The unexpected

In case you missed it, the war ends on Thursday. This means you have about 48 hours to lock into a five-year mortgage rate you might not see again. Ever.

Days ago Scotia told brokers it was pulling its 2.99% special on four-year fixed loans. On Monday RBC, too, yanked the plug, not only jumping its four-year rates from 2.99% to 3.49%, but increasing its five-year mortgage by a fifth of a point, and goosing the VRM at the same time. And BMO’s cheapo product – which started this latest basis-point pissing contest – also expires on the very day F stands up to deliver his budget. How unexpected is that?

This is happening because at 2.99% the banks make no money. The whole exercise was to build market share in a slagging economy where mortgages are critical because the banks view them as ‘relationship’ products. If you have a home loan, then the odds are you’ll also apply for a LOC and a car loan, as well as opening a TFSA and an RRSP, filled with bank mutual funds. Before you know it, TNL@TB is rubbing your thigh when you go in to pay a bill.

And it’s no coincidence all this will be over by the time F struggles onto his cute little pixie legs in the House of Commons at four in the afternoon. Ottawa’s been aggrieved that throwing around bank billions at crazy low rates is doing nothing but encouraging house-horny people to bury themselves in masses of debt, destined to reset at higher rates. That just adds to a record level of personal indenture and fuels house prices.

Recently, bidding wars erupted again in godless Toronto with the average SFH price jacking through $841,000, at exactly the time this mortgage war erupted. Ironically, the same bank CEOs pushing the feds to hose down borrowers with shorter amortizations or higher down payments, share blame for the housing orgy. If they could suck and blow any harder they’d be airborne.

Speaking of F, that little devil, he’s now been relieved of the burden of icing the housing market in this budget. The mortgage truce helped, but the real knockout punches are coming from CHMC and the bank regulator, OSFI. As I told you last week, tough new rules will be enacted within the next few months forcing the banks to scrutinize borrowers more, get accurate house appraisals, then reappraise when mortgages are renewed. That could mean if house prices fall between purchase day and renewal five years later, homeowners might be forced to make up the difference. Yikes.

As for CMHC, it plans on drastically cutting the amount of insurance available for those high-risk, high-ratio loans that everybody loves.

How drastic? Well, the average rate of growth in the CMHC portfolio over the last five years was 13.5%, and that’s now scheduled to plunge to just 1.5%. The change is so profound, it’s led insiders to wonder if the Crown Corp has had its chain yanked big time by a federal government terrified real estate could meltdown.

The likely victims: people buying investment properties to rent, self-employed and commissioned borrowers, banks wanting blanket coverage on loans they’ll sell or (of course) the Y&H upon which our entire real estate empire is based.

F no longer needs to drop the 30-year amortization to 25 or consider raising the minimum down to 7%. Instead, with the regulator about to ban cash-back mortgages and force tighter lending guidelines, while CMHC turns off the insurance spigot, that housing bubble is history. If you can remember 1991, you know what comes next.

So if you have a variable rate mortgage with the ability to lock up, do it. A year from now the cost of money will be higher, and houses lower. Bankers will be dorks again, which will be comforting. And hopefully more people will be investing than slobbering over granite.

Did you hear about the new survey on savings? Almost four in ten Canadians say they have none. But seven in ten have houses.

How can the outcome not be obvious?

220 comments ↓

#1 Duke on 03.26.12 at 7:53 pm

Fuyst!

#2 TurnerNation on 03.26.12 at 7:54 pm

First?

#3 Nick on 03.26.12 at 7:57 pm

First!

Not even close. — Garth

#4 Bear on 03.26.12 at 7:57 pm

Our media will continue to quote Sherry Cooper and CREA and continue to dupe the uninformable that their money is safe in housing. Kinda like continuing to blame Sadaam for 9/11. Many still believe because they can’t handle the truth.

#5 chris on 03.26.12 at 7:58 pm

DELETED

#6 Addict on 03.26.12 at 7:58 pm

First? Nah…

#7 Shane on 03.26.12 at 8:00 pm

Garth, I was hoping I didn’t have to wait a year from now to wait for the housing to correct I was hoping in 2012

Shane

You won’t. — Garth

#8 Duke on 03.26.12 at 8:03 pm

I remember 1991 very well. My father offloaded a roncesvalle store front to a bunch of Japanese investors. Too bad they bought at the top of both our property market and their equity market. Ouch!

Everyone around me in their early thirties is drooling over a bung in Etobipepsi. Everyone is leveraged 300-400k with no job security or any investments. They all laugh behind my back thinking I’m a moron for not believing in real estate.

They don’t want to listen to me about oil prices. I ask them how can the price stay high if oil is 2-3$ a litre like it will be some day? They look at me like I crapped in their cornflakes and continue speaking about renos and the 5-10% they made as a paper gain on their property. this year.

Garth I am “psychic” and I know this isn’t going to end well.

#9 Chaddywack on 03.26.12 at 8:05 pm

Garth or anyone else,

Do you know if current mortgage holders will be “grandfathered” from having to reappraise when mortgages are renewed?

I just ask this because I have a friend in Langley BC who bought a $340k townhouse on a 0/40 with a 25k a year Walmart Salary….his is coming due soon and I’m pretty sure the townhouse is floating around $300k right now…….

OSFI has said its proposals will be regulations by the end of the year. Some could be amended, so there is no answer to your question. — Garth

#10 AprilNewwest on 03.26.12 at 8:05 pm

Garth, Global is doing a segment on the 6pm news cast tonight… locals being prices out of the Canadian housing market.
Is this more RE spin?
I’ve written a complaint to Global.

#11 I'm stupid on 03.26.12 at 8:12 pm

#7 Shane

When it does correct, another game will emerge. One where everyone waits to see how low it can go. I like to call it the housing limbo. I can almost be certain you will be on the sidelines until you think it hit bottom, just like everyone else.

#12 JO on 03.26.12 at 8:14 pm

let the much needed RE bust start…one way or another, markets rarely give you what you expect, but usually what you deserve. Life is simply not as easy as buying residential RE/shelter on massive leverage and then retiring rich. Many recent speculators and clueless idiots will hopefully pay the price for gambling with huge subsidies from savers and taxpayers. While gov’t might try to take token measures to appease the debt slaves among us once the downturn turns into a 15-20 % meltdown, the real panic will begin once these same debtors realize about 6-12 months after any silly gov’t actions that gov’t can’t do anything in the long run to save them..then prices crash and burn..20-25 % is realistic and 30 % is not out of the question. The issuer of the reserve currency of the world (US), Japan, and Euro countries have not been able to stop the needed decline, so rest assured the Canadian gov’t will not be able to save these sorry asses.

Cheaper shelter is a great thing for all of us “little” people in the long run. Lets start to see some price falls soon.

JO

#13 Nostradamus Le Mad Vlad on 03.26.12 at 8:15 pm

-
“Expect the unexpected. How unexpected is that?” — As it’s all co-ordinated and a collusion by TPTB, it is not unexpected. Most here having been waiting for the rug to be pulled out.

“TNL@TB is rubbing your thigh [and] cute little pixie legs . . ” — F, you do have beautiful thighs!

“Speaking of F, that little devil, it’s no coincidence all this will be over by the time F struggles to a record level of personal indenture and fuels house prices.” — Only fair that as C – H – F put this together, they can forfeit their gold-plated pensions and salaries, to help ordinary folks out.
*
A Democrat walks into a doctor’s office with a frog sitting on his head.

The frog says,

“Hey doc , can you get this wart off my ass?
*
Snowboid — R U renting at the Centurion (Bernard and Gordon)? We looked at selling up and renting (if possible) a few years ago. Seems like a nice place, but wouldn’t want to buy there.
*
Question of the Day: Should a teen be allowed to invite a porn star to the Prom?

Answer: “Yes, but I draw the line at bringing a member of Congress or a Wall Street Investment banker!” wrh.com.
*
1:41 clip Paranoid USA; Greece Still protesting after all these months; Credit Unions are better than megabanks; US is broke, but is able to support Egypt’s military; GE Whitewash More jobs going / gone; Chaos on UK Roads?
*
German TV re: Fukushima, and Nuke Catastrophe and Psychiatric Disorder Fear of radiation in Japan; <a href="http://www.businessinsider.com/whoops-president-obama-caught-on-mic-telling-russian-president-that-things-will-change-after-he-wins-re-election-2012-3Owhoopsie It’s all in the stars, and Obloodyhell; Aspartame sux; Ottawa and the NWO Alive and well; Continuing Saga The m$m continues to flounder; Bolivia New super volcano discovered; Norfolk Police “The United Nations has pretty much admitted that their agenda for a global government partly rests on the reception of a human-caused climate-threat to the entire world. Needless to say, this means a great deal of political and even monetary pressure will be brought to bear on anyone questioning the revealed orthodoxy.” wrh.com; High Blood Pressure has no favorites; Licorice Cures some illnesses, and no prescription req’d.

#14 Ryan Perich on 03.26.12 at 8:18 pm

Unexpected indeed ! Much like that poor asian woman (Panty shot !) and Garth posting a ripped short shirt panty shot – the look of pain on people’s faces when / if they realize they are on the hook for the shortfall value of their home ! 1991 was nothing – housing prices increased what – 25 % over a few years ? vs 200+ % in 2 years ? we had a 5-7 year recession and a young working population : no worries. We have 2 workers for every retiree now : this will be epic

#15 live within your means on 03.26.12 at 8:20 pm

DH & I were talking this eve about wages. Caretakers (cleaning staff) in schools here earn more than computer techs with 3-4 yrs experience. Computer techs & Supervisors are not unionized.

#16 Smoking Man on 03.26.12 at 8:23 pm

A year from now the cost of money will be higher,

I disagree,
The FED is gettng ready for QE3
That’s why stocks took off.

As the USA gets stronger, so will our dollar, with ontario running huge deficits, Carney will be presured to keep the overnight rate in the basement to presurve ONT mfg.

And with RBC rasing rates, the zillions of people out there pre approved deals, will be climbing all over each other in spring bidding wars.

WE may see a 15% correction at the end of the year, but a 25% spike in sfh in the spring market in the GTA is not out of the question

#17 Smoking Man on 03.26.12 at 8:28 pm

Tic Toc Tic Toc
your all time record low pre-approval mortgage will expire in 12 weeks.

HURRY you don’t want to lose out on best rates ever.
Buy Buy Buy

Am I the only one that sees where this might go. This spring?

#18 TaxHaven on 03.26.12 at 8:30 pm

Haven’t we learned anything from the last five years?

“House appraisals” are a racket. Houses – illiquid as they are and usually highly individual – don’t have anything that can be accurately called “value”.

They have PRICE – which, as we have seen, differs from week to week, area to area, mortgage rate to mortgage rate.

But government property tax junkies love “appraisals”.

#19 kaboom on 03.26.12 at 8:37 pm

can someone fill history gap… what happend in 1991? tx

#20 Deb on 03.26.12 at 8:39 pm

I clipped a 2.99% Special ad out of the newspaper and gave it to my nephew to put into his elementary school’s time capsule. I couldn’t find any pixie dust around, so I attached a packet of Kool-Aid to the ad instead. My nephew didn’t really understand the point, but his teacher gave me a knowing smile.

#21 P & T S on 03.26.12 at 8:42 pm

Garth – if TNL@TB starts rubbing MY thigh, the Mrs will be VERY much “less than Happy” – and she’s a Taurus too.

That’s why I don’t visit the Banks much these days . . .

(p.s. TNL@ the Quito Banks are all really nice looking too – (REALLY nice looking . . . .) so yet another reason why I’m not allowed in the Bank . . . . . ! !)

#22 Axehead on 03.26.12 at 8:43 pm

Great news Garth, if a specker can’t buy investment property without a 2.99% mortguage, then maybe, just maybe they shouldn’t, It’s time for this game end…I”m pulling up a lawn chair to watch this thing play out.

#23 zeeman on 03.26.12 at 8:48 pm

hi Garth

The rise in mortgage rates is just temporary and rates will fall by the summer. This is what happened last year about this time, rates went up and then went down, when the people ran towards the bond market as equities went up in flames. I have a strong feeling that this will repeat and you have jumped the gun here.

As for the proposed changes by OSFI, these are just that proposed changed and likely will take a long time to become law.

And regarding the CHMC decision to scale back on the insurance, is it really all that important given that Genworth will step in to pick up the business left by CHMC.

Wrong on bonds. OFSI regs will be law this year. Genworth does not offer 100% insurance. You’re out. — Garth

#24 mel in victoria on 03.26.12 at 8:50 pm

I’m curious Garth…..under what circumstances might you become even luke warm receptive towards the precious metals perhaps in their safest form, the physical, as a small portion,ie 2-5 %, of one’s total investment portfolio?

Read my books. Spelled out there. — Garth

#25 Blasé on 03.26.12 at 8:50 pm

Garth, I heard dividends in America might be taxed at 43% from the current 15%. Do you anticipate a change like this coming to Canada soon?

No indication of it. — Garth

#26 Yanz on 03.26.12 at 8:59 pm

DELETED

#27 Can it be? on 03.26.12 at 9:03 pm

#14… Funny :)

#28 len on 03.26.12 at 9:05 pm

Calgary housing market is growing very hot indeed. Sales year over year are 40% higher (prices….not so much and only around 3% ahead)

We have been looking for rental and every single tenant vacating rentals because they are moving to their “own” home – hehehe

Landlords are “lordly” as rental market is going nuts with hundred dollar increases from month to month.

We have settled on a very similar place we rented three years ago for $900, now $1400 and we feel lucky we “snagged” this place over competition. Urghhhh…

Calgary sales were up 5.7% in March over year-ago levels, not 40%. — Garth

#29 Can it be? on 03.26.12 at 9:06 pm

This all seems like déjà vu to me, people buying up homes, upcoming changes… It’s not different here people… Unless there is an infinite number of immigrants with money landing… And then we have a whole different problem starting… Because the locals will have no place to live. What’s with the constant falling glass in toronto??? Building standards anyone???

#30 Can it be? on 03.26.12 at 9:10 pm

Sadly I might actually agree with smoking man on the spring rush…. Our preapproval years ago was. Held for 6 months. That puts us in to the end of the summer with the mortgage brokers… Which gives some speculators that I know time to get out still.

#31 Lookoutbelow on 03.26.12 at 9:10 pm

It seems to me that the Govt has been semi-responsible in creating toxic mortgages with programs such as 0/40 and then 5/35, in the name of economic stimulus. The other half of the responsibility lies with the Banks that have enabled a new generation of homebuyers eager to sign on the dotted line for Cash Back mortgages.

Surely, by definition, these mortgages are TOXIC and as you pointed out, sub-prime. The question is why is CMHC insuring this financial garbage, at the future risk of the taxpayers.

No wonder the CMHC is being put on a short leash. We should demand the return of these mortgages back to the Banks so they can carry the risk.

In addition, there is no need for the CMHC to sell insurance on “pooled mortgages”. Makes you wonder, obviously the Banks see risk in even the non-high ratio mortgages.

#32 steev on 03.26.12 at 9:11 pm

kaboom

I was all of 6 years old in 91, but housing declined starting in 89 for about 6 years. Good graphs for various Canadian cities here:

http://theeconomicanalyst.com/content/house-price-and-income-ratios-canadian-cities-part-2

Unfortunatlely I was not approved for a mortgage in 95 at age 12….

Cheers

#33 arbroathscotland on 03.26.12 at 9:12 pm

Garth, Bill Good interviewed Cameron Muir or as I like to call him Cameron Manuir today in Van. More of the same crap. Was so PO I wrote Bill an email. See below, and keep up the good work.

Hello,
Why is it that you always have Cameron Muir who works for the real estate industry or Bank economists who have a vested interest or Bob Rennie pump up this market while you throw them low balls. What a joke, why not have someone on there that makes sense. Someone who gives you an honest opinion of what is going on in Real estate because all it sounds like is a 30 minute infomercial on why you should be going out to buy real estate or else you will never be able to. I just heard Muir say that people haven’t gone out and over extended themselves in mortgage debt. What? That is not what is going on. Why not have Garth Turner on to be interviewed instead of the same old pump up hype repeat junk. At least have someone on to give an opposite opinion because there is a growing belief that this is a over hyped market by real-estate minds. Bill mentioned that 430 suites where sold in 4 hours but what you did not mention was that there where only 130 buyers. Hmm Speculation? Come on Bill you can do it bring in some one who does not have a vested interest like Garth Turner, so I don’t have to listen to the same old propaganda.

Thanks
Alex

#34 mel in victoria on 03.26.12 at 9:16 pm

I’m curious Garth…..under what circumstances might you become even luke warm receptive towards the precious metals perhaps in their safest form, the physical, as a small portion,ie 2-5 %, of one’s total investment portfolio?

Read my books. Spelled out there. — Garth

I’ve got all of them…………just wondered if you’d changed your opinion as lately you seem so neg about them..cheers

#35 Bottoms_Up on 03.26.12 at 9:17 pm

Pixie legs? I’d say a cross between Santa Claus and Ronald McDonald:

http://www.ottawacitizen.com/news/Austerity+gives+prosperity+federal+budget/6361053/story.html

#36 Rex on 03.26.12 at 9:19 pm

Yesterday, we learned from Garth that a couple with $57,000 in pension income plus CPP and no debts will have a really rough go in their retirement.
Many families with multiple part time jobs with debts and childeren will shake their heads at this.
Yes Garth, there are actually families out there that manage to raise a family with this income without getting depressed about it.

Nowhere did I say they would have a ‘really tough go.’ I said losing 40% of your income and not planning for it is a shock. It you have to fabricate to make a point, you don’t have one. — Garth

#37 Gord In Vancouver on 03.26.12 at 9:20 pm

Thanks, Garth.
I hope you’re right.

#38 earlymidlifecrisis on 03.26.12 at 9:24 pm

The dumbest condo marketing Ive ever seen

http://www.cbc.ca/video/watch/News/ID=2014810347

#39 Cam NO Good on 03.26.12 at 9:26 pm

Cam no Good is on Global news at 6 with his rented chopper and rented No Name millionaires and giving another stellar performance as the Junior Whopper HAM GoGetter

#40 Van guy on 03.26.12 at 9:27 pm

Is Global pumping bad news now? What’s going on here?

#41 Cy on 03.26.12 at 9:33 pm

I wonder how despised Real Estate Agents will be after this bubble pops, maybe this is an extinction level event for the Real Estate profession? I mean won’t they go the way of the travel agent and be slowly replaced by the Internet?

#42 Dontcallmeshirley on 03.26.12 at 9:33 pm

“Little pixie legs”???

C’mon Garth, you’re like an inch taller than the guy.

Not with my horse. — Garth

#43 Devore on 03.26.12 at 9:34 pm

#18 TaxHaven

“House appraisals” are a racket. Houses – illiquid as they are and usually highly individual – don’t have anything that can be accurately called “value”.

The value of any investment comes from the income it earns. It’s very easy to calculate.

#44 TurnerNation on 03.26.12 at 9:34 pm

Oh gawd, listing to that Global anchor pair seems to drop my IQ by a few dozen points. Do they do this on every night?

#45 Devore on 03.26.12 at 9:37 pm

#23 zeeman

And regarding the CHMC decision to scale back on the insurance, is it really all that important given that Genworth will step in to pick up the business left by CHMC.

They’re not picking up the business today, could it be they want nothing to do with it?

#46 Thomas on 03.26.12 at 9:37 pm

Ok, so if houses go down, doesn’t it take 4-6 years from peak to trough? Basically, it would be a mistake to buy a house 1 year into a downturn. It would be like buying nortel at $95 because it dropped from $120. Be patient, and get it cheaper!

#47 darrell on 03.26.12 at 9:39 pm

“Genworth will step in to pick up the business left by CHMC.

Wrong on bonds. OFSI regs will be law this year. Genworth does not offer 100% insurance. You’re out. — Garth”

Genworth quite frankly might be the greatest short of 2012 / 2013. The smart money is finally starting to figure this out. The PUT to CALL ratio is terribly skewed. For example, OCT 21 PUTS 840 contacts, OCT 20 PUTS 340 contacts, OCT 15 PUTS 570 contacts. On the OCT CALL side a total of just 30 contacts! Reminds me of Lehman Brothers 2008.

#48 DM in C on 03.26.12 at 9:40 pm

#28 Len

No, actually it’s not. I have people working for me that have had places listed since xmas that have not sold, despite lowering prices. Just on my street there is a house listed (backs on a green space, near new LRT), for the last 2 years — hasn’t sold.

And rental prices have not increased by the hundreds every month.

What broker do you work for? SPIN SPIN SPIN!

#49 Dontcallmeshirley on 03.26.12 at 9:41 pm

The gov’t not raising CMHC’s $600 billion insurance in force cap will have MASSIVE consequences.

Genworth is no better off. They are at 245 billion insurance in force and have a 250 billion cap.

Canada Guaranty? Anyone know what they’ve used up of their insurance in force cap? Teachers Pension is one of their owners. Deep pockets…might be a factor.

#50 earlymidlifecrisis on 03.26.12 at 9:42 pm

oops that link went nowhere
http://vancouver.24hrs.ca/News/local/2012/03/25/19547356.html

#51 Axehead on 03.26.12 at 9:44 pm

Oh Bearded One…any comment on the new Bearded One in parliment?

Sadly, I know him. — Garth

#52 P & T S on 03.26.12 at 9:45 pm

219brainsail on 03.26.12 at 8:01 pm
#216 P & T S

Belize!

http://finance.yahoo.com/news/18-best-places-retire-overseas-200012124.html

- Or, Honduras (formerly known as “British Honduras”) – arguably the best snorkelling / Scuba diving in the Americas.

We chose Ecuador on the basis of many personal recommendations from ex.Pats (UK, French (!!) and Aussie / NZ) who were all broadminded enough to NOT expect “everyone to speak English”.

Ecuador’s economy is currently more stable than Belize, and we do have oil, (until the US decides to steal it somehow!), and pretty good Universities too, with a very broad, mostly European, Lecturer-base.

They are also far less “ageist” than many “developed” countries – if you have the knowledge, and are willing to share / use it age seems to be a far more minor barrier.

From the viewpoint of our local Community (mixed bag Locals, US, Aussie / NZ and Canuck migrants), Ecuador is heading in the opposite direction to the West. Far less “OTT” regulation / “pretend” safety management, so a very vibrant and efficient pool of small businesses servicing everything from the emergent Cafe culture, to “traditional” needs including light engineering – there’s a LOT of US owned Manu. / Fab. Engineering equipment on the secondhand market, and a fair proportion of the better stuff moves here. Add to this an emergent interest in the local economy by such “Big Boys” as Intel, AMD, Nat. Semi. and many others, and the future is certainly looking rosier than “Up North”.

Definitely worth a visit if only for a vacation – really, really eye-opening!!

#53 Peter Green on 03.26.12 at 9:46 pm

In 2011, I bet my househorny co-worker that Van RE will be down at least -10% by end of 2013.

Good for both of us, he did NOT buy, and I get to collect 20 smackeroos.

#54 Devore on 03.26.12 at 9:48 pm

#30 Can it be?

Without having any numbers about the number of pre-approvals and their completion rates, you can’t say much about their impact, except that it is very limited. Also, many of these mortgage specials can only be held for a week, or in some cases the pre-approvals expire with the offer period unless closed on.

#55 Eggy on 03.26.12 at 10:03 pm

I think you may have mistimed the market Garth. No question that Canadian real estate will come back to earth, but not before the Bank of Canada significantly raises rates. The US Fed (which is the only one that matters in Canada) has indicated they will stick with ultra low rates for at least a couple more years. So your going to have to come up with another 700 or so blog posts about this before it actually happens.

And no, I am not going to move out of my 2.25% variable any time soon…

Rate roulette. Never worth playing. — Gartg

#56 not 1st on 03.26.12 at 10:13 pm

The CMHC limit isn’t going to have any effect. People will just go get the nonpayment from their RRSP or worse yet, their credit cards or from mom and dad’s HELOC.

#57 Dontcallmeshirley on 03.26.12 at 10:14 pm

#47 darrell,

My brother, you do not want to short MIC. Genworth’s insurance is backed by the gov’t. They’re not going anywhere. We should all be so fortunate to have a gov’t backstop.

call / put activity is ambiguous. Those puts you see are probably uncovered and intended to expire harmlessly, leaving the seller to pocket the premiums.

Over on the mortgage broker sites they’re touting foreign lenders taking the place of those domestic lenders too chicken to lend without insurance.

Talk about grasping at straws.

#58 Chris on 03.26.12 at 10:14 pm

I an four years into a five year variable at 2.7% on a 25 year mortgage. I’ve 100k equity into a 400k home. I won’t sell and rent b/c I’m 2500 square feet (cedar) on 40 acres with a river, a forest a 10 minute commute to work and no neighbours. Wife and I gross 190k with 2 small kids and a dog. Do I lock my rate in for the last year? Are there other options? I’m not too bright at finance but I know how to work hard. Please help.

#59 CrowdedElevatorfartz on 03.26.12 at 10:16 pm

@ #44 Turnernation

Your comment,

“Oh gawd, listing to that Global anchor pair seems to drop my IQ by a few dozen points. Do they do this on every night?”

while true, raises the question,

“Have you never heard Tamara Taggart stumble her way through an hour of teleprompting?”

PAINFULLLLLLLLLLL

#60 DonDWest on 03.26.12 at 10:17 pm

Wouldn’t this temporarily rush prices up at extrodinary levels as people try to get in before the cheap credit dissapears?

I can see many greater fools rushing in – worried that if they don’t get that 800K junker bungalow in Toronto they will indeed be priced out forever.

Most people are not aware of boom and bust cycles or even their existance for that matter. Most see the economy as a nice staircase that improves 3% upwards every year. That’s what they teach you at High School – I wish I were kidding here.

#61 DJB on 03.26.12 at 10:28 pm

Garth although the F can manipulate the short term rate it is the bond market that dictates the long term rate. That being said the covered bond market in Canada could be at risk of having the over-collateralize buffer eaten away. Threatening the AAA rating and hence the low interest rate provided if the LTV drop within that vehicle over the next 2 years.

I guess the investor who holds that vehicle bought today wants the same AAA security 1-2 years from now. I figure this could be a driving factor in the reappraisal and re-qualifying upon renewal and if there is deficiencies in LTV’s, a top is required.

Since the Fed is at the mercy of the long bond market and near the CMHC buffer of $600 Billion there is a real strong chance of the long end moving higher as CMHC has provided taxpayer guarantees to keep the rate artificially low to this point.

I am just trying to connect a few of the dots in this train wreck between the F, CMHC, OSFI and the big 6.

Below are a few excepts from a recent FP article

http://opinion.financialpost.com/2012/03/21/risks-of-cmhc-mortgage-cover/

The bonds are “covered” because they are backed, normally, by high quality, or low loan-to-value ratio, mortgage loans. Canadian banks originate mortgage loans, and sell them to a bankruptcy-remote special purpose vehicle, which in turn sells bonds, typically with five-year terms, to foreign and domestic investors. The stream of interest and principal payments on the mortgage loans backs these contractual covered bonds.

The cover pool is always overcollateralized, meaning that the face value of the mortgage assets exceeds the value of the bonds they back; Canadian practice limits overcollateralization to 10% of the bond issue. The issuing bank’s full faith and credit gives the bonds dual cover.

Since 2007, Canadian banks have increasingly come to the covered bond market with bonds backed, in whole or in part, by mortgages individually insured by the Canada Mortgage and Housing Corporation. This insurance cover boosts the surety of the bond pool, and marginally lowers the banks’ cost of capital and, arguably, perhaps lowers the cost of homebuyers’ mortgages. But an otherwise functioning financial market also gains government and taxpayer participation, and risk exposure, to uncertain net benefit.

#62 Narrowgate on 03.26.12 at 10:28 pm

I can’t WAIT for Thursday night’s blog post! Counting down…

#63 Canadian Watchdog on 03.26.12 at 10:29 pm

CMHC charts for the discussion.

http://i43.tinypic.com/20s93sl.png
http://i39.tinypic.com/9kbhb8.png
http://i44.tinypic.com/2413vhi.png
http://i41.tinypic.com/mn0o5y.png

#64 TaxHaven on 03.26.12 at 10:30 pm

#43 Devore

That’s my point…! Houses shouldn’t be considered “investments”. As we are seeing, a buyer could pass away before the family home produces any “income”. Maybe they’re speculations….?

How long does it take people to realise houses are consumables – like firewood? Thus it’s silly to talk of an absolute “value”, disregarding time, market, location, features, financing or economic climate…

#65 Terra No-more on 03.26.12 at 10:32 pm

Toronto: Bay street is becoming increasingly irrelevant to the Americans. Read that Wall Street and Ground Zero’s former occupants. Stateside business is being conducted elsewhere and with new partners. Downtown Toronto is out of the loop.

#66 guy from toronto on 03.26.12 at 10:35 pm

#59 Chris, I can’t answer your mortgage renewal question, but I have a question for you. Where do you live that you can get 40 acres, a river and forest and 10 minute commute to $190K of salaries, and a nice house for $400K?

I want to go to there.

#67 Smoking Man on 03.26.12 at 10:38 pm

Isn’t it annoying when I come on here and brag about how absolutely smart and wonderful I am. Well I have a good crystal ball with an amazing track record which limits the odd teacher from making how many smoking men does it take to change a light bulb

3 hours to change the bulb on my son’s car who the Fk designed those things, Should have went to a mechanic, but when I make my mind up, cant quit got to finish.

Which brings me to this, do any of you know why you can’t stand braggers, I do.

It’s been programmed into to your soul by your grade one teacher. You see the state would be in big trouble if even but a small handful of people thought there excrement did not smell.

They were not afraid to be judged, and became judge. They would not be afraid to Challenge, They would have confidence to do anything they want. And never let anyone or anything put boundaries or limitations deep in the soul.

Can you image a resource rich country with a small population full of Invocative genius Smoking Men.

This people of the country would own the world. But sadly a few asshole billionaires are afraid of a little competitiveness, hence you dumbing down of the tax farm slaves via schooling.

#68 TRT on 03.26.12 at 10:46 pm

I’m repulsed by the statement “…at 2.99% the banks make no money.”

I guess I would say that too if i had money invested in the banks.

The current spreads between 5 year bond yields and 5 year fixed rates are as wide as they’ve ever been. So please with the they can make money….and I’m sure you already know that. Aren’t we all altruistic?

#69 Mike Rotch on 03.26.12 at 10:49 pm

24 Mel, RE Gold and PMs

Mel, Garth advocates a sane percentage in PMs for all the right reasons.

As far as owning the physical, surf on over to scotiamocatta’s website and have a look at the cold hard facts:

For small time schmucks like I (you?), physical metal is probably a dumb bet:

-You don’t get the market price unless you’re buying something like 100 ounces. The premium on one ounce maple leafs is about 10%, the premium on smaller coinage of the realm is a fair bit higher.

-When you sell it, the dealer or bank is going to give you something around market price, less a fee.

I dunno about you, but I shy from investments where I need a 10% plus gain just to break even on my transaction costs. Paper gold of some sort is probably a wiser bet.

I know there are a few doomers out there who think gold is going to be the only thing worth anything if the financial system collapses, so you must own the physical metal.

They may have a point that gold will buy something, but I’m placing my bets on other physical metals – lead and steel.

If used as designed, these can also secure food, fuel, shelter, and other needs

Hell, maybe it can even help one score gold…if they have any time to worry about pretty little rocks that don’t burn and can’t be eaten in such times.

#70 Can it be? on 03.26.12 at 10:53 pm

Whatever you do people… Be careful walking the streets of
Toronto… Falling glass daily! Eeek! Scary if someone was to lean against a glass railing or window :(

#71 The Thing in the Basement on 03.26.12 at 11:05 pm

32 Steev – toronto, Ottawa-Garineau; St Cat; London; Kinston etc is not a good cross-section of Canadian cities.

Standard reponse in BC to “Do you remember the recession of 91?”

“Yes, we went home early that day”.

#72 nonplused on 03.26.12 at 11:13 pm

1991? How about 1982? I remember that and it was way worse than 1991 out west.

#73 City Slicker on 03.26.12 at 11:35 pm

See Garth I told ya:

“And big international institutions such as the UN and the IMF have even been issuing official reports about the need to move away form the U.S. dollar and toward a new global reserve currency. So the reign of the U.S. dollar as the world reserve currency is definitely being threatened, and the coming shift in international trade is going to have massive implications for the U.S. economy.”

http://theeconomiccollapseblog.com/archives/10-reasons-why-the-reign-of-the-dollar-as-the-world-reserve-currency-is-about-to-come-to-an-end

I’m just curious as to how this will affect house prices in the US.

You are quoting a doomer, metalhead web site. Zero creds. — Gartg

#74 Axehead on 03.26.12 at 11:41 pm

#28 Len…nope, you’re wrong, I rent a condo downtown Calgary and rent has gone up once in 2 years from 1200 to 1300…I wouldn’t call that hot.

#75 Bottoms_Up on 03.26.12 at 11:41 pm

#34 mel in victoria on 03.26.12 at 9:16 pm
——————————————-
He’s not negative precious metals… just advocates a certain percentage of your net worth.

He’s negative precious metals when it forms a significant portion of your net worth. Much like should be the case with any investment.

#76 Riding the Pine on 03.26.12 at 11:43 pm

So, the real question here is…

buy now with super low interest rates?
vs.
buy later with higher rates and hopefully lower house prices?

Who in this world is qualified to do the math and suggest one over the other for a SFH in the Lower Mainland?

Doesn’t look like a slam dunk for either.

#77 Guy_in_Regina on 03.26.12 at 11:51 pm

“tough new rules” ?

Sounds more like a new set of rubber stamps to me.

We’ll see about the CMHC bit.

#78 Mr Buyer on 03.27.12 at 12:01 am

Nice try Smoking man (sorry, Smoking Realtor)but bubble mechanics call for an ensuing bloodbath. Sales are falling all across Canada (and likely even in Calgary in the abscence of the usual jiggery pokery). THE BUBBLE HAS PEAKED. SALES ARE FALLING ALL ACROSS CANADA. NOW IS NOT THE TIME TO BUY A HOUSE. (lock in low interest rates for a short 5 year period so you can have your house assed at a much lower value and you have to come up with the difference between today’s assesment and the assessment 5 years from now. Ya, that is a huge incentive to run out and convert on your pre-approuval. I am becoming increasingly certain you are in fact a realvestate agentvor at the very least a specker with a vested intrest). BUYER BEWARE.

#79 JIM on 03.27.12 at 12:03 am

#28 Len
I’ve lived in Calgary since 2008, just got my rent renewal notice, no change from last year, or indeed since 2008! And this is in the province with no rent controls. Housing prices, since 2009, at least in this part of the SE where I’ve been tracking, have been gently but firmly trending down.

One interesting phenomena I’ve observed is the vacant house. See them as I do my nightly run through the neighborhood. Not abandoned, the grass gets cut and the snow shoveled, there is just nobody living there. Perhaps this is one of the reasons why house prices are still levitating. People simply holding on and not selling

#80 Ronaldo on 03.27.12 at 12:04 am

#59 Chris – my son had a similar rate with BNS which he just locked in at 2.79% over 4 years. (portable mortgage). It would be wise to lock in at these very low rates if you don’t plan to move in the long term. As Garth just stated above, we may never see rates this low ever again. I believe he is right about that.

#81 Dan T on 03.27.12 at 12:16 am

I have saved a family today. My buddy with no sense and no money closed the deal on his house that he couldn’t afford AND all settled pulled out a capital gain.

He thinks I’m a good friend, so we celebrated with a few pints. While we were celebrating his wife un-friended me on facebook.

Conclusion

I am a good friend and he definitely has grown a set.

#82 a prairie dawg on 03.27.12 at 12:28 am

#59 Chris

You don’t just have to settle for locking in your last year. You could also opt for a longer locked in term as well. Get them to run a few scenarios for you. Generally, going longer term into a higher fixed rate, on a 1year early renewal, shouldn’t be something you’d be penalized for. As long as the fixed rate is higher than the variable you have now, they make make money. Hard to penalize you for that.

#83 Smoking mans smarter coousin on 03.27.12 at 12:29 am

#51 Axehead on 03.26.12 at 9:44 pm

Oh Bearded One…any comment on the new Bearded One in parliment?

Sadly, I know him. — Garth

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

Yeah…..Libby Davies…right? I mean left….

#84 C on 03.27.12 at 12:29 am

Smart dog :).
Is she an RE agent friend of yours Garth – you devil ?
I won’t mind becoming acquainted :)

#85 TRT on 03.27.12 at 12:33 am

On the CMHC limit… stop salivating doomers. Here are the numbers:

Sept, 2011 — 540 Billion (Actual)

Now — ? (almost 6 months later; mortgage market humms along) — surely we should have hit the wall by now?? no?

Dec, 2012 — 557 Billion (projection)

If you’re any good at numbers; you would realize that if there was going to be a mortgage problem, it would have happened by NOW…. do some averaging/extrapolating.

If you’re not good at numbers; read some suspenseful/emotion eliciting prose….

#86 ex bc boy on 03.27.12 at 12:38 am

Hi Garth, I mentioned a couple of nights ago I would be looking at condos in Red Deer. You asked why. I’ll be short. Divorced , three kids (live in Edmonton with Mom). I live in a basement, but have a couple hundred grand.Its sounds like I should wait a year maybe more? Maybe never buy? Maybe I should give you a call? I appreciate your opinion. thanks

#87 mark on 03.27.12 at 12:38 am

http://www.globaltvbc.com/video/asian+impact+on+bc+real+estate/video.html?v=2215719225&p=2&s=dd#video

Vid link for the global asian story

#88 Nostradamus Le Mad Vlad on 03.27.12 at 12:53 am

-
BRICs and the super sovereign currency. Is that why China, Russia and Obama are currently meeting in DC? Plus Ten Reasons; RBS and Abu Dhabi Robbed? UK’s elite? Some of them; China Arrogance of the west; Houston America’s getting better? Some think otherwise; Spend More Money? As long as it’s someone else’s.

Suicides? The waters get muddy; Divorces Not money, past divorces; Central Bank Independence? Not so fast; 21 HDR pix of Spain; Top 10 US cities for job growth; Coolest military stuff; Time to dump gold? Oil in Kenya How convenient for the west to be in Africa right now; Bernanke Puzzled over jobs; Illusion of cheap money.
*
Smoking Man You have been unmasked! 4:10 clip Two Smartmeters explode setting homes on fire; Not the Bovine Excrometer Cowboy vs. bull; Pinegap and the Oz ‘quake “Dumb jerks should know better. Wait..what am I saying…it’s all part of their plan. Duh.”; 2:55 clip Radiation fallout hitting the PNW; The Haunted Seas and UFO’s; Syria Removing Assad is tougher than expected; Sarkozy Similar to Hitler? Lightning Good for some things; Beam us up, Scotty is getting closer, and Research Paper.

#89 Aussie Roy on 03.27.12 at 12:54 am

Aussie Update

Very relevent title today Garth as the unexpected (by the delusional) just keeps happening here in Australia.

Australian home loan delinquencies rose unexpectedly as a stalling housing market kept a lid on financing options for homeowners, Fitch Ratings said.

Mortgage payments overdue by more than 30 days rose to 1.57 percent of the value of loans in the three months ended Dec. 31, from 1.52 percent in the third quarter, according to the London- based ratings firm’s Australian residential mortgage performance index.

http://www.bloomberg.com/news/2012-03-26/australian-mortgage-arrears-rise-unexpectedly-as-housing-stalls.html

“It is too early to judge which factors contributed to the increase in arrears during Q411. To a measurable extent, declining house prices were the only key driver of mortgage performance to show a negative trend through Q411,” said James Zanesi, Director in Fitch’s Structured Finance team.

http://www.macrobusiness.com.au/2012/03/fitch-mortgage-arrears-surge/

Far more jobs will be at risk when the boom finally goes bust, an economic forecaster warns.

Marian Wilkinson’s absorbing Four Corners report this month on the collapse of the Irish economy was a powerful reminder of two fundamental truths. Booms tend to end in busts. And the busts do more harm than the boom does good.

http://www.theage.com.au/opinion/politics/irish-nightmare-prepare-20120326-1vumc.html

Melbourne-based public policy think tank the Grattan Institute found we place significant emphasis on creating sustainable and productive cities but pay little attention to making them “friendly”.

Its new report, Social Cities, found the way cities are constructed affects how citizens interact.

“A lack of face-to-face contact can put our health at risk,” report author Jane-Frances Kelly said in a statement.

“Unfortunately, there are worrying signs that isolation and loneliness are growing in Australia.”

The report found evidence that Australian city-dwellers have fewer friendships now than 20 years ago and 25 per cent of households are occupied by a single person.

http://www.news.com.au/travel/news/australian-cities-becoming-lonelier/story-e6frfq80-1226310688211

#90 Bill Gable on 03.27.12 at 12:55 am

Smoking Man and morons that yell FIRST are starting to drive me nuts.
I love this Blog – but imbeciles are ruining all the great information posted by Mr. Turner, and some very smart folks.

How about it, Mr. Turner? Can you bury these losers that waste space and hook moronic jerks like Smoking Man?

They are an insult.

#91 cb on 03.27.12 at 12:57 am

Does Smoking man smoke crack?

#92 Awareness on 03.27.12 at 12:59 am

Looks like the dog is going to get a piece of HAM, yup many expressions like hers will prevail, shock, anger & embarassment!

#93 Williston Geo on 03.27.12 at 1:21 am

Visited the mortgage dude at TD today, we are locked in to the 2.99% 4-year rate until August.

Our T4′s last year showed about 165k combined. To settle a bet with my wife, I asked what the maximum mortgage we would qualify for. After 5 minutes of number crunching. Bank guys says ‘a little over a million’!!! That’s just insane.

#94 Debtfree on 03.27.12 at 1:46 am

@ 42 stature is not measured by height . By my measure h is much shorter than f and gt towers over all the neocons as he does not have to lie and cheat to fill his pockets . Gt is trying to lead us to survival . The latter are trying to lead us all to slaughter. Gt writes books .The neocons are writing laws that will destroy the country as we have known it . h is taking the o out of country.

#95 mad vancouver on 03.27.12 at 2:11 am

Garth, what do you thing of this:
http://pls.ca/

Thanks!

#96 Doug in Victoria on 03.27.12 at 2:19 am

Apparently the boomers aren’t going to retire and instead start new careers with their work skills traded like commodities on a “job market”!

http://www.timescolonist.com/touch/story.html?id=6328979

#97 martin9999 on 03.27.12 at 2:43 am

as much as i believe in america, lately they are making me feel insecure. maybe its just politics

http://ca.news.yahoo.com/video/us-22424932/president-obama-talks-missile-defense-with-russian-president-dmitri-medvedev-28729250.html#crsl=%252Fvideo%252Fus-22424932%252Fpresident-obama-talks-missile-defense-with-russian-president-dmitri-medvedev-28729250.html

#98 martin9999 on 03.27.12 at 2:46 am

that’s why i always like mccain :
usa never compromises — he used to say

#99 daystar on 03.27.12 at 3:41 am

18% of this nation is employed by housing. If CMHC scales back mortgage insurance from 13.5% growth to 1.5% growth through whatever means, the impact on the economy will be huge. The government either engineers the correction in RE through policy or Canadians take even greater systemic damage than we already have, its one or the other, there is no happy ending.

So my questions are, “when will OSFI actually change the rules? Christmas? And how does CMHC plan to achieve a 1.5% mortgage growth rate… a rapidly growing drop off in application volumes? Is CMHC actually going to make an attempt to turn away applications? Will our banks? How?

Far as I can tell, its business as usual for the next 6 months. So the 2.99% sale is over, 3.5% is still cheap, 30/5′s are still alive, its same old same O.

This bubble grew to large for too long, its already too late to save the economy now from a long ugly recession brought on by normalized interest rates but seriously, does F “really” want to wait for the market to self correct (with rates coinciding with OSFI changes, most likely) and enslave the next 6 months worth of buyers to debt for life or bust in the meantime?

F should do the honorable thing and reduce amortizations. 30 year 5% down is still bubble forming CMHC policy in this interest rate environment. OSFI could take6 months before their changes (as of yet not written in stone) take effect. Why wait? F’s only ruining more lives financially, as well destablizing Canada’s financial security by keeping this bubble inflated by not implimenting immediate changes to the CMHC regs that count.

#100 jay on 03.27.12 at 4:31 am

Dog Walk Index update. Leafy, old suburb in Victoria. No further homes for sale. None of the dozen on the DWI have sold. “New Price” up on a couple. HAM free.

What we have here, at the upper end, is the smart money wanting to sell and the dumb money sitting out the dance.

There are at least five houses also for sale on the DWI but the forest of signs have made them pull out.

Renting is grand!

#101 ANONYMOUS on 03.27.12 at 5:19 am

Here is a link to the most UNDERVALUED and the most OVERVALUED real estate markets in the World:

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

According to this study, Canada is the world’s 2nd most OVER-VALUED real estate market in the world, currently Canada’s home prices are overvalued by 54%.

If that is true, then house prices will pause and stay still while inflation rises and DOUBLES the cost of everything else to come up to the price of today’s houses.

Unfortunately, wages are NOT one of those things that will be rising anytime soon.

#102 Waterloo Resident on 03.27.12 at 5:25 am

#59 ‘CHRIS’ :

You say that you and your wife Gross $190,000 a year and you are worried about a tiny little mortgage on a $400,000 house?

ARE YOU NUTS?

Just save up half of your yearly income and your house will be paid off in 5 years GENIOUS !

#103 Lana Del Ray on 03.27.12 at 5:35 am

Wow, Smoking Man, great post! What an improvement from yesterday’s post on how to incorporate an 8 yr old child into panhandling. Like Dick Cheney, did you have, er, um, a change of heart? Stick to the script, and don’t try to steal someone else’s schtick. If Hunter S. Thompson were alive today, he’d sue you for doing a bad impersonation.

Garth “Obi Wan Kan Obi” Turner, will these people who have bought in to the real estate market over the past few years be able to recover their losses? If these young fiat driving, latte sipping, banana republic wearing hipsters who have bought condos at their peak, were to lose as much as 15% or more, could they make it back in time for retirement? Personally, I hope they can. I don’t want anyone to live in poverty, unless, of course they smoke.

http://www.youtube.com/watch?v=8t-I-Lqy06g

You’re welcome, Ladies.

#104 Keeping the Faith on 03.27.12 at 6:18 am

Hey Stevenson and BPOE,

This week is your demarcation point.
All activities prior to this point in history you will remember fondly as the ‘good old days’ maybe even ‘Happy Days’ without Fonzi because both of you were never cool.

From here forward you are on the slippery slope of what will prove to be the greatest generational slide in house values and networth in Canadian history. Buckle up ladies and pull-up your stockings because you’re about to have the ride of your lives!

Boooo-Yaaaa!

#105 John on 03.27.12 at 7:01 am

“Ottawa” and any of the government participants
( elected or otherwise) are not and cannot be “aggrieved”. These are groups of people reacting to unmentioned ( here) decision-makers, and are only concerned about keeping their irrelevant roles. Nothing more.

Even if the drivers aren’t explicitly put up on the table, that doesn’t stop their impact.

It’s about moving forward with the same spirit of reality being offered people foolish enough to think houses go up forever. Why limit this spirit?

It’s a good question. And the answer is always right there.

#106 fancy_pants on 03.27.12 at 7:32 am

Pixie moron & co. had more than enough time to address this problem (especially since they set the table for it).

Glad to hear that other orgs are stepping up for the occasion. Pixie moron & co. needed guidance. Someone has to reign in the morons.

#107 T.O. Bubble Boy on 03.27.12 at 7:36 am

@ #25

Garth, I heard dividends in America might be taxed at 43% from the current 15%. Do you anticipate a change like this coming to Canada soon?

That would certainly change the landscape of Canadian investments, especially those “juicy” preferred shares that Garth loves… However, I can’t see this happening, as it could hit the stock prices of Canada’s biggest companies (banks, cable/telco, oil&gas, etc. all have big dividend payers, and are favourites in all of Canada’s main funds).

The U.S. “proposal” is really more of a political stunt for Obama to prove how the system is too advantageous to Romney and the like. Congress would never vote for this, as they are all among the uber-rich .1% that gain the most from these reduced taxes.

The “good” news is: tax treatment of U.S. Dividends for Canadians really wouldn’t change, as they are already treated as income here.

#108 Kip on 03.27.12 at 7:54 am

A lot of if, might and maybe in todays blog.

Here’s one for ya. I work in high rise forming in GTA and if your houseageddon actually comes to pass this time, it will have been one hell of a good run. 35 years in construction and it is flat out right now!

#109 Kevin on 03.27.12 at 7:55 am

@AprilNewwest:

“Global is doing a segment on the 6pm news cast tonight… locals being prices out of the Canadian housing market.
I’ve written a complaint to Global.”

You wrote a complaint about a piece you haven’t even seen yet?

#110 fancy_pants on 03.27.12 at 7:57 am

for the amount of $ forked over to banks they should be rubbing more than your thigh

#111 Smoking Man on 03.27.12 at 8:03 am

#91 Bill Gable on 03.27.12 at 12:55 am

Billy, Billy, Billy
Are you also suffering from a vitamin B12 deficiency, or perhaps your state manufactured personality is in conflict with Logic, Reason and clarity.

The supreme analytics I share with all the insignificant tax farm slaves on a daily basis, should be embraced, rather than ridiculed.

For I am the only one on this pathetic blog that shares and lets you witness what is inside the mind of your owners.

You don’t need to ask Garth or kiss his ass for me to stop posting just ask me nicely.

Get on your knees, like a good dog, and say, Please Smoking Man , my mind is incapable of absorbing your un bound brilliant ideas and attitudes.

I have spent a life time following the rules, listening to authority and swallowing the cool aid without question, just as I was programmed to.

You smoking man are putting my belief system in dyer conflict with reality.
I can’t take it anymore , Please stop posting.

Do this Billy Boy.
Then I will stop posting.

#112 TW on 03.27.12 at 8:16 am

Where’s that guaranteed correction to happen in Q1 2012 Garth? Hasn’t happened yet! I like your blog but your timing is a little OFF from the stuff you were preaching 2 – 3 years ago! your right – just hard to guess TIMING EH!

Sounds like you are trying, too. — Garth

#113 TurnerNation on 03.27.12 at 8:31 am

Scary chart for the shorts. A weekly chart of QQQ.US, 100 top non-financial companies you know and love.

Go-go Bernanke buy program.

http://stockcharts.com/h-sc/ui?s=QQQ&p=W&yr=1&mn=1&dy=0&id=p67544025708

#114 Mr Buyer on 03.27.12 at 8:49 am

#91Bill Gable on 03.27.12 at 12:55 am
How about it, Mr. Turner? Can you bury these losers that waste space and hook moronic jerks like Smoking Man?
…………………………………………………………………..
Lets turf Mr Gable and Mr Buyer as well. Wait a minute I am Mr Buyer :(

#115 fancy_pants on 03.27.12 at 9:06 am

what next…
http://www.cbc.ca/news/offbeat/story/2012/03/26/bc-video-glass-house-drama.html

#116 Steven Rowlandson on 03.27.12 at 9:06 am

The war is ending in 48 hours?
War never really ends Garth, War is for all intents and purposes permanent. Only the details change from time to time. Stuff like strategy and tactics, weapons, who the enemy is . If war ever really came to a stop for any appreciable amount of time the world as you know it would need to start some kind of a conflict to justify excessive government spending to keep a debt based currency supply from imploding from either debt repayment or default. Add that to the expected decline of the real estate market and you will have real fire works in the realm of finance. War is required to be permanent for the sake of the powers that be and the economy.

This is not an existentialistic blog. — Garth

#117 Axehead on 03.27.12 at 9:17 am

#87…Moving to Red Deer. I would ask the same question Garth asked…why? Less jobs, less amenities, more crime (yes – per capita, one of the highest in Canada – we serve Edmonton and Calgary Heroin addicts in our free methedone clinics and offer up homeowner garages for barter). Think this through.

#118 refinow on 03.27.12 at 9:30 am

The Banks make no money ??? Really ??

Bank’s make money on mortgages when values go up or down…

Lets face it margins are thin at 2.99 but if the client’s break the mortgage early their magical profit machine kicks in with penalty figures and or power of sale fees..

BMO’s mortgage – at 2.99 $185000 mortgage if you broke the term after 3 years and rates are where they are today penalty is approx $6500.00 add that ot the rate it would be a return of 4.60% over 3 years…. Not too shabby. If rates climb higher up goes that penalty. Win win situation for the Banks

Most people do not break mortgages and, yes, margins are virtually non-existent at 2.99. This is why they are being pulled. — Garth

#119 Grantmi on 03.27.12 at 9:35 am

#84 Smoking mans smarter coousin on 03.27.12 at 12:29 am

Yeah…..Libby Davies…right? I mean left….

Ok…… THAT was funny!!!

#120 Mark on 03.27.12 at 9:38 am

January 1st 2013 the HIRE Act will go into effect in the USA. 30% tax on all money leaving the US. Investment, real estate, banking transfers etc. Capital controls are getting worse. Canadians plan accordingly.

#121 City Slicker on 03.27.12 at 9:39 am

#74 City Slicker on 03.26.12 at 11:35 pm See Garth I told ya:

“And big international institutions such as the UN and the IMF have even been issuing official reports about the need to move away form the U.S. dollar and toward a new global reserve currency. So the reign of the U.S. dollar as the world reserve currency is definitely being threatened, and the coming shift in international trade is going to have massive implications for the U.S. economy.”

http://theeconomiccollapseblog.com/archives/10-reasons-why-the-reign-of-the-dollar-as-the-world-reserve-currency-is-about-to-come-to-an-end

I’m just curious as to how this will affect house prices in the US.

You are quoting a doomer, metalhead web site. Zero creds. — Gartg
———————————————————-
Garth this “doomer site” info is all supported. And he is not the only one who is seeing this reality unfold before our eyes.

This blog is a tinfoil-free zone. Keep this junk in your own little closet of insecurities. — Garth

#122 Lana Del Ray on 03.27.12 at 9:39 am

Smoking Mentally Handicapped Man, I wouldn’t push my luck the way that you do with Garth’s blog. He’s a patient cat, but he didn’t get to where he is putting up with fools like you. Do you ever see Devil’s Advocate posting here? Or what about Shawn Allen? Where are you going to go when you’re banned? This isn’t a WWE blog or the Angry Alcoholics blog. You’re not even funny and it’s getting boring. Why don’t you go start your own blog and see how many visitors you get.

http://www.youtube.com/watch?v=90h2gLgTz5g

You’re welcome, Ladies.

#123 Mr Buyer on 03.27.12 at 9:41 am

Please Smoking Man , my mind is incapable of absorbing your un bound brilliant ideas and attitudes.

I have spent a life time following the rules, listening to authority and swallowing the cool aid without question, just as I was programmed to.

You smoking man are putting my belief system in dyer conflict with reality.
I can’t take it anymore , Please stop posting.

#124 Tony Right on 03.27.12 at 9:49 am

Where have the municipal politicians been in all this? Aren’t they the one’s who allow these condos to be built? If so, why have they let so many be built? Shouldn’t they be held accountable? Or is accountable even a word in Baby Boomer lexicon?

#125 Dontcallmeshirley on 03.27.12 at 9:53 am

#100 Daystar,

OSFI regs might not become “rule” for some months to come, BUT…banks have already adjusted their activity in advance.

Most / all the banks have already gotten rid of stated income mortgages, CIBC is selling Firstline, lenders are scaling back on financing of condo projects, etc.

Check some of the mortgage broker blog sites for the latest and greatest on the ground, front line happenings(canadianmortgagetrends, mortgagebrokernews).

#126 Confused on 03.27.12 at 9:54 am

#28, Len … I live in Calgary and have no issues finding a place to rent. My rent has stayed the same for the last three years and will probably do so till the end of the year. You clearly are flat out lying or simply are the dumbest rent negotiator in all of Calgary.

#127 Lana Del Ray on 03.27.12 at 10:01 am

Sorry, last post, but I just looked up Smoking Crack Man’s twitter account and check out these stats.

He’s tweeted 6 times, has 3 people following him and the only person he’s following is my main man, Garth Turner.

http://twitter.com/#!/SmokingMan/following

You make Oscar the Grouch look like a role model.

hahahahahaha!

#128 dd on 03.27.12 at 10:07 am

People on this sight talk about a US recovery: Where?

WASHINGTON (MarketWatch) — U.S. home prices fell for the fifth month in a row in January to the lowest level since early 2003, according to a closely followed index.

The S&P/Case-Shiller 20-city composite index dropped 0.8% in the first month of 2012. The three-month rolling index includes transactions that took place from November to January.

Meanwhile bidding wars erupt for homes in some US markets. You are a very depressing person. But, thankfully, wholly wrong. — Garth

#129 dd on 03.27.12 at 10:10 am

Bill Gross … remember this is coming from the bond (paper) king:

“Commodities and real assets become ascendant, certainly in relative terms, as we by necessity delever or lever less.” As for the endgame: “Is a systemic implosion still possible in 2012 as opposed to 2008? It is, but we will likely face much more monetary and credit inflation before the balloon pops. Until then, you should budget for “safe carry” to help pay your bills. The bunker portfolio lies further ahead.”

#130 The American on 03.27.12 at 10:11 am

Seriously, the Canadian media is awful. I know we have it bad in the U.S., but damn. For example, the commentator makes claim “The U.S. and Canadian economy are well into recovery…” Actually, this is an untrue statement. The U.S. economy is in recovery while the Canadian economy is at the very beginning of a massive downfall, much like was experienced in the U.S. Canadians haven’t yet experienced in any capacity what had happened in the U.S. (but it is on its way, I promise), high compression of real estate values (and it is beginning), across-the-country mass layoffs (and it is beginning), not being able to afford the mortgage (it is just beginning), defaulting (raising as each month passes), and moving in with your relatives to make ends meet. All of these things are going to happen in Canada, and until they do, Canada isn’t going to experience any kind of “recovery.” These things must happen first before the healing can begin. The delusion is impressive. I’ve often noticed that Canadians want to ignore the degree of negative impact going on within their own land, but when there is something positive to offer, they immediately attach themselves to the U.S. Why is this? For credibility? If this is truly the attitude going on in Canada right now, meaning to bury the heads in the sand and hide from the truth, Canadians will indeed get burned much harder than Americans. The Canadian economy is losing jobs month after month and increasing household indebtedness, while the American economy is gaining jobs, reducing household indebtedness, and closing trade deficits. These are the facts.

#131 cb on 03.27.12 at 10:16 am

Smoking Man: quit it now…do you not know people that enjoy the jobs they do? You sound like Robert Kioski the way you begrudge a job. I teach high school history, coach football and love my work. Could have panned real estate like my old man but chose a better fit for me. Does that make me a fool? Well, gotta go and do something I love to do. Can’t wait to work with these young minds today. What are you doing? Circle jerking in the den? Remember, the most sensitive part of your body for you when you do that is probably your ears!!! Lemme guess, bet your wife’s a bomb shell too, no? What’s that, a porn star? Wow, what a life you lead? Anymore great advice I can share with my 2 kids?

#132 NoName on 03.27.12 at 10:31 am

Someone exposed Smoking Man on youtube…

Make sure to turn “cc” on ( lower right corner), and chose english.

http://youtu.be/t0aycjtL8tE

#133 The Thing in the Basement on 03.27.12 at 10:36 am

110 Kevin – I was wondering if April was complaining to
Global about being priced out!

#134 KingBubbles on 03.27.12 at 10:47 am

Some good economic news from yesterday

http://www.cbc.ca/news/business/story/2012/03/26/rbc-ottawa-deficit.html

I wonder if this will make F raise interest rates when he delivers his new budget ?

#135 John G. Young on 03.27.12 at 10:52 am

#92 cb on 03.27.12 at 12:57 am

“Does Smoking man smoke crack?”

Doubtful. I used to smoke crack (no longer, thank God) and believe me, when you do that the ONLY thing you want to do is smoke more — no posting on blogs.

I think that Mr. Smoking Man’s tastes run more towards the depressants.

#136 Kilby on 03.27.12 at 10:54 am

#80 JIM on 03.27.12 at 12:03 am
#28 Len
I’ve lived in Calgary since 2008, just got my rent renewal notice, no change from last year, or indeed since 2008! And this is in the province with no rent controls. Housing prices, since 2009, at least in this part of the SE where I’ve been tracking, have been gently but firmly trending down.
___________________________________________
1 year lease on our $1,600 per month Vancouver 1 bedroom waterfront condo came up on January 1st. I told the management company that we would stay on a month to month basis at the same rent, no more….They just said OK.

#137 Mister Obvious on 03.27.12 at 10:56 am

#91 Bill Gable

“How about it, Mr. Turner? Can you bury these losers that waste space and hook moronic jerks like Smoking Man?”
————————

I agree with you in principle Bill. But I imagine its work enought just weeding out the blatantly sexist, racist and hateful stuff. To scrub out moronity on a daily basis here in the peanut gallery is a bit much to ask.

#138 bill on 03.27.12 at 11:02 am

#91 Bill Gable on 03.27.12 at 12:55 am
your the only one complaining

#139 Dr. Wayne on 03.27.12 at 11:09 am

Any bets March 29 will not go as far as it should.

#140 Victor on 03.27.12 at 11:16 am

#112 Smoking Man on 03.27.12 at 8:03 am

Others here know but perhaps choose not to pontificate. Perhaps that shows they know even more than you purport to know. Now wouldn’t that be something new for you to know, if you know what I mean.

#141 Tiny Bottoms on 03.27.12 at 11:24 am

US house prices fall to lowest levels since 2002

http://money.cnn.com/2012/03/27/real_estate/home-prices/index.htm?iid=Lead

Closer to a bottom. — Garth

#142 Snowboid on 03.27.12 at 11:37 am

#121 Mark on 03.27.12 at 9:38 am…

Huh?

The Foreign Account Tax Compliance Act (originally part of HIRE when introduced) is intended to track US citizens’ foreign investments and is already in place as is HIRE.

Foreign financial institutions have until June 30, 2013 to put in place reporting processes to the IRS on US citizens with substantial investments in their foreign accounts.

This has nothing to do with Canadians, but of some concerns to US expats who work outside the US.

Where do you get your information?

#143 steev on 03.27.12 at 12:05 pm

The Thing in the Basement

The link is part of a three part blog post. Check the other ones for the rest of canada:

http://www.theeconomicanalyst.com/content/house-price-and-income-ratios-canadian-cities-part-1

http://www.theeconomicanalyst.com/content/house-price-and-income-ratios-canadian-cities-part-3

You’re correct about BC not being hit very hard…or at all. But taken as a whole the three posts paint a picture of what is to come.

Cheers

#144 gladiator on 03.27.12 at 12:06 pm

hey people, leave the Smoking Man alone, or take his words with a grain of salt.

I know a young couple (immigrants) who came to Canada and were almost ready to go back, but they BS-ed their ways into well-paid jobs and now have a paid-off house, management-level jobs, vacations, etc. etc. I, on the other side, played by the rules and don’t even have money for a downpayment for a house. A former colleague of mine from a previous job bs-ed her way into an ah-mazingly paid job in my current company. A friend told me a story about one of his friends who bs-ed his way into a software development company as a consultant and then became a manager there. BS works so well in Canada – you will be surprised! So SM has a really good point here.
Another good thing I learned from SM is “think, weigh your options and then make that goddam bet, don’t be indecisive”. When I analyzed why people I know are doing so well, I came to realize that they all made a good bet – or call it a decision? – at certain points in their lives and made a killing: building houses and selling them, choosing to have their own businesses and not work for a salary, working on an idea they had, etc.

So please, even if he rants about things, he knows what freedom means and it’s not what school teaches the kids: find Activist Teacher’s blog and read it.

#145 Kris on 03.27.12 at 12:07 pm

Why no March 27th posting from Garth?

Tonight. Keep your pants on. — Garth

#146 Smoking Man on 03.27.12 at 12:09 pm

#132 cb on 03.27.12 at 10:16 am

Great advice for your two kids.

If they want to grow up to be good employees let then drink the same cool aid you drank.

If you want then to be employeers, get them to study my posts

#128 Lana Del Ray on 03.27.12 at 10:01 am
Your just jelous

#147 Fraud investors on 03.27.12 at 12:22 pm

No wonder the HAM money keeps coming.

http://news.asiaone.com/News/AsiaOne%2BNews/Crime/Story/A1Story20120327-335952.html

#148 Bill Gable on 03.27.12 at 12:22 pm

Smoking man, you can’t spell, and your inane ramblings are boring.

It’s spelled DIRE, you twit.

Shut up and crawl back into your drug filled basement suite.

Sheesh.
You are a moron.

#149 Wage Slave on 03.27.12 at 12:27 pm

#128 Lana Del Ray on 03.27.12 at 10:01 am:
He’s tweeted 6 times, has 3 people following him and the only person he’s following is my main man, Garth Turner.
http://twitter.com/#!/SmokingMan/following
You make Oscar the Grouch look like a role model.
hahahahahaha!

Nice work, Lana! You forgot to mention the crackpot theories he subscribes to, as espoused by a friendless, jobless former physics prof, whose only talent seems to be internet bluster. From one of his former students (this should sound familiar):

Most media stories so far have almost portrayed him as a martyr who is fighting for the students, when in reality he is fighting for his own personal agenda and does not care at all about students, except those that have the same political ideals as he does. He considers that he “indoctrinates” them into the light… or something like that, where as everyone else is simply “brainwashed” by the university’s “corporation machine”. Source: http://oncampus.macleans.ca/education/2009/04/06/he-didnt-teach-at-all/

Could it be that the “all knowing” SM is actually plagiarizing, on top of believing in absolute tripe? That impotent p.o.s. would never!

But Smoking Moron should really take heart, here; zeeman and bill on this board will always be willing

#150 jess on 03.27.12 at 12:30 pm

32 steev
unemployment 1991 around 7-8
went to 12% by 1993
desert storm on tv
Canada introduces the Canadian Goods and Services Tax (GST) a national sales tax
The Dow Jones average topped 3,000 for the first time
=============
“A violent market correction needs a trigger such as the sub-prime crisis which ignited the U.S. real estate meltdown, or abnormally high interest rates as was the case during the 1991 property crash in Canada,” said Tal. (cibc)
———-
excessive risk taking and failure of regulators said mr. Ben B
http://www.youtube.com/watch?v=hkOXhRTflFk

#151 Canadian Watchdog on 03.27.12 at 12:31 pm

Repost: #114 TurnerNation

Volume is vaporizing. http://i40.tinypic.com/2cwllhk.jpg

#152 City Slicker on 03.27.12 at 12:34 pm

Garth this “doomer site” info is all supported. And he is not the only one who is seeing this reality unfold before our eyes.

This blog is a tinfoil-free zone. Keep this junk in your own little closet of insecurities. — Garth
———————————————————-
Garth this is exactly what I’m talking about. You write it off as a doomer tinfoil site but all the info is brought from credible sources like the Wallstreet Journal, BBC News, CNN Money and Seeking Alpha (this is one you also used in your previous posts).
No insecurities here just a search for truth.

Only in your mind will America fail, fiat currency become wallpaper, hyper-inflation erupt and the financial system stumble. In the real world we will have slow but incremental growth, years of deleveraging, borderline asset deflation and a surfeit of opportunity for those not hiding under rocks, however precious. — Garth

#153 Ret on 03.27.12 at 12:37 pm

#64 graphs

CMHC spin graphs and a related chart show only 28% of mortgages are >80% LTV in Q3 2011. It’s a great story.

Almost as good a story as the ones from my indebted neighbours. They blow about their $450-500,000 bank appraisals on their $350,000 homes. The same home has an (Ontario) MPAC value of $285,000.

So what numbers are being used by CMHC for the value determination in LTV statistics? One guess.

Show me some charts stress tested with a 5% and 10% decline in RE values. Ditto using MPAC tax assessed values please.

#154 John G. Young on 03.27.12 at 1:00 pm

#138 Mister Obvious

“I agree with you in principle Bill. But I imagine its work enought just weeding out the blatantly sexist, racist and hateful stuff. To scrub out moronity on a daily basis here in the peanut gallery is a bit much to ask.”

Agreed. And it helps me to take Smoking Man’s posts with a grain of salt — use whatever substance works for you (with moderation of course).

#155 Buy Low Sell High on 03.27.12 at 1:02 pm

DELETED

#156 Wage Slave on 03.27.12 at 1:07 pm

#143 gladiator on 03.27.12 at 12:06 pm

So please, even if he rants about things, he knows what freedom means and it’s not what school teaches the kids: find Activist Teacher’s blog and read it.

This last paragraph undermines your entire post, gladiator. Activist Teacher (Denis Rancourt) bullshitted his way out of a job. All he has left is his sad blog.

Not to mention the fact that you presume that the stories SM tells are true; he is always the first one to say he tells lies, and to never presume that anything anyone says is the truth.

My money’s on him being some office monkey, in actuality, with a harpy wife and disappointing kids.

#157 Steve on 03.27.12 at 1:14 pm

Here’s a few notes on Saskatoon:
A rental property right across the street from me sold in about 3 weeks. Listed for $400k, sold for $380k. This house was most likely worth $450k at the peak. Smart landlord getting out now while they can?

#158 Steve on 03.27.12 at 1:31 pm

More notes about Saskatoon – Young people:

I was out for dinner and drinks with 5 other young people (late 20′s, early 30′s, all with some sort of degree, diploma, etc). Long story short – EVERYONE is up to their eyeballs in debt (except me). Zero savings, tons of monthly payments, no RRSP’s, living paycheck to paycheck.

-They all feel they’ve been priced out of the housing market permanently, or at least until their parents die and they receive some inheretance
-Couple 1: Just moved back from Vancouver b/c there’s no jobs there. Hoping to find decent jobs for a couple years then maybe back to Vancouver
-Girl 1: Works 4 different jobs to combine for 40hrs a week. Is getting by, but just barely.
-Guy 1: Works 3 jobs, has zero cash, no assets.
-Guy 2: Started a ‘trendy/hot’ restaurant. His business after the 1st year is starting to stall bigtime. He puts on the show that he is extremely successful, no problems at all, built his mini empire from the ground up. Little does anyone know though that he borrowed all the money from his parents, hasn’t paid back a dime of it, and is racking up debt at a non-sustainable rate.

Then there’s me. I had $60k in debt after university. Moved to Ft Mac, worked my butt off, paid it all off, have tons of diversified investments, have an amazing great paying job, and I continue to rent as I watch the housing market slowly come back down to earth.

Moral of the story – I’ve always wondered how ppl my age are buying all these $300k+ houses, new cars, hot tubs. I always suspect it’s purely with credit, and here’s 5 more examples of proof of that. It’s scary to think just how screwed many of my friends really are.

#159 John G. Young on 03.27.12 at 1:35 pm

#68 Smoking Man on 03.26.12 at 10:38 pm

“Isn’t it annoying when I come on here and brag about how absolutely smart and wonderful I am…do any of you know why you can’t stand braggers…It’s been programmed into to your soul by your grade one teacher.”

IMHO, I think that, deep down, you really don’t think you’re that wonderful — it sounds like defensive ego to me.

Also IMHO, teachers aren’t the only ones who try to instill a sense of humility in people; parents, churches, and many organizations do. However, they have to battle against North American culture, and in particular the advertising industry (and reality TV shows).

And finally, IMHO, a lack of humility is often at the root of addictions.

Just my thoughts. And to bring this back to the subject of this blog, I think many people’s addiction to consumption and debt relates to this same lack of humility — it certainly did for me.

#160 City Slicker on 03.27.12 at 1:47 pm

Garth this is exactly what I’m talking about. You write it off as a doomer tinfoil site but all the info is brought from credible sources like the Wallstreet Journal, BBC News, CNN Money and Seeking Alpha (this is one you also used in your previous posts).
No insecurities here just a search for truth.

Only in your mind will America fail, fiat currency become wallpaper, hyper-inflation erupt and the financial system stumble. In the real world we will have slow but incremental growth, years of deleveraging, borderline asset deflation and a surfeit of opportunity for those not hiding under rocks, however precious. — Garth
———————————————————-
Collapse of the USD due to $15 trillion national debt, and $50 trillion unfunded liability isn’t in anyone’s “imagination”, it’s real, unsustainable and mathematically gauranteed to imploded when the prick finds the bubble. I dont’ know why you can’t see this.

Because it isn’t happening, and won’t. — Garth

#161 disciple on 03.27.12 at 1:47 pm

#114 Turnernation… it’s mostly due to AAPL at 18.65% and AMZN at 3.04% which have both spurted like sunflowers.

#125 Tony Right… “Where have the municipal politicians been in all this?” – - – I’ll tell you where they’ve been: on FACT-FINDING missions to tropical destinations. Take a wild stabbing guess where the money came from…LOL.

#131 The American…”The delusion is impressive.” Understatement. Mass mind control would be more accurate.

#136 Johnny Young… physician…. or psychiatrist?

#162 AprilNewwest on 03.27.12 at 1:49 pm

110 Kevin
True, and I don’t need to see it. I don’t watch Global spin anymore. I only heard the headline that was enough. As usual Global is pumping real estate. Irresponsible and shameful considering all the warnings about too many Canadians taking on too much debt.
You assume I complained about an upcoming program.

#163 Harlee on 03.27.12 at 1:51 pm

Ahhh..I hope Smoking Man doesn’t get banned. He can be plenty annoying but he does offer a kind of cheap entertainment that borders on genius.
Sort of like George Carlin’s “Hippy Dippy Weather Man” or Cheech Marin of “Cheech and Chong”.
Hands of Smoking ! Man ! (unless he wants your hands on him….in that case, he’s on his own.)

#164 Smoking Man on 03.27.12 at 1:56 pm

#149 Bill Gable on 03.27.12 at 12:22 pm

Billy, that was an absolutely exquisite rebuttal, well-formed sentences structure, creative and innovative selection of words, impressive. Your implicit imputation of my weaknesses and susceptibilities are without question, Amazing. I am not worthy.
Billy now if I could only spell Dire.

#165 Kevin on 03.27.12 at 1:57 pm

@refinow:

” at 2.99 $185000 mortgage if you broke the term after 3 years and rates are where they are today penalty is approx $6500.00″

I’m not sure that’s correct. The penalty is either the IRD, or 3 months’ interest, whichever is higher. If rates are unchanged in 3 years (as in your example), then the IRD would be $0. So they’d go with 3 months’ interest, which is only $1,383 (on $185k @ 2.99%). Garth is right – that’s a pittance.

#166 Smoking Man on 03.27.12 at 1:57 pm

#149 Bill Gable on 03.27.12 at 12:22 pm
Billy, that was an absolutely exquisite rebuttal, well-formed sentences structure, creative and innovative selection of words, impressive. Your implicit imputation of my weaknesses and susceptibilities are without question, Amazing. I am not worthy.
Billy now if I could only spell Dire.

#167 John G. Young on 03.27.12 at 2:00 pm

#158 disciple

“#136 Johnny Young… physician…. or psychiatrist?”

General practitioner specializing in psychotherapy for addictions.

And please, it’s John — I don’t like diminuitives.

A psychotherapist with a personal hangup about his name. I love this blog. — Garth

#168 Kevin on 03.27.12 at 2:00 pm

@Tony Right:

“Where have the municipal politicians been in all this? Aren’t they the one’s who allow these condos to be built? If so, why have they let so many be built? Shouldn’t they be held accountable?”

This is the one paradox among real estate doomers that I still don’t understand. You claim there’s a dangerous bubble, waiting to burst and destroy our net worth, yet you think the solution is … to constrain supply?

This is basic Economics. What happens to price when supply is constrained and demand remains unchanged? It rises. So if we want housing prices to come back down to Earth, isn’t the solution to build more housing, rather than crucifying politicians for issuing building permits?

#169 Smoking Man on 03.27.12 at 2:12 pm

#150 Wage Slave on 03.27.12 at 12:27 pm
#128 Lana Del Ray on 03.27.12 at 10:01 am:
He’s tweeted 6 times, has 3 people following him and the only person he’s following is my main man, Garth Turner.
http://twitter.com/#!/SmokingMan/following
You make Oscar the Grouch look like a role model.
hahahahahaha!
……………………………………………………………………………………..
Dennis did not get fired for his teaching methods, he got canned because he took pot shots at most powerful self-interest lobby in the western world.
As far as having only 3 followers 2 of which are spam.
I could care less, I’m not a writer.

My http://www.keysme.org

is what I care about, little over a year old, no advertising or pushing 2 million downloads, current valuation approx. 10 million $$$, built on a drunken Sunday afternoon.

Na Na na boo boo

That is the last commercial for your site. — Garth

#170 John G. Young on 03.27.12 at 2:13 pm

#168 John G. Young

“A psychotherapist with a personal hangup about his name. I love this blog. — Garth”

LOL. I’m working on it with my therapist!

#171 raider on 03.27.12 at 2:16 pm

@103: Haven’t you heard that expenses creep up with income. I doubt that many in the 200k employed income range have relatively more savings than the average guy. In fact if this is earned income, picture the type of profession they are in. If it’s stressful stuff with lots of overtime, they need to buy stuff to reward and pacify themselves. That rat-race is actually the engine that keeps our consumer economy going. Unfortunately, Boomers (for not having had downside risk) and HAM (being short of the experience of a market economy and aspiring American lifestyles) took it a bit to far ;).
I would not judge or blame anyone for taking part in it. In fact, I’d be a little worried of what comes around when it blows up and both of these crowds experience hardship and stop spending. Throw in Canadian demographics and the whole picture becomes interesting.

#172 Wage Slave on 03.27.12 at 2:27 pm

#170 Smoking Man on 03.27.12 at 2:12 pm

Dennis did not get fired for his teaching methods, he got canned because he took pot shots at most powerful self-interest lobby in the western world.

That’s a lovely little straw man you’ve built there, Smokey. Keep on keepin’ on, Moron.

#173 Chris on 03.27.12 at 2:45 pm

Thanks for the pointers. I live in Northern Ontario and believe me the short commute, property, and no neighbours is nice but the winter is brutal. Would love to pay the house off in 5 years but daycare is killing me. Do the crime do the time they say! Like the idea about asking for a longer term and locking it in. Thanks.

#174 Suburban Princess on 03.27.12 at 2:51 pm

TNL@TB is already rubbing your thigh when you go and pay your bills. I used to work for her. It’s supposed to increase the likelihood that you’ll recommend her branch to your friends and family. That’s the metric that determines her bonus.

#175 arctodus on 03.27.12 at 3:12 pm

To those who actually believe that the USA is in “recovery”….;)

Get back on your meds!

The so called deleveraging event that is now encompassing the entire planet is just getting started you economic jug heads.

The deleveraging is occurring because us little monkeys have finally hit the resource wall that was predicted by the club of rome and by a myriad of folks a lot earlier…

ergo….yap all you want about fiat currency, the USAs superpower status or how special we canucks are (or think we are) and it will not matter a tinkers fart in a hurricane.

peak oil has already happened boys and girls and now we are in production decline (saudi Arabian propaganda and North dakota shale oil BS included)…..that is then end of modern economics and all the weak brained fuzzy ideology that cheap energy gave us.

The hammer of short energy supply will now proceed to pound the world economy into a medieval state of affairs (does anyone still believe that North America is running democratic governmental system…seriously?).

brace yourselves little monkeys because your world is ending and most of you are to stunned to even know it.

RRSPs, TFSAs…..for 30 somethings,…in canada,….yeah sure, …you do that,….;)

#176 Poorgoisie on 03.27.12 at 3:18 pm

Hey Kevin, toronto has been tops in the world in high rise condo construction for a few years now. Low interest has fueled both speculators and people who should have waited to buy to get in too early causing an increase in demand. The supply side has kept up and then some. So what happens to demand when interests rates increase or if people have pay thousands based on their LTV? Couple that with many boomers leaving the market and most of the generation that could have bought their homes ended up building new ones a few years early effectively taking them out of the market for years to come and what do you get?
Answer: big time surplus/a fun blog to read while the mess unfolds

#177 City Slicker on 03.27.12 at 3:19 pm

Collapse of the USD due to $15 trillion national debt, and $50 trillion unfunded liability isn’t in anyone’s “imagination”, it’s real, unsustainable and mathematically gauranteed to imploded when the prick finds the bubble. I dont’ know why you can’t see this.

Because it isn’t happening, and won’t. — Garth
———————————————————-
Can I join your violin ensemble as the Titantic sinks – City Slicker

We’re on the berg. Didn’t you get the memo? — Garth

#178 mac on 03.27.12 at 3:29 pm

How, pray tell, will that slow the flow of foreign capital into Vancouver’s housing market?

#179 daystar on 03.27.12 at 3:31 pm

#126 Dontcallmeshirley on 03.27.12 at 9:53 am

Thanks for the reply. If the banks themselves are slowing down the pace of RE, we know its bad because CMHC assumes the risk with insured mortgages in this country and I’m of the opinion that while our bankers understand the seriousness of the credit bubble we’ve developed in this nation, they are in business to make loans and they complete with each other for market share so the risk of being conservative is that banks lose a percentage of this market share by being prudent.

The question remains, is it a market share that has value going forward? CIBC doesn’t think so as you’ve pointed out in dropping firstline and I don’t think they are alone as of late. But BMO thought there’s value there offering 5 year terms at 2.99% and so did other banks by dropping their rates the same in an effort to keep market share and since BMO can’t expand their market share with competition and the whole idea bites into profit to begin with, 2.99% is history but the point I’m trying to make is the same as Garth’s.

Banks suck and blow in this nation. On one hand they ask for tighter regulations to “even” the playing field but on the other hand, they are competing with each other for that market share through the likes of temporary 2.99% 5 year terms coupled with the regs we still have that encourage people to borrow their brains out.

As long as CMHC assumes all mortgage risks, we can’t expect banks to be conservative with their banking practices until forced to do so. If CMHC didn’t insure mortgages, would our banks have run up housing valuations the likes to which we’ve seen today? There’s your answer. We can’t expect banks to cool this market on their own.

When banks aren’t being prodded by fear, prudence and smart PR to ask for tighter regs , they are being greedy, competitive and thus blind. In case people have missed why, its because we are products of our own environment and in the case of banks, they’ve had a bubble forming loose regulatory environment for 6 years that has forced them to be anything but conservative with their lending practices. Cooling off this market has to come from government and the scarey part of all this is that F seems completely and utterly oblivious to the points I’ve just made. Good God, he’s our finance minister and he’s not aware of what I and others are saying? ( read this link below and judge for yourself. F’s oblivious)

http://www.cbc.ca/news/politics/story/2012/03/22/flaherty-banks-lending.html

It’s government that created this RE bubble through regulations to begin with (and still is!) and its government that needs to deflate it through regulations or we’ll get a sustained bubble that drags on til’ interest rates begin to rise or consumer borrower fatigue kills the economy or F finally does something or it all happens at once insuring the hardest landing possible but in the meantime, a market sideways until then will only do only more harm than good.

F’s got to man up and quit denying the existence of a RE bubble (at least privately) and address this mess he’s created quickly regardless of how it reflects on him or step down to leave room for someone who can. They’ve got their majority, whats stopping F besides demonstrated denial, delusion, pride and a general overall lack of common sense?

#180 disciple on 03.27.12 at 3:33 pm

#168 John G. Young… “I don’t like diminuitives.” I did not need to know that…

Canada Watchdog (Greg), I need a chart on consumer spending on beer/liquor over the last two years as a percentage of average disposable income… much appreciated.

#181 Coraline on 03.27.12 at 3:44 pm

#64 Canadian Watchdog: Hi Watchdog. The main source of the fluctuations in CMHC’s portfolio seems to be contributed by the <80% LTV. I suppose it's conceivable that they made more loans in that bracket, but I don't buy it. I suspect that their portfolio just looks better because the "value" of the houses insured has increased by so much.

As #64 above mentioned, we need to see the data they use for their stress tests, but they won't show us. A few weeks ago some analyst was complaining about this, but I can't remember where I read it.

#182 betamax on 03.27.12 at 3:56 pm

#143 gladiator: “he knows what freedom means and it’s not what school teaches the kids”

School as in K-12 maybe, but university can be quite different. People with no experience rail against ‘book learnin”, but that’s their ignorance talking.

You can be street smart and still go to university and then make a killing, without being a ‘wage slave’ or whatever other fabricated, self-justifying label people like to come up with.

As for Smoking Man, I don’t mind his posts — they provide some mild entertainment. But a drunkard has nothing to teach anyone about success.

#183 vreaa on 03.27.12 at 4:01 pm

Infographic Argues For A Canadian RE Soft Landing – “Just because it is in the form of a Tintin book, doesn’t make it true.”

http://wp.me/pcq1o-3SH

#184 Thomas on 03.27.12 at 4:21 pm

Garth, what % of net income should go to housing? 35%?

The banks say 40% for TDS – total debt servicing. But remember the Rule of 90. — Garth

#185 John G. Young on 03.27.12 at 4:22 pm

#181 disciple on 03.27.12 at 3:33 pm

“#168 John G. Young… “I don’t like diminuitives.” I did not need to know that…”

Oh, well excuse me… you didn’t need to know that unless you actually care about how someone feels about something. Apparently you don’t — which kind of confirms my suspicioun that you were using the diminuitive of my name as a way to condescend.

Sorry to have wasted your valuable time with useless personal information. Rest assured that it will never happen again.

#186 Ben on 03.27.12 at 4:42 pm

Here’s a question?

Where will the money go when it leaves housing? I want to be first in.

#187 bill on 03.27.12 at 4:44 pm

bill on this board will always be willing to ?

#188 John G. Young on 03.27.12 at 4:49 pm

#143 gladiator: “[Smoking Man] knows what freedom means and it’s not what school teaches the kids”

#183 betamax on 03.27.12 at 3:56 pm

“I don’t mind his posts — they provide some mild entertainment. But a drunkard has nothing to teach anyone about success.”

Or freedom.

Well put.

#189 Blacksheep on 03.27.12 at 4:54 pm

About ten years, ago while watching the evening
news, I recognized my wife’s ex Aunt, via a divorce,
on TV. Seems she and her new husband Bob had won
14 million on the 649 lottery. Before they won, no body
liked the arrogant pr*ck. After the money, still no one
could stand him. Regardless of how much money Bob
spent on family, still, no love.

I’m guessing all he wanted was someone to pay
attention to him, maybe a little respect.

He started to drink, a lot and the Aunt was getting concerned. One morning, the wife got a phone call
from her mother, letting us know old Bob, had expired.
Turns out buddy was drunk and somehow managed to drive his Mercedes into a lone cedar tree, on the edge
of a cow field.

I share this little ditty, in the hopes it could benefit,
at least one person, on this pathetic blog.

take care,
Blacksheep

#190 Rene on 03.27.12 at 5:10 pm

IRD only applies if the posted rate at the time of reimbursement is HIGHER than at the time the mortgage was issued.

Example:
Posted rate when loan is granted 5%
Posted rate when loan reimbursed 7%
Penalty = Balance x (5%-7%) x number of months remaining / 12 = Negative amount

If rates are going up or stagnating (they can’t really go lower), IRD is irrelevant.

P.S. I got raped by RBC on IRD. Long story, but they will go to any length to screw you.

#191 Wage Slave on 03.27.12 at 5:12 pm

DELETED

#192 s harper on 03.27.12 at 5:26 pm

garth you are such a tool

#193 Canadian Watchdog on 03.27.12 at 5:29 pm

Below is an example of what types of changes are made when standardized guidelines are imposed.

http://news.equifax.com/index.php?s=18010&item=125432

#194 Bill Gable on 03.27.12 at 5:29 pm

It’s Bill.

Your narcissism is showing, Smoking man.

Obviously you have a deep psychological need to shoot off your mouth, and

Anything else brilliant to add?

#195 Rene on 03.27.12 at 5:32 pm

185. Garth, what % of net income should go to housing? 35%?

The banks say 40% for TDS – total debt servicing. But remember the Rule of 90. — Garth
****************************************
To be clear, 40% of TDS means all monthly debt obligations (PITH + car loan/lease + 5% of LOC + 3% of CC) / GROSS monthly income. Do the math. Anyone at 40% has very little disposable income when you consider the other 60% includes all payroll deductions, renos, utilities, phone, insurance, gas, maintenance, food, leisure, savings, daycare, child support, etc.

Moral of the story: 40% is financial suicide.

#196 Mr. Plow on 03.27.12 at 5:35 pm

I have been quiet, but thought I would offer an update at least from my perspective.

I own rentals in Edmonton. I have gone through a period since the fall where I have lost some good tenants.

It’s a business, I want top dollar and the best tenants, but the two don’t always balance out; at times I take less money for a better tenant.

I had one property in particular that I discounted $125 a month to get it filled with a good tenant. Unfortunately, (more for him than me) he died 4 months into the lease.

I am now refilling the position and the rental market in the last 4 months has certainly changed. I am offering the property $100 per month more than what he had it rented for and I am being slammed with calls from very qualified interested parties.

Open house this weekend and it will go to the best people, I started advertising it yesterday.

Makes me think it’s too cheap. But I won’t get greedy.

#197 bill on 03.27.12 at 5:35 pm

you are astounding in your vehemence. you do have a problem with him dont you ?
I could care less about what he posts or him,or you for that matter , garth seems to think smoking man has a place here or at least as much right as you.
so your just going to have to live with it.
perhaps you should take a careful reread of my posts concerning smoking man.my first comment on him still stands.

as for your insult:
yow! talk about your weird twisted anxieties
up your meds or see a doctor.

#198 Smoking Man on 03.27.12 at 5:48 pm

#189 John G. Young on 03.27.12 at 4:49 pm
You wana see drunkard , come out to some bay street bars on a thur night.

#199 Darryl on 03.27.12 at 6:09 pm

Blacksheep said

“I share this little ditty, in the hopes it could benefit,
at least one person, on this pathetic blog.

take care,
Blacksheep”

At least he didn’t out live his money. :)

#200 EdmontonJim on 03.27.12 at 6:19 pm

#187 Ben

Unfortunately, much of this money doesn’t really exist, so it can’t actually go anywhere.

The real question is, what part of the economy is going to inflate the most – and that depends on alot of things.

If people panic, it could be gold
If the US economy really does recover it will be fossil fuel
If climate change takes hold it will be agriculture
If there is a war with Iran it will be (?)

In short – I don’t know.

#201 };-) aka DA on 03.27.12 at 6:28 pm

#123Lana Del Ray on 03.27.12 at 9:39 am
Smoking Mentally Handicapped Man, I wouldn’t push my luck the way that you do with Garth’s blog. He’s a patient cat, but he didn’t get to where he is putting up with fools like you. Do you ever see Devil’s Advocate posting here? Or what about Shawn Allen? Where are you going to go when you’re banned? This isn’t a WWE blog or the Angry Alcoholics blog. You’re not even funny and it’s getting boring. Why don’t you go start your own blog and see how many visitors you get.

http://www.youtube.com/watch?v=90h2gLgTz5g

You’re welcome, Ladies.

Say not my name thrice lest ye be condemned to hearing it in perpetuity. };-)

That was one. Ya Baby!

mwahahahaha

You are still banned. Shoo. — Garth

#202 Wage Slave on 03.27.12 at 6:54 pm

#198 bill on 03.27.12 at 5:35 pm:
you are astounding in your vehemence.

Welcome to the internet: a place where every a-hole has an opinion, and every opinion belongs to same.

#203 John G. Young on 03.27.12 at 6:58 pm

#199 Smoking Man on 03.27.12 at 5:48 pm

“You wana see drunkard , come out to some bay street bars on a thur night.”

Thanks for the invitation, but I’m in recovery.
Boring I know, but it works for me.

#204 T.O. Bubble Boy on 03.27.12 at 7:15 pm

@ #135 King Bubbles

Some good economic news from yesterday

I wonder if this will make F raise interest rates when he delivers his new budget ?

2 things:

1) Flaherty doesn’t set rates, the bank of Canada does.
2) How much would that deficit be if the 2% GST cut never happened? Pretty much zero me thinks!

#205 Smoking Man on 03.27.12 at 7:21 pm

#195 Bill Gable on 03.27.12 at 5:29 pm

Ok Bill but remember who took the first swing today.
Believe it was you.

All I try and do on here provoke some thought that takes you away from your comfort zone and expand peoples minds from the boundaries of A to Z in which the Educators and the state what you confined too. I’m doing a public service.

When I got on my Teacher rant awhile ago, I had my coconuts busted by a teacher who started emailing me via my blog. Hate mail.

Trying to convert my opinion, I asked him to just observe the language and lingo in the school for 2 weeks with an open mind, and make notes of the words used to control. Results blew him away.

He now sees it. He will never be the same, we are buddy’s now. I did his students a big favor, for this I will never say sorry.

Innovation, creatively does not come from rule followers. Prosperity of any nation is dependant on having enough creative’s around, that benefit all of us.

I will never back down from my anti obedience school slave making institutions till it changes.

And remember Bill

“You Can’t Bend what you Can’t Offend” SM 2012

Now let’s get back the booming GTA spring real estate market.

#206 Nemesis on 03.27.12 at 7:23 pm

…”and a surfeit of opportunity”… Hon. GT

Ah… The old, “Plethora of Pinatas?” gambit…

http://tinyurl.com/9w2cyg

#207 disciple on 03.27.12 at 7:29 pm

#186 John… chillax, you misunderstood me… what’s up, Doc? No? I intended the modified pronoun as a form of endearment not disdain. Holy feelings, Batman…

#208 disciple on 03.27.12 at 7:35 pm

#190 Blacksheep, I liked that, thank you. You’re my kind of sheep-le.

I’ve got a similar story, my grandparents once told me of her dirt poor neighbours who hit the big one, spent it all on lavish things while ridiculing every one else on the street, moved away of course, and eventually after the thrill wore off and the money ran out, came back to ask my grandparents for money! I never forgot that sad tale.

#209 brainsail on 03.27.12 at 7:47 pm

“Shiller: Housing Has “Chance” to Bottom But Suburban Prices May Not Recover “In Our Lifetime””

http://finance.yahoo.com/blogs/daily-ticker/shiller-housing-chance-bottom-suburban-prices-may-not-161914444.html

#210 bill on 03.27.12 at 7:50 pm

wageslave
up the meds or see a shrink would be my advice none the less.

#211 Dontcallmeshirley on 03.27.12 at 7:50 pm

#180 Daystar,

Unfortunately, Canada has little in the way of a productive foreign exchange generating economy outside of resources. If you buy that, then you can’t blame the gov’t for getting behind property and construction so slobs like us can pretend we have an economy.

I also can’t blame a banker for writing any positive cash flow mortgage while the default risk is nil. I know i would use up as much CMHC insurance as i could in their shoes.

BUT, someone has decided enough is enough. Don’t fret, we’ll see before long how property lending and the RE game look without plentiful default insurance.

No insurance is an unforgiving change in the market, and far more impactful then easily undermined, penny ante moves like higher downpayments and longer amorts.

Need proof? See how loudly the mortgage broker chorus is crying.

#212 Cb on 03.27.12 at 8:21 pm

Smoking man discovered thesaurus . Com….Lol…next he’s lining up to find a brothel in the big smoke …oh, wait, he will buy one and own it instead because then it will be free for him and he makes money while blogging , er bragging, er lying….lol

#213 blobby on 03.27.12 at 8:25 pm

Ive not been here for a while – so i appologise if this had already been covered.

I got a letter from HSBC today telling me they’re getting out of the mortgage market.

When banks start to do that… Alarm bells have to sound surely?

#214 Smoking Man on 03.27.12 at 8:41 pm

#213 Cb on 03.27.12 at 8:21 pm

Why would I open a brothel when the market will be dying off soon (Boomers), and you kids have no money, and your generation of ladies are too easy.

Everybody and their brother that watched dragons den will be opening one up soon.
No barriers to entry (No pun intended)

Now you know why I’m loaded and your not.

#215 The Thing in the Basement on 03.27.12 at 9:44 pm

144 steev – thanks for the links, good stuff. Wow, look at Regina/Saskatoon – crazy!

#216 Cb on 03.28.12 at 2:14 am

Loaded as in drunk, no?

#217 Not Wondering Anymore on 03.28.12 at 2:47 am

#180 Daystar

What is stopping Flaherty?

The fact that he and his colleagues represent the interests of the financial and corporate sectors, NOT the general electorate. Politicians (of all political stripes) gain power as a result of special interests, with the explicit intent of gaining access to public funds – in this case, the deregulation of CMHC is one example, and the 2009 corporate and financial bailouts are another.

This misrepresentation, along with the coming austerity measures to be imposed on all citizens to address the resulting deficits, as well as the latest robo-call expose, is making Canadians awaken to the fact that our so-called democratic process is, in reality, as broken and corrupt as any third world country.

It is proving to be an outdated concept which has outlived its purpose and it is evident technology must be allowed to evolve a truer,less costly, more direct and efficient democracy by circumventing the existing third party representational mode altogether to go directly to voters on issues.

The question should not be “What is stopping
Flaherty”, but rather why WE do not stop participating in and enabling a dysfunctional charade.

#218 Chris L. on 03.28.12 at 12:32 pm

This infographic proves Garth wrong.

http://www.ratehub.ca/mortgage-blog/2012/03/canadian-housing-market-will-cool-not-crash-infographic/

The only thing that graphic proves is that mortgage brokers are adroit at spinning myth and half-truth as fact to save their own cash flow. Every one of these ‘arguments’ has been discussed and discounted here. Need we do so again? Sigh. — Garth

#219 SRV on 03.28.12 at 1:40 pm

Well, nice group you have here Garth!

That poor young lady is being attacked by that vicious creature and not a word of support in the comments!

btw… you wouldn’t have a phone number would you?

#220 Chris L. on 03.28.12 at 2:13 pm

“The only thing that graphic proves is that mortgage brokers are adroit at spinning myth and half-truth as fact to save their own cash flow. Every one of these ‘arguments’ has been discussed and discounted here. Need we do so again? Sigh. — Garth”

As historical proof – that graphic makes a great record. I was being sarcastic ;)

You forgot to turn the sarcasm switch on. — Garth