of that. Hope to God we’re not headed that way, or the way of Greece.

Is there a way out, or do we as a nation have to ride it out???

#12 MarcFromOttawa on 02.13.12 at 10:12 pm

There’s another cougar preying on a young buck.

I like it!

#13 The American on 02.13.12 at 10:20 pm

Like I’ve been saying – 40%+ correction in Vancouver. Guaranteed. Its already happening. The government and media have done all they can to try and negotiate the “soft landing” in the Canadian housing BUBBLE. You have one of the globe’s most respected financial institutions finally saying Canada is 54% overvalued. This, of course, has been known for well over a year by, frankly, all financial institutions, including JP Morgan Chase, Bank of America, Bank of Tokyo Mitsubishi Union, Deutsche Bank, and so on. I wonder why it is only now that a bank finally has the cajones to step up to the plate and publish the information. I have a theory… Germany and Europe got burned badly in the mortgage securities they had purchased. They’re not going to let it happen again, and they’ll be damned if they allow it to happen on the open market. Yes, Canada has the CMHC, but there is no way it can afford to back such nonsensical “securities.” The deal with the First Line is quite simple – Its Canada’s version of Countrywide Home Loans, which of course was acquired by Bank of America at the force, errrr I say, request of the U.S. Government (regardless of what the public should be made aware). Firstline is front and center of the focus now. Firstline has BY FAR more toxic assets in its portfolio, per capita, than Countrywide ever did. A nightmare is about to ensue, and I’m very happy I’ve already woken from mine here in the U.S. The CMHC has no way of absorbing the portfolio. And, frankly, neither do any one of the Canadian banks. I see a pizza party coming. A segmented strategy by which the company is sliced and diced and force-sold to all of the Big 6 and a portion to the CMHC, behind closed doors of course.

#14 The American on 02.13.12 at 10:21 pm

In a nutshell, its completely over. And, as I’ve stated the crash will begin in the East in Toronto and head West, precisely as it did in the U.S. Toronto condos are absolutely ground zero. Expect years of devaluation from this point forward.

#15 Temenos on 02.13.12 at 10:27 pm

@13 – American

40% correction in Vancouver? I think you are confusing what you want to happen (or can afford), with what will happen. A 40% correction will never happen. If it did, rents would be well above purchase price, and everyone would simply enter the market, causing bidding wars.

The very fact people are babbling about 40% is proof-positive it will not happen. The risk has been hedged. There is no black swan sub-prime crisis here. Years from now, experts will be saying the same thing.

Worst case, Vancouver will simply see a multi-year flatline while inflation catches up to house prices, followed by a renewed march upwards. They aren’t building any new land in Canada’s only year-round city are they?

You have my sympathies

#16 not 1st on 02.13.12 at 10:28 pm

Just stay out of sask for another 6 months until I can unload my over inflated mcmansion crack shack, then I am out and liquid on the sidelines watching the carnage.

#17 zman on 02.13.12 at 10:33 pm

hi Garth

I went by some open house in markharm and there is no correction. Asian money together with local house horny families continue to buy anything that is for sale.
As a result the home owners continue to increase prices.
I think a correction is really needed but I am not sure if this is going to happen this year.

#18 Arse on 02.13.12 at 10:37 pm

When I read the CHMC report this morning, I was taken aback by their positive outlook on housing. If the bubble continues to inflate for another year or two, it could end up as bad as the U.S.

#19 blase on 02.13.12 at 10:40 pm

It’s all so simple. The money tap is being turned off; without it, nearly every non-boomer won’t be able to buy real estate.

Just as easily as housing prices went up, they will surely come down just as far or further.

Finally, when you see a sh!t box house near the airport on wind-pelted bald prairie on a 15 foot lot with no garage and no transit service, you won’t see a price-tag of $330,000 (that realtor has to insist the seller take!) in Cowtown.

Let’s see…no garage and minus 40 in the winter? Sure, why not? People are so desperate to nest, and to move here, they’ll be lining up to buy! And so they did, from 2003-2008 (hiccup) 2009-2011. Canada housing market, RIP Spring 2012!

#20 Loan money to anyone on 02.13.12 at 10:40 pm

Since the experts at the CMHC say the Canadian housing market is strong and prices will continue to rise, obviously it’s an excellent time to tackle Canada’s debt problems. Now is the time for the feds to tighten mortgage rules and reduce mortgage credit.

Taxpayers are on the hook for almost a trillion dollars worth of mortgages. I’m sure F doesn’t want to be remembered as the Finance Minister who bankrupt the country.

#21 squidly77 on 02.13.12 at 10:41 pm

#15 Temenos

40% correction in Vancouver? I think you are confusing what you want to happen (or can afford), with what will happen. A 40% correction will never happen. If it did, rents would be well above purchase price, and everyone would simply enter the market, causing bidding wars.

If prices can go up 150%, please explain to us mere mortals why prices cant go down 40% ?

realtor math perhaps ?

#22 Republic_of_Western_Canada on 02.13.12 at 10:42 pm

Truly a fine elk. Congrats to the hunter. Reminds me of mine.

And condolences to all the RE and mortgage holders about to be slaughtered. Years ago I called the demise of Fannie Mae/Freddie Mac early on but couldn’t short it at the time. CMHC will definitely be in the cross-hairs now if I can find the right financial instruments.

#23 Thomas on 02.13.12 at 10:43 pm

Garth, is 5 times avg. household income of 70 k bad? I suspect anything above 2-3 is bad.

#24 pbrasseur on 02.13.12 at 10:45 pm

Man this is getting serious now.

Remember, the loony is no reserve currency and if we try to print our way out of this mess it’s going to cost us dearly

#25 Throwstone on 02.13.12 at 10:46 pm

@15–Temenos,

The correction will happen. First it will be .0001% then up.

When, and to what amount can be speculated on…the rest will just be collateral damage.

#26 squidly77 on 02.13.12 at 10:48 pm

#15 Temenos

everyone would simply enter the market, causing bidding wars.

By everyone are you stating that the 28% of the people that haven’t already bought a house would suddenly buy ?

And would they require Canadian taxpayers to backstop their mortgages or will they have 25% to put down.

#27 Puzni on 02.13.12 at 10:50 pm

While back I have read that usual real estate cycle is between 7 -12 years. I lived in vancouver for a while and it always somehow managed to dodge the bullet. I remember the times when it was cheaper to buy than to rent. Then the olympics happened. Than the supper low rates and today there is more cranes throughout vancouver then its ever been. I think at some point the run will come to the end but will have to wait and see.

There is no real estate cycle. — Garth

#28 Will on 02.13.12 at 10:50 pm

@#15 Temenos I don’t think he will be needing your sympathies.

A plateau of high prices hasn’t happened in any market yet, but it is different in Vancouver right?

#29 grantmi on 02.13.12 at 10:51 pm

What a Joke! Michael Levy is on CKNW (Vancouver) right now.. and says we’re not in a housing bubble!

This from a man who talks about finances for a living on the radio.. and he declared bankruptcy years back!

CKNW is a joke!!!

#30 X on 02.13.12 at 10:52 pm

Has F informed the public of the date of the budget release in March yet?

No. — Garth

#31 Controller on 02.13.12 at 10:55 pm

Watching Mathieu Laberge on BNN today, I laughed out loud as he had to read from his prepared, all is rosy script, while answering questions. Too funny.

#32 squidly77 on 02.13.12 at 10:55 pm

#15 Temenos

Stop and really think about what you said, no really, think about it.

Only about 28% of Canadas population do not already own a mortgage, most likely that 28% have no interest or no means to buy a house. Canadas housing bubble is a pyramid scam in its truest form, there’s simply no one left to keep it going.

Good luck though !

#33 Golden Stu on 02.13.12 at 10:57 pm

A good friend and fellow tin foil hatter just dropped a bombshell and bought a place in cowtown. After many a conversation discussing the way real estate is heading he went ahead and did it anyway. Im shocked.

If I was even remotely religious Id pray for him, however as Im not, Ill just hope he got a smoking deal out of the distressed sale.

#34 the bubble machine on 02.13.12 at 10:57 pm

checked out some some sales on mls.
GTA still going strong – 39 chester ave listed for 689 sold
for 885 K .
And the machine keeps on ticking

#35 eviee1973 on 02.13.12 at 10:58 pm

Had a FirstLine Visa, then CIBC decided to call it a CIBC Card. Was FirstLine a family of products through CIBC?

#36 Stuck on the Island on 02.13.12 at 11:01 pm

Mid-Island is a ghost town. Open houses are empty. Nothing is selling. There are no buyers. We are screwed.

#37 Don on 02.13.12 at 11:06 pm

@ #15 Temenos on 02.13.

You should have skipped realtor class and made your way to economics, math and history. Vancouver will fall and rents will fall. I am sorry you have a stake in the Vancouver game. It’s not the city of choice, it rains too much and the traffic is atrocious.

#38 earlymidlifecrisis on 02.13.12 at 11:06 pm

I’m still bsmt dwelling, watching prices in the OK, and dreaming of an above-ground mtge free simple lot. All i care about is paid off and not crumbling- then i see this crap is still out there.

http://www.realtor.ca/propertyDetails.aspx?propertyId=11062805&PidKey=-716018708

I’d say overvalued.

#39 Renters Revenge on 02.13.12 at 11:10 pm

Yawn. Wake me up when we reach 54% off.

#40 45north on 02.13.12 at 11:10 pm

Events are moving fast. So it turns out CIBC can turn on a dime – it shuts down First Line – like tomorrow morning. If you own a house try selling it tomorrow morning.

Mark Hanson said that in Canada, house valuations are systemically flawed.

not 1st: Just stay out of sask for another 6 months until I can unload my mcmansion

you got 6 days

#41 renters rule on 02.13.12 at 11:12 pm

All in RE ownership costs are currently about 3-5x rents in Van. Get a grip!

#42 Temenos on 02.13.12 at 11:15 pm

@21

prices in vancouver are sticky. i just looked at the 1977-current property chart. prices just flat-line after growth periods while inflation catches up. it’s always been like, and this time isn’t different.

vancouver is filled with buy and hold immigrants who value ownership. vancouver also has a million people lined up waiting to come in from the bric countries.

#43 49 on 02.13.12 at 11:15 pm

Saw some interesting news on BNN today…
Can someone who’s more well versed than I am please explain the Volcker Rule and why our feds are so upset about it?
Will it limit leverage & liquidity to Canadian banks whose invesments are backstopped by the government?

#44 Al on 02.13.12 at 11:17 pm

Dear F, C & H:
Look what cheap and easy money did to the Greeks.

#45 OnlyTheBankersLaugh on 02.13.12 at 11:18 pm

And now, from your brilliant, prudent Canadian banker minds trying to prime the pump and change the debt discussion…. obviously, we just don’t get it here in Canada as we should only look at interest rates/monthly payments like used car and Harley salesmen. Actually, not sure who’s worse lately. Bankers or used Harley sales guys? At least, one is selling a dream of open roads (with nature’s natural Viagra).

http://www.theglobeandmail.com/report-on-business/economy/the-debate-over-canadian-debt-data/article2337128/

#46 GTA Girl on 02.13.12 at 11:18 pm

This past weekend papers had newly released condos in Toronto. I counted 10 of them, just for this week. You hear about them when released, then many have no more advertising (except for those on Etobicoke lakeshore-soon to be single’s slum).

Asian money is always the last to learn. If their lining up for new builds in Markham, doesn’t mean the market is hot. Just that they haven’t gotten whiff of the decay. Sort of like how Canada is always 5years behind the US.

#47 Sebee on 02.13.12 at 11:19 pm

Sorry, I’m newer here. Is “F” Flaherty?

#48 Fifty Percent Correction Predictor on 02.13.12 at 11:19 pm

No tears… No tears…

#49 SophieZombie on 02.13.12 at 11:23 pm

Canadian Realtor sale pitch line for 2008: “House prices will always go up! ”
for 2012: ” Do you want fries with that ? “

#50 RM in Oakville on 02.13.12 at 11:26 pm

F=Flaherty

#51 dogman01 on 02.13.12 at 11:32 pm

#19 blase on 02.13.12 at 10:40 pm

You speak of “Skyview Ranch”, seen it, drove by it, cannot understand it. Flat in the middle of nowhere. Would have to drive 10km for a coffee and no kid could walk for a popsicle. Will be 10 years+ before they get a school.

#52 Canadian Watchdog on 02.13.12 at 11:33 pm

Look what you’ve done Garth…

http://www.google.com/insights/search/#q=canada%20housing%20crash&geo=CA&cmpt=q

#53 Led on 02.13.12 at 11:33 pm

Garth saying he might be revising his forecast just made me salivate.

#54 45north on 02.13.12 at 11:37 pm

not 1st: you got 6 days

I take that back. I think you have more than six days.

#55 squidly77 on 02.13.12 at 11:38 pm

#42 Temenos

vancouver is filled with buy and hold immigrants who value ownership. vancouver also has a million people lined up waiting to come in from the bric countries.

it’s always been like, and this time isn’t different

Its always different this time.

#56 Temenos on 02.13.12 at 11:43 pm

@37 – Don

I see just a flat-line occuring, followed by a renewed march upwards. Go look at long term chart of Vancouver real estate.

I think deep down people know that the very fact people are saying 50% off pretty much means they know it will never happen. the risk has been built in. Every additional bubble article in the media simple deceases the liklihood of it ever happening.

Obviously it sucks for those who don’t have white collar professional jobs or have family money, as they need to commute from Maple Ridge/Langley to wage slave downtown, but no one said life is fair.

#57 Devore on 02.13.12 at 11:43 pm

#15 Temenos

A 40% correction will never happen. If it did, rents would be well above purchase price, and everyone would simply enter the market, causing bidding wars.

SFH already costs about twice as much to buy as it does to rent. 40% still makes rents lower than buying. Plus, in housing correction, rents go down. If house prices can double in less than 10 years (when renting was still cheaper), while rents barely move, they can easily fall 40%. There will certainly be pockets where 40%, and more, happens.

Worst case, Vancouver will simply see a multi-year flatline while inflation catches up to house prices, followed by a renewed march upwards. They aren’t building any new land in Canada’s only year-round city are they?

Oh, that explains it, the “catch up” soft landing theory. Good luck with that.

Inflation catching up requires incomes go up as well. How many decades will this take?

#58 Smoking Man on 02.13.12 at 11:43 pm

I got kids looking to buy,

I would love a big fat correction. Espcialy for the great bearded one, for three years now and waiting.

I could just see him riding into a MSM set on his harley and leather paints, with a big fat grin. A ha told ya.

But the Big Fat Lady in the GTA has not sang her song…..

And she aint till 2014………………

How do I know……….The Kavork

Not doing a certified post , little wasted amd can’t remember my password on my blog.

#59 neo on 02.13.12 at 11:46 pm

Isn’t it ironic that First Line could end up being the first in line to fall…

#60 John H on 02.13.12 at 11:47 pm

The Vancouver area is a special freak show because what is driving it are billions of dollars in hard cash coming in from China.
These people are not going to any banks for a mortgage, they are just writing a cheque for the entire amount.
In places like White Rock (a suburb of Vancouver) wealthy Chinese fly over the area in helicopters so they can see the area they plan on buying up.
Newspapers in China claim that 39% of all the money being spent in Vancouver right now is direct cash from China, and the multiplier effects of this only start from there.
To look at this from a ratio of yearly income for residents may not really apply here?
These people are left out in the cold, very true, but what you have in Vancouver is Chinese hard cash flaming the fire big time.
Vancouver is a city that has had the guts of it’s middle class violently ripped right out of it and the hostility is manifest.
Lot’s of underlying social problems in Vancouver that exploded to the forefront during the Stanley Cup Riots, and I believe there is a direct connection to what I said in the previous sentence and that event.

#61 Harry in Saskatoon, no bust here, maybe next year, or the year after on 02.13.12 at 11:49 pm

What’s CMHC’s record on forecasting? Probably better than douche bank.

Calls for an alledged bubble popping in Canada are now in its 5th calendar year on this blog. If I remember correctly , bubble talk in the media was at its zenith at the end of 2008, not now. Most homeowners are unfazed by bubble talk now.

Here is my list of why housing will not tank, especially in the west.
- interest rates will stay low.
- RBC monthly affordability shows that affordability is not as bad as 1990 or 2008.
- when first time buyers are priced out of townhomes and condos, then there will be a problem but now yet, house prices to incomes are not that high outside of Vancouver and Toronto
- this is a great country, immigrants are knocking at the door to live here.
- for many places, like the west, supply can barely keep up to demand
-as long as the world wants what we have, no problems with housing
- stock market is very risky

It really comes down to interest rates, immigrants, foreign investment and monthly affordability. As long as these don’t change, a housing crash is not likely to happen.

I don’t believe that prices will keep marching upwards, but I do believe the powers to be have learned from the mistakes of other countries and can achieve a soft landing.

#62 Frank Dean on 02.13.12 at 11:49 pm

So Toronto has more skyscrapers going up than any other North American city. Did you know that Toronto already has the second highest number of skyscrapers in North America? Only exceeded by NY? Almost double Chicago? Nearly 4x LA?

http://skyscraperpage.com/cities/

Without context, this data point is meaningless. I would suggest that the position of Toronto on the skyscraper list tells us about land use regulations and development policy. It doesn’t tell us whether or not Toronto has a condo bubble.

#63 Two-thirds on 02.13.12 at 11:50 pm

Something interesting about CMHC’s fictional piece from yesterday was that they gave a very specific period for their forecast: 2 years = 2014.

Inquiring minds may wonder if this number has something to do with Bernanke’s pledge of ZIRP until 2014.

Perhaps some bright analyst at the CMHC “reasoned” that Canadian interest rates are to stay pegged to the USA’s rates unless Carney wishes to destroy whatever is left of Canada’s manufacturing sector via CAD appreciation.

In any case, mortgage rates (as our host has repeatedly said in this camouflaged blog) are set by the bond market.

The question is thus, what will the bond market do in 2012? Is it trend-reversal time now?

For starters, how about this news, released today after market closing time, of course:

“Moody’s downgrades Italy, Portugal, Spain

Ratings agency Moody’s Investor Service on Monday downgraded its credit ratings on Italy, Portugal and Spain, while France, Britain and Austria kept their top ratings but had their outlooks dropped to “negative” from “stable.”

Moody’s also cut its ratings on the smaller nations of Slovakia, Slovenia and Malta. All nine countries are members of the European Union.

The agency said it took the actions due to the uncertainty over EU financial reforms, the region’s weak economic outlook and the resulting pressure on fragile markets. Government debt ratings can play a major role in countries’ borrowing costs because they often lead to higher interest rates that must be paid to offset investors taking on greater risk.

Moody’s moves were less severe than those taken last month by rival ratings agency Standard & Poor’s, which downgraded nine European countries, including stripping France and Austria of their AAA status. Fitch ratings downgraded Italy, Spain, Belgium, Cyprus and Slovenia last month. ”

Full text available from:

http://news.ca.msn.com/top-stories/moodys-downgrades-italy-portugal-spain

But perhaps interest rates are no longer a factor, seeing that sentiment in Canada’s hormonal RE market may be about to change course, thanks to all of the recent media focus on our “balloon.”

All eyes now turn to Mr. F and his upcoming budget.

Will he do what is right or what is popular?

#64 Form Man on 02.13.12 at 11:52 pm

good post

#65 Uh Oh Canada on 02.13.12 at 11:52 pm

I agree with comment #11 c/o Gypsy Kid. I’ve been waiting years for this bubble to pop…and now that it’s popping in front of my very eyes, it’s all quite upsetting, really. The smart ones I know will be safe, but as for the others, I’m not so sure.

#66 Sh on 02.13.12 at 11:56 pm

Ha, ha, ha funny SOL posters here; must work for the Vancouver Rain, same mentality: “If I think of a thousand pretty butterflies they will actually stay.”

#67 wishful thinking on 02.13.12 at 11:57 pm

Toronto prices are crazy right now. Prices have increase 50 percent in five years and it can easily go the other way. If you look at long term trends for Toronto real estate there has always been a big big dipm it just might take five years to get here because there is no catalyst.Can someone else let me know what they think will cause the market to crash? Just because houses are expensive doesn’t mean they will get cheaper. If something happens to swing supply up or demand down then I can it happening…but what will Trigger this?

#68 Frank on 02.14.12 at 12:00 am

Some people on this blog salivate when they hear news of doom for the RE market in Canada in the hopes that they will get a $700,000.00 house for $350,000.00. Sorry folks this will not happen. This same magazines have been saying the housing market in Canada will crash for the last 4 years or so and the opposite keeps on happening. Canada is a growing country and prices will only go down when there is more people that have to sell than there is buyers and those conditions do not exist in Canada.

#69 Van guy on 02.14.12 at 12:02 am

If “everyone” wants to live in Vancouver, then can someone explain why there only is 2.3 million people in the LOWER MAINLAND? The world has 7 billion people. I guess we have 1 billion people waiting to immigrate to Vancouver.

#70 Herb on 02.14.12 at 12:03 am

OMG!

#71 Fifty Percent Correction Predictor on 02.14.12 at 12:04 am

#17 zman on 02.13.12 at 10:33 pm

I don’t think so. The peak was last summer. You can visit any and each builder in the Markham and Stouville. Half of the units have not been sold. You can pick and choose.

We are entering next stage, albeit a little slow in speed.

#72 Rafinator on 02.14.12 at 12:08 am

Something to look at:

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

#73 jess on 02.14.12 at 12:12 am

Maxx

… it would really be interesting if the fibre was spun and combined with other fibres to create textiles and sold back into the market…

Crazy!
“Industry is hoping to secure a $58-million bank-loan guarantee from the Quebec government to survive.”

Canadian asbestos industry not concerned by
conviction of European execs

MONTREAL — Canada’s asbestos industry says it has nothing to fear after two men were criminally convicted by a court in Italy, on Monday, in more than 2,000 asbestos-related deaths in Italy.

Construction-firm executives Jean-Louise de Cartier of Belgium and Stephan Schmidheiny of Switzerland were each handed 16-year prison sentences for negligence following a trial that officials called historic..

http://www.therecord.com/news/world/article/670820–canadian-asbestos-industry-not-concerned-by-conviction-of-european-execs

#74 Temenos on 02.14.12 at 12:15 am

@69

25% of Chinese millionaires want to live in Canada, with Vancouver/Toronto being ground zero. These numbers come straight from the Bank of China.

So no, not everyone wants to live in Vancouver, just wealthy people that want to take advantage of the temperate clean climate/good schools/stable political system.

#75 Mr Buyer on 02.14.12 at 12:17 am

The Bubble has Topped…
I am not surprised to see that Japanese real estate has been identified as undervalued even though it is really really expensive. My house here is worthless and in fact a liability as it drives the price of the land down. Here in Japan a house is a depreciating asset not unlike a car. The land my house sits on is valued at about $2500 per 3.3 square meters (the Japanese unit of land is tsubo) but I would never get that price unless I tear down the 40 year old house and remove all trace of it from the land. There are factories and nuclear power stations humming all around us and 5% unemployment is cause for concern. I am actually more than a little stupid even considering returning to Canada at this point anyways. It is just that
my kids are losing their capacity to speak English before my eyes and my youngest spouts incomprehensible Japanese to me continuously (my Japanese level is beyond pathetic due to the 70 plus hour work weeks for the past 10 years and I am underestimatating the hours I work when I say 70 hours, maybe not by much but an underestimation all the same).
….buy now before everyone can afford to…
…and they landed softly ever after….

#76 Maya on 02.14.12 at 12:18 am

What I know that Firstline used to give the variable rate @ prime-0.9, it’s about 0.3 lower than other banks offered.

#77 NoName on 02.14.12 at 12:18 am

I am kind of hopping that Mr. Hyper and Mr. Flapery will use this RE bubble to our advantage by positioning and keeping CAD vs USD around 80c. It will probably bring some new business and maybe put floor on RE. But lisening Hudak talking how hydro prices are killing business and putting stress on consumer, doesnt give me any hope that they are capable of coming up with anything that will help Joe the button pusher.
good night every one, it’s all good according to CMHC, and dont forget to turn off lights…

#78 Temenos on 02.14.12 at 12:20 am

@57

Agreed. RE is local. The westside is crazy. you do have to realize, though, that the people buying are from overseas, and they don’t care about rental ratios. they also see 1 million dollars as cheap for a piece of prime, urban land.

and you seem to be discounting the fact RE prices are sticky. the vast majority of people are buy and hold – they simply won’t sell for less than what they paid – and they don’t need too, as there are people lining up from overseas to buy.

i don’t see how that will change.

#79 Throwstone on 02.14.12 at 12:23 am

#68 FRANK…

you have alot of homework to do.

#80 dutch4505 on 02.14.12 at 12:24 am

even if prices only fall 10% the economy will start to hurt. banks cancel or reduce lines of credit. also people will not feel like spending money when their past housing atm is now out of funds. which bank is going to approve refinancing of homes?? retail sales fall….more people lose jobs and so the cycle begins.
reminds me of my home state of texas and my present state of washington. welcome to the real world canada.

#81 Silvertip on 02.14.12 at 12:26 am

The talk of real estate is daily news in Canada. There is more and more coverage through the news and media on housing being in Bubble territory. This usually is the signal for the inevitable collaspe that will likely happen this year. There was mimimal talk in prior years but the coverage at present is ongoing and in most newspapers, radio, on a continuous basis. I recently read a book on Warren Buffet (3rd wealthiest man in the world) and his insight reminded me of the situation with real estate in Canada. He mentioned he increased his cash position in stocks in 1969 and the market crashed in 1972. Those 3 years were the toughest time of his life as good gains occured from 1969 to 1971. However, the market crashed in 1972 and he was able to buy heavily the next few years on cheap stocks. Most people at this time had no money to invest. This scenario was similar for him in 2007. I strongly believe we are in the same scenario with Canadian Real Estate. This market has to collaspe as it is way to frothy and expensive. Time will tell but likely to happen soon i.e. sometime this year.

#82 Stasis on 02.14.12 at 12:31 am

NAH NAH NAH NAH NAH NAH NAH NAH NAH NAH NAH NAH NAH NAH NAH NAH NAH NAH NAH NAH NAH NAH NAH NAH … With my finger stuffed snugly in my ears and and chanting loudly I find reality is my own NAH NAH NAH NAH NAH NAH NAH NAH NAH NAH

#83 AACI Home-dog on 02.14.12 at 12:38 am

I wonder what percentage of those 1stline loans are CMHC insured….

#84 Mr Buyer on 02.14.12 at 12:41 am

The Bubble Has Topped…
The general strategy by the bubble cultivators is to simply state things are going to continue to rise for x,y or z reasons. It is essential that the pool of buyers that simply believe this be maintained. Economics are irrelevant. It is willing buyers that are essential to the charade. The continuos supply of water or sorry cheap money is assumed to be politacally expediant by the bubble cultivators and hence the continuos supply of willing buyers can be assumed. Buy high sell higher is the new mantra. I see the possibilty of continued delay tactics of increasingly brazen levels in the hopes of dumping this catastophe upon the next party in power. The conservatives will never again be elected if this economic dissaster unfolds on thier watch with an economist at the helm. The next election is far far off though and the top of the bubble has passed and the pool of buyers is much smaller than years past even though the money is still flowing from the banks. They are going to have to start digging people up from their graves and wheeling them into the loans offices around the country or maybe lower the borrowing age limit. In the abscence of real buyers, the perception of real buyers still out there in droves must be fostered and maintained and along with the perception of continued elevation of house prices. Reasoning is not important, it is the simple statement that such is so that is required….
…buy now before everyone can afford to…
…and they landed softly ever after….

#85 Lee on 02.14.12 at 12:42 am

Seeing lots of comments along the lines of “Years ago I thought housing was going down, but it keeps going up, therefore I now believe it cannot go down.”

When the faithful start deserting, the end is near.

If housing was overvalued and failed to correct, it is simply more overvalued now.

#86 Canadian Watchdog on 02.14.12 at 12:45 am

Here’s your typical central banker and finance minister putting on a side-show before F deposits those fresh new US bonds into the EFA account, where funds get swapped, repoed, hypothecated and daisy chained multiple times their value.

U.S. accused of interfering in Canadian bank practices
http://m.ctv.ca/topstories/20120213/flaherty-carney-accuse-us-of-interfering-in-canadian-bank-practices-120213.html

Totally predictable—right from the central bank playbook.

#87 Hicksville Alberta on 02.14.12 at 12:53 am

Temenos is way more right than anyone from what i see and know of Vancouver.

There is a limitless number of Chinese coming to Canada and Vancouver is their first choice.

There are very deep pockets attached to most of these new immigrants and the trend is in force and will continue unless there is a change in immigration laws which there won’t be.

Ten years ago nobody cared and i don’t think that if anyone cares now it likely won’t matter as the force and trend is so strong.

Think and look out ten or twenty more years and the demographics of these changes will be profound.

Price really doesn’t matter in the scheme of things for this kind of money and i can’t blame then for coming.

#88 BPOE on 02.14.12 at 12:56 am

CMHC who is responsible for CANADIAN loans says all is fine.
Offshore investors buy with CASH ON HAND. This is why the cost of ownership compared to earnings does not add up.
The Americans predicitons have never materialized. Now he has moved to Toronto as the epicentre. I guess he realized how wrong he has been and will continue to be

#89 The BioTech Guy on 02.14.12 at 12:57 am

RE 68 Frank on 02.14.12 at 12:00 am

Yours is very uninformed opinion. Suggest you research this issue.

Prices have dropped significantly in Canada several times before, some price drops were ugly. Although I profited from similar bubble in the past I am not looking forward to a repeat and I am sure many on this blog share this view. If the correction gets out of hand many normal people with families suffer.

I could not care less for HAM to get burned but why would I want my neighbours to lose all their savings. Very shortsighted and un-Canadian.

So Garth has been warning of this issue for a long time. Educating people.

The reason the bubble did not pop yet, at least not in a way obvious to all, is a government intervention not the underlying fundamentals. And fundamentals eventually prevail.

Some believe Canadian goverment can now engineer a soft landing, just as it engineered a false boom. Hope it is true. So your best case scenario is flat line for many years.

Of course every street and every transaction is unique. But if you think the overall trend will continue as before you have another think coming.

#90 BPOE on 02.14.12 at 12:59 am

The helicopters were a publicity stunt. But it is true that millionaires and billionaires are buying hand over fist and always will
***************************************
John H on 02.13.12 at 11:47 pm
The Vancouver area is a special freak show because what is driving it are billions of dollars in hard cash coming in from China.
These people are not going to any banks for a mortgage, they are just writing a cheque for the entire amount.
In places like White Rock (a suburb of Vancouver) wealthy Chinese fly over the area in helicopters so they can see the area they plan on buying up.
Newspapers in China claim that 39% of all the money being spent in Vancouver right now is direct cash from China, and the multiplier effects of this only start from there.
To look at this from a ratio of yearly income for residents may not really apply here?
These people are left out in the cold, very true, but what you have in Vancouver is Chinese hard cash flaming the fire big time.
Vancouver is a city that has had the guts of it’s middle class violently ripped right out of it and the hostility is manifest.
Lot’s of underlying social problems in Vancouver that exploded to the forefront during the Stanley Cup Riots, and I believe there is a direct connection to what I said in the previous sentence and that event.
.

#91 SWM on 02.14.12 at 12:59 am

From the business insider article, Ireland is now undervalued. A couple things about that are interesting:

1-Ireland is has full recourse mortgages, more strict than Canada (prison is technically possible for default).
2-Like our bubble, the Ireland bubble was much more long term compared to the US bubble.

#92 Preciousss on 02.14.12 at 1:07 am

“The gigantic flood of extremely inexpensive high-powered money does have a major impact, not in the real economy, but in the liquid investment markets.

Ultra cheap money sets a very low hurdle for a short-term investment and as long as the transaction has decent liquidity, why not do the trade. As a result, almost every equity, commodity, and credit market is moving higher.

High beta currencies are moving higher as well, as risk is clearly on the front foot”.

See the rest here:

http://www.safehaven.com/article/24349/why-does-the-market-keep-rising

#93 Mr.T on 02.14.12 at 1:16 am

Realtors have made a lot of money over the past decade, so its about time they understand the reality of hard earned cash. Hope they practice what they preach…buy..buy..buy…it’s always going up!

#94 Patz on 02.14.12 at 1:19 am

Haven’t been here for awhile but it looks like I haven’t missed much. There’s always a rube from Vancouver talking about “a million people from the brics lined up to come here.” Uh huh, sure. It’s just gonna get busier, happier and wealthier while the rest of the poor suckers look on in envy. Meanwhile I live here and often wonder why. There’s only so much joy in the occasional day when it’s clear enough to see the mountains. The rest of the time the palette’s grey, the temp is cold and, oh yeah, there are just too damn many Starbucks and wannabees.

#95 Van guy on 02.14.12 at 1:21 am

Do you ride? — Garth

This is a financial blog eh? Sounds dirty to me hehe

#96 george on 02.14.12 at 1:22 am

Garth. If and when you revise your forecast for the Canadian housing market to “crash”, could you please bring back the link to The Automatic Earth blog that you once had on your website?

#97 Mel on 02.14.12 at 1:24 am

After reading most of the above posts, what am I reading? Well, some are happy to see the balloon to blow. Some, are in the middle somewhere. The rest, is trying to convince me that because of Chinese, inflation, growing economy etc…. For those who believe such nonsense.

Well, read my lips if you can. ‘ Stop making excuses for overblown house prices’. I will repeat myself.

RULE#1. A bubble is inflated by nothing more than the ‘expectations’ of future higher prices.

RULE # 2. The moment people cease to believe that house prices will rise forever, the market will CRASH!

That is it folks. Forget Chinese money, forget cheap money, forget everything else. You have a bubble that is routed not in reality. Reality is; income matters, rents matter, debt matters, prices matter….

#98 McExpat on 02.14.12 at 1:24 am

@Temenos
You are like a horse with blinders on right now. And reading your posts reminds me of the attitude of many people in Dubai in the summer of 2008. It is so deja vu it gives me shivers. That summer everything was looking so great, so rosy,everyone was making money on real estate hand over first…all foreign money…until it stopped and then financial armageddon for lots. Even the wealthiest. Don’t think that for one second Vancouver is different or it won’t happen there because of the wealthy Chinese. Sure, lots of things are different but the bubble fundamentals are all in place and right now we are in the first inning call denial. Let’s chat in a year or two when you finally see the light…

#99 Nostradamus Le Mad Vlad on 02.14.12 at 1:24 am

-
The chickens have come home to roost, and now it’s time TSHTF every which way.

Depending upon the war situation in the MEast, when or if oil goes to US$200 / brl., gas is in the $2.50/L range, rising food prices, fixed incomes falling due to higher inflation, Canada will be Greece Part Deux, and Harper will have fulfilled his “You won’t even recognize Canada when I’m through with it” prophecy.

“Well, somebody’s lying. Would you trust CHMC?” — Fat chance. See the preceding.

“I may soon be revising my forecast.” — The forecast will revise itself, so don’t bother. Actions speak louder than words, and that’s why politicos should be ignored.
*
#13 The American — “. . . 40%+ correction in Vancouver.”
– and –
#19 blase — “The money tap is being turned off; without it, nearly every non-boomer won’t be able to buy real estate.”
– and –
#21 squidly77 — “If prices can go up 150%, please explain to us mere mortals why prices cant go down 40% ?”

All three, combined with Garth’s “Events are moving faster than a speeding hormone . . .” show how quickly things are moving ahead, which is why, as Buffett said, “We will see who has been swimming naked” when the tide goes out, such as this.
*
UK Credit Rating Downgraded? Govt. and Insurance Cos. In each other’s pockets; Bombardier threat to shut down;
Fiscally Responsible in 2012; Three Economic Misconceptions; BoA part winner in Greek austerity, and Greece loses sovereignty; Bond Bull closing; 1:57 clip Global tax part of UN agenda for transfer of wealth; Epidemic Levels Unemployment from 18-34; SDRs The elite like them; Deleveraging World; Redefining Canada’s CPI before bubble bursts; The Withdrawal of Money affects peoples; minds’ sometimes badly.

Pepsi Cutting jobs and benefits while boosting production; Predictions for 2012 is like catching a fart in the wind; Seven Equations “The world can be explained with math.”; US$46 mln. RE in the French Alps; Overpriced RE BPOE, this one’s on me! Inflation Keynesians jumping the gun; 1987 Myths; Barking Dog Market; Of Red Green and ductape, Obomba As per Soros, massive tax hikes; US Fed Another crisis; Further reading Lotsa links; 22:20 clip China kicking the can, or preparing to call its debts from the US? 29:18 clip How the broke are surviving.
*
New weapon; Cancer Cure More research needs to be done; Shakira It’s a funny old world; The Nightmare of Govt. “Sometimes I despair.” Didn’t Garth say that? Four Lemons Cdn. subs. brought from UK.

#100 Soper Eats Babies on 02.14.12 at 1:26 am

@ #15 Tenemos–

“Worst case, Vancouver will simply see a multi-year flatline while inflation catches up to house prices, followed by a renewed march upwards. They aren’t building any new land in Canada’s only year-round city are they?”

They aren’t building any new land in California’s year-round Bay Area cities either, where urban spaces are hemmed in by sea, mountains and parks. Crashed and still burning:

http://housingbubblebust.com/OFHEO/Major/NorCal.html

#101 lookoutbelow on 02.14.12 at 1:28 am

Mr. Flaherty, here is some hot news from the West Coast.

Vancouver housing is not in a bubble, it’s just a big balloon. Only one problem, it’s a lead balloon and kinda heavy.

Hot horny Asians are still parking their money in Vancouver real estate. Is this money laundering?

Here is a plan, just call your buddy, Minister Jason Kenney over at Immigration and tell him to open the flood gates so we can keep the real estate market percolating nicely with more HAM.

Are you listening ? Did we learn anything from the US collapse?

#102 TRT on 02.14.12 at 1:29 am

Happy Mistress Day Everyone!!!!

#103 Alberta Ed on 02.14.12 at 1:30 am

My built-in BS meter pinned in the red zone when I read today’s rosy CMHC prediction.

#104 LJ on 02.14.12 at 1:30 am

#77 NoName on 02.14.12 at 12:18 am
“I am kind of hopping that Mr. Hyper and Mr. Flapery will use this RE bubble to our advantage by positioning and keeping CAD vs USD around 80c.”

Well, in that case, you can enjoy paying around $1.50-$1.60 for a litre of gasoline.

#105 The Thing in the Basement on 02.14.12 at 1:35 am

75 Mr Buyer – Can you tell us what an average salary is in
your area?

#106 Mainlander on 02.14.12 at 1:36 am

Some of the mortgages given out at firstline are so toxic you’d need asbestos gloves to handle them. When firstline leaves there will be one less easy approval for the brokers to make a quick buck on. The entire industry has been based on the “shift the responsibility” rule.
Only ten years ago if you shook the hand of a millionaire it was an occurrence, now everyone in Vancouver is a millionaire. No way everyone leaves this casino with a million.

#107 Vancouver Island on 02.14.12 at 1:48 am

Seriously is that picture real? If not, still a very powerful metaphor for what is going on. We have lots of those cats on the island here. A co-worker was even stalked by one, of course he was out in the forest picking mushrooms. So I guess one could say if you are out in the forest you can expect to be stalked by a hungry lion waiting to devour you; unless you take precautions of course.

#108 Waterloo Resident on 02.14.12 at 1:55 am

we keep waiting for 15% correction, we’ve been waiting now for 6 years !

But each year we keep getting a 15% rise in prices ; when are prices going to stop rising to the moon?

Frankly, I’m beginning to think that they never will stop rising, they will keep rising at 15% per year for eternity.

#109 smartalox on 02.14.12 at 1:59 am

Sitting in the international arrivals section of YVR, 3 out of 5 12 foot billboards are for builders: Polygon, ASPAC, and Concord Pacific.

“welcome to Vancouver… BUY CONDOS!!”

I’m surprised that there aren’t agents handing out business cards. Maybe when business starts to drop off.

#110 Sgip on 02.14.12 at 2:10 am

This acre of dirt is rich in history, too—the post-millennial kind. It was the figurative summit of the city’s frenzied condominium boom of the 2000s, and ground zero for the bust stemming from the financial crisis in 2008. But most important, One Bloor East stands—or, rather, just lies there, for the moment—as an emblem of Toronto’s unkillable condo market. For that bust was quickly reversed by a stunning resurgence, despite a punishing recession.

If you were making a movie of this saga, you’d set the first scene on Nov. 13, 2007. Hundreds of people line up on the sidewalk for the opening of the neighbouring sales office for One Bloor East. The proposed 80-storey condo and hotel tower will be the tallest in Toronto. Many of those in line are stand-ins, hired by real estate agents, and they’ve been waiting in line for days.

http://www.theglobeandmail.com/report-on-business/rob-magazine/one-bloor-east-reveals-tos-unquenchable-thirst-for-condos/article1991333/
.
.
.

#111 Ronaldo on 02.14.12 at 2:16 am

#15 Temenos – ”They aren’t building any new land in Canada’s only year-round city are they? ”

Look up, wayyyy up. No shortage of space there.

#112 Smart Blonde on 02.14.12 at 2:35 am

#60 John H
You obviously haven’t done your homework. The helicopters over White Rock, was a scam put on by local realtors. Investigated and proven! Along with the developers paying people to stand in lineups at condo sites, to encourage the sheep. Sad, but true.

Temenos, you are ridiculous.

Best to say nothing and be thought a fool, then to open your mouth and leave no doubt!

#113 Mister Obvious on 02.14.12 at 2:35 am

#61 Harry in Saskatoon…

“I don’t believe that prices will keep marching upwards, but I do believe the powers to be have learned from the mistakes of other countries and can achieve a soft landing.”
——————-

Get a grip Harry. There is only one reason only anyone would pay today’s insane RE prices and assume such crippling debt: the erroneous belief prices will always increase thereby making debt irrelevant.

A soft landing will not cushion the blow, nor will a flat market be any kind of reprieve. For droves of overextended families, the price of leveraged assets that earn no dividends or interest (i.e. houses) must continually rise or the game is over.

#114 villain? on 02.14.12 at 3:19 am

#74Temenos
25% of Chinese millionaires want to live in Canada, with Vancouver/Toronto being ground zero. These numbers come straight from the Bank of China.
=======================================
“China has more than a million millionaires as economic growth, savings and a strengthening currency helped swell their ranks by 262,000 last year, according to a Boston Consulting Group survey.
Millionaire households jumped 31 percent in 2010 from the previous year to 1.11 million, the BCG Global Wealth Survey released yesterday showed.”

Yikes, better think Chinese or mandarin as second, wrong- FIRST language- when living in Vancouver or lower mainland.

#115 truth hammer on 02.14.12 at 3:26 am

According to the last census report Canada has approx 1500 immigrants landing every day ……365. The real estate goons are counting on every one of these new cans to buy within days of landing. I can hear the boardroom squawk from here.

“If we can get them all to come to Toronto, we’ll only have to sell 200 units a day to suck up the inventory”.

“Well if thats the case…. lets build another tower…..200 hundred units a day is nothing….We might run out of stock….better build two”.

Such is the mentality of the ‘real clowns’.

Its sad to know that the one and only reason that real estate inflation and debt have skyrocketed is because of the governments interferance with interest rate settings. These rock bottom rates will hamstring two generations of purchasing. We can look forward to a very ugly future economy.

This state of affairs lays solely on the hands of F …C…and S

………never has the leadership of so few let down so many……as I wax Churchillian.

Feel free to use that as your campaign slogan. Mi guano es su guano.

#116 truth hammer on 02.14.12 at 3:36 am

This real estate debacle is the sole responsiblity of Mr’s Harper Flaherty and Carney. The ultra low rate policy has been exceptiomnally mismanaged.

“Never before has the leadership of so few led to the rape of so many”.

#117 betamax on 02.14.12 at 3:44 am

#42 Temenos: “i just looked at the 1977-current property chart. prices just flat-line after growth periods while inflation catches up. it’s always been like, and this time isn’t different.”

Realtor revisionisms. Look again at 82′ or 96′, esp. in real (inflation adjusted) dollars. Some “flat-line”.

http://cuer.sauder.ubc.ca/cma/data/ResidentialRealEstate/HousingPrices/housing-pri-vancouver.pdf

#78 Temenos: “RE prices are sticky.”

Yes, just like everywhere else, only they crashed in other markets regardless. Prices are set by those that sell, not those that don’t.

#118 bluethunder on 02.14.12 at 3:56 am

#15 Temenos
It’s February 13. Currently there are 50+ condos for rent on Craigslist in downtown Vancouver in a price range from $3K to $4K / month. It’s the same thing everyday. The only difference is that as new ads get added tomorrow, many of the the old ads will get frantically reposted in CAPITALS to try and catch the attention on the non existent renters. The newbee Olympic condo investors are getting creamed. Only matter of time before everyone else gets dragged down.

#119 Kilby on 02.14.12 at 4:13 am

temenos.
Are you the guy with the chamber of commerce in Surrey?

#120 ShipsNGiggles on 02.14.12 at 4:13 am

Garth any comments on this….

http://www.theglobeandmail.com/globe-investor/canada-raising-alarm-over-volcker-rule/article2336296/

#121 Math is Fun on 02.14.12 at 4:42 am

Garth – Well done.

#122 Canuck Abroad on 02.14.12 at 5:22 am

15 / Temenos – “…Worst case, Vancouver will simply see a multi-year flatline while inflation catches up to house prices, followed by a renewed march upwards. They aren’t building any new land in Canada’s only year-round city are they…”
****
If this happens it will be the first bubble in the history of time that did not correct.
Not. Gonna. Happen.
Expect a sharp decline followed by several years of melt below the rate of inflation just like every other real estate crash / asset crash before it.
If you want to get an idea what that looks like, here you go.
http://i563.photobucket.com/albums/ss73/dorseydwa/Bubbles.png

Seriously, they’re not building any more land? That was snark, right?

#123 nickolaos vlittas on 02.14.12 at 5:24 am

Whoa! Whoa! WHOA!

What exacting do you mean by revising your forecast? Do you think your predictions were a little too conservative? I think everyone who acted on your advice should send you a dollar.

Now go on. Do your victory dance for us.

http://www.youtube.com/watch?v=FF_vliKV2Lw&feature=related

#124 Ralph Cramdown on 02.14.12 at 6:19 am

prices in vancouver are sticky. i just looked at the 1977-current property chart. prices just flat-line after growth periods while inflation catches up. it’s always been like, and this time isn’t different.

Do you know what inflation rates were back then? Are you predicting 10% inflation for a few years — in wages, too — or are you predicting that the new flatline period will last forty years with 2-3% inflation?

vancouver is filled with buy and hold immigrants who value ownership. vancouver also has a million people lined up waiting to come in from the bric countries.

Absolutely. Ditto for Miami, San Francisco, San Diego.

#125 Steven Rowlandson on 02.14.12 at 8:09 am

Far better for houseless canadians that the real estate prices collapse by a horrifying 90% plus than to have to spend a whole horrifying life working for nothing and never being able to afford hearth , home and never being able to start a family. Rather than show restraint, mercy and make fiscal sanity possible.
The market would condemn the common man to the fate of Sisyphus in the afterlife. For his greed and arrogance Sisyphus was condemned to roll a large rock up a hill and when he succeeded the rock would roll to the bottom and he would have to start all over forever.
What does it profit a man to jack up the price of real estate to the point where no man can buy it on reasonable terms? Why spend so much for so little on something that is taxed and can be seized and is not really owned by the purchaser? Property tax is evidence of government ownership of the property you bought but really rent. In such a situation paying obscene amounts of money for a property is absurd.

#126 Bob on 02.14.12 at 8:11 am

There is a lot of talk/speculation about Toronto condos being ground zero in the coming correction.

What about single family homes in the GTA? How bad will they suffer? Should we all expect a slower rate of decline on a SFH? Or will we continue to see bidding wars (it’s happening still)?

Questions, questions, questions.

#127 Beach Girl on 02.14.12 at 8:48 am

I have only lived in an apartment for a short time in the 70′s. What a horrid existence. It was on the 30th floor on Denton Avenue. New and considered a respectable abode at the time. Probably is what I think it is now.

That experience was a eye-opener. Never will I live in the sky. And I was only paying rent. Stayed 3 months. Was going to jump. To imagine owning a mortgage on nothing. I guess that is why there is a lack of balconies.

Do people actually like living in shelves, like sardines that are getting toasted. Park your car in a smelly basement, looking over your shoulder for your friendly neighbourhood crack head to crack you too.

Then, if you survive, lug your groceries to the lobby, get on an elevator, with people that fart, for fun. smoking Man.

Go home, try to enjoy what is left of this dismal day. And the VOODOO people next door are smoking so much weed the dog is stoned. Then they decide to kill each other.

Another evening in paradise. and people actually pay a mortgage to live like this.

No the real owners have taken off, leaving it to rent to young scumbags.

NICE LIFE. BS.

#128 tkid on 02.14.12 at 8:52 am

I am employed by Firstline, in a support staff position. I have 20 years with CIBC.

When the layoff notice comes, O wise and noble blog dogs, do I take the lump sum severance payment or go with monthly instalments?

Do I leave the company pension where it is (I am vested with 20 years into a contributory plan where I get a fixed amount every month when I retire), or do I roll it into my own RRSP?

I need your help on this one. What do I do?

Tkid (who is a helluva lot calmer because I sold the townhouse two years ago).

#129 TurnerNation on 02.14.12 at 8:56 am

The trade to watch is Oil. Back above 100, if it can break higher pick a # – 105, 110?

http://finviz.com/futures_charts.ashx?t=CL&p=d1

Higher oil will further hurt the economy. Inflation = rate hike ammo?

#130 I'm stupid on 02.14.12 at 9:01 am

#68 Frank

That is the most flawed argument anyone can make. The reason why is because most who come to this country come from poor countries looking to have a better life. Sure some come with specific talents and are sponsored by companies to enter but that number is very small compared to the total number of immigrants. So how is a cab driver going to buy a 700k + home? What ends up happening is that people stop coming, they choose other places to apple for immigration. You can see this with the outflows from BC.

#131 I'm stupid on 02.14.12 at 9:02 am

Apply

#132 I'm stupid on 02.14.12 at 9:06 am

Garth

Why don’t you write about Loc’s and how they are delaying the correction in housing? I could explain it, but you will do a much better job.

#133 TurnerNation on 02.14.12 at 9:23 am

#60John H on 02.13.12 at 11:47 pm

Was talking to someone who knows a Toronto police officer. Apparently said officer told him things are much worse in Toronto than we are told. Mostly due to the gang effect. I know every week or so there is a spate of overnight shootings in the usual areas – always teens and young men.

#134 tonyw on 02.14.12 at 9:24 am

Your recent example of a semi in Leslieville (Logan Ave.) listed for $599K with a zen room in the basement sold for $701K in a bidding war – phew!

Long line-ups last weekend for a feeding frenzy of new single family homes in north Richmond Hill (off Yonge Street).
98% Asian buyers fighting it out (literally) with prices up $250K from 33 months ago from the last phase – e.g. $799K is the old $549K…

#135 TurnerNation on 02.14.12 at 9:28 am

#67wishful thinking on 02.13.12 at 11:57 pm

Buying is maxed out, current lending standard are being maxed out.

Example: a “correct” house (such as a old semi or SFH) in WASPy areas like Bloor West, Leaside, Leslieville, Riverdale, cost at 600k-1.2 million. Only possible due to 30, 35 year amortizations. What kid of dual income must a couple sustain to carry this house? Include rising prop taxes, utilities. Forget about having kids – RESP, daycare, activites, clothes. Unless you go into even more debt activity. RRSP and TFSA contribs? Not likely.
“But housing always goes up, we made an investment in our future”….

#136 I'm Sexy and I know It on 02.14.12 at 9:42 am

BPOE, The American’s predictions are definitely materializing. Hell, he has only been on here a little over a year. The Titanic didn’t sink in a matter of milliseconds. The American’s predictions have been very accurate. He said the decline would start to show visible signs of happening first quarter of 2012. Guess what, pal? That’s exactly when it is starting. You’re all smoke and mirrors trying to convince the world others’ predictions are wrong by literally making up things they never claimed. You go after Junius and The American on a daily basis. We all know why you go after these two. Its because you know they’re right and you can’t afford for the world to believe them because your whole life depends on it. Fact checking everything, YOU PAL, claimed that American dollar would collapse while the Canadian dollar soared. That never happened as we’ve been on par with one another for a while now. Shit, what does that say about OUR economy and we haven’t really even began to feel the full effects of a housing bust. You claimed Richmond can’t be stopped. Well, it obviously has stopped because EVERYTHING is sitting on the market there. You claim the HST is what is slowing things which is a load of shite. You claim nobody pays for homes using a mortgage here in Vancouver because everyone pays cash, which is a lie. There are more bad loans in Vancouver than anywhere else in Canada. The Wall Street Journal by the way BPOE claims Vancouver is OVERPRICED. Vancouver is a total backwater compared to other cities with real economies. We try WAAAAAAAAAY too hard to be noticed here in Vancouver when actually the world could care less. BPOE if the world wanted to move to Vancouver then the world would already be living in Vancouver. You lie and make claim it is because of cost. Then I say every rich person in the world would be living there and they clearly are choosing not to live in Vancouver. A handful of rich immigrants doesn’t mean the world wants to live here. All the rich Chinese CLEARLY choose the U.S. over Vancouver. The rich Chinese have the means to come to Vancouver if they want, and some do, but most don’t. Most go Stateside and they go there for a reason. Vancouver is only pertinent to us Canadians. The secret is out now everyone… Our Canadian real estate market has been cooked beyond recognition for years now. Every major media publication is showing to press the fact we’re way overpriced. This is going to end horribly.

#137 Canuck Abroad on 02.14.12 at 9:48 am

91 / SWM – Ireland is a really good example, and people there were tripping over themselves to scoop up real estate several years ago. Some areas are like ghost town now (I’m imagining Toronto waterfront condos being in the same boat – Cityplace anyone?).
Anybody interested, if you have 20 minutes, Max Keiser did a short film about it. It’s a year old but still relevant.

http://maxkeiser.com/2012/02/09/hotspots-ireland/

#138 I'm Sexy and I know It on 02.14.12 at 9:56 am

Temenos sounds very afraid. If The American is so absurdly wrong then why are you so obsessed to counterpoint craziness? You cannot fight crazy right? Answer is very simple. You combat him because you know he is correct. I admit I think our correction in Vancouver will be over half off.

#139 Canuck Abroad on 02.14.12 at 10:02 am

Re the short film I posted, if you don’t have time to watch the whole thing, watch from minutes 5-11 of the film, which covers ghost estates and “emigration wakes” which are happening for the first time since the famine and are taking place so that people can avoid going to prison for debts.

#140 NoName on 02.14.12 at 10:13 am

#103 LJ on 02.14.12 at 1:30 am
_____________________________________________
#77 NoName on 02.14.12 at 12:18 am
“I am kind of hopping that Mr. Hyper and Mr. Flapery will use this RE bubble to our advantage by positioning and keeping CAD vs USD around 80c.”
Well, in that case, you can enjoy paying around $1.50-$1.60 for a litre of gasoline.
_____________________________________________

Ok, we are an average family two cars on a driway, one with K20Z3 engine and second with VQ35DE engine, both engine require premium gas, and that is what they get, last night i happened to fill my car (K20Z3, now you know what i am driving) [email protected]=61.16 paid by visa (love to collect points for vacation). As you see i am already paying close to those numbers, and surviving 10-15% increase on based on yesterday visit to the pump will ding me 6-9$ every time i fill, and how i will compensate for that… I WILL STOP BUYING TIM HORTONS COFFEE, plz forgive me is so unCanadian to do this. But this gasoline conundrum raise other question, how i will pay more for everything else, and can i compensate for that, sure Vacations on points, petro Canada car wash, one day one wash, split in between 5 people gives you an about 18 washes for 40$, keeping minimum required on account not to pay fee, and the most important thing beside shalter is food, pay close attention on cost per unit . (buying a whole chicken you chose cheaper one, there is a saving of 50c alone on 1 item from grocery list, now add NoName shampoo and you saved enough to have medium regular from tim’s) I know many will say i don’t want to live like that blah blah blah… But stop for a moment and think how much more fun is to take kids to WDW on points vs paying 3500-4000$ for it. And Joe the button pusher is better off having some job vs no job at all, and taxes he pays will fund our pensions, healthcare, etc…

We have to adopt, that all… It’s sounds more difficult than actually is…

NoName

#141 down and out on 02.14.12 at 10:30 am

You ain’t seen nothing yet.Just ask anyone trying to sell in southwestern Ontario what happens when a bubble breaks. Toronto is not even aware of the tidal wave which already hit us is building. Sorry about that but ground zero stared in Windsor hit London last week with some plant closures washing up in Waterloo with Rim and surging on to To. Bail out now.

#142 disciple on 02.14.12 at 10:30 am

I feel like I’m in stuck in a bad dream:

In less than 8 years, gasoline prices have doubled, from about 60 cents in 2004 to a buck 20+. This chart only goes back 6 years: http://gasbuddy.com/gb_retail_price_chart.aspx

But you can also check out this graph here:
http://www.theglobeandmail.com/report-on-business/economy/economy-lab/daily-mix/gasoline-prices-in-line-with-historical-trend-analyst/article2023356/

And national brands have deceptively reduced pack sizes of common groceries while slowly raising prices over that time, effectively also doubling grocery bills in total costs for a typical family. If you don’t have kids, you would not likely to have noticed. That is price inflation of 100%.

Housing in most of Canada has inflated at about the same rate during this same period, such that a typical SFH that was once around 250,000 is now over 500,000. I know what a 25%+ correction would do to our economy. And so do our business leaders. Many strong companies are finding creative ways to get rid of long-term people right now as we speak.

But it would be only natural for prices to revert back down to normal levels which would mean, in my opinion, a reduction by 50% (which would bring us back to 2002 and reverse the 100% doubling of prices), and continue violently on the down-stroke due to negative sentiment before reverting back to the mean, meaning up to 80% losses for some. That 1.5mil crack shack will once again go for a more reasonable 300K if indeed in a good area. There is no doubt in my mind.

In the absence of further cheap money from our lovely leaders, I don’t see any reason why this would not occur. Sticky sellers? Increased media propaganda? Hardy belief in the asset class? Sustained first-time buyers? ZIRP 2.0? I don’t think so. Do you?

#143 pablo on 02.14.12 at 10:42 am

ok, I guess I’ll throw my 2 cents in as well.

According to cmhc gurus; there won’t be any bubble popping for the next to years, just stability and continued increases in prices in the same range as 2011 saw. Also that economic prognosticator; Roubini, if forget his first name, the guy that predicted u.s. r/e crash(apparently); sez that the canadian r/e market is likely to experience a 10% price correction, nothing like the carnage seen in the u.s. and other countries in europe.

Time will tell who’s right or wrong, but I wouldnt be betting my financial future on it, no matter how it turns out. If you’re thinking about selling, don’t sit on the fence waiting to establish the newest high price on your street. List at a reasonable price, and take the best deal you can make.
If you have to buy now, or can’t stand the idea of renting, then again, do your due diligence be patient and try to remain detached and unemotional in the process. Make the best deals you can on the purchase terms, financing and closing costs.

You do the best you can with what you have, after all; the prognosticators have all been wrong more than they’ve been right, but they don’t talk about that do they.

#144 blase on 02.14.12 at 10:43 am

#107 Waterloo Resident “I keep waiting…it’s been six years”

No, it hasn’t. Remember Fall of 2008? House prices cratered that fall and into the winter. That was until F stimulated rates and terms. It happened, and it will happen again, in weeks, not years.

#145 disciple on 02.14.12 at 10:46 am

Speaking of “the kill”, it’s come across my desk recently that Nikola Tesla was murdered by Otto Skorzeny (Hitler’s bodyguard and assassin). Lots of other good juicy tidbits can be found here, such as Hitler’s double, etc…:

http://www.veteranstoday.com/2012/02/13/nikola-tesla-was-murdered-by-otto-skorzeny/

#146 Canadian Watchdog on 02.14.12 at 10:50 am

You might find this chart interesting Garth. Many don’t have this data…

https://p.twimg.com/AlljZAcCMAAqtKY.png:large

#147 disciple on 02.14.12 at 10:52 am

Free energy is real. A static point charge, positive or negative, derives its charge from a vortex of some sort protruding from the higher dimensions into our third dimension. Modern physics ignores the problem of explaining the origin of the charge. That is not its main concern. But it was Tesla’s concern. And also T. Henry Moray’s as well:

http://www.free-energy.ws/t-henry-moray.html

#148 NoName on 02.14.12 at 10:54 am

#103 LJ on 02.14.12 at 1:30 am

Sorry forgot to add link

http://www.youtube.com/watch?v=vOF2fI14uj0

#149 Mr Buyer on 02.14.12 at 10:55 am

#104The Thing in the Basement…People are not getting rich quick here in Japan that is for certain. As for average wages, I will have to dig around and I do not have much time to do so so do not hold your breath. I will s.ay this, a new city servant office worker makes around 2k a month salary and recieves a bonus of around 4k twice annually while a higher level city worker with over 20 years in makes about maybe 5k a month after tax (at current exchange rates) and about a 13k bonus once a year and a second 9k bonus, I do not know if you can make any generalizations about the guy with 20 or 30 years in as he was pretty highly placed. People really really do not talk about money here (I learned that the hard way being quite a loud mouthed foreigner when I first arrived, I am not a big blow hard by Canadian standards but in the land of few straight answers I proved quite amusing to the natives when I first arrived ).

#150 Alistair McLaughlin on 02.14.12 at 10:56 am

@ #22 Republic, you can’t short CMHC. It’s a government entity. That means you’re long CMHC. As taxpayers, we’re all long CMHC. With no way to liquidate our position, no way to hedge our losses, and no way to short it.

#151 live within your means on 02.14.12 at 10:56 am

Funny & so sweet – Maybe I should get a Jack Russell.

http://www.youtube.com/watch_popup?v=P9Fyey4D5hg

#152 Aussie Roy on 02.14.12 at 10:59 am

Aussie Update

A list, The Most Overpriced Housing Markets In The Developed World

http://www.businessinsider.com/the-most-overpriced-housing-markets-in-the-developed-world-2012-2?op=1

The future for Canadian realtors ?
Queensland and Western Australian estate agent numbers have slumped as a consequence of a nationwide drop in transaction volumes and property prices.

Last year’s volumes were about 13% lower than volumes in 2010 across Australia, according to RP Data head of research Tim Lawless.

The figure was 26% lower than 2009 and 33% lower than the recent highs of 2007.

“The real estate industry is doing it tough,”

http://www.smartcompany.com.au/property/048194-agents-exit-property-sector-as-sales-and-prices-drop.html

Mortgage demand is strong, but it’s not to purchase

Angry home buyers are breaking with their banks at unprecedented rates. More than 50,000 home owners refinanced a record $12.6 billion of mortgages in the December quarter, as they voted with their feet to get a better deal.

http://www.theage.com.au/opinion/political-news/bank-switching-booms-as-rates-anger-grows-20120213-1t2as.html

Aussie Banks and New Zealand farm land

Between 1990 and 2000, the price of rural land doubled in New Zealand. It doubled again between 2000 and 2005. And again between 2005 and 2008.

Prices were largely fuelled by a flood of cash from the banks. According to data collated by the Reserve Bank, over the past seven years alone the amount banks have dished out to the agricultural sector has more than doubled from $19 billion to $47 billion.

Two-thirds has gone to dairy farmers, or to people wanting to convert land to dairying.

The dam burst in early 2008, and since then land prices have plummeted. In some parts of the country, values have halved and many farmers now owe more to their banks than their farms are worth – a situation known as negative equity.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10704031

#153 jonny on 02.14.12 at 11:11 am

Garth, is it CMHC or CHMC?

#154 disciple on 02.14.12 at 11:12 am

Even though there is tons of research proving it, many people don’t believe that there is a secret society that controls the music and film industry. This is mostly due to ignorance and because they don’t want to awaken from their celebrity dream world. But that’s OK, I guess, if you’re still 12 years old…

This is why the owners of the matrix put so much money and time into promoting celebrities, because the celebrities are the stars that keep the matrix alive to billions. Whitney Houston sold over 100 Million records and generated billions of Federal Reserve notes (dollars), euros, and pounds, for the world’s rulers. But more important than the money, Whitney Houston represented an image to the world.

When I did my research on the music industry I found out that there are 3 major labels that own the Industry and all of the smaller labels within it. These labels are Sony, Universal, and Warner Brothers. Now, what most people don’t realize is that these record labels are all owned by certain Elite families.

The music industry is a cult and once one gets a record deal they are now an initiate and are a part of the cult for life. Whitney Houston was no exception to this rule and she took the oath back in the ’70s. Once the oath is pledged you become the property of the record labels and the machines and you can NEVER retire. The only way out of the game is death! If you think I’m joking, try to name one entertainer who has successfully retired from the industry, never to come back again. There is no way out.

Whitney Houston reached the peak of her career in 1992 when she starred in the film, Body Guard, with Kevin Costner. Notice that all of the big entertainers have to do a film when they reach their peak so that they can generate more capital for their masters a.k.a the label.

Whitney had a clandestine image and character. Who in their right minds didn’t like her? But the cult masters like to tarnish images for fun. Enter Bobby Brown. Whitney Houston stated in her interview with Oprah in 2010 that she was attracted to Bobby because he, “took control of her and their relationship, and she liked that.” In reality Bobby was acting as Whitney’s handler, which is a term used in mind control. A handler is one who is used within a mind control experiment to break another and to get them to do what the controllers of the experiment want, this was Bobby’s role.

#155 Junius on 02.14.12 at 11:15 am

#135 I’m Sexy and I know it,

Great post. Very sexy. As you know.

#156 disciple on 02.14.12 at 11:20 am

Whitney Houston was addicted to cocaine and she became infamous for this habit. You have to ask yourself why was she addicted to cocaine, because from a metaphysical point of view, people that use drugs are using them to cover up something. According to her 2010 interview with Oprah, Whitney said, “Bobby would draw eyes all over their home.” Could these be the all seeing eye that depicts Lucifer’s eye within the occult?

She further states that, “Bobby was her drug”, which further proves that she was using the drugs as an escape from her life with Bobby. Whitney wasn’t happy with herself and the way her life was ending up and in the same interview with Oprah she even referred to herself as “the devil.”

According to Bobby Brown’s sister, who would go on drug binges with the couple, “Whitney hallucinates and sees demons when she’s high; she bites and beats herself black-and-blue but blames the devil for the injuries.” Bobby’s sister Tina goes on to say that, Houston sees ‘demons’ everywhere she goes, and beats herself up while saying “The Devil be hitting me.” Tina claimed that drugs have made Whitney so paranoid she sees evil apparitions and once drilled a spy-hole in her bathroom to look for “demons.” She said: “She’ll point to the floor and say, ‘See that demon. I’m telling you somebody’s messing with Bobby.’ She always thinks it’s something to do with Bobby.” She added: “She breaks everything – mirrors, phones, cabinets, appliances.”

Now, ask yourself, what’s really going on within the music industry? Is it just drugs or was Whitney demon possessed? Why are all of these celebs hooked on drugs and why are all of these celebs dying young?

Whitney was of no use to the industry anymore because as many of you know she couldn’t sing the way she used to. The drugs and the demons drained her life force, because Whitney was pure and wasn’t built for demonology. Whitney was sacrificed aka thrown from the freedom train, and done away with a day before the Grammys as an industry ritual. She was found dead in a bath tub within the hotel of Clive Davis’s pre- Grammy Awards party. This was a ritual, just like every other aspect of Whitney’s life. Whitney was born on August the 9th and died on February 11th (9-11). 9-11 is a numerical code used by the elite to perform human sacrifice rituals and Whitneys death was no exception. She died a night before the Grammys because within the Occult one can harness the energy of the deceased to attain the ends of their choice. Whitney’s energy was used for the awards the next night and this is why the media jumped all over her death before the cause was even discovered. This was a ritual folks.

#157 Junius on 02.14.12 at 11:34 am

#46 49,

The Volcker Rule is an addition to the Dodd-Frank that prevents banks from engaging in making investments in certain types of speculative investments. Rule is named after former Fed Chairman Paul Volcker.

The Rule was part of the Glass-Steagall Act that was repealed in the late 90s. The basic concept is that the Banks are essentially insured by the Gov’t whether directly or indirectly as we saw in the bailouts of 2008. The concern is that their “too big to fail” size creates a moral hazard as they don’t fear their own failure. Every gamble is “heads we win, tails you lose” because the tax-payer bails them out. The Volcker Rule is supposed to prevent this situation.

Why F is against the Rule is bizarre and once again demonstrates that he just doesn’t get it. If he says it is because our banks are inherently conservative or something like that I am going to throw-up in my breakfast.

Let’s not forget that the US arms of many Canadian banks took a big hit in the mortgage crisis. CIBC and TD were both up to their eyeballs in it.

#158 Junius on 02.14.12 at 11:39 am

#153 and #155 Disciple,

That’s all fine but when does the MOTHERSHIP come to pick us up and take us home to our Alien birth place?

Should we pack light?

#159 Canadian Watchdog on 02.14.12 at 11:43 am

#149 Alistair McLaughlin

CMHC is backed by the government so you would short Canadian sovereign CDS in OTC market. Not very accessible.

#160 Stevenson on 02.14.12 at 11:43 am

It’s very simple. It is becoming more and more unaffordable for Canadians to buy RE. There will always be people buying. This Canada and there are 2 cities that majority of both immigrants and Canadians want to move into. The people who can’t afford will have to move out of towards more affordable areas. That’s life so deal with it or make more money.

The ones who thought that it was smart to stay away from RE may have gotten it wrong. Well it was a speculation just like how investors speculation RE prices to increase. Some of us are on the upside. Others choose to subsidize other’s mortgages while the landlord benefits the appreciation on the property.

#161 bill on 02.14.12 at 11:47 am

”These numbers come straight from the Bank of China.”

well that sure was an argument clincher….. not

temenos I have a bridge for sale. revenue earner and everything. interested?

#162 Kris on 02.14.12 at 11:49 am

#11 Gypsy Kid, #65 Uh Oh Canada.
Hold on to your sympathy, folks. What we have here are predictions.. convincing predictions, but still predictions.

The avg SFH market in the GTA is not “popping in front of my very eyes”. Au contraire, multiple bids are still a reality, as traffic spotters from Markham, Oakville etc report on this blog (like #133 tonyw).

I’m sort of with “#39 Renters Revenge” on this one.. Predictions are great, evidence is better.

#163 NoName on 02.14.12 at 11:52 am

#141 disciple on 02.14.12 at 10:30 am

I agree with most of what you wrote, RE will eventually correct to some more affordable levels… But food and energy inflation is here to stay! Just imagine what will happen when rural India and China gets running water… If you think its expensive now wait few years.
And if we think is tough for us, imagine how tough it will be for generation Y.
If we don’t micro manage ourselves, government will macro manage all of us, and we know how good they are at doing that…

#164 chubster on 02.14.12 at 12:03 pm

why canada? it’s simple. canada is the last major RE market on earth where credit is still cheap, widely available and underwriting standards are crap. this qualifiies it as the most dumbass place on earth (mdapoe).

#165 Beach Girl on 02.14.12 at 12:05 pm

#150 live within your means on 02.14.12 at 10:56 am

Funny & so sweet – Maybe I should get a Jack Russell.

____

WOW, awesome video. I own a Jack Russell, Miss Daisy. They are super smart. Get one. But they own you. LOL. Happy Valentines.

#166 Devil's Advocate on 02.14.12 at 12:11 pm

With over 20 comments on the untimely and unfortunate passing of Whitney Huston isn’t it time we took a step back and gained some perspective here? There are people all over this planet who have lived a far less fortunate life than the one Ms. Huston lived, people who endured hardships beyond comprehension, people who respected their lives and did not abuse themselves, people who made the ultimate sacrifice for their fellow man, people who contributed every bit as much as Ms. Huston but just not with such a high profile.

I enjoyed Ms. Huston’s work immensely but there are people who are not so famous for going to rehab who are dying for you as they fight against the atrocities in other countries. Where is the news coverage for them?

Besides, last time I looked this wasn’t an Entertainment Tonight (E.T.) spin-off blog. Although it’s “entertainment” value does clearly rival.

I consider your posts immensely entertaining. — Garth

#167 Kilby on 02.14.12 at 12:12 pm

Central Okanagan. 4,022 active residential listings.

Completed sales Feb. 1st to 14th 2011….191

Completed sales Feb 1st to 14th 2012….112

This is a reduction in the number of sales of over 40% from same time last year.

#168 curious! on 02.14.12 at 12:13 pm

#145 Canadian Watchdog

Very useful chart for properties under $500k…do you have similar chart/data for pre-2006?

It seems like our #of sales for Dec-11/Jan-12 is similar to Dec08/Jan09…but with lower mort. rates and more favourable lending standards.

#169 Beach Girl on 02.14.12 at 12:37 pm

#157 Junius on 02.14.12 at 11:39 am

#153 and #155 Disciple,

That’s all fine but when does the MOTHERSHIP come to pick us up and take us home to our Alien birth place?

Should we pack light?

____

Ditto.

#170 Throwstone on 02.14.12 at 12:38 pm

#149…Allistar Mcl…

I am going to short CMHC…Trying moving to another country. I think im going to south america…the winters are’nt as bad.

#171 Temenos on 02.14.12 at 12:52 pm

@123 – Ralph Cramdown

I’m sorry, but you’re simply wrong to compare Vancouver to San Diego, Florida etc.

Canada encourages foreign wealth to come to its shores, because it doesn’t crack down on foreign income reporting. I know this because I just spent the last 3 years working in an overseas tax haven setting up segregated bonds for HNWI.

USA is not doing a very good job attracting wealth, compared to Canada. It’s simply the current reality.

Your comments about the CRA are patently false. — Garth

#172 Form Man on 02.14.12 at 12:53 pm

#166 Kilby

Not surprised. We took a tour through Vernon and Kelowna on the weekend. Developers are still sitting on homes they built last year. Not much new stuff starting. This will throw a wrench into DA’s spin………

#173 Temenos on 02.14.12 at 12:58 pm

@159 -Stevenson

Yes, you are right. Vancouver, in particular, is a Pacific Rim city that will continue to prosper in the Asian Century.

As long as someone can afford it, go and get a primary residence. I love my home in Vancouver, and I don’t find it expensive at all. Cheap financing is allowing me to double my mortgage payments, due to be paid off by the time i’m 40. I guess I find it cheap here because I did not come here from small town Canada, but rather from having lived abroad in cities where home ownership doesn’t exist, save for the tiny minority of HNWI.

#174 live within your means on 02.14.12 at 1:03 pm

#141 disciple on 02.14.12 at 10:30 am
I feel like I’m in stuck in a bad dream:
———————–

Re gas prices. In Halifax we’re paying $1.32 a lt. If you check Gas Buddy, which I do weekly, there is no competition locally. At least in NB prices differ from one retailer to another in the same market area.
———————-

And national brands have deceptively reduced pack sizes of common groceries while slowly raising prices over that time, effectively also doubling grocery bills in total costs for a typical family. If you don’t have kids, you would not likely to have noticed. That is price inflation of 100%.
——————-
We have no children, nor does my elder sis, but we have noticed the same. We’ve only 2 large grocery chains here from which to choose. I find Loblaws flyers to be the most deceptive. The other week they offered lean hamburger for $2.29/lb. This week, medium is on for $3.49 – save $1./lb. Normally lean is more expensive than medium. Funny how they can offer one product for $1. one week than the next week offer it for, e.g. $.79 and advertise it for a savings of $.50. I really feel those on low and fixed incomes. At least I & DH can take advantage & stock up on ‘real’ sales.
————————–

Re Housing inflation. We recently received our property assessment. It has doubled since 2001. Our home is 28 yrs. old. Wow, noticed that the homes on the new end of our street are assessed lower than what I was told they originally sold for several years ago. I know assessed value is not ‘fair market value’. We won’t be selling any time soon as we consider our house a home, rather than just an investment. We bought it in ’91 for $118K, put down 25% and paid it off in 7 yrs. Rentals here are quite expensive for what you get. A friend pays $625. for a tiny one bed in Clayton Park, Halifax after having lived in it for 25 yrs. The building is older. The owners wanted to put up her rent to $700+. Its a 3 story – hallways, stairs are dingy and haven’t been renovated since she moved in. She looked around but everything was more expensive. Heat is included but she pays her own electricity. She even painted, on her own dime, kitchen cabinets and put some new fixtures in her bathroom. HRM is not a cheap place to live considering the wages.

#175 disciple on 02.14.12 at 1:05 pm

No Name… interesting point about running water. You got me thinking about the need for it. We must not confuse western development with necessary progress. Their water is “running”, but just not from extensive indoor plumbing. Heck, it was only in the last 25 years or so that most homes in Britain acquired central heating and central hot water heaters…

I’ve mentioned before that the gasoline engine will likely not dominate the emerging economies like it did in the West for the last hundred years. Similarly, the methods of energy generation and water procurement that exist now are working just fine (mechanical/solar, and from wells), perhaps “running” water would be a regression rather than a progression (water that turns 90 degrees inside of plumbing is said by some to lose its nourishment).

A very common misconception running circles in the Western mind is that the emerging economies must follow in our footsteps and along the same path. But in my opinion, this is a huge mistake, and part hubris on our part. Disruptive technology is always the game changer. Apple’s patents on fuel cell batteries for example…

#176 Timing is Everything on 02.14.12 at 1:05 pm

#140 down and out

Ground zero…

http://tinyurl.com/6otttta

#177 Temenos on 02.14.12 at 1:07 pm

@170 –

Your comments about the CRA are patently false. — Garth

It is the reality in my experience. Canada utilizes an honor system and a silly foreign income verification statement. You really don’t think the factory boss in Dongguan who has PR status in Canada is paying any tax on their foreign income, do you?

The USA and Canada are worlds apart in enforcement of foreign income reporting.

#178 SWM on 02.14.12 at 1:08 pm

145/ Canadian Watchdog :

Wouldn’t a lot of the 500k sales decline in your chart be due to increasing prices?

A $475k house from a couple years ago would be $600k now and on to a different chart.

Or am I interpreting wrong?

#179 Coraline on 02.14.12 at 1:08 pm

Canadian Watchdog: Great charts, keep them coming!

#180 Snowboid on 02.14.12 at 1:08 pm

#131 I’m stupid on 02.14.12 at 9:06 am…

I think the illusions that LOCs can create have already started to vanish. Starting in December, and continuing to last week – several relatives’ and friends’ LOCs have been cut back or cancelled.

We are already on the hook for almost $5K to keep one close relative out of foreclosure. It’s ironic, we followed Prof. Turners’ advice and cashed out of RE while we could – and are now ‘saving’ someone who thought we were nuts to suggest RE was going to crash!

#181 Timing is Everything on 02.14.12 at 1:14 pm

#140 down and out

Windsor was just target practice.

#182 Snowboid on 02.14.12 at 1:15 pm

#139 NoName on 02.14.12 at 10:13 am…

Our VQ37VHR also uses premium, and folks at the local Valley of the Sun Costco are upset – it is almost 95 cents a litre (assuming CAD at par and 3.78 litres in 1 US Gallon). While that is still about 28% cheaper in the US (vs $1.334 in the Okanagan), it was about 50% less this time last year.

Our plan to adapt centers on renting in Canada until such time as the buy/rent calculator moves to the buy side. We enjoy a better ‘lifestyle’ down south during the winter, but more frugal in the summer up north.

But we may be buying sooner than 2013 with Prof. Turners’ latest research!

#183 Sky on 02.14.12 at 1:43 pm

A real variety pack today – from canine Einsteins to Tesla conspiracies. Think I’ll join the club.

Presenting the Shark Whisperer… watch to the amazing ending.

http://www.youtube.com/watch_popup?v=WK2LpUoqX6A&vq=medium

#184 Temenos on 02.14.12 at 1:45 pm

98 McExpat on 02.14.12 at 1:24 am

@Temenos
You are like a horse with blinders on right now. And reading your posts reminds me of the attitude of many people in Dubai in the summer of 2008. It is so deja vu it gives me shivers. That summer everything was looking so great, so rosy,everyone was making money on real estate hand over first…all foreign money…until it stopped and then financial armageddon for lots. Even the wealthiest. Don’t think that for one second Vancouver is different or it won’t happen there because of the wealthy Chinese. Sure, lots of things are different but the bubble fundamentals are all in place and right now we are in the first inning call denial. Let’s chat in a year or two when you finally see the light…

Actually, i made it quite clear I am not in denial about anything. I see a flat-line for a few years followed by further increases. Property prices would naturally double every 20 years if we are to assume they hedge inflation. A cursory examination shows similar % has occurred in Vancouver in the past, and it was also followed by a relatively soft landing. Of course, some neighborhoods will be greater hit than others, as property is totally regional. At the end of the day, prices will stabilize near-term around 2008 pricing.

#185 T.O. Bubble Boy on 02.14.12 at 1:55 pm

25% of 1.1M Chinese millionaires are moving to Vancouver? That’s 275,000 new millionaires arriving soon — we’d better start stacking those Crack Shack or Mansion houses one on top of the other to make room!

So, apparently Vancouver is now the “Monaco of the Pacific”? Who will be crowned the Prince and Princess?

#186 Waterloo Resident on 02.14.12 at 2:01 pm

According to this article ( http://tinyurl.com/7vmnpb5 )
The Organization for Economic Co-operation and Development recently reported that Canada has the highest number of underpaid, highly educated citizens among member countries.

Well, that’s great news !
I guess that means that we can just about guarantee that house prices will continue to rise 15% per year for the next 35 years, correct ?

#187 dave on 02.14.12 at 2:01 pm

Canada real estate bubble Starting to hit mainstream media globally now.

http://www.moneyweek.com/investments/property/rest-of-the-world/canada-house-price-bubble-20700

#188 live within your means on 02.14.12 at 2:02 pm

#148 Mr Buyer on 02.14.12 at 10:55 am
People really really do not talk about money here (I learned that the hard way being quite a loud mouthed foreigner when I first arrived, I am not a big blow hard by Canadian standards but in the land of few straight answers I proved quite amusing to the natives when I first arrived ).
……………….

Where I live people never talk about how much they earn, their finances, etc. I have an idea, but that’s about it. When my neighbour’s hubby died in Nov. 2011 she told her children they would not receive a cent of his insurance policy. She retired several years ago but works PT in the health field in various US states and here. She likes to get out of the house and hates cleaning so can continue to afford a cleaning lady. Good for her. INOHO, her 2 kids have taken advantage of their parents’ generosity for years. Never liked the daughter & since last summer, I think less of her school VP son who smiled cause he was ripping off his Mom’s electricity bill at her cottage.

#189 debtified on 02.14.12 at 2:25 pm

Great post, Aussie Roy. I am compelled to repost the New Zealand portion because not a whole lot of people really understand the impact of negative equity. Some people may have missed it because it was at the bottom of your post.

A lot of the Real Estate bulls here argue that homeowners will continue to keep their houses and pay their mortgages despite having negative equity. I just can’t imagine a bank that would let anyone carry a mortage for a significant period of time that is more than what the value of the house. At one point, likely during mortgage renewal, the bank will ask for the difference. When you have homeowners that do not have savings and owe $1.50 for every $1 they take home, have how will they manage to pay?

#151 Aussie Roy on 02.14.12 at 10:59 am

The dam burst in early 2008, and since then land prices have plummeted. In some parts of the country, values have halved and many farmers now owe more to their banks than their farms are worth – a situation known as negative equity.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10704031

#190 Preciousss on 02.14.12 at 2:28 pm

I’m not selling my house. I’m not selling gold. I’m not loading up on shares. I am going to sit back and observe and work for 20 or more years if health permits.

I will purchase silver. I may buy a few fully funded nat. gas futures contracts with a tight stop.

I have no pipedreams of an idle, wealthy retirement. I have visions of being a fantastic provider, life coach, mentor, and contributor.

#191 You can smell it on 02.14.12 at 2:31 pm

Balloons pop to.

#192 Abitibi Doug on 02.14.12 at 2:33 pm

It’s interesting to note that while talk of a real estate bubble is becoming mainstream, you also hear and read otherwise. An example is in the Feb. 13 Globe and Mail Business section where an article said, and I quote: most economists believe the housing market is slowing but in little danger of a steep correction. One has to wonder, do they really believe that is true, or are they trying to keep confidence up to prevent a housing correction from becoming a self fulfilling prediction? It’s also worth noting that most of the economists sounding the warning of a bubble are from outside Canada.

#193 Brad on 02.14.12 at 2:39 pm

I think that Waterloo Resident is on to something, i feel that he is very correct in his assumptions.

If houses in the T.O. region are listing for $500 k and quickly selling for $800 k, then Waterloo Resident’s continual and ANNOYING talk about how that $400,000 house will soon be $800,000 and that $800,000 house will soon be $2 Million ; well, all of it WILL be coming true , and SOON !!!!

And that has the daylights scared out of me !!!!

#194 Devil's Advocate on 02.14.12 at 2:41 pm

#171Form Man on 02.14.12 at 12:53 pm
#166 Kilby

Not surprised. We took a tour through Vernon and Kelowna on the weekend. Developers are still sitting on homes they built last year. Not much new stuff starting. This will throw a wrench into DA’s spin………

I don’t get it Form Man. Do you really enjoy cutting your own throat like that? Besides which you must need to get off the highway and check out some of the hoods like mine where there are 4 new infill homes being built in the $600,000 plus range and 3 new tear down rebuilds in the $1,000,000 plus range. I watched a foreclosure sell for $100,000 over list the other day.

Everywhere I turn there are signs that those who have been sitting on the fence the past three and four years are jumping off. They’re tired of watching and waiting. Their inaction held the market back and their new movement forward just might surprise you with an unexpected market surge.

Time will tell. But one thing is certain… your frame of mind can’t be doing you any good. Why don’t you just put your Estwing hammer away and call it a day?

#195 45north on 02.14.12 at 2:45 pm

tkid: who is a helluva lot calmer because he sold the townhouse two years ago.

pretty funny

Mel: The moment people cease to believe that house prices will rise forever, the market will CRASH!

That moment is now.

#196 dd on 02.14.12 at 3:05 pm

#128TurnerNation

… Inflation = rate hike ammo?…

Inflation is the increase in the money supply. Increase prices are the result.

#197 Form Man on 02.14.12 at 3:19 pm

#193 DA

Kelowna project is complete. We are still very busy elsewhere in the interior and Alberta. Sorry to disappoint you.
I know exactly what is going on in the Okanagan right now. Don’t try and feed me your BS.

#198 Snowboid on 02.14.12 at 3:33 pm

Okay, I’m off topic but I’m in a flu-bug booze and pill induced state.

It may be Valentines’ Day – but it’s also the Arizona Centennial today – Happy Birthday AZ!.

With apologies to Smoking Man, I offer this 1972 Tucson studio recording from Verns’ Wasted album (I was there)!

http://www.youtube.com/watch?v=TeNcqqF-858&feature=player_embedded#!

More info at http://www.azcentral.com/

Now, off to sleep it off…

#199 Milk Man on 02.14.12 at 3:40 pm

Folks, there will be NO CRASH… However it will be a slow grind down to maybe a 5% correction over 2 years. Remember for a crash you need mass foreclosures ,huge job losses and high rates. It won’t happen because we have a manageable job market and it will only improve with US starting to grow. Also rates are staying within manageable limits for atleast next 5 years.

There’s already a correction taking place in most of the country, despite what you and your realtor buddies assert. Be responsible for once. Help people prepare. — Garth

#200 terces on 02.14.12 at 3:48 pm

Temos #176

The USA and Canada are worlds apart in enforcement of foreign income reporting.

Recently Teachers pension fund – the grand daddy of them all recently made a statement that they are not all that interested in investing in Canada because of the fractured regulatory climate.

There is a reason that the Vancouver penny stock market is in Canada – because they can get away with a lot more here than other jurisdicitions.

There are people like Lord Black and Peter Pocklinglton who go scott free for many years with their white collar crime in Canada but when they try it in the US they end up behind bars.

Now we have F refusing to go along with the Volker rule – in effect telling the banks to go ahead and invest in very risky assets.

I can’t comment directly on your statement about Canada being lax, but it does not surprise me one bit.

#201 Keith in Calgary on 02.14.12 at 3:51 pm

I wonder if Deutsche Bank sold all of their CMHC mortgage backed securities before the announcement ?

LOL !!!

#202 T.J. BONES on 02.14.12 at 3:54 pm

Sir Garth, I have searched canada media and find nothing about First Line Mortgage’s difficulties. Is it just me, or is there no mention of it anywhere. Does H, C and F have the media that controlled that the truth is hidden, even to the point of obstruction?

#203 Condo Sucker on 02.14.12 at 3:54 pm

Volatility index (VXX.TO) is running wild on the upswing again today. Time to jump back in and go long? The share price remains excessively low, as of today trading at only $28/share.

#204 tkid on 02.14.12 at 4:07 pm

tkid: who is a helluva lot calmer because he sold the townhouse two years ago.

… she …

pretty funny

One is glad to be amusing? Got my 20 year service award today.

#205 reasonfirst on 02.14.12 at 4:08 pm

#193 Devil’s Advocate

Buy any more real estate yet?

#206 Victoria on 02.14.12 at 4:19 pm

i see so many properties for sale in Victoria that are over $1 million.

So what are these people doing…. are they moving up or are they moving down or moving away.

hmmmm. i wonder.

#207 Canadian Watchdog on 02.14.12 at 4:22 pm

#167 curious!

I’m still gathering data…More soon.

#177 SWM

You are correct. I’m working on an inflation adjusted formula to achieve a constant value. For now the chart still shows sales for $200-350k falling y/y. Not a good indicator and makes you wonder who’s buying all those condos (on deposits).

#208 CHANGES on 02.14.12 at 4:28 pm

Mortgage Fraud ?

48 18TH AVE E
MLS® V929762
3904 lot
2536sqft home built 2006
Asking $1,499,000
SOLD for $1,818,000 on 10-Feb after 9 days on the market

#209 eagle eyes on 02.14.12 at 4:41 pm

Homes are still selling – but fewer. Believe it or not, recently someone bought a monster home in Richmond for 3.1m. Everyone is rushing for the fire exit and a few will get trampled.

It happened once in 2008 when the market came tumbling down, only to bounce right back up and then some. The ones who sold sadly regretted it last January 2011.

I think that the government will not allow the housing market to crash and will do something stupid to intervene. Repeating what happened in 2008.

#210 Realtors in a Panic (Canada 54% OVERVALUED) on 02.14.12 at 4:50 pm

Realtors are in an up in arms PANIC. They know Canada is in a MONSTER HOUSING BUBBLE PONZI SCHEME. Word is spreading around the world. Realtors who have on average ONLY high school education want to tell you otherwise..Thanks for the info Garth!

“Deutsche Bank Securities, and published by Business Insider. If you want to get a deal, it says, go to Japan (-37%), Germany (-26%) or the US (-9%). But it you crave buying high and being a risk-drenched greater fool, then Canada’s your baby – overvalued by a stunning 54%. Only Belgium is worse”

#211 Josh L on 02.14.12 at 4:54 pm

#85 Lee
“Seeing lots of comments along the lines of “Years ago I thought housing was going down, but it keeps going up, therefore I now believe it cannot go down.”

When the faithful start deserting, the end is near.

If housing was overvalued and failed to correct, it is simply more overvalued now.”
————–
This is known as the “Turkey Fallacy”. All the turkey knows is that for 360 days in a row the farmer has fed him breakfast lunch and dinner. What a nice guy that farmer is. What the turkey fails to realize is that Thanks Giving is right around the corner.

Just because something has “always” been so is no justification that it will continue into the future.

#212 Linda Pearson on 02.14.12 at 4:54 pm

#165Devil’s Advocate on 02.14.12 at 12:11 pm – re Whitney Houston

I say, ‘right on DA’ to your post. On the evening of the Grammy’s it would have been so refreshing – though unlikely – if an entertainer of stature, one untouched by the hint of substance abuse, had stepped to stage front and said something like:

What the f&*K are some of you people doing to yourselves? Don’t you know you’ve got the world by the tail; the adulation of millions young and old; an income only dreamed of by most of humanity; the opportunity for travel that is the envy of most other people? Instead you drink yourselves stupid and plug your blood with poisons. And why do some of you marginally talented young things step on this stage and wail your sorrow at the passing of a woman who destroyed HERSELF? She wasn’t a victim – she murdered herself by slow motion suicide. It isn’t a tragedy. It’s stupidity!”

And yes, DA, I know something like that will never be said and I should probably just shut down my computer right now to avoid the backlash that is sure to follow.

#213 Realtors in a Panic (Canada 54% OVERVALUED) on 02.14.12 at 4:56 pm

#131 I’m stupid on 02.14.12 at 9:06 am
Garth

Why don’t you write about Loc’s and how they are delaying the correction in housing? I could explain it, but you will do a much better job
—————————————————————-

Most have no idea that LOC have kept many from going bankrupt as they borrow inorder not to default. Yes …sounds crazy! Borrowing money because you can’t make payments on borrowed money. You take away easy credit and people would not believe how many are swimming naked in this housing/credit ponzi.

#214 Preciousss on 02.14.12 at 5:12 pm

Here is an excerpt from some of the things I like to read (USA based):

“At zero interest rates in any currency, you can’t compound interest any longer. This is an
unnatural situation, and yet it can last for years. The new policy is basically forcing people
into taking risks. This is fine for those in their 20s to 50s in age. But for older people, they
don’t need to be taking risks. If they lose, then there is simply not enough time or energy left
to build things up again. Seen in this light, the Fed’s policy is a war against not just
savers, but those in or facing retirement.
These people are being sacrificed. And after three more years of this, the picture won’t be
pretty at all. There’ll be people selling any asset that can be sold in order to get a little income
or cash. This is another reason I am in no hurry to buy property now. Within the next three
years, a buyer will be able to get great deals from people who need to sell at whatever lower
price the market will give them. For now, sellers can live on the sweet but mostly deluded
hope that a cash buyer will come and pay the price the seller sets.
But what will happen two or three years from now? The longer time passes, the more
pressure on the sellers to take whatever they can get. This is an argument to have cash on
hand, to be able to take advantage of great deals when they appear, as they will”.

#215 jess on 02.14.12 at 5:14 pm

Following the money trail

On Thursday, February 23rd at 9PM ET/PT, CNBC presents “Filthy Rich,” a one-hour original documentary reported by award-winning Senior Correspondent Scott Cohn and the CNBC Investigations Inc. team. They follow the money around the globe to Dubai, London, Paris and the United States, which is fast becoming a place for the Filthy Rich to hide their wealth.
CNBC Follows the Trail of International Corruption and Money Laundering to a Shocking Tax Haven… the United States
February 13th, 2012

The Oblates have been working with other members of the Interfaith Center on Corporate Responsibility (ICCR) to counter tax havens through dialogs with international financial institutions. OMI is also a member of FACT coalition (Financial Accountability and Corporate Transparency Campaign) and Tax Justice Network USA. A new one-hour documentary by CNBC Investigations, Inc., reported by CNBC Senior Correspondent Scott Cohn, focuses on the issue

http://omiusajpic.org/2012/02/13/cnbc-investigates-tax-havens/#more-10892
============
Bureau of Investigative Journalism must be credited.
dividend “washing” arbitrage
http://www.thebureauinvestigates.com/2011/12/23/city-banks-cheat-europe-in-e600m-tax-avoidance-trading-scheme/

#216 Cato on 02.14.12 at 5:19 pm

You know the writing is on the wall when the big banks start maneuvering and hedging against RE exposure. One of the reasons CMHC is hitting the mandated ceiling so quickly is the banks buying optional coverage on existing mortgages in their portfolio. Not exactly confidence inspiring, the banks are just looking out for own interests but its clear the CHMC has no interest in looking out for the taxpayer.

#217 JRoss on 02.14.12 at 5:22 pm

DA 193,

“Everywhere I turn there are signs that those who have been sitting on the fence the past three and four years are jumping off.”

You mean like post 166? Sales down 40%. Signs like that?

“4 new infill homes being built in the $600,000 plus range and 3 new tear down rebuilds in the $1,000,000 plus range”

Three $1,000,000 rebuilds into a market that has 3 years of inventory in that price range. Let us know how that turns out.

#218 Canadian Watchdog on 02.14.12 at 5:24 pm

RioCan REIT facing pressure to list on NYSE

http://business.financialpost.com/2012/02/14/riocan-reit-facing-pressure-to-list-on-nyse/

But here’s what I stated before Garth:

“Part of the problem with a listing in the United States is the REIT would face then tax complications in Canada if its base of investors was less than 50% Canadian. It had about “28%” foreign investors at the end of the fourth.”

Despite the NYSE listing, those foreigners will flee once the headlines start printing a technical recession in Canada.

#219 Silver on 02.14.12 at 5:30 pm

Went to the BC Assessment appeal over the raise in my assessment tax.
asked to see the properties that were used to evaluate the claimed increase in assessed property value as claimed by the assessment board.
… the increase was based on four comparable properties which have sold,
… two from 2009,
… 1 from 2010,
… and 1 from 2011.

4 sales. Over 3 years.
none of the properties that did not sell were used as a balance to compare to.
trust your assessment do you? enough to borrow against its cherry picked numbers…

again four property sales spread over 3 years doubled the value of my assessment over purchase price for the assessment in the fourth year.

and we get our property tax base assessment from these numbers…
..this will not end well… not at all.

Silver

#220 Bill Gable on 02.14.12 at 6:01 pm

Bill Bonner:
“Meanwhile, hardly a day passes that we don’t hear of an impending attack on Iran.

The developed economies are borrowing money at 2 to 5 times the rate of GDP growth.

And the world’s major central banks eagerly print money.

Maybe Buffet will be right. Maybe the next 47 years will be like the last. But it seems like a bad bet to us. All the key circumstances are completely different — even opposite.”

>> Sounds like someone we know, what?

#221 Abitibi Doug on 02.14.12 at 6:09 pm

Keith in Calgary, post #199 said:
I wonder if Deutsche Bank sold all of their CMHC mortgage backed securities before the announcement ?

Maybe they sold them to Greek investors who believe that it’s different in Canada!

#222 City Slicker on 02.14.12 at 6:10 pm

#209 Josh L on 02.14.12 at 4:54 pm #85 Lee
“Seeing lots of comments along the lines of “Years ago I thought housing was going down, but it keeps going up, therefore I now believe it cannot go down.”

When the faithful start deserting, the end is near.

If housing was overvalued and failed to correct, it is simply more overvalued now.”
————–
This is known as the “Turkey Fallacy”. All the turkey knows is that for 360 days in a row the farmer has fed him breakfast lunch and dinner. What a nice guy that farmer is. What the turkey fails to realize is that Thanks Giving is right around the corner.

Just because something has “always” been so is no justification that it will continue into the future.
———————————————————-
This is what I’m talking about. It was orchastrated to enslave through debt. After the crash the banks just get richer.

#223 Bill Gable on 02.14.12 at 6:15 pm

HELOC’s are keeping house horny Vancouverites, fed and housed.
The tide has started to go out – boy, is this getting ugly.

Note downtown For Rent/Lease signs are springing up like dandelions in our 24/7 rain.

Vancouverites are in for a heck of a Spring.

#224 Ling on 02.14.12 at 6:21 pm

1st Credit Union in Burlington, Ontario is offering 4-uear fixed rate mortgages at 2.98% as of Feb. 14th, 2012.

I thought the banks were wising up to this stupidity!

Back to pulling tricks I go…

The 1st Credit Union of Burlington? Seriously? — Garth

#225 Rock O Rama on 02.14.12 at 6:39 pm

Disciple #153:

You forgot Disney, who owns Hollywood Records. I played in a band that was formerly signed to Hollywood, had songs on Billboard and on major TV Shows and Feature Films, some of which you’ve probably even watched. No one is chasing after anyone from that band to bring them back into the ‘cult’, believe me.

Having said that, the record biz is a gong show. That I will agree with you on. :)

Are you Meatloaf? — Garth

#226 John G. Young on 02.14.12 at 6:53 pm

#210 Linda Pearson

Sure hope you don’t have any addiction in your family — for their sake, not yours.

PS I think my spelling in this post is okay — if not I’m sure you’ll let me know.

#227 Milk Man on 02.14.12 at 7:06 pm

There’s already a correction taking place in most of the country, despite what you and your realtor buddies assert. Be responsible for once. Help people prepare. — Garth

Yes in locations dependent of temp jobs, tourism, HAM and views…for the rest of country with real jobs, the market isn’t booming or going bust. Like I said, In these locations yes there will be a correction, but not a crash. btw Vancouver and Toronto are toast.

#228 Junius on 02.14.12 at 7:16 pm

#208 eagle eyes,

You said, “I think that the government will not allow the housing market to crash and will do something stupid to intervene. Repeating what happened in 2008.”

Certainly I agree that they are stupid enough to try something. However the government no longer has the options they did a few years ago. They are already going to have to raise the CMHC debt ceiling well beyond comfort levels.

Other countries have used tax credits and other initiatives to try to stimulate buying but they only work for a short time and don’t solve the fundamental problem. Besides, with home ownership at its highest level ever who is left to buy?

The fact is that the changes in 2008 stoked the markets but they ensured the eventual collapse would be worse. They pulled many young buyers into the market early with little or no down payment and caused many speculators to leverage themselves to the max.

The contraction of credit on a global basis will limit the damage they can do. We still run a deficit in Canada and they will have to continue to borrow and print money. The more the world focuses on our bubble the less room they will have to maneuver. The cost of sustaining it will exceed the cost of dealing with reality.

#229 Nostradamus Le Mad Vlad on 02.14.12 at 7:17 pm

-
Mediocrity Take pride in our mediocrity! Learn to be less essential! The govt. thanks you in advance! Plus New TSA Equipment.
*
Interesting to see the downturn is in soccer now. Glasgow Rangers, one of the two giants in the Scottish Premier League (Celtic is the other), announced they were in administration (bankruptcy), and will be deducted ten points at the end of the season, meaning Europe’s lucrative championships will not happen for them. Is that a lesson for BPOE?
*
Spanish Peseta “”No, no, no, no, NO! You will use the Euro! You will get used to a life of permanent debt and poverty! You will learn to like it! Why do you think we set up all those private central banks? So losers like you could actually have a comfortable life? What is wrong with you slaves?!?” — Gold in My Sacks (wrh.com); 3:25 clip “Adrian Salbuchi, author and consultant talks to RT, suggesting it’s the bankers, who are responsible for the economic downturn in the first place.”; Michigan Breeding poverty; 6.3 mln. UK’s real unemployment figure; Inflation “The short version is that the cycle of inflation followed by recession is a deliberately created heartbeat that pumps real wealth from the people whose labor creates that wealth into the pockets of the bankers.” wrh.com; Off-grid Living Certainly cuts into the elites’ profits; Detroit and learning about it, and Washington, D.C.

India seeks further ties with Iran, and Guess who wants Iran’s central bank? Hint: Understand Libya; Wars cost Are politicos prepared to pay that cost? Taxpayers shouldn’t have to; Riots in Athens then EUSSR and us; Rats for Supper? A person has to do what they have to do.
*
FBI and here. “Good cover to shut down all the blogs, the way all the Muslim sites were shut down by the FBI six days before 9-11, and just in time for the attack on Iran!” wrh.com; 0:50 clip Putin on why the US has no allies (except one); 5:44 clip West could fire first shots in WW3 (Syria); Eurocrats Boiled Brussels Sprouts; China Ruled by colonial elites? FF due in the Straits of Hormuz? “Killing billions of us only convinces the rest that we have nothing left to lose.”, and FFs in Georgia and India; SIECUS Abominable sex machine (no, I am not talking about me!); Electric Cars and pollution; Fukushima ‘Quake time again?

Defector (?) “They said the same thing about Saddam, too. “Fool me once …. ummmmmmm” — George W. Bush (wrh.com); Current FFs ABC is the spokesmouth for the WH. “Google “Lavon affair.” Google “USS Liberty.” Google “9-11 Dancing Israelis.” Then ask yourself why Iran, which is the only nation trying to AVOID a war, would carry out the very kind of attacks Israel and the US would need to justify an attack.” wrh.com; HP “In my experience, it stands for “Horrible Products.” wrh.com; Mac Trojan discovered.

#230 GuyInBurnaby on 02.14.12 at 7:24 pm

Recently saw a lot of ‘Debt helper’ advertisement on TV, some of them are pretty funny though, maybe they really see their chances and try to do their best to ‘help’.

CMHC said two years solid market? What about 2 years after? Can I just get a two year mortgage? I don’t know what they are smoking but at least I’m not interested in jumping in with a 5/40 knowing that it will not be guaranteed within just 2 freaking years!

#231 Junius on 02.14.12 at 7:24 pm

#183 Temenos,

You said, “A cursory examination shows similar % has occurred in Vancouver in the past, and it was also followed by a relatively soft landing.”

Two things.

First of all, the cycle we are currently in does not have any historical comparatives. There have been booms and busts before but not a bubble on the scale that we are seeing.

Secondly, adjusted for inflation the housing prices are significantly out of line. A few estimates put them at more than 35% and even over 50%. Consider the future impact of interest rates rising and it could really be a very, very hard landing.

It is easy to look out at the ocean and not see the tide is moving out. Stand there for 5 minutes and you would never believe that in a matter of hours the water levels will drop by a significant amount. Just wait. The tide is going out.

#232 BPOE on 02.14.12 at 7:25 pm

YEEESSSSSSSSSSSSSSSSSSSSSSSSSSS
http://www.vancouversun.com/business/Zurich+most+expensive+city+Vancouver+tops+North+America/6150752/story.html

#233 TurnerNation on 02.14.12 at 7:38 pm

From a mortgage broker email blast today:
__________________________________
“We have received word from a number of lenders that they plan on increasing their 5 year fixed rate in the coming days. We anticipate that by the end of the week our best 5 year fixed rate will be 3.29%.

This was not unexpected given the positive economic news coming from the US and the recent rise in bond yields.

If you need a pre-approval or know somebody that does please call in today.

We don’t anticipate our 10 year rate at 3.84% will change.”

#234 Shawn Petriw on 02.14.12 at 7:40 pm

If I am selling and recommending a particular security, I’m morally obligated, if not legally obligated, to disclose my position in what I’m hawking.

Why don’t realters have to disclose their real estate holdings?

#235 Devore on 02.14.12 at 7:43 pm

#97 Mel

RULE#1. A bubble is inflated by nothing more than the ‘expectations’ of future higher prices.

RULE # 2. The moment people cease to believe that house prices will rise forever, the market will CRASH!

The belief in “the belief theory” seems strong among many. But it is wrong. These things do not happen in a vacuum. WHAT causes people to believe certain things? Cause and effect, do not invert please.

#236 Devore on 02.14.12 at 7:49 pm

#107 Waterloo Resident

Is everyone sick of telling you to stop whining and buy already?

#237 digitalmonk on 02.14.12 at 8:08 pm

Nicole Foss seems to agree with this analysis; she made a number of comments on the Canadian housing bubble during a recent visit to Vancouver, 3min video clip here: http://wp.me/p18o1P-1AK – there’s also an explanation on how and why prices eventually start falling

#238 live within your means on 02.14.12 at 8:17 pm

#174 disciple on 02.14.12 at 1:05 pm
Heck, it was only in the last 25 years or so that most homes in Britain acquired central heating and central hot water heaters…
……….

LOL -Brings back memories. I stayed at a gal’s apt. near Hyde Park in London for 10 days about 42 yrs ago. She went for vac. on the continent. Never met her. Had to put in ‘money’ in the heaters in Bedroom and Bathroom. Lights in the entrance to the ‘lift’ only stayed on for a minute or so. Loved my time in London and, of course, I did lots of shopping. I have wonderful memories.

#239 BB on 02.14.12 at 8:25 pm

DA and Linda Pearson…

Right on! It’s refreshing to hear what you say.

#240 Devore on 02.14.12 at 8:28 pm

#205 Victoria

So what are these people doing…. are they moving up or are they moving down or moving away.

From what I’ve seen so far, they’ve not moving anywhere in a hurry.

#241 Andrew on 02.14.12 at 8:29 pm

“$600,000 Toronto condo for $1,600 a month”

Where did you find a condo in Toronto where the gap between renting and owning is that large? A $600000 condo typically costs $3000/month to rent, i.e. purchase price is about 200x monthly rent. Prices in Toronto aren’t THAT crazy.

#242 Temenos on 02.14.12 at 8:30 pm

@116

#42 Temenos: “i just looked at the 1977-current property chart. prices just flat-line after growth periods while inflation catches up. it’s always been like, and this time isn’t different.”

Realtor revisionisms. Look again at 82′ or 96′, esp. in real (inflation adjusted) dollars. Some “flat-line”.

http://cuer.sauder.ubc.ca/cma/data/ResidentialRealEstate/HousingPrices/housing-pri-vancouver.pdf

#78 Temenos: “RE prices are sticky.”

Yes, just like everywhere else, only they crashed in other markets regardless. Prices are set by those that sell, not those that don’t.

Agreed, and thanks for the good link….To me, all your link really shows is that while property usually doubles ever 23 years, based on 3% inflation, in Vancouver its much quicker given its geographic constraints and unique positioning in Canada. To your final point, i would say the fact the market is set by sellers is exactly why the market is sticky. Wealthy immigrants don’t need to sell – they came here by choice. Remember, prices are actually cheap in Vancouver compared to China, where a detached house in an urban environment would run 10s of millions of dollars.

Unfortunately for many, Vancouver is one of those cities that has international attraction for its climate, beauty, and it acting as a window to the Orient. Having lived all over Asia, I can attest that this will only change if our immigration laws change.

#243 Ogopogo on 02.14.12 at 8:40 pm

#196 Form Man
#193 DA

Kelowna project is complete. We are still very busy elsewhere in the interior and Alberta. Sorry to disappoint you.
I know exactly what is going on in the Okanagan right now. Don’t try and feed me your BS.

Form Man, as a lay sideliner (i.e. neither a realtor nor a developer) I always appreciate the balanced perspective you bring in contrast to DA’s pumper-happy smoke screens. I see nothing in the Okanagan at the moment but painful slowing down of the market, even as deluded sellers and shills try to hold their ground. One of the best sites I know of here to see the mess Kelowna is in is the BC Assessment website. It shows most of the unites in my building are already underwater.

The correction has already begun here, no matter how much DA bends over backwards trying to deny it.

#244 49 on 02.14.12 at 8:44 pm

Re: #156
…Thanks!!

#245 Ogopogo on 02.14.12 at 8:50 pm

Garth, finished reading Money Road at last! Amazing eye-opener of a book. A seriously good read. Much of it I still need to digest further, but already I’ve learned so much that I can begin to put into practice. I’ll recommend it to all my friends, especially the poor souls still bowing to golden calf of RE.

Here’s a question foks: If I choose to go with what Garth calls a “mess of REITs” in a TFSA, would it be better to go with ZRE or XRE? I’m also tempted to go all-in with RioCan but the volatility issue might keep me up at night.

REITs, being a landlord without ever scooping up floaters off the toilet. Sweet!

#246 dan on 02.14.12 at 8:51 pm

http://ca.finance.yahoo.com/news/wealthy-barmaid-s-rrsp-is-2-income-properties.html

Look at this idiot buying two houses with hardly any down. Now she wants to buy a third.

#247 spaceman on 02.14.12 at 9:02 pm

If prices can go up 150%, please explain to us mere mortals why prices cant go down 40% ?

realtor math perhaps ?

100% up is 50% down get out a pencil and dot the math… 40% correction ? it happened once, but until interest rates rise, and the “Perception” that housing is a garunteed winning ticket, is diminished, it will not happen. We have had 13 years to impregnate the idea, a few years of decline will only spur bargain hunters, and we have another year of low low low interest rates. I agree with Garth, slow decline (happing here in Victoria) up to 15%, and then nil for several years, final outcome a 20% decline. But remember, you add inflation in to that, and it becomes a lot more.

#248 Al on 02.14.12 at 9:07 pm

Carney & Flaherty are worried about the proposed Volker Rule as it will prevent Canadian Banks from engaging in “proprietary trading” which is trading for their own book using client funds – exactly what MF Global was doing before it went bankrupt!

#249 Patiently Waiting on 02.14.12 at 9:12 pm

#131 I’m stupid on 02.14.12 at 9:06 am
Garth

Why don’t you write about Loc’s and how they are delaying the correction in housing? I could explain it, but you will do a much better job
—————————————————————-

Most have no idea that LOC have kept many from going bankrupt as they borrow inorder not to default. Yes …sounds crazy! Borrowing money because you can’t make payments on borrowed money. You take away easy credit and people would not believe how many are swimming naked in this housing/credit ponzi.

—————————————————————–

This is true. I know of several people who use their HELOC to subsidize their mortgae payments / lifestyle, as hubbies take home pay doesn’t quite cut it . . . I tell them it’s crazy but they look at me like I have 2 heads because “what does it matter because the value of the house keeps going up?” . . . they all seem to think that because it has always worked out that way in the past it will just work that way in the future . . . some people only learn the hard way . . .

#250 TurnerNation on 02.14.12 at 9:14 pm

#202Condo Sucker on 02.14.12 at 3:54 pm

Just be careful – VXX follows 3 month volatility futures, and rollover risk is present. These things are like Frankenstein. Options exist on the VIX itself – but really, a derivative of an index based that’s upon derivative volatility? Who can price this stuff – market makers and quants, and they will eat you alive.
VIX futures are a pure play, but futures are for pros (people who can handle margin calls and up to 80% leverage).

#251 Blasé on 02.14.12 at 9:27 pm

I agree with Linda Pearson; would have been wonderful to hear someone say that. A problem in society is that we don’t want to offend anyone. Yet, shame is a powerful deterant. Just look at chris brown performing and getting awards after beating Rihanna to a pulp, and getting community service. There is no long term thinking these days, a year is an eternity now, and so people put little value on morality, thrift, loyalty. Very flyby night culture

#252 Habbit on 02.14.12 at 9:28 pm

#189 Preciousss Well said. Good job. Enjoy.
#213 Preciousss Yep, ugly.

#253 truth hammer on 02.14.12 at 9:29 pm

DELETED

#254 guy from toronto on 02.14.12 at 9:39 pm

hey disciple I got a good chuckle out of your entertainment cult theory but it made me wonder if your tinfoil hat was just a bit tight today :)

that being said I always enjoy your posts so please don’t take offense and please keep on posting!

#255 maxx on 02.14.12 at 9:40 pm

#44 Al on 02.13.12 at 11:17 pm

“Dear F, C & H:
Look what cheap and easy money did to the Greeks.”

Precisely. And a weak middle class=a weak economy.

#256 TurnerNation on 02.14.12 at 10:19 pm

Kind of off topic for but of interest (Boomer-era music!) for:#252guy from toronto on 02.14.12 at 9:39 pm

If you want to know what “lady gaga’s” onstage music award performances use blood and other ritual, this link’s for you.

http://theindustryexposed.com/

It’s all there for those who care to look.
Perhaps you have the 1969 Stones album: In her statanic majesty’s service?
Or noticed Alister Crowley’s face on Beatles Sgt. Pepper’s album (top left)?
Or have read Led Zep bio books (e.g. Hammer of the Gods) where they describe their occult practices, and symbols on their albums? Jimmy Page bought Alister’s old house.
But it’s all just “entertainment” right…until someone loses an eye or a life…

This guy:
http://en.wikipedia.org/wiki/Aleister_Crowley

OK, this is weirding me out. Next blog! — Garth

#257 The Thing in the Basement on 02.14.12 at 10:32 pm

148 – Thanks Mr Buyer. The numbers you give indicate that even good wage earners spend several multiples of annual earnings on the typical dwelling – ie it is still expensive as you state in your first post, even if the link
Garth supplied indicates Japan is historically “undervalued” in the local metric.

Now is it fair to compare Vancouver to Japan? From a Canadian perspective probably not. But how does a
person from Japan (or similar high ratio market) see
it? They may think Vancouver prices are quite
reasonable, and Toronto downright cheap.

#258 Ozy - SELL SELL SELL on 02.14.12 at 10:38 pm

SELL as much you can, from your Canadian Bonds financing soon to be bankrupt CMHC, here are some examples; they are loosing money anyway this year comparead with 2011 anyway

http://quote.morningstar.com/fund/f.aspx?Country=USA&Symbol=F0CAN05M27

http://quote.morningstar.ca/quicktakes/fund/f_ca.aspx?t=F0CAN0721F&region=can&culture=en-CA

http://quote.morningstar.ca/quicktakes/fund/f_ca.aspx?t=F0CAN05M4X&region=can&culture=en-CA

#259 cramar on 02.14.12 at 10:38 pm

@ #248 TurnerNation on 02.14.12 at 9:14 pm

If VXX is bad try TVIX. It is a derivative of VXX. Not for the faint of heart!

#260 Form Man on 02.14.12 at 10:48 pm

#253 maxx

actually look what Goldman Sachs did to the Greeks…………teaching them how to borrow money while hiding the evidence from the EU………

#261 John G. Young on 02.14.12 at 11:16 pm

#249 Blasé

“…A problem in society is that we don’t want to offend anyone…”

If by “society” you include postings on this blog, then I can only assume that you’re new here.

#262 Tony on 02.14.12 at 11:44 pm

Re: #22 Republic_of_Western_Canada on 02.13.12 at 10:42 pm

You could have shorted any bank or financial institution. Today with the suckers’ bounce in the bank stocks just pick ‘em. Bank Of America would top the favourite list. Likely a drop to one dollar or less in the foreseeable future is where Bank Of America will end up.

#263 villain? on 02.15.12 at 3:36 am

#211Linda Pearson on 02.14.12 at 4:54 pm

No backlash here Linda, I think you hit the nail on the head!

#264 TurnerNation on 02.15.12 at 9:46 am

#257cramar on 02.14.12 at 10:38 pm

I hedged my VXX (avg $25) with March covered calls. The time decay is about $5/day on those puppies already! You gotta hedge junk like that. Long volatility, long theta. Quoting the Stones: “Time…is on my side, yes it is”.
Those ETFs are toxic. Hedge em off with equally toxic stuff. Will roll to April as more time bleeds off.

#265 G-Unit on 02.15.12 at 6:54 pm

Home foreclosures skyrocket in Kelowna

http://www.cbc.ca/news/canada/british-columbia/story/2012/02/15/bc-okanagan-home-foreclosures.html

#266 harden on 02.15.12 at 7:19 pm

talking to couple agents today the buying presently in van/throughout lower mainland is primarily local money. not so much HAM these days.

typical buyers are BoM 2.99′ers with two kids spending $800M-$1.3 million, with renter or MIL in the basement etc

top of the market to ya…………..

#267 John on 02.16.12 at 4:54 pm

@Temenos…..re: “A 50% correction will never happen”.

I lived in Vancouver for five years, and I remember that trance. It doesn’t just apply to real estate. It’s a weird kind of hyper-reality built on…hyper reality.

Here on the planet, there is a massive derivatives scandal so bad that there may even be a possibility that a US election be held off ( who knows what kind of chaos they’d need to cover the ponzi unfolding). You have 22 year olds feverishly campaigning for Ron Paul, a 76 year old “ban the fed” proponent. He might take the GOP without it being reported on CNN.

“Canadian” banks is not a real term. The ponzi scheme is global, and so is Vancouver’s real estate “market”. The new money supply is global, derivative, and ponzi. This fact is so obvious, it would take a few decades of “Vancouver trance” to not see it.

Currency wars, trade wars and real wars are the tools of global ponzi, and thinking that the Canadian economy is not intimately plugged into all of this is delusional.

Vancouver real estate will fall much more than 50% in value. Canadian currency is made up by central bankers in a world which has disconnected it from a true productivity-based economy.