Death by condo

The longer I have walked this earth, enthralling women, the more I’ve learned about hot markets. They don’t wither or wilt, or end with a whimper. They blow up.

Take, for example, what’s happening in the US. Six years into a real estate implosion, it just gets worse. The home ownership rate’s plunged to a 15-year low. Guru Robert Shiller says things probably won’t rebound for a generation. “I am sad to say this,” he adds. There are 18.5 million empty houses and it looks like six million more families will lose their homes over the next five years. Every week local media run realtor-fed stories of a renaissance. Each week, they are wrong. Prices fall still.

The lie of a nation is that Canada escaped. We won’t. And our fate will likely begin with death by condo.

Sharon shows well how we never learn. “I really appreciate your blog,” she says. “It’s definitely sobering.” Maybe so. But she’s still corked.

“I live in Vancouver and own a condo in the heart of downtown. Bought it for $515K and only seen a slight increase in value in two years. Quite depressing… If what you say is true about a 30% reduction, I would indeed lose almost all the equity I have which is made up of my down payment and two years of mortgage payments.

“Is it a stupid idea to buy another property, maybe sub-500 sq ft for roughly $280K to rent out, with a 20% down payment and a locked in 3.29% 5-year fixed rate? With rate and market adjustments to come, if I am not borrowing 95% (though still 80% debt), am I in the same risk category? Or should I just wait until 2015 to snatch something up when prices are?”

See what I mean? Even somebody whose real estate has made nothing, who accepts she could be completely wiped out, and could live in the same place for half the cost as a renter, can’t leave the cult. Despite being at risk, Sharon’s possessed. Real estate is likely the only asset class she knows, and now – like hundreds of thousands of others – she’s falling for the myth that buying a rental condo is anything other than financial suicide.

In Toronto these days, it’s epidemic. With 23,000 new condo units hitting the market in 2012 (and twice that number in the pipeline) an estimated 80% will be sold to flippers, speckers and virgin landlords. Similar numbers preceded the US real estate meltdown, when average Americans flocked to investment properties, fueling their avarice with borrowed money, egged on by developers, hustlers, floggers and property pushers who dangled mythic, riskless profits.

Kinda like Calgary. Circa now.

6th and Tenth is a honking big tower of concrete boxes being developed and marketed by Toronto’s roi-des-condos, Brad Lamb, the baldy, Rolls Royce Phantom-driving, HGTV-starring, imperious urban legend. His journey from condo salesguy working out of a little Harbourfront real estate storefront to purveyor of trendoid digs for the Vespa-riding crowd has earned him fame and millions.

So Calgary’s now being Lambed. The ad at the top of this post shows you how the unsuspecting can be sucked into investing at the wrong time, for the wrong reason. Buying a single condo now as an ‘investment’ is a lot like lining up for Nortel a $120 a pop or gold at $1,900 a single ounce.

So, is purchasing a $230,000, one-bedroom apartment across the tracks from downtown Calgary the ticket to a 282% return on your investment?

Here’s the math: Put $57,500 down, mortgage at 3.5% and with condo fees and taxes the monthly is $1,151. Rent it, says Lamb, for $1,450 and you end up with positive cash flow of $298, or $3,585 a year. Add in the $4,410 in mortgage principal paid annually, and you have “total annual cash flow” of $7,995, for a “rate of return of 13.9%.”

Hell, who doesn’t want to make almost 14%?

Trouble is, mortgage repayment is not cash flow, nor would any accountant label it as a return on capital. So that drops the return on the $57,500 invested to 6.2%, assuming the condo is never empty. And this is 100% taxable as income, which sucks. In contrast, just sticking the down payment money in bank preferred shares paying only 5% and claiming the dividend tax credit would give a better after-tax return. And no risk.

But this is just the start. The ad also says “rental condos provide large capital gains” – in this case, the condo will have a “value after 4% annual appreciation for 10 years” of $340,000. So the “return on equity” is now 192%. Add to this $52,817 in mortgage repayment after 10 years (assuming a 3.5% mortgage for a whole decade), and the “total cash gain” is $162,217, or a 282% return on equity.

If this developer were selling a stock, mutual fund or any other regulated financial asset, this ad would be the end of him. He guarantees future capital gains. He fibs about cash flow. He ignores interest risk and market risk. And nowhere a word of caution on the use of 75% leverage to buy an asset a modest correction could destroy.

But we all know what will happen. 6th and Tenth will sell out. People will use this math to justify property lust, and step off a cliff into a void they see not.

This is why things will not settle quietly. And might explain the fence.

239 comments ↓

#1 Dan in Victoria on 05.01.12 at 9:04 pm

People believe that crap ?
So lets see…I picked up a few empty pop bottles at the site today and threw them in the back of the pick-up truck box.
I’ll give them to shopping cart Terry, the recycle guy next time I see him.
So that means one of us is up more than those condo suckers.
I think he owes less than them too……

#2 Halifornia on 05.01.12 at 9:04 pm

Furrrrrrrrr!

#3 Devore on 05.01.12 at 9:05 pm

I don’t say “there oughtta be a law” very often, but there oughtta be a law against this kind of “investment advice”. Oh well, fools and their money.

Also, return OF equity not quite the same as return ON equity. Idiots.

#4 GTA Girl on 05.01.12 at 9:07 pm

Listened to a bride to be gushing that she was going to sell her Toronto condo when she is pregnant and buy a really nice house in Leaside with her groom.

“I’ve made a fortune on my condo! After only 2 years!”

Did I mention that she was the girl at the reception desk of my salon?

#5 futureexpatriate on 05.01.12 at 9:07 pm

Condos. “The Projects” of the 2010’s and 2020’s.

Abandoned, derelict, condemned, and razed to the ground by 2030.

Line up, suckers.

#6 futureexpatriate on 05.01.12 at 9:08 pm

Hey! At least all those granite countertops ground up will make some nifty real terrazzo floors for the mid-modern revival of the 2020’s!

#7 Sasquatch on 05.01.12 at 9:12 pm

Here’s another hole in that scheme. most rental condos in that neck of the woods is only between $1000-$1200 a month. that barely covers the mortgage. condo fees are going to come out the owners pocket.

Why buy a asset that has been sinking slowly for the last years.

#8 condopoor on 05.01.12 at 9:12 pm

hey Garth, why don’t you sell seminars like Steve Martel so we can come pay for this in person? I’d love to meet the cast of this blog… and I’d whip up a few bucks from my minuscule net worth to see you sing in real life… makes sense, no?

No. — Garth

#9 condopoor on 05.01.12 at 9:13 pm

ps, his website says I could win a free iPad, so you’d have to compete with that.

#10 Glenn Smith on 05.01.12 at 9:18 pm

Foreign Bubble money is turning some of these new condo developments into apartment complexes. So many renters and so few owner occupiers that they can’t even get a quorum to have a transfer meeting to take control from the developer. Should help the rental market when all of these units coming online.

#11 YYC on 05.01.12 at 9:19 pm

Crazy stuff. I live in Calgary and I only see the young people talk about RE like it’s the quick way to the riches.

Even after seeing most properties down 20% over the last 3 years.

Not sure if this was posted. Back lane houses in Van and micro condos in hogtown. How nice.

http://www.cbc.ca/video/#/Shows/The_National/Canada/1264652881/ID=2229183570

#12 Just Park It on 05.01.12 at 9:19 pm

Reading Garth’s post for the past few years, I had a hard time visioning all those supposed crane towers that were dotting all across the GTA. Ahhh, Garth’s using some old set builder’s quote, impossible – surely there can’t be that many on the go.

Well folks, last Saturday I drove into the Big Smoke, probably been more than 12 years since I returned to my old stomping grounds – no word of a lie – if I didn’t check the map – I wouldn’t have guessed what city I was in (well, the CN tower was a give away though) .. like no way – on every street corner on what appears to be every other street, large concrete towers are being erected. From tiny lots (the recently built trump towers was built on a sliver of land that had previously held 40 parked cars – towers in the sky ..it’s frightening is what it is… people remark that’s this isn’t going to end well – take a stroll along the harbour front and you would swear the government was handing condo’s out .. take 2…

I’ve lived in the City almost 30 years before breaking to the open country as conjestion back then was stressing me … now – it’s nothing but condo after condo. Literally box sized balconies – surrounded by greenish tint glass and a overwhelming sense of cold and impersonable. I actually feel for those who actually bought one to live in – you’ll have to walk away if things get bad. I wouldn’t put my pet cat in one of those.

Truly sad – for our fellow man and for the country at large – we all will be stung by this relentless thirst for properties at all cost.

#13 DJB on 05.01.12 at 9:19 pm

First off the rental income would be taxable and second the capital gain on selling would be taxable if sold. The only benefit is that the owner could write off the interest portion of the payments.

Mortgage principal paid plus monthly positive cash flow would be taxed as income at the given tax rate.

#14 Furst on 05.01.12 at 9:19 pm

FURSSTTT. I WIN AGAIN!!!!

#15 Condo Sucker on 05.01.12 at 9:24 pm

I can’t believe people still fall for this. Yeah there was a time in T.O. and Van when buying and flipping condos could turn in a brisk profit. But that train left the station a long time ago. I guess these are some of the same people currently contemplating buying Apple stock. Financial geniuses.

#16 Canadian Watchdog on 05.01.12 at 9:24 pm

Presenting the chart that keeps Brad Lamb awake every night.

New Toronto High Rise Condo Sales
http://i46.tinypic.com/33vl0y0.png

#17 Gordeaux on 05.01.12 at 9:25 pm

Brad Lamb=Nelson Skalbania.

And by that I mean he strikes me as a slick huckster and not much else.

I try not to wish ill on anyone, but there`s a few of these types I`m looking forward to watching go broke.

All it will take is one project of that size at the wrong time…

#18 Raj on 05.01.12 at 9:26 pm

“So Calgary’s now being Lambed”
LOL.

#19 NFN_NLN on 05.01.12 at 9:26 pm

And a light comical read:

http://ca.finance.yahoo.com/news/former-currency-strategist-went-150k-144400234.html

“A few years ago, Kevin Cronan had it all.

At 38, he was bankrolling $100,000/year (plus a $50K bonus) as a currency strategist for a major Boston investment firm and was this close to dropping $35,000 to rub elbows at an ultra-exclusive country club…”

#20 Mark on 05.01.12 at 9:30 pm

The numbers aren’t very interesting considering the ROI’s that are embedded into currently very low stock prices.

Its not hard to buy oil companies or gold miners, without even using a dime of leverage, that trade at better valuations cash-flow wise.

#21 Buy Low Sell High on 05.01.12 at 9:31 pm

Like Lambs to the Slaughter – Go Forth Young Property Virgins!

http://blog.buzzbuzzhome.com/2011/01/this-hunter-eats-lambs-hilarious-parody.html

#22 GTA Girl on 05.01.12 at 9:32 pm

Just Park It; I was in the downtown area of Yonge and Dundas last weekend. Didn’t recognize looking north on Yonge, nor Bay street.

What I noticed is the lack of amenities.

In NYC you get city blocks with, food markets, dry cleaners, laundry, book shops, banks, gyms, schools..all repeated every few blocks. Many of these condos are near nothing. Just other vacuous concrete condos w/empty rental retails units at the bottom.

Yet so many condos.

If there are so many people, a contained market..why aren’t service business’s opening?

This I find very suspicious.

#23 I'm stupid on 05.01.12 at 9:34 pm

Garth you forgot to mention one thing.
If the returns where guaranteed why would the developer sell anything? I guess Realestate developers are in the business of charity. Lmao

#24 Buy Low Sell High on 05.01.12 at 9:36 pm

http://www.google.ca/imgres?imgurl=http://www.torontoist.com/attachments/toronto_david/homelesscondo.jpg&imgrefurl=http://torontoist.com/2007/01/tall_poppy_inte_43/&usg=__akQM0Jl0-xbXxqjd4gghqqoHGIQ=&h=405&w=640&sz=126&hl=en&start=1&zoom=1&tbnid=CIXhCyEw5YAsPM:&tbnh=109&tbnw=173&ei=cI-gT8_4Gs36ggeIxJ2UDg&prev=/search%3Fq%3Dbrad%2Blamb%2Bbillboard%26tbnh%3D127%26tbnw%3D201%26hl%3Den%26sa%3DX%26gbv%3D2%26sig%3D113522512866599062414%26biw%3D1152%26bih%3D654%26tbs%3Dsimg:CAESEgkIheELITDlgCGkPTV9E5wXhw%26tbm%3Disch&itbs=1&iact=hc&vpx=104&vpy=187&dur=2955&hovh=178&hovw=282&tx=186&ty=114&sig=113522512866599062414&page=1&ved=1t:429,r:0,s:0,i:74

This poor soul bought a Brad Lamb condo and is now homeless!

#25 TurnerNation on 05.01.12 at 9:37 pm

Brad should be lambasted!

#26 Brad Lamb Will Soon be Roasted on 05.01.12 at 9:38 pm

The condo kool aid drinkers will soon learn a valuable lesson in markets. They are being led like lambs to the slaughter…

#27 Gtawest on 05.01.12 at 9:41 pm

I’m not sure how you say that preferred shares have “no risk.” The numbers show otherwise:

http://www.theglobeandmail.com/globe-investor/markets/indexes/chart/?q=TXPR-I

That’s an index. — Garth

#28 Coraline on 05.01.12 at 9:42 pm

Just watched the CBC roundtable on house prices and whether people should buy or rent. Garth, I hate to tell you, but you’re now mainstream. The consensus was that prices are crazy, people should rent, and that houses are not a good investment in the long-run.

#29 thinker on 05.01.12 at 9:44 pm

Garth, you should escalate guy to the authorities. How can he get away with this?????

1) Rent – will he rent from you at that price and increase it with inflation?
2) 10 Year return 282%, at least say 28.2% p.a Where the hell is he getting that growth from, will he buy from me at that price in 10 years??
3) How about my loss on interest on that 25% down?

I can go on and on…forget bringing justice to bidding war causing agents, this is just unethical.

#30 Peterfromcalgary on 05.01.12 at 9:48 pm

6 and 10th is bed bug country. Look at the report of Bed bugs near 7th and 9th street SW. Just a block away!

61 bedbug reports near this address:

924 7 Ave Sw 0.177 km
909 7 Ave Sw 0.208 km
912 6 Ave Sw 0.237 km
920 9 Ave Sw 0.258 km
1112 7 Ave Sw 0.347 km
820 5 Ave Sw 0.520 km
1030 12 Ave Sw 0.559 km
1118 12 Ave Sw 0.663 km
100 10a St Nw 0.664 km
825 12 Ave Sw 0.713 km
811 12 Ave Sw 0.731 km
927 14 Ave Sw 0.797 km
505 6 St Sw 0.821 km
1140 14 Ave Sw 0.872 km
1304 11 St Sw 0.886 km
328 10a St Nw 0.896 km
1411 7 St Sw 0.922 km
916 Memorial Dr Nw 0.932 km
1122 15 Ave Sw 0.953 km
1200 6 St Sw 0.980 km
738 14 Ave Sw 1.004 km
1440 Memorial Dr Nw 1.056 km
1312 12 Ave Sw 1.064 km
703 14 Ave Sw 1.078 km
1320 12 St Sw 1.089 km
910 18 Ave Sw 1.114 km
827 18 Ave Sw 1.197 km
906 19 Ave Sw 1.213 km
1331 14 Ave Sw 1.231 km
1005 Cameron Ave Sw 1.240 km
1027 Cameron Ave Sw 1.241 km

http://bedbugregistry.com/location/AB/T2P/Calgary/700%209%20St%20Sw

What do you think the chances are 6 and 10th will be bedbug free for long?

#31 Farmer Fred on 05.01.12 at 9:50 pm

#19 NFN

Your article sums up so many in our society. They are not heeding the advice my late immigrant father gave me when I started working 25 years ago. “Just because this week is great it doesn’t mean next week will be.” He was a farmer and his second piece of advice was, “make hay while the sun shines”. I have faithfully adhered to these two principles and have never looked back. I have always lived like a depression was around the corner and in recent years have released some on my funds and enjoyed several European vacations without even blinking an eye because in farmer lingo, the barn is completely stacked with hay. Time tested and proven principles that will never go out of style.

#32 Werner Patels on 05.01.12 at 9:54 pm

There is no scam or scheme that doesn’t net at least some (greater) fools. No matter how novel, or old, such scheme may be. Just look at all the telemarketing scams out there, not to mention Nigerian e-mail scams: there are still people who get duped, and no one can say the media haven’t been full of stories about those things.

#33 Smoking Man on 05.01.12 at 9:54 pm

We are so owned by the MACHINE

Just watched 20 minutes of the national at leased 20 talking points 15% over valued. Not 6 million% , not 10% not 5% Not 14% or 16%

15% 20 times. Translation soft landing please.

Talking down real estate justifiably so.

Why all fuss Now?

No Red Dots, April Stats are going to shatter records in the GTA.

With out the counter balance before stats are released, May would be a monster.

Just saying

#34 Smartalox on 05.01.12 at 9:55 pm

I was driving behind a city bus in Vancouver last week, and noticed an ad for what looked like a condominium project, but the tag line was “RENT with us”. I was surprised… What would it take to have these towers of excess re-purposed into rental property? Is it just a matter of an REIT coming in and scooping up distressed units before the final certification?

#35 Jim Lahey, Sunnyvale Trailer Park Supervisor on 05.01.12 at 9:57 pm

#8 Condopoor

“I’d love to meet the cast of this blog…”

Well you should have made it out to the FASTGFBDCParty where the bearded mystic oracle who runs this blog, former minister of national revenues and lone voice of reason crying out in the financial wilderness of Canada thoroughly trounced Ron Paul and Mark Carney in a deabte whilst regaling the audience with his witty aphorisms and incredible east coast jig dancing. You can always make it out to next year’s bash.

#36 Chaddywack on 05.01.12 at 9:57 pm

Interesting because although I’d like to believe that most Canadians are honest I think a lot of people out there are having 0% of their rental income taxed.

#37 Fisc on 05.01.12 at 9:58 pm

“282% return of investment”

Garth,

We don’t have any law in Canada to stop this kind of sale practices?? It’s illegal to guaranty future capital gain for any market… It’s always illegal, except for Real Estate market??!!

Poor people who will buy that crap…!!

When our authorities will wake up about that??

#38 blase on 05.01.12 at 10:07 pm

What 20-something condo buyer, full of student loan debt, has $57,000 for a downpayment?

I know someone who bought a condo for half that price and couldn’t get even $5,000 out of her tapped-out boomer parents, who had a combined income of over $200,000 and lived in a small city in B.C.

Say it one more time: this will end badly.

#39 Smoking Man on 05.01.12 at 10:10 pm

Everyone bitching about being scammed by the like’s of Brad.

Well you have a choice. Buy or Run.

But lets trash instead and bash creativity, smarts, brains, individuality and showman ship.

But the biggest scam on earth well that’s ok

Taxes, no choice and if you don’t play, the state goes violent on you.

Schooling damn.

#40 Smoking Man on 05.01.12 at 10:11 pm

My sober posts suck

#41 John G. Young on 05.01.12 at 10:14 pm

Brad Lamb owns a Rolls Royce and is on HGTV?

The man’s lack of imagination says it all.

#42 T.O. Bubble Boy on 05.01.12 at 10:16 pm

Either Brad J Lamb is getting desparate (maybe a Bentley payment is overdue?), or he thinks Calgarians are even worse at math than Torontonians.

Although, $230k for a standard one-bedroom unit sounds great compared to Toronto. In T.O., that would buy you a zero-bedroom closet like this:
http://www.realtor.ca/propertyDetails.aspx?propertyId=11808074&PidKey=151108852

#43 Canadian Watchdog on 05.01.12 at 10:17 pm

Meet the woman who helped create credit default swaps and mortgage backed securities. Full Interview with Terri Duhon JPMorgan (1994-02) http://www.pbs.org/wgbh/pages/frontline/oral-history/financial-crisis/terri-duhon/ Recommended watch.

#44 Toronto_CA on 05.01.12 at 10:17 pm

Garth, here’s a story for you.

My 32 year old girlfriend bought her condo in Toronto last year from a guy who bought the place pre-construction. It is a 1 bed/1bath loft style unit, with a ton of street noise since it’s on the 2nd floor off King near the lovely Regent Park slums.

She cleaned out her meager RRSP entirely using the homebuyers plan to put 5% down and took a 35 year loan. She nearly freaked when registration got delayed and they had to put in a 30 year loan as the 35 year loans got nixed.

Now she just started paying her mortgage as it was registered so she could actually buy it (her funds were out of her RRSP for over a year, earning nothing in that time).

If I bring up a GTA condo bubble story, she shuts down and says she doesn’t want to hear it. She would be cashflow negative if she rented it out by about ~$300 or so a month (without any maintenance), and that’s with the lowest mortgage rates in history.

A 10% drop in condo prices would have her underwater. The only thing I can happily say is there is no HELOC on this property.

Her parents and friends are so proud of her for buying, too. I guess the 15 years of repayments to her RRSP back to $12,000 will be enough to retire on?

And you chose her why? — Garth

#45 T.O. Bubble Boy on 05.01.12 at 10:18 pm

Maybe the “mortgage principal repayment as cash flow” assumes that the owner constantly maxes out on a HELOC tied to the same property?

#46 FromthePeg on 05.01.12 at 10:20 pm

Garth, you said not to buy individual stocks unless you have a portfolio of $1,000,000 or more. Reading a prior comment the poster tried to show an index of preferred shares that lost money over 5 years. Do you not recommend ETF’s/index preferrers?
If not, then how should an average investor obtain preferred share exposure?

Preferreds are not equities. You do not buy them for capital gains, but for yield and stability, as they are fixed income assets. — Garth

#47 Renting In The GTA on 05.01.12 at 10:22 pm

DELETED

#48 Mark on 05.01.12 at 10:22 pm

And you chose her why? — Garth

Same reason why most men do stupid things.

#49 ozy - Banckrupcy still a legal option for Kondo Buyers in 2012 on 05.01.12 at 10:23 pm

Banckrupcy still a legal option for Kondo Buyers in 2012

Hev fan! Engioi!

Who are the POOR POOR SOULS buying in this coming bloodshed? Do something to wake them up Garth, do seminars in FRONT on new Kondo (to be later nuked) projects, whatever but urgent help is needed

#50 Cory on 05.01.12 at 10:26 pm

this is all the rage among Calgary yuppies these days…

http://www.newswire.ca/en/story/910529/-8-3-million-condo-breaks-real-estate-history-in-calgary

http://www.therivercalgary.com/

although I don’t know how many are selling now. I would have a hard time believing these will sell out since the cheapest is in the millions. Many houses in the millions sitting for awhile now so why would a house/urban sprawl city rush to buy such an expensive place to live when people with this type of cash (if it’s real cash) are hitting acreages not condos..

It will be interesting to watch. No speccers in this building though.

#51 frozen trumpet on 05.01.12 at 10:29 pm

we live in a weird world where governments allow and encourage the publication of lies that will lead people into financial hardship and even ruin, yet they make their citizens wear bike helmets.

#52 J.I.M. on 05.01.12 at 10:30 pm

I just called my landlord. I’ve been living in a large 2 bedroom apartment here in Calgary for the last several years. . I said I want a rent reduction. He said OK!

This out here is the wild west kids, not Ontario. Rents CAN go down, and of course they can go up , depending on the market, and right now, its a down market for rents

#53 Sherry Cooper on 05.01.12 at 10:33 pm

Oh Garth talk dirty to me….Granite floors…laminate countertops…… stainless steel ceilings……

#54 Joe Q. on 05.01.12 at 10:34 pm

Never been to Calgary, but thanks to Google, MLS and Craigslist, that can’t stop me from debunking Lamb’s BS.

Condo fees: $185 per month is wildly optimistic. The norm for 1BR units in the area seems to be $300-$400.

http://bit.ly/II9Z1g
http://bit.ly/K6tzL9
http://bit.ly/IsFv7C
http://bit.ly/JMr1gp

Meanwhile, the $1,450 monthly rental yield seems even more optimistic. Why would a tenant rent your unit for $1,450 when comparable places in the neighbourhood are available for $1,200 or less?

http://calgary.en.craigslist.ca/apa/2973758323.html
http://calgary.en.craigslist.ca/apa/2977553141.html
http://calgary.en.craigslist.ca/apa/2927119989.html

So much for that cash flow…

#55 Toronto_CA on 05.01.12 at 10:35 pm

“And you chose her why? — Garth”

It’s not her money I’m after…
I do wonder how many are like her tho, unmarried (single) men and women who make around $60k a year in Toronto and bought with 0-5% down with 30-40year mortgages on overpriced condos to live in, not as investment properties? The future looks bleak.

Better than your last answer. — Garth

#56 Tim on 05.01.12 at 10:36 pm

There are a lot of stupid people in Canada, judging by the property sales. Then again, many were stupid enough to vote for Harper…

#57 Not 1st on 05.01.12 at 10:38 pm

Garth, I’ve never seen an ad like that for a condo development. Most developers just show the product – he actually makes a claim on return/cash flow/costs etc. I don’t see any fine print or disclaimers either.

Isn’t that false/fraudulent advertising? Wouldn’t such a claim be open to a class action lawsuit?

#58 Canada's housing crash under way on 05.01.12 at 10:38 pm

#24 I’m stupid on 05.01.12 at 9:34 pm
Garth you forgot to mention one thing.
If the returns where guaranteed why would the developer sell anything? I guess Realestate developers are in the business of charity. Lmao
——————————————————————

It’s obvious to people like you but the masses are a stupid group of idiots. Realtors and mortgage brokers and yes Brad L prey on the weak minded fools. It’s hard people can believe such propaganda.

#59 Gmac on 05.01.12 at 10:42 pm

Got an letter from Scotiabank today requesting proof of home insurance with them list as the primary beneficiary. Threatens to insure it on their own at my expense if I am not carrying any. Could be a sales pitch or could be them covering their behinds?

#60 Canada's housing crash under way on 05.01.12 at 10:44 pm

Smokingman #35

Realtor smokingman you must be in a panic? The good times are over and the ponzi scheme is done. CHMC was the ONLY reason why the ponzi hasn’t crashed. CHMC limit will not be increased and thus prices can not and will not go higher . Watch june and onward as sales and prices will drop.

#61 Grantmi on 05.01.12 at 10:49 pm

#14 Furst on 05.01.12 at 9:19 pm
FURSSTTT. I WIN AGAIN!!!!

Biggest Idiot Furssttt! You lose Again!!!!

#62 The American on 05.01.12 at 10:50 pm

This is a repeat of exactly what happened in the U.S. over five years ago… Realtors are now plaguing the blogging sphere in desperation to keep the artificially-inflated market pumped up. Each day as I read this blog I realize just how many more comments are coming out of all the nooks and crannies… very much like cock roaches. The more you see realtors defending the “health” of the market, the more you should know that it is all but over. Their livelihoods depend on it.

If I told you how many reaturds I know who were living relatively high on the hog in 2006 and are now working two and even three jobs to make their rented car payments, you wouldn’t believe me.

#63 45north on 05.01.12 at 10:57 pm

Canadian Watchdog: Genworth CEO resigns!

“After navigating through the recent financial and housing crisis, and as the company transitions to the next-generation Genworth, I believe this is the right time for me to move on to other opportunities,” Fraizer said in the statement.

http://online.wsj.com/article/BT-CO-20120501-719975.html

I looked at your new condo sales – March 2012 sales are way down – this is way beyond Brad Lamb, this touches the banks and CMHC

Terri Duhon reminds me of the actress Rebecca Pidgeon (www.imdb.com). Same British accent , same mannerisms

#64 Carpe Diem on 05.01.12 at 11:03 pm

You really can’t cure stupid.

Today I saw two purchases. One for a co-worker’s kid going to University “and needing a home to stay”. I remember in the 90’s my buddies renting a place in MTL and they had a blast and then went back to the States. Versus purchasing a place in RIM country …. give your head a shake.

Then I come home to my awesome, “let the market drop to its knees and then vultch” wife talking with the to-be divorced mom probably going for a 5% down / 30 year mortgage purchasing a granite and stainless steel “ready to move in” townhouse and for 1000K rebate, she gets the TV in the wall!

Wow.

You just can’t help stupid … going forward I’m not doing the Garth thing. I’ve standing back and seeing how things turn out for stupid people.

#65 NFN_NLN on 05.01.12 at 11:03 pm

#59 Not 1st on 05.01.12 at 10:38 pm

Garth, I’ve never seen an ad like that for a condo development. Most developers just show the product – he actually makes a claim on return/cash flow/costs etc. I don’t see any fine print or disclaimers either.

Isn’t that false/fraudulent advertising? Wouldn’t such a claim be open to a class action lawsuit?

That picture is pure gold. I’ll save it for the future and have T-Shirts printed when the time is right. All the suckers will be too broke to afford new shirts though.

#66 Market Bull on 05.01.12 at 11:04 pm

Tick tock…tick tock… time waits for no bear…

It’s May, 2012, and still no crash.

How. Remarkably. Inaccurate.

Some people get all defensive about being wrong – So they invoke invective.

Childish…yes, I agree.

#67 Stupesing in Cabbagetown on 05.01.12 at 11:04 pm

#44 T.O. Bubble Boy – re. the zero-bedroom closet you identified. Apparently it is a ground floor unit and apparently it also offers “Downtown Vista From Balcony”. I’ve never seen a ground-floor balcony, especially one with a view. This couldn’t possibly be a misleading description, could it?

#68 Furst on 05.01.12 at 11:13 pm

#63 Grantmi on 05.01.12 at 10:49 pm
#14 Furst on 05.01.12 at 9:19 pm
FURSSTTT. I WIN AGAIN!!!!

Biggest Idiot Furssttt! You lose Again!!!!
_____________________________________
Oh yeah? wanna fight? ;)

#69 Kasia on 05.01.12 at 11:13 pm

http://www.cbc.ca/thenational/indepthanalysis/thebottomline/2012/05/the_housing_market.html

Finally they are talking about it!
The panel choose they words carefully, but there is no denying it anymore. Let’s hope next time they do this at 6pm news i/o 9pm.

#70 Another Albertan on 05.01.12 at 11:16 pm

Lamb’s building is literally on the other side of the track from downtown. Like a heavy 9-iron away from the CPR line… I live at altitude 6 blocks from the CPR line and the noise is crystal clear. I can’t imagine being immediately adjacent…

As for Cory who posted about The River in #52, I can’t wait to hear about the ingress of the Elbow to all points below grade at that location. The river routinely laps against the backyards of multi-million dollar homes during spring run-off from the mountains.

Everyone else’s mileage may vary.

#71 Furst on 05.01.12 at 11:20 pm

#42 Smoking Man on 05.01.12 at 10:11 pm
My sober posts suck
___________________________________-
Correction Smoking Man, ALL your posts suck. Unlike mine, which are all Blog Gold. FURRRST!

#72 unhappy house hunter on 05.01.12 at 11:22 pm

cbc the bottom line is saying the same things as Garth (was on at 1030) its going mainstream media! HOUSING BUBBLE

#73 Min in Mission on 05.01.12 at 11:24 pm

“enthralling women” – yeah I have had the same problem – for years.

Where does that guy get off? Isn’t a lot of that advert. a load of bs and bad math?

#74 DonDWest on 05.01.12 at 11:26 pm

What’s going on in Toronto right now is a tragedy – an economic killer. More condos being built than NYC and Mexico City combined? Do you truly believe Toronto has genuine growth of that high a level, and this quickly, to justify this rate of condo building?! Toronto is starting to resemble Dubai.

Whenever I see footage of downtown Toronto, all I see are condos. Not a single shop, not a single gym, not a single piece of park space, no restaurants, no salons, etc. I’m left scratching my head why exactly are people paying big money and making such huge sacrifices in living space to essentially just live close to other condos. If you want living space next to no amenities, here’s a hint, buy a small SFH in the suburbs. You would get three times as much space and perhaps even a small garden lot if you’re lucky – all for the same price. However, I guess my generation just finds it “too uncool” to live in the suburbs.

As for the environmental argument – not buying that anymore. What we have here is essentially a version of the suburbs but even worse. Incredibly cramped quarters, traffic congestion, because there are no shops I assume these people still have to be transported to a commercial district somehow. Not to mention the engineering/structural issues of building a 40 story building on a 1500 sq ft. lot that’s bound to lead to “accidents” in the future. Sorry, we don’t have the technology today to make Toronto more densely urbanized than NYC and Mexico City combined. This is a disaster waiting to happen – our children will never forgive us.

We’re still a country with a small population base – the sucking sound that’s Toronto’s real estate will suck the entire nation’s economy down the toilet.

#75 Canadian Watchdog on 05.01.12 at 11:26 pm

Realty Sellers – April Condo Sales Stats https://docs.google.com/file/d/0ByrPFSoPLahJa3ZaejlQOGJ0LTA/edit?pli=1

Quick Stats: (These are not total month sales as reported by TREB)

GTA
—Only 237 (31%) of =999 sales sold above list price.
—Of the 762 listings that sold below list price, the average loss was $10,534 while the median was $6000.

Toronto
—Only 128 (25%) of 508 sales sold above list price.
—Of the 380 listings that sold below list price, the average loss was $11,479 while the median was $6650.

#76 the word of reason on 05.01.12 at 11:26 pm

god bless our little lamb ! baaaaaaaaaaa mm baaaaaaaaaa!

#77 Dave on 05.01.12 at 11:28 pm

Hopefully this Lamb guy gets calf roped during Stampede…..He can take his scheme elsewhere.

#78 Ogopogo on 05.01.12 at 11:33 pm

The MSM is beginning to sound the alarm. Watching Bottom Line on CBC as I type. Header: “How Fragile is the Market?”

Garth’s finest hour is upon us.

#79 raj on 05.01.12 at 11:33 pm

Its pathetic not to compare new developments with resales. My stepson just rented a 1400 sq ft condo with a balcony, completly done up and renovated and you’ll never believe how much he paid. 1500 a month. The owner was trying to sell it for 375000 and she owns another unit in the building. The maint alone are 650. Its crazy…Doesnt make any sense at all… I remember 89 and it feels the same. 15-20% reduction has to be in the cards…No way it can go up..

#80 charles on 05.01.12 at 11:36 pm

I was lucky last year having sold an investment property I had enough of tenants . This year we sold the country place. We down sized and moved to the country with 50 acres . Peace . I consider myself lucky before all hell breaks out

#81 freedom1 on 05.01.12 at 11:36 pm

what a grade-A butt head this guy. he cites roughly 100 bucks for taxes and condo fees. And for a full 10 years, nary a budge.

WTF?

A good friend of mine who recently got his immigration papers after working in the country for many years diligently was being pushed by his wife to buy a house. They do have 2 young boys.

I however, moved to the states, which allowed me a 50% bump in salary, believe it or not. I would’ve taken the RE death plunge in 2005 and would’ve been tied to the same 5hitty job forever.

Anyway, so i did an analysis for my friend.

400k house, 50k down.
350k amort over 25 years at 4% constant
3% appreciation over 25 years.
Monthly payment:
1847.43
400 prop tax (mississauga/bram)
150 for heat
150 electricity
100 avg maintenance
50 water (i know it’s high)
?? home insurance
it came out to 2700 (that’s conservative) (what about bylaw officer harassment cost?), cleanups, renos?

Total cost 810k
sell home 838k for a gain of 28k. Also, 838k is in 2027 dollars where you’ve been paying the 810 since 2012.
———-
NOW

Pay rent 1500/mo for 25 years at 2.5% increase each year.
total cost 614839
Save 1000/month invested at 3% for 300 months
Final savings 392243.9

If I f’ed up somewhere, let me know. I do know there are major pros/cons to renting and owning like extra space, pets etc.

#82 Island Living on 05.01.12 at 11:38 pm

Wow…watching The Bottom Line on The National. Garth they must be reading your blog.

#83 Investx on 05.01.12 at 11:42 pm

Garth, thanks for reviewing that ridiculous condo ad and exposing Brad Lamb for the shady character that he is.

#84 99% on 05.01.12 at 11:45 pm

#29 Coraline
At the round table discussion, it was agreed that you should only get into a mortgage if you could afford to pay double the current rate in the near future. That is so scary.

One of the members said that he knows many couples in Vancouver who couldn’t afford to get out of a bad marriage because neither could afford to move. They end up staying in a sexless marriage for 20-30 years because of housing. That is so sad.

They agreed that renting is more profitable now that the price of real estate is so high.

#85 trulycanadianbubble on 05.01.12 at 11:54 pm

Freedom of speech: that’s what is left.
I don’t even know who’s on crack: buyers, sellers, brokers but one thing is certain: F and Carney are the drug dealers.
If the housing goes down, i wouldn’t feel sorry for those who are “losing” their houses. One should really look how renters are living, families hoping day after day they can break the cycle and be able to accumulate more and have more opportunities, to really improves their lives but try to stay out of debt.
To me it doesn’t even matter. Canada has became a country of slaves confined in their “suburban detached comfort”.
And people thought that comunism was such a injustice, loss of freedom, blah, blah,… How much “freedom” do you have when you are a “bank slave” for 35 years. aka taxpayer living in Canada…
At least in comunism you had it upfront: job and a house. In capitalism you have the illusion you’ll make it in the end if you are a good, obedient servant.
My thoughts. Post it if you want.

#86 Derek R on 05.01.12 at 11:56 pm

10th Avenue and 6th Street Southwest, eh? So right beside the CP mainline. And I mean right beside the tracks.

I hope the soundproofing is grade A.

#87 Jane on 05.02.12 at 12:00 am

Ok, what does FASTGFBDCParty stand for?

#88 Burnt Norton on 05.02.12 at 12:05 am

Vancouver prices and sales declining, active listings soaring…

http://s1057.photobucket.com/albums/t385/Leahcim_Erom/?action=view&current=photo.png

#89 S on 05.02.12 at 12:06 am

Garth wrote: “In contrast, just sticking the down payment money in bank preferred shares paying only 5% and claiming the dividend tax credit would give a better after-tax return. And no risk.” I would take issue with the last sentence. True, in 2008 fiasco Canadian banks did not fold as a number of the ones south of the border did, but we now know they were more at risk than was back then suggested. And more bail out money was handed over than was then disclosed. There must have been risk and thus can be again. Unless governments on both sides of the border are in the business of handing out cash just for the hell of it…
Otherwise another fantastic post. Thanks.

#90 TheNumbersDon'tMakeSense on 05.02.12 at 12:09 am

It’s official in Vancouver – the crash has started. Detached homes down 100k / 10%!
http://www.yattermatters.com/2012/05/its-cold-outside-for-vancouver-real-estate/#more-30473

#91 Carlyle on 05.02.12 at 12:10 am

#22 GTA Girl on 05.01.12 at 9:32 pm
Just Park It; I was in the downtown area of Yonge and Dundas last weekend. Didn’t recognize looking north on Yonge, nor Bay street.

What I noticed is the lack of amenities.

In NYC you get city blocks with, food markets, dry cleaners, laundry, book shops, banks, gyms, schools..all repeated every few blocks. Many of these condos are near nothing. Just other vacuous concrete condos w/empty rental retails units at the bottom.

Yet so many condos.

If there are so many people, a contained market..why aren’t service business’s opening?

This I find very suspicious.

—————————————-

Cityplace is getting a little better with the Sobey’s finally opening up a year or two ago and a few shops underneath the towers (hell there are FOUR banks on the corners of Spadina/Bremner/Fort York Blvd) alone.

But yeah there is a noticable difference between a condo at say Wellington and and John, compared to the mass of condos stretching from Front/Spadina to Bathurst. Even in Liberty Village their amenities are marked by the Metro plaza and that’s about it. I’ve heard from some business owners that occupy the space underneath some of the cityplace towers that the lease fees for these businesses are insane. There are also crappy rules set by CityPlace, for example some shops aren’t allowed to sell lottery tickets, other shops are the designated “cigarette place”, only one dry cleaner allowed, etc etc …. High rent with alot of dumb rules leads to businesses finding a better place to set up shop.

I actually like the place I am leasing at Spadina and Bremner … it’s close enough to walk into the main part of the city and also very close to the highway. But there is a reason I’m leasing and not owning … and that’s mainly because people paying 320k for 570 sq ft condo’s are freaking insane.

Downtown Condo living is great if you enjoy that lifestyle, just make sure you lease. I’m in a position right now I can move whenever to whatever next shiny building catches my interest. The rental market in the downtown (Toronto) core (spadina to Sherbourne/Bloor to Lakeshore) is very tight right now, I expect that to change very soon and lease prices to come down as well as spec owners get desperate.

#92 Observer on 05.02.12 at 12:10 am

he knows many couples in Vancouver who couldn’t afford to get out of a bad marriage because neither could afford to move. They end up staying in a sexless marriage for 20-30 years because of housing

“Freedom 55” has now taken on a whole new meaning…

#93 Harlee on 05.02.12 at 12:13 am

It doesn’t really matter you know…Condos,real estate,helocs…
Ronald Weinland says the end of the world on May 27,2012. Ronald was a disciple of Herbert W. Armstrong and will prove to be more accurate that Harold was. Harold is history now.
Mark it : May 27 (that’s a Sunday).
Yesh,den de zumbies truly do take over. You better believe it,man….

#94 Mr Gadget on 05.02.12 at 12:22 am

Somebody posted about the poor construction quality problems that are likely to surface in the not-too-distant future on these condos being thrown up.

This is probably more significant than the condo buyers realize–focused as they are on granite, stainless, hardwood, and all the money they stand to make when they flip the property.

For a real world example of how this ended badly, check out this story.

http://en.wikipedia.org/wiki/Pruitt%E2%80%93Igoe

This was initially ‘sold’ not as a ‘housing project’ (which is what it turned into before it was demoed) but as the ‘next big thing’ in urban living.

The section on construction and design is particularly interesting.

#95 Island Living on 05.02.12 at 12:24 am

http://www.cbc.ca/thenational/indepthanalysis/thebottomline/2012/05/the_housing_market.html

#96 Devore on 05.02.12 at 12:26 am

#61 Gmac

Got an letter from Scotiabank today requesting proof of home insurance with them list as the primary beneficiary. Threatens to insure it on their own at my expense if I am not carrying any. Could be a sales pitch or could be them covering their behinds?

You remember that stack of mortgage papers you signed? Yeah, the one you didn’t read? I think it’s time to start reading it.

#97 Carlyle on 05.02.12 at 12:28 am

The downtown rental condo market in Toronto is still pretty expensive. Marked by the boundary I mentioned above (Spadina in the west, Sherbourne in the east, Bloor in the north, Queen’s Quay in the south, condo’s in that downtown core box seem to command a larger monthly lease.

You are looking at approx 1500 a month for a 500 – 600 sq ft 1 bedroom condo with parking and locker. Interestingly because so many units are owned by specers there are a gigantic amount of units for lease with NO parking and NO locker … these 1 bedroom units typically go for about 1300 a month. Units with parking demand a big premium in part because condo developers have sold tonnes of 1 br units with no parking available as well as speccers that don’t want to pay the extra premium for a parking space (35k usually).

In the coming crash I’m thinking alot of those speccers are going to be very sad they didn’t spring for the parking space … for many people looking to lease lack of parking is a dealbreaker.

Once you leave the “box” in the core prices plummet. For example if you go to Stadium street in between Spadina and Bathurst just off lakeshore http://maps.google.ca/maps?rlz=1C1AVSC_enCA437CA437&q=stadium+st+toronto+Ontario&um=1&ie=UTF-8&hq=&hnear=0x882b3522f9447091:0x56f8834a0e26aee6,Stadium+Rd,+Toronto,+ON&gl=ca&ei=SbagT_G6KYjL2QXorsSzCQ&sa=X&oi=geocode_result&ct=title&resnum=1&ved=0CB4Q8gEwAA

You can easily get a condo there with parking and locker for 1300 … and the condo unit itself will be bigger and better furnished (hardwood/stainless steel) than most condo’s in the “box”. There are entire buildings on that street that are basically empty, owners begging people to rent them.

The issue is that most young people looking to rent a condo want one that is “walkable” (see http://www.walkscore.com/ ). Outside of the box your condo becomes much less walkable which lowers what you can get in rent due to lack of demand. The appeal of the condo lifestyle is that you can walk instead of drive … alot of people like me though want to have the choice (drive to work, walk around the city when just enjoying life).

If you go further up to North York (around Yonge and Sheppard) you can also easily get a 1 br with parking and locker for 1300.

Personally I think these lease/rental rates are unsustainable with the tsunami of condos about to hit the Toronto market. With this many spec units on the market prices are going to have to go down … I feel kinda bad for condo owners that will basically have to subsidize leasers like me … but those are the breaks.

I’m just waiting I know it’s coming. The “box” downtown will likely drop in lease price, and outside of the “box” I think you will see a calamitous drop in what people are willing to pay in rent for a home in the sky.

I’m looking forward to it, hoping to see rents drop in the next couple of years.

#98 You a bad monkey, Mojo (I know) on 05.02.12 at 12:34 am

Seems y’all need a little reality check:
1. Real estate is gonzo by at least fifty percent over the next few years. 15% drop is only in the minds of those lacking imagination
2. If you buy equities now, you are gonna lose — no volume means market manipulation — “balanced ” portfolios are gonna lose big — think ponzi
3. Gold price is suppressed — beginning of every NA trading session the manipulators drop it down, but it always rises back up — remember gold is the enemy of the ponzi
4. if you don’t like gold – you’s a racist

Peace out – Mojo

#99 Nostradamus Le Mad Vlad on 05.02.12 at 12:36 am

“They blow up, big tower[s] of concrete boxes [like this?]Concrete and Steel enthralling women about hot markets. Each week, they are wrong. Prices fall still. They don’t wither or wilt, or end with a whimper.” — Can’t y’all just see them now? Glossy-eyed young folk being thrown into a meat grinder, rough edges first then through a long process of bankruptcies, coming out Class AAA Cdn. Pure Ground Dust, or smooth particles the other end.

“If Mr. Lamb were selling a stock, mutual fund or any other regulated financial asset, this ad would be the end of him.” — Every dog has their day, and everything, no matter what, runs its course. Lamb may end up as another Earl Jones.
*
Where’s the collateral? New Normal Math Incl. charts and funny lines; The new Blackberry Pix; Taiwan mfg. dips, but SSKorean mfg. rises slightly; Apple destroyed American jobs; Cyber Spy Good reason to become one; Spain is the new Greece; Smoking Man Was this you? Global Paradigm Shift Winners and losers; Taxmageddon Not incl. the great ‘quake on May 20 (solar eclipse?), plus Austerity and Liquidity.

Money is Useful Illiquid RE isn’t; Nova Scotia Teachers Pension dump? A New Tax Just what we need; Spanish Bonds; Greenspan on Stocks; Swap gold for silver; Carney Does he know more than what he’s letting on? Bonds are winners; The Velocity of Money plus price inflation? Bank of Japan Time for a fresh approach; Chinese Palaces in central Ireland; UK exports falling.
*
1:28 clip Exploding iceberg in Antarctica; 2:32 clip 93 days in jail for growing a veggie garden; Iran goes nuke (for power stations); Obloodyhell reminder (before US citizens vote); 4:22 clip HAARP cont. its wayward ways; Civil Liberties no longer exist in America, and not for too much longer here; Garlic 100x better than antibiotics; Fukushima Coolant system broken? Class Warfare it’s working to divide America; US Poisoning their own; Secession? If Obomba wins, yes; Tweeting into Shitland.

#100 Bill In Calgary on 05.02.12 at 12:42 am

I have to comment on the location of this 6th and 10th condo as I drive past it every day. It is right next to the main rail line in Calgary. I lived downtown next to it for a year and it drove me insane. Those diesel trains chug through at ALL hours of the day and night. Kiss your fresh air goodbye because you can’t leave the window open at night and expect to get any sleep. It is also right next to a freaking bottle depot. This is the the bottle depot that all the homeless people in downtown Calgary use. If you peruse the Google StreeView images there are 3 people with shopping carts within a block of the condo site. I drive past sometimes and there are line ups on the sidewalk of people waiting to turn in bottles. This is a fact. Doesn’t sound like a place I’d like to live, and my standards aren’t even that high.

#101 lookoutbelow on 05.02.12 at 1:04 am

Apart from the Purchase Price, Down Payment and Monthly Mortgage Payment, all other figures and calculations are pure Fantasy.

You are right, “There ought to be a Law”.

#102 Bast on 05.02.12 at 1:27 am

Really? Does Lamb think Calgary is the new Toronto? If so he’s about 5 years too late to the party. Take a look at Mike Fotiou’s recent blog about how much Calgary condo owners have made/lost since 2007 – go to http://www.findcalgary.com – click on “Blog” and look for headline that reads “Hot Potato” – how apt. Lots of folks losing 20% or more.

#103 truth hammer on 05.02.12 at 2:06 am

The CBC braintrust panel suggested that ‘owners’ should ‘stress test’ their mortgage for rates at double the current level…bwahahahahahahahahahaaaaa …..this is saying that a majority of thepeople who have purchased at the current ZIRP rate have had any ability to service a conventional mortgage in the first place……side splitting…omg.

all four said bubble…crash….correction of at leat 10-15% at least ten times each……..each focused their laser future vision on condo’s…..as in coming down due to spec buyers…….

honestly…..given that the CBC is little more than a mouthpiece for their largest client…the government…i smell a rat in that this program and others like it…are nothing more than the governments attempt to force suasion on the market by jawboning the rate of consumption down …and not intending to do anything about the canadian calamity…which in fact only starts with real estate….in fact real estate is only the tip of the ice berg and has become a convieniant whipping boy for the government to misdirect the citizen from all the other huge problems they face….like hyperinflation in food, fuel, costs of services, taxation, low wages , no industry…..stalled economy…etc etc etc

#104 Finally Sold on 05.02.12 at 2:28 am

I live in Vancouver and finally sold my DT townhouse. Its been listed for 1.2 years, went thru 3 agents, over 10 open houses, countless showings, 5 price drops and finally an offer came thru, but well below asking. A quick yes, subjects removed and I’m running to the bank with all that equity.

I’ll be renting until the market cools. Before, I felt trapped, now I feel so free.

#105 mad vancouver on 05.02.12 at 3:09 am

http://www.cbc.ca/video/#/News/TV_Shows/The_National/1233408557/ID=2229772604

pass it around :)

#106 A place for my stuff on 05.02.12 at 3:22 am

You know it gets tiresome listening to people banter me to buy a house. I am in my mid 20s I have a good job that is stable and I have seen a pay increase of about 20% every year since I started 3 years ago.

I continually hear people tell me “why don’t you buy a house instead of going on vacations and buying cars and other toys that won’t make you any money” or “why don’t you buy a place, paying rent you are paying someone else’s mortgage and NOT your own”

I have a reasonable downpayment between 60-70000 and add about 2000 a month towards that (while still enjoying the finer things)

I have looked at houses comparable to the one I am renting. Currently my rent is 1500 a month (not including utilities) on a 1500 sqft mid 1990s bilevel house with attached garage. I pay no taxes, I pay no repairs, when something like the diswasher, washer, drier, furnace, etc breaks I call my landlord. He eats the bill.

If I were to buy a comparable house in this area my mortgage would be about $280 000-300 000. That works out to a payment of $1400-1500 a month (at these super low interest rates). However, Only about $7000 annually goes towards principle and the rest goes to interest. Property tax would be about $3000. Soo ok I could potentially be ahead $4000 a year. I could however also be on the hook for house repairs as a home of this age will begin to need. Then if I had or wanted to move I would have to pay all sorts costs associated with buying/selling a home. Finally there is the potential loss if the market goes down.

I have explained this logic to people and they look at me with a stupid stare and go “well you would still OWN your house”

Nooooo! The BANK owns it.

Garth like you say housing is a very emotional market and people cannot even justify why they think you should buy a house just that “housing always goes up in value”

I was fresh out of highschool when I told my boss at my old job “HOUSING WILL CRASH” he called me an idiot and it did and then rebouned. He years later tried to tell me that because it rebounded it wasn’t a real crash.

I can say it again HOUSING WILL CRASH. I make more money then most married couples, have no children, have no debt and do not see how everyone around me can raise 3 kids, drive 2 brand new vehicles and have a 450k home.

Then again they probably don’t just go on vacations whenver they want.

Finally, a house is not an investment if you are living in it. To quote George Carlin “Its a pile of your stuff with a roof over it”

I will keep buying stuff and continue renting a roof…. until I can justify otherwise.

#107 Aussie Roy on 05.02.12 at 3:26 am

Aussie Headlines

Perth RE prices are about to go to the moon – lol.
Read comments section

http://www.inmycommunity.com.au/news-and-views/local-news/Perth-real-estate-market-set-to-rebound/7620664/

Remember prices have been falling here WITH this scheme in place, now?, it’s gone.

THE axing of the popular first home buyer bonus is expected to impact on new home sales in Melbourne’s growth corridors almost immediately.

It will come at a cost to first home buyers who will have to save up to $19,500 more in downpayments.

Treasurer Kim Wells yesterday cut the state-funded bonus for first home buyers which gives up to $13,000 in rebates to city buyers plus another $6500 for regional areas if they purchase a new dwelling under $600,000.

http://www.theage.com.au/victoria/home-bonus-axing-to-hit-sales-20120501-1xx9u.html#ixzz1th8bMLEF

More jobs go, more Austerity by govt.

http://www.theage.com.au/business/optus-to-slash-750-jobs-in-revamp-20120502-1xxzf.html

http://www.theage.com.au/opinion/politics/baillieu-gambles-with-a-surplus-at-all-costs-20120501-1xwlm.html

New Aussie House price blog, one for bears and one for bulls%$#.

http://bearz.voot.com.au/

#108 Smartalox on 05.02.12 at 3:39 am

@investx,

I watched that piece on the national tonight. Boy, that Jim Stanford is an idiot, calling on the Government to raise the limit for CMHC. Amanda Lang’s eyes almost popped out.

No Jim, limiting capping CMHC won’t lead to sub prime lending, it is precisely what will stop it. Instead of passing risk onto taxpayers, it should be up to private companies to accurately assess risk, and price it accordingly.

I guess that they need a token fool to make the others look good, but he’s bordering on embarrassment.

#109 Tim on 05.02.12 at 3:57 am

Is it different here in Montreal?

#110 Aussie Roy on 05.02.12 at 5:31 am

Well worth watching

FRONTLINE tells the inside story of the global financial crisis.

http://www.pbs.org/wgbh/pages/frontline/money-power-wall-street/

#111 The Gospel of Garth on 05.02.12 at 5:43 am

#84 Island Living

“Wow…watching The Bottom Line on The National. Garth they must be reading your blog.”

Of course they are! The lone voice of reason in the financial wasteland of Canada is getting louder by the day. Herrs Carney, Flaherty and Harper are well aware of this blog and are nervously sweating as the voice of the bearded mystic oracle, former distinguished minister of national revenues gets closer and closer to the magic moment of, “I told you so Canada!”

#112 Jim Lahey, Sunnyvale Trailer Park Supervisor on 05.02.12 at 5:51 am

FURST!!!!!

Your sense of humour cracks me up! I would like to invite you well in advance to the SASTPGFBDCParty (it is the second annual, hence the S to start the acronym). You can start the festivities with a loud and prolonged, “FUUUUUUUUUURRRRSSSSSSSST”.

#113 Who is the Real Fool? on 05.02.12 at 5:59 am

With so little skin in the game (think the 0-40 crowd, the 5/35ers)who is the real fool? What does the no equity crowd have to lose? They have to live somewhere…Now that CHMC is no longer backstopping the fools (and hence transferring foolship to the Canadian taxpayer)who will the final fool be?

#114 Condo Zombies Will Soon Stalk the Land on 05.02.12 at 6:03 am

#82 Charles

Make sure you are armed and ready in your lovely oasis of rural tranquility when the condo zombies come a knocking…:)

#115 bigrider on 05.02.12 at 6:26 am

“If Mr Lanb were selling a stock ,mutual fund or any other regulated fnancial asset, this ad would be the end of him”-Garth.

Finally Garth, some acknowledgement on the different regulatory framework, higher standards and greater scrutiny required on the financial asset sales side over RE sales.

Why do you think that is ?

RE investors beware. This is the wild west of investing. — Garth

#116 Crystal Ball Gazer on 05.02.12 at 6:30 am

I think the bearded mystic oracle who runs this blog must have read Jeff Rubin’s book, Why Your World is About to Get a Whole Lot Smaller when he said that one day McMansions will not have a market. Rubin argues that with oil becoming prohibitively expensive in the future, the current model of global trade will be chucked out the window for localized trade and agriculture. The current McMansions in the burbs will be ploughed over and converted to farmland once again. A call to all Unionvillers and Markhamites, get out your vegetable seeds and gardening hoes, the times they will be a changing!

Actually I read my own book, 2015: After the Boom, published in 1995. — Garth

#117 Crystal Ball Gazer on 05.02.12 at 6:33 am

#112 Tim

Yes Tim Montreal is an island of independence from the global forces that are swirling the earth and the massive credit bubble that has been generated in Canada. You lucky Montrealers!

#118 bigrider on 05.02.12 at 6:35 am

#4 GTA Girl

Next time you see said girl at the salon ask her how much she has “made’ on her condo.

Then tell her she has lost 4 times that amount if she buys house in Leaside.

She won’t get it but I know you do.

People like her constantly fail to see the fallacy in their thinking. Somehow a 100k gain in a condo makes them prepared to buy a home which has appreciated by 500k over same period as condo.

Stupid f-in people.

And the Lambs of the world ( should I say wolves) prey on that stupidity.

#119 bigrider on 05.02.12 at 6:42 am

#3 Devore.

There ARE laws against this type of investment advice in the financial asset world. A financial advisor who dared to put something like this out would be immediately no more.

In addition, leverage in the financial asset world is strictly scrutinized and must be approved by dealers and be monitored as to suitability on a regular basis between, investor advisor and his dealer. Takes a long time for final implementation.

In the RE world, leverage is handed out like a free cup of coffee to anyone who wants it.

Double standard makes me f-in sick !

#120 The real Kip on 05.02.12 at 7:08 am

“Brad Lamb, the baldy, Rolls Royce Phantom-driving, HGTV-starring, imperious urban legend”

I work on a a condo across the street from Brad J Lamb’s office on Kong St. I see that Rolls every day except in winter when he drives the beater (Mercedes gull wing) but I thought the Rolls was a Ghost EWB? I saw one at the auto show but it had no price. EWB is extended wheel base.

The man is a god and even you must give him credit Garth. From a straight business perspective, he’s made it big!

#121 John on 05.02.12 at 7:15 am

99% wrote:

“They end up staying in a sexless marriage for 20-30 years because of housing.”

——————

That’s the deal with a depolarized society. Front to back. This is the first comment that refers to what goes on inside these “homes”. It’s the tip of the iceberg.

This is exactly why people don’t notice what’s happening around them. They’ve given up on what’s going on inside them.

Healthy decisions can’t arise out of that kind of system.

#122 Andrew Norman on 05.02.12 at 7:19 am

The industry pushes ROI, but that game is over.

The next 5-10 years or more will be about wealth preservation.

Stock markets keep going up as more bad news piles up and the Fed keeps pumping out cash.

http://DELETED

They know if the markets tank, Obama will lose.

Canadian real estate remains insane while oil and gold tax revenues sent to Ottawa keep big government working – for how much longer?

Don’t come here to promote your own site. — Garth

#123 Uki on 05.02.12 at 7:36 am

#116 Who is the Real Fool?

You are so right.
OTOH – think about “the no equity crowd”‘s quality of life when SHTF.
OTOOH – most of them come from poor countries anyway.
Excellent slave material.

#124 Shane on 05.02.12 at 7:41 am

Garth, realistically when would you expect a 20% correction in the GTA.. 2014-2015?

Shane

I’ll give you several days notice. Like The Weather Channel. — Garth

#125 fancy_pants on 05.02.12 at 8:03 am

how long before Lamb has a set of nuts hanging from the hitch of his car? A good argument to buy a Ram.

#126 TurnerNation on 05.02.12 at 8:15 am

____ in May and go ____?

“Globe says this may not be the May to sell out at TSX
Wednesday May 02 2012 – In the News

The Globe and Mail reports in its Wednesday edition that analysts say the old saw about “sell in May and go away” is likely to be bad advice this year, thanks to the strengthening U.S. economy and upcoming presidential election. The Globe’s Simon Avery writes that as a rule, May through October has been the hardest half of the year to make money in the stock market. During the past 20 years, the S&P/TSX composite index has gone up 15 times between November and April, compared with just 13 times between May and October. Similarly, the S&P 500 index has gained ground in 16 of the past 20 November-to-April periods, compared with just 12 times during the rest of the year. In Canada, an investor who began with $10,000 and employed the sell-in-May strategy for members of the TSX composite index beginning in 1977 would have seen a gain of more than $176,000 up to the end of 2010. However, a contrarian who was invested in only the other six months of each year would have registered a loss of almost $3,700. Whatever accounts for the pattern, some money managers note the trend may be shifting as traders try to pre-empt it, selling in April and buying back into the market late in summer.
© 2012 Canjex Publishing Ltd.”

Agreed. — Garth

#127 fancy_pants on 05.02.12 at 8:19 am

#89 Jane on 05.02.12 at 12:00 am

The FASTGFBDCParty is a gathering near the land of misfit toys where blog doggers join to celebrate the wonders of Canadian Real Estate and reflect on the greatness of political greats who were pivitol in the development of THE BUBBLE.

It is also a time to pat the one and only GT on the back and share a drink. I usually saddle up Ollie as my method of transportation to get to the party. Mr. Lahey is an inviting fellow and my fine feathered pet is well cared for during the festivities.

Hope to see you there next Xmas.

#128 Furst on 05.02.12 at 8:54 am

#115 Jim Lahey, Sunnyvale Trailer Park Supervisor on 05.02.12 at 5:51 am
_____________________________________________
It’d be my pleasure to be the guest of honor to kick off the festivities at SASTPGFBDC. No charge for my esteemed presence because I’m in a giving mood.

#129 Nonno Nicola on 05.02.12 at 9:02 am

Hiya Bigga Rider. I just wanna saya dat you got Nonno Nicola in alota troubla wid Nonna Nicola. She yella at me for a weeka because I was so a mean to you Bigga Rider. She tella me I gotta give you an apologia or she no letta Nonno back in da bedarooma (she no your typical Nonna, she go to da gyma and look like Sophia Loren). Anywaya, I a sorry Bigga Rider for being so a meana to youa. I gonna be a nice Nonno to youa in da futura. Please forgiva me a Bigga Rider. I no do it again. One last commento on da real estata, you know a lotta of your paesani, they maka a lotta moneta on da real estate over da years, including me Nonno Nicola. I even taka some a da moneta off da tavolo in da last couple a years like dat mangia a cake who writa dis blogga saya to do. Dat is it Bigga Rider. I hopa I can getta backa in da good booka of my cara moglia!

#130 disciple on 05.02.12 at 9:03 am

#53 frozen trumpet… The gov’t deception is a lot more twisted than you may realize; for example, the fake politics of Calgary. The Canadian Wildrose political campaign is just as fictitious as the Australian Green Party. As it turns out, Danielle Smith is just an actor, who you may know as Katie Holmes. What is even more shocking is that this same person plays the role of Kate Middleton!

http://xdisciple.blogspot.ca/2012/05/wildrose-danielle-smith-katie-holmes.html

#131 Crystal Ball Gazer on 05.02.12 at 9:13 am

“Actually I read my own book, 2015: After the Boom, published in 1995. — Garth”

I knew that Rubin had to have stolen his idea from the bearded mystic oracle that runs this blog!

I said nothing of that. Instead I referenced ideas on the future of suburbs which were made public 17 years ago. — Garth

#132 The real Kip on 05.02.12 at 9:28 am

I looked up Brad J. Lamb on Wikipedia, an interesting guy to say the least. I often wondered why he stuck strictly to selling condos and it appears he shunned subdivision development due to ecological and social effects.

Interesting, a realtor with morals.

In any event, according to Wikipedia, his office at the height of the boom years on 2007 sold 700-million dollars in sales. At 5% commission that equals success on any scale.

Agreed. I respect his success and entrepreneurship. — Garth

#133 eaglebay - Parksville on 05.02.12 at 9:42 am

#64 The American on 05.01.12 at 10:50 pm

They are mad and they won’t take it anymore.
They are rioting in downtown Seattle.

#134 Jim Lahey, Sunnyvale Trailer Park Supervisor on 05.02.12 at 9:43 am

#131 Furst

“It’d be my pleasure to be the guest of honor to kick off the festivities at SASTPGFBDC. No charge for my esteemed presence because I’m in a giving mood.’

Well a hearty east coast thank you Furst. We are starting to feel the excitement even though we are many months away from the SASTPGFBDCParty. Ricky and the gang are so much more civilized after rubbing shoulders with the many blog dogs who attended and of course the beared mystic oracle who runs this blog really impressed them. Ricky now understands why the gold standard will never be implemented again and Bubbles got a real kick out of hearing the word real estate BUBBLE being bantered around so much. His classic line was (with his big eyes in his glasses look), ” I never knew my name was so popular with a group of people”

#135 Mike on 05.02.12 at 10:01 am

The sad thing is that the general public are sheep and still have zero idea that the tides are finally starting to shift across Canada. I’ve yet to meet a person over the last couple months whose eyes didn’t nearly pop out when I told them about Kelowna/Vic/Van. Saskatchewan will be late to the party – they always are. Then one day (at least a yr down the road) the grasshoppers will open their eyes and ask “why would we pay $300k for a dump house here when we can get a really nice one for $50k less next door?”

Another example: I feel sorry for the friend of friend who (with help from her parents) just bought a $425k <1000sqft dump in Calgary. To own it she HAS to have a roommate (my friend), and she'll most likely rent out the basement suite. And in the end, she'll still be paying far more than her 2 tenants and will weep as that shack's value erodes to $300k or less.

It amazes me that people generally do much more research when buying a car then when buying a home.

#136 bigrider on 05.02.12 at 10:02 am

Nonno Nicola , I never perceived you as being mean to me at all. Not sure where that came from. Anyway, good luck with tu moglia.

An update on the RE101-gottohumpahoma viral pathogen I spoke of yesterday.

Brad Lamb is a carrier. One of the first to spread the infection.

Stay away from him.

#137 Toronto_CA on 05.02.12 at 10:08 am

http://www.thestar.com/business/article/1171380–toronto-s-beach-waterfront-home-lists-for-record-8-million?bn=1

Good lord…

#138 Bobby on 05.02.12 at 10:11 am

I love all of these financial gurus, whether it be real estate or finances.
Did anyone see the weekend National Post? Story of a middle aged couple who borrowed $250k+ to invest, at the advice of their financial adviser. Sadly it was in high fee, low return funds that probably only benefitted the adviser. Now a year later, they are wiser and $110k poorer.
When I hear of returns of 10% plus, I just chuckle and ask why they are telling me if it is so good.
They are left scratching their heads!

#139 Dividend Yield Investor on 05.02.12 at 10:19 am

High returns for Canadian condo’s or RE in general.

Remember this: Past performance is no guarantee of future results!!!

Dividend Man
Atlanta GA

#140 truth hammer on 05.02.12 at 10:24 am

so….dr.sherry is trying to blow smoke up my arse by rejigging rolling averages…..and using dated referances …..for shame sherry……the math you’ve used would only fool a child…….you’ve looked for examples of why other countries have crashed and cited those examples as to why ‘it can never happen here’…..really sherry?…..really?

according to sherry……its all ‘bubble…we don see no freakin bubble’ …..bwhahahahahahahaha….and this statement comes after she’s dumped her own digs. talking out of both sides of our mouth today are we sherry?

http://business.financialpost.com/2012/05/01/putting-torontos-housing-boom-in-perspective/

#141 The Thing in the Basement on 05.02.12 at 10:30 am

61 gmac – SOP as I recall – also your insurer will ask you
when you renew your policy. My broker wanted
confirmation I had paid off my mortgage.

#142 Mixed Bag on 05.02.12 at 10:43 am

#96 Mr Gadget on 05.02.12 at 12:22 am

Interesting comment in the Wikipedia article you linked to:

Despite decay of the public areas and gang violence, Pruitt–Igoe contained isolated pockets of relative well-being throughout its worst years. Apartments clustered around small, two-family landings with tenants working to maintain and clear their common areas were often relatively successful. When corridors were shared by 20 families and staircases by hundreds, public spaces immediately fell into disrepair.[17] When the number of residents per public space rose above a certain level, none would identify with these “no man’s land[s]” – places where it was “impossible to feel … to tell resident from intruder”.[17]

This reminds me of the people warehouses along Jane St.

A long-time resident in the area relayed the following background info: When the government (municipal? provincial?) was looking to build these buildings in whatever neighbourhood in Toronto, the residents of that neighbourhood vociferously rejected and protested such construction in their neighbourhood. Now in this part of North York were many immigrant families who perhaps didn’t understand what was happening, so they were the least squeaky wheel, and the construction was pushed through. This is the story that was relayed to me.

#143 The American on 05.02.12 at 10:48 am

At #136: eaglebay – Parksville, you’re right! It much reminds me of the riots in Vancouver when they lost to an American team, the Boston Bruins. Only, they were rioting over a stupid hockey game – not rights for workers, unfair treatment by the banks, etc. I’d say the cause for protests on one side is far more warranted than the other.

http://www.sportsnet.ca/hockey/2011/06/15/fans_streets/

#144 disciple on 05.02.12 at 10:54 am

Former BofC governor, Dodge, does not think there is any danger and that foreign ownership is to blame for TO/VAN.

http://www2.macleans.ca/2012/05/02/former-bank-of-canada-governor-david-dodge-disagrees-with-successor-mark-carney-on-debt-housing-bubble/

#145 bigrider on 05.02.12 at 10:57 am

Garth’s reply to Bigrider-“RE Investors beware. This is the wild west of investing”- in response to the regulatory framework differences between financial asset sales and RE sales.

I would add to the response that so long as people are making money, as they have been in RE past 10 years, there is very little to complain about, hence the lack of lawsuits and/or formal complaints from buyers/investors.

Now compare that to the financial advisors, where investment advisors are continually at risk of complaints from clients who have had poor results in the financial markets same past ten years, coupled with the fact that lawyers have made a profit center out of suing investment advisors( and coaching others on how to do it) on various issues from suitability to God knows what else, and hence the ever evolving compliance and more onerus regulatory framework.

I sit and wait in gleeful hope, in the case of a possible RE meltdown, that similar complaints will arise from purchasers of condos and various other RE ,that they find reason to complain, formally, over unsuitable leverage loans and ‘poor investment advice’ from the likes of Brad Lamb et all . Ads like Garth posted today, should solidify cases for restitution, in a court of law.

Looks like only industry growing in Canada over coming years will be the legal industry.

#146 jess on 05.02.12 at 11:01 am

Death by words or math

Regarding that cbc housing panel

One of the panelists , the expert 30 year bubble watcher , used the air coming out of a tire similie and prefered not to use the word bubble since that word scares people.

Using her own personal time frames
She had bought at the top in 1989 a 1920’s bungalow, 75k sold it 4 years later for 300k and spent the 300k in Oakville and then had 10 years of negative equity. The present valuation close to a 1m. and had attempted to sell since these valuations are ridiculous!
—————-
Ridiculous isn’t a bubble?

#147 fancy_pants on 05.02.12 at 11:08 am

#137 Jim Lahey, Sunnyvale Trailer Park Supervisor on

Given you are the park supervisor may I make a recommendation that we invite the TO pencil top this year and serve lambchops as the main course? Appropriate dish for one high on self-indulgence. thank you for the consideration.

I may buy a set of nuts for Ollie to wear this year. If so, I request VIP parking for the big bird. thanks

ps. if you would be so kind… no turkey again this year, it makes Ollie nervous.

#148 gpc on 05.02.12 at 11:21 am

Market Bull,

Have you been taking blogging lessons from the EDMONTON REAL ESTATE BLOG HOST, Sheldon?

Wait, Sheldon….? Sarah….?

#149 vreaa on 05.02.12 at 11:32 am

Unrealistic Expectations in Vancouver –
“Robson is like Rodeo Drive, it’s like Park Avenue” (But 20 Stores Sit Vacant)

http://wp.me/pcq1o-44f

#150 bigrider on 05.02.12 at 11:43 am

Flaherty and Carney working hard to find a cure for the viral pathogen , RE101-gottohumpahoma virus.

So far, various inocculations such as ‘talking the market down’ “warnings of too much indebtedness among Cdns”
etc have proven ineffective.

Higher interest rates would probably work but ,unfortunately ,also probably kill the host body.

Garth’s sage homeopathic advice totally ineffective but valient try.

#151 Makavelli on 05.02.12 at 11:43 am

When housing corrects, that means the banks make less. How are preferred shares not at risk?

Because they are more like bonds, whose dividends are fixed and do not reflect earnings. — Garth

#152 Canada's housing crash under way on 05.02.12 at 11:44 am

Smartalox on 05.02.12 at 3:39 am
No Jim, limiting capping CMHC won’t lead to sub prime lending, it is precisely what will stop it. Instead of passing risk onto taxpayers, it should be up to private companies to accurately assess risk, and price it accordingly.
——————————————————————

No sub-prime? Canada has lent out 500 billion dollars worth of sub-prime. he ponzi is going to crash so hard it’s not even funny.

#153 bigrider on 05.02.12 at 11:57 am

Symptoms to look out for regarding a possible early infection of RE101- gottohumpahoma virus

1) insatiable need to go to open houses
2) MLS in your list of favorites, browser history.
3) excessive talk, chatter among friends ,associates on home value escalations
4) The need to jump Mike Holmes’ bones(applies only to females) or other housing TV personality

Signs that you are in full blown state of disease

1) Running through the streets, stewing on realtor signs, lining up at condo sales offices days on end without food or dignity.
2) Brick licking, roof rubbing, copper eavstrophes copulating.

End Stage of disease
1) Partaking in multiple bidding war situations
2) redeeming all funds from all rrsp’s and the like, begging and pleading for money from relatives, stealing if necessary.
3) Driving or walking the streets only at night, think movie “I am Legend ‘Will Smith’ crazed with envy at neighbors recent reno job.
4) attending RE purchase seminars for US property early Sunday mornings at various airport locals.
5) foaming at the mouth over Viking and Wolfe appliances

No cure so far.

#154 Arshes on 05.02.12 at 11:58 am

#61 Gmac on 05.01.12 at 10:42 pm Got an letter from Scotiabank today requesting proof of home insurance with them list as the primary beneficiary. Threatens to insure it on their own at my expense if I am not carrying any. Could be a sales pitch or could be them covering their behinds?
——————————————————-
Had a relative who had a neightbour who was from South East Asia i think (its where my family are from), who purchased a home but no home insurance. Of coursse the house caught fire (i didnt get the details as to why) of course with no home insurance they didnt have money to rebuild the house and didnt want to pay out of pocket for it, so they let it go into forclosure. This why the mortgage company wants you to have home insurance, if you cant pay to rebuild it chances are you’ll just walk away.

#155 Ottawa Gal on 05.02.12 at 11:59 am

I don’t post here very often, but I had an interesting conversation with a realtor in Florida… I want to buy a small condo there for my own use when I retire in a couple of yrs.

She told me to wait out the two yrs (prices are about a third of what they were a few years back) because things are still unraveling and prices could drop even further. She told me there is a backlog of bankruptcy/foreclosures which haven’t even come onto the market yet because the banks and others keep hoping the tide is turning but its not…

Why is she being honest with me??? Who knows!!!!

#156 Tony on 05.02.12 at 12:10 pm

What would likely happen is they would never rent out because one bedroom anything doesn’t rent out anywhere in Alberta. Revenue Canada would disallow the terminal losses after three years if the buyer could even hold out this long as prices keep falling and they never rent. Factor in oil dropping back to the 20 to 25 dollar U.S. a barrel area as the worldwide recession crushes commodity prices. All scenarios precludes foreclosure.

#157 Jim Lahey, Sunnyvale Trailer Park Supervisor on 05.02.12 at 12:25 pm

#151 Fancy Pants

“Given you are the park supervisor may I make a recommendation that we invite the TO pencil top this year and serve lambchops as the main course.”

What a marvelous idea Fancy Pants! Since Ronnie Paul and Markie Carney left the FASTPGFBDCParty before they even debated the bearded mystic oracle that has brought us all together on this blog, an invite will go out to Mr. Lamb and we will see if he is willing to debate the all knowing, all wise, reader of financial tea leaves, former parliamentarian and minister of national revenues and all round jolly good fellow, former right honourable Garth Turner, aka, el capitano of the blod dogs.

“I may buy a set of nuts for Ollie to wear this year. If so, I request VIP parking for the big bird. thanks.”

Request noted and done! Everyone loved Ollie, especially Bubbles. He has more than once expressed a desire to add an ostrich to his growing collection of exotic animals but he fears Steve French may view Ollie as breakfast. Don’t worry, Steve French will be safely spending the time in Halifax at a friend of Bubbles during the big bash.

“ps. if you would be so kind… no turkey again this year, it makes Ollie nervous”

What an oversight on my part!!! My sincerest apologies to you and Ollie. I will make sure we feast on Christmas ham during the get together.

#158 Coraline on 05.02.12 at 12:44 pm

Further to the CBC panel, I think that Patricia Croft came close to lying when she claimed that the Australian housing market only corrected by 10%. She was implying that Australia’s correction was over, which it isn’t, and that Canada’s would be similar. She also cut Amanda Lang off when Lang suggested that prices could drop by more than 10 to 15% in Vancouver and Toronto.

#159 The real Kip on 05.02.12 at 12:53 pm

When Mr. Lamb went to buy the Rolls the salesman asked if he would be taking the 0% financing. His reply, “no, that won’t be necessary.”

That salesman has been demoted to hood ornament polisher, another casualty of the overheated real estate market. Thanks a lot Brad!

#160 John Moeller on 05.02.12 at 12:55 pm

This is a question for Garth, you always recommend buying bank shares as opposed to buying real estate, why? I agree with you that Canadian real estate is in for a correction similar to the US, but would that not also mean that the banks are in for a plummet similar to that of the US. After all, they are they entities that will get stuck with all the bad debt when the kiddies default on their flipper condo…

The bad debt would belong to you, not the banks. And I do not advocate direct equity investing. — Garth

#161 FullofFear on 05.02.12 at 1:05 pm

There have been a few comments about preferred shares and risk (#28, #48). I’d like to suggest to you, Garth, that you do an article on them and how vulnerable the various types of preferred shares are to interest rate hikes.

The ground is well trodden already. Besides, the gradual ascent of rates over the next three years will be a digestible event for fixed income, but a turning point for real estate. Worry about that. Finally (as I keep saying, keep saying, keep saying) one buys preferreds for stability of price and yield over the long term. They are not equities. — Garth

#162 Bill Gable on 05.02.12 at 1:07 pm

Had to read this garbage ad twice to make sure I got that right. This guy Lamb is some kind of piece of work- this guy’s NUTS – certifiable.

RUN…screaming

#163 anon on 05.02.12 at 1:20 pm

Housing is driving most of our GDP now… looks like interest rates are not likely to change soon.
(source: http://www2.macleans.ca/2012/05/01/how-the-housing-market-is-pumping-up-our-gdp-numbers/)

Buy now and see if you can make a quick buck… if you can’t beat them, might as well join them.

#164 Ogopogo on 05.02.12 at 1:26 pm

A crew is outside right now doing the spring washing of all the external side of the windows in my condo. Now I can see the hills across the lake with crystal clarity. Ah, the beauty of being a renter… Read the condo board report from the last meeting with all the expenses to be divvied up among the owners, right down to the busted doorknob in the garage. Aw, shucks.

As I sit here and contemplate the coming calamity I can’t help but feel the slightest twinges of a smug renter’s smile curling up. Serenity, peace and knowing that my diversified portfolio is there to weather out the storm come what may.

The CBC Bottom Line piece is now hitting the blogosphere with a vengeance. The “crash” meme is spreading like a virus and I’m an enthusiastic propagator, with total immunity!

#165 john on 05.02.12 at 1:27 pm

Garth, can you put the blog on hiatus and ask your buddies in the msm to quit talking about the housing market for a couple weeks? Just about to list my downtown-ish condo next week and want to make sure I get top dollar for it. I’ll be renting after that but if you could just hold off until I get the place sold. Thanks in advance

#166 Victoria on 05.02.12 at 1:35 pm

Disciple,

Dodge probably owns a ton of RE.

#167 Ken on 05.02.12 at 1:40 pm

Did you notice that payments on the principle are counted twice in the Lamb ad?
Also can they really get $1450 for a 1 bedroom condo in downtown Calgary?

#168 Sebee on 05.02.12 at 1:58 pm

Regarding debt and credit, where is Canada in this symbolic example?

“If you think of the pig in the python, the U.S. is the pig at the end of the snake, Europe is the pig in the middle of the snake and Asia is about to be eaten by the snake,” Chanos said. “We are through most of our credit issues.”

#169 dd on 05.02.12 at 1:58 pm

Marginal cost of oil – 11% increase.

http://www.theglobeandmail.com/globe-investor/markets/markets-blog/oil-production-costs-are-going-up-up-up/article2420299/

#170 dd on 05.02.12 at 2:04 pm

Garth,

Where did you see that ad? I would like to file complaint with BBB.

Thanks,

#171 mac on 05.02.12 at 2:05 pm

I hope it sells out. The idiots get what they deserve. I find it hard to believe that the email writer even exists. I’m hoping, Garth, you made her up.

#172 };-) aka DA on 05.02.12 at 2:27 pm

If Mr. Lamb were selling a stock, mutual fund or any other regulated financial asset, this ad would be the end of him. He guarantees future capital gains. He fibs about cash flow. He ignores interest risk and market risk. And nowhere a word of caution on the use of 75% leverage to buy an asset a modest correction could destroy. – Garth Turner

Don’t be so sure of that. There are rules and regulations which govern real estate advertising. If anyone believes Mr. Lamb has breached any of those rules they should complain to their local real estate board and may trust that Mr. Lambs practices will be well scrutinized and if found to be in violation he will be appropriately reprimanded.

Not that I am defending Mr. Lamb’s advertising practices in any way, nor condemning them, but I would be most interested to see the footnotes to that advertisement which are indicated as being there somewhere by the “ * ” as located next to those claims that need qualification but the referenced claims appear to have been a cropped from the bottom portion of the ad in the picture posted on this blog. Interesting…

A half-truth told by a teller who purposely neglects key components of a claim against another but withholds them is not so far removed from the pot calling the kettle black. One should be careful when discrediting another if not avoid the practice all together.

};-)

This is the full extent of the ad’s disclaimer: “* Information is based on estimates which may vary at completion date.” So much for my half truth. Now apologize. — Garth

#173 getreal-tor on 05.02.12 at 2:41 pm

#140 Toronto_CA on 05.02.12 at 10:08 am

I’ve put in my bid for 8m + 1 dollar on the condition that it comes with a little giraffe and I win Lotto Max on Friday… Opulence, I has it.

http://www.youtube.com/watch?v=rkB9OT2XVvA

#174 Uxbridge Reader on 05.02.12 at 2:54 pm

#99 Carlyle

“I’m just waiting I know it’s coming. The “box” downtown will likely drop in lease price, and outside of the “box” I think you will see a calamitous drop in what people are willing to pay in rent for a home in the sky.”
____________________________________________

You exemplify the herd mentality in your posts, from a renters perspective. I applaud you for choosing to rent instead of purchasing a condo at these peak times, however your argument is flawed. You state that areas outside of “the box” will be hit harder than areas within “the box”. This is flawed, since the areas outside of “the box” that are still within walking distance of downtown offer many more amenities than areas within “the box”. Take for example, Queen and Broadview or Queen and Carlaw in the east end of Toronto. These are neighborhoods outside of your “box” but yet very accessible to downtown and yet also have better access to unique shops, community centres, the beaches and transit. The herds are flocking to the concrete jungle within the “box” failing to realize that just east of the DVP offers some of the better neighborhoods in Toronto with much less supply of Condo’s.

This could all change in time, but in the upcoming year/years, the uniqueness of the supply of low rise condo’s will not keep up with demand.

I’m not disputing that renting is the right idea at this time, only disputing that there are areas outside the “box” that may not be hit as hard as within the “box” , due simply to supply.

Keep your head up high!

#175 cramar on 05.02.12 at 2:55 pm

127 Shane on 05.02.12 at 7:41 am
Garth, realistically when would you expect a 20% correction in the GTA.. 2014-2015?

Shane

I’ll give you several days notice. Like The Weather Channel. — Garth

———————-

With several days notice, are you then guaranteeing you will be just as accurate? (Accurate weather several days out is an oxymoron.)

This might be one of your finest commentaries, but I have to disagree with the idea that buying bank preferred shares for a 5% return is of little risk (let alone “no risk” as you wrote). Preferred shares can easy trade over a +/- 20%-30% range over the years. For example, Royal Bank preferreds are around $56 now, but tradied below $30 in early 2008. If someone buys $100,000 of preferred and collects 5% over the years, there is no guarantee that they will get $100,000 back when they sell in future. Usually everyone will eventually sell to meet some financial need. You might get $120,000 back or you might get $80,000 depending what the market is doing years from now. And don’t forget to subtract inflation over time. To believe that stocks always go up over time is the same fallacy that real estate always goes up over time. The ideal situation is that the preferreds will be worth more than the inflated capital you started with.

Such fear is amazing to behold. In 2008 everything went down. But if you had an asset paying you a guaranteed 5% yield and you did not sell (why would you in a global financial crisis?) then this was an excellent place to have capital. Remember, most preferreds (like bonds) have a payout value. Obviously it’s time for another lesson, as so many confuse preferreds with equities. — Garth

#176 pop on 05.02.12 at 3:06 pm

Vancouver Stats REBVG.org

property sales in Greater Vancouver reached 2,799 on the Multiple Listing Service® (MLS®) in April 2012. This represents a 13.2 per cent decline from last year

At 16,538, the total number of homes listed for sale on the region’s MLS® increased 8.5 per cent in April compared to last month and increased 16 per cent from this time last year.

#177 Makavelli on 05.02.12 at 3:09 pm

http://www.theprovince.com/touch/business/story.html?id=6549702

Does this affect REITs?

No. — Garth

#178 and so it begins.. on 05.02.12 at 3:12 pm

Vancouver

Detached home sales decline 19.7 %y/y
apartment sales decline 0.9 %y/y
townhomes sales decline 22.9 % y/y

Victoria prices are flat m/m

#179 Beach Girl on 05.02.12 at 3:14 pm

Hi, I am back. Seems like the boys are showing some testosterone. What is with this B.S. LOL.

Brokeback Westerman fighting with everyone, love that. Smoking Man is smoking man, where is Herbie? Love you all. Hitting the beach, everyone get Fucked and stay Fucked. A little girl told me that on the weekend. I took her to the dollar store. She was bothering Miss Daisy.

Favourite song from a goat, I think, thats’ his name. You fucked me over, or you were someone I don’t remember knowing. Having fun, see if this gets posted.

#180 jess on 05.02.12 at 3:17 pm

113 Aussie Roy

regarding that Frontline investigation….
How about those “frankenquants” and that derogatory term for F9er’s.

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

From
http://www.commondreams.org/views07/0113-20.htm

“Corporate morphing to escape public accountability has been going on for a long time. Note the coal corporations digging deep under residential streets in Pennsylvania and other neighboring states decades ago. As the homes began to cave in (this is called ‘subsidence’), the coal companies disappeared by collapsing themselves only to be succeeded by their next of (corporate) kin. Today, this corporate morphing is far more ranging and far larger in the economy, drawing trillions of dollars from pension funds and institutional investor firms which themselves are largely closed off from workers and small investors whose money they shuffle around. Corporate attorneys are super-experts in arranging ways for corporate capital to escape not just the tax laws of the U.S. but also the public regulatory frameworks of the Securities and Exchange Commission and other public “law and order” entities. ”

===============
Does that include Publish what you pay for extractive industries?
Canada’s Action Plan on Open Government
http://www.open.gc.ca/open-ouvert/ap-patb-eng.asp

#181 6'-5" Money Engineer on 05.02.12 at 3:36 pm

Last week Toronto Star had a large article on Lamb and his impressive achivements in business, both RE and Development. The author of the article mentioned that Lamb initially worked as an engineer but was bored with the filed of engineering. His math skills on profit calcs, however, seam to demonstrate his “money engineering” talent.

#182 Kick the Lamb on 05.02.12 at 3:39 pm

The Lame ass Lamb assumes condo fees for a 230K to be around 185/mnth. haahahha double that in 2 years from new and that would be your realistic condo fee. Most probably he has never lived in a condo himself.

Real estate agent speculators should be punished by law.

#183 Oceanside on 05.02.12 at 3:41 pm

Richmond activity in the last 7 days.

2,491 active listings (949 apartment units)

Last 7 days, 63 completed sales….

HOT MARKET !

#184 Lamb Ass.... on 05.02.12 at 3:44 pm

DELETED

#185 truth hammer on 05.02.12 at 3:50 pm

Garth..there are various term preferreds …short and long term ….some called back in two years or less…..some like ‘POW.PR.G’ with first premium call rights in 2017 with the final call in 2021 @ 5.6%. Looking at current rate speculation would you ‘prefer’ the 2021 or the shorter…say 2013 issue? IOW if rates ‘double’ as suggested by Patricia Croft in her ‘stress test your mortgage pmt’ analogy…..will not the easy money back off the fixed and move into equivalent paying treasury issues ergo bring the beta in prefs up and the per share values down as rates rise? you know…..the old…’supply and demand’ saw.

#186 zeeman1 on 05.02.12 at 3:57 pm

#133 Disciple.

Dude, PUUHHLLEEAAASSEE…

I mean, really?

#187 getreal-tor on 05.02.12 at 4:01 pm

#159 Ottawa Gal on 05.02.12 at 11:59 am

If you can find a good property near the water, and you are not dropping your life savings into it, then it could be a good time to explore it now. A lot of the foreclosures tend to be inland and isn’t the point of Florida to live near the water for retirement?

#188 };-) aka DA on 05.02.12 at 4:14 pm

This is the full extent of the ad’s disclaimer: “* Information is based on estimates which may vary at completion date.” So much for my half truth. Now apologize. — Garth

Included that disclaimer, I think, given reasonable consideration by a reasonable person would make all the difference in the world to the advertisements message and such “puffery” Mr. Lamb might be accused of if it were otherwise neglected.

That being said, I do apologize for feeling the need to point out in the blog comments rather than a personal email to you the omission of that part of Mr. Lambs ad. It was not my intent to discredit you so much as make the Blog Dawgs aware that the real estate profession doe endeavour to maintain some level of socially acceptable moral and ethical standard.

Again, mine is not meant to be an endorsement nor condemnation of Mr. Lambs advertising. I agree with you and too “respect his success and entrepreneurship”. He must be giving the public what they want or they would not patronize him.

#189 DonDWest on 05.02.12 at 4:43 pm

What truly irked me over the CBC panel is all the denial going around that this is a national problem – they argue that it’s only Toronto and Vancouver. Well, only Toronto and Vancouver is 25% of our population.

As for only Toronto and Vancouver? The average price for a house in Calgary is now 400,000 (almost double the peak of the US housing bubble) and Montreal is now in a condo bubble. I’ve seen fees for old condos in Montreal that cost almost the same as the rental rate for a bachelor pad. Emerging cities in Saskatchewan such as Regina and Saskatoon are in huge bubbles. Even slummy Winnipeg is starting to bubble. In the Halifax peninsula they’re now asking 300K for condos that cost 90K just 10 years ago, which is retarded because if you look hard enough you can get a 2000 sq. ft. old house in the burbs for 250k.

But it’s not a national bubble, no way, let’s blame it all on Vancouver and Toronto; so we can score votes with people from the outside who naturally resent the arrogance of Torontonians and Vancouverites.

#190 J.F. on 05.02.12 at 4:58 pm

Hi Garth Old Buddy,

Saw my BFF Mark the other day. Had to ask him where he got this fierce foundation that just speaks to the cameras. He asked me where I got my new hairpiece. Pshaw, he’s not the only one who noticed. I’ve had more than a few compliments lately. It’s absolutely amazing how a makeover can give you a renewed sense of confidence. Now we have the confidence to blame this whole impending crash on the irresponsible actions of the public. Tehe. They might even just buy it. Love. Kisses. You have always been the smart one Garth. Drinks?

#191 Nostradamus Le Mad Vlad on 05.02.12 at 5:07 pm


Women in Leather Dresses

Do you know that when a woman wears a leather dress, a man’s heart beats quicker, his throat gets dry, he gets weak in the knees and he thinks irrationally?

Ever wonder why?

It’s because she smells like a N e w T r u c k.
*
#95 Harlee — “Mark it : May 27 (that’s a Sunday).” — Holy sheepshit! Don’t we have to finish this GFC first? Who / what are his sauces?!

#104 Timing is Everything — “Bank of Canada head sees long-term commodity boom” — Is it ending or beginning? No one is quite sure.

#172 Sebee — Good post and question. Toss in a few wars, FFs and the like, it’s easy to understand that not many places have the basic ability to service debts – deficits anymore.

Canada Post lost a ton, the Royal Mail in the UK is in the same or worse shape, and the USPS loses US$25 mln. / day.

#95 Harlee may be right — we could all be outta here sooner than later!

#192 John on 05.02.12 at 5:11 pm

A Place for My Stuff, wrote:

“I will keep buying stuff and continue renting a roof…. until I can justify otherwise.”

————-

So you see, this is the “best takeaway” people are getting out of the “Commodity Super Cycle” fraud. In other words, there was no learning at all. What’s more, there’s no interest in knowing.

The real issue is irrelevant. Hint: It’s not about dodging the world central banker property scam. It’s a nice start, but it doesn’t touch the fundamentals. At all.

#193 Devore on 05.02.12 at 5:18 pm

Hmm, anyone notice CIBC has been going gangbusters redeeming reams of their preferred shares this year?

#194 GTA bubble H on 05.02.12 at 5:38 pm

# 180 pop

Victoria prices are also down

detached down 1%
Condo down 10%
townhomes down 20%

#195 Westernman on 05.02.12 at 5:40 pm

Beach Girl @ # 183,
Sickening, woman, just absolutely sickening…
A curse on all you A-holes who encouraged this horrible creature to make a return… may the fleas of a thousand camels infest your collective armpits…

#196 Carney's commodity supercycle on 05.02.12 at 5:52 pm

#104 Timing is Everything

Commodities look to have topped out last year.

http://i.imgur.com/aSNjA.png

#197 cramar on 05.02.12 at 5:54 pm

From #179

Such fear is amazing to behold. In 2008 everything went down. But if you had an asset paying you a guaranteed 5% yield and you did not sell (why would you in a global financial crisis?) then this was an excellent place to have capital. Remember, most preferreds (like bonds) have a payout value. Obviously it’s time for another lesson, as so many confuse preferreds with equities. — Garth

Hey, it is not fear by any stretch—it is just recognizing reality. You act like preferred shares never change in value! In this respect they are exactly like equities except they do not change as much! Personally, in a global financial crises where ALL asset classes are tanking, I’d rather be in cash! Then you can buy anything at deflated values when the time comes. But that is not my point. My point again was that some time you might have to sell due to unforeseen emergency (i.e. where do you think Canadians seeking expensive medical treatment outside of Canada get their funds?). If you are forced to sell assets in a global financial crises you loose. But if the “black swan” in your life doesn’t happen…wonderful! Preferred shares are great! Life and your investments are NEVER risk free. (Disclosure: bonds, preferreds, REIFs, equities, precious metals, Index Funds, ETFs, RE, etc.)

So don’t buy any. — Garth

#198 harden on 05.02.12 at 5:55 pm

But according to the REBGV, the Vancouver RE market remains BALANCED!!

http://www.vancouversun.com/business/Metro+Vancouver+housing+market+remains+balanced+despite+sharp+sales+drop+report/6554355/story.html

#199 Gord Stewart on 05.02.12 at 6:08 pm

It seems that when the crash comes, bank stocks would be a safe bet. CMHC has taken all the risk out of any defaults and the bank would be able to foreclose on these houses, a double win for them. Is this logic correct or am I missing something?

#200 Ballingsford on 05.02.12 at 6:18 pm

#68 Market Bull on 05.01.12 at 11:04 pm

Tick tock…tick tock… time waits for no bear…

It’s May, 2012, and still no crash.

How. Remarkably. Inaccurate.

Some people get all defensive about being wrong – So they invoke invective.

Childish…yes, I agree.
********************
Actually, it finally looks like the shit is about to hit the fan. Vancouver is in trouble. Activity for April is at it’s lowest in 10 years.

I swear I read the article in the Globe and Mail earlier today, but now it seems to have disappeared. Google searches aren’t coming up with anything either.

Does anyone remember reading that article earlier today?

#201 Realtors and mortgage broker's know the crash is here! on 05.02.12 at 6:21 pm

The end of the bubble is here and now. CHMC limit has not been increased which means the bubble can not increase. The downturn will look like a slope . It will start off slow but will pick up speed very fast as the house of cards falls apart as the layoffs mount and the spending stops. People who are maxed out looking to sell will not find a greater fool…much like 2009 when banks stopped lending. Imagine it’s even worse and more of a bubble

#202 Cory on 05.02.12 at 6:31 pm

#54J.I.M. on 05.01.12 at 10:30 pm
I just called my landlord. I’ve been living in a large 2 bedroom apartment here in Calgary for the last several years. . I said I want a rent reduction. He said OK!

==========

Is this an apt building or a speccers rental?? What area is this since we are looking at moving?! thx.

And yes, to #72, river levels are always high in the spring….getting there now. Almost all backyards on this stretch of river become flooded. They all were last year, including this 3MM+ house that’s been sitting for sale for well over a year.

http://www.realtor.ca/propertyDetails.aspx?propertyId=11572854&PidKey=-582625812

this whole backyard was underwater last spring…couldn’t even see the for sale sign anymore that’s how high it was!! ha.

But proves my point, lots of 1MM+ homes for sale in Rideau and Roxboro, not selling, yet people are going to spend minimum 3MM+ on a condo on the river across the street???? hard to believe.

#203 Ballingsford on 05.02.12 at 6:33 pm

I found the link that I was looking for in my previous post about the state that Vancouver’s housing is in. Garth’s predictions are now coming to fruition.

http://www.theglobeandmail.com/report-on-business/economy/housing/vancouver-housing-slows-to-a-crawl/article2420431/

#204 pablo on 05.02.12 at 6:46 pm

In contrast, just sticking the down payment money in bank preferred shares paying only 5% and claiming the dividend tax credit would give a better after-tax return. And no risk.- garth

Really; no risk with three of the big five; bmo cibc, and bns taking u.s. and cdn govt bail out funds to remain viable during the banking crisis. I’d call that one hell of a risk.

Then you’d be wrong. — Garth

#205 I'm stupid on 05.02.12 at 6:52 pm

#60 Canada’s housing crash under way on 05.01.12 at 10:38 pm

You mean to tell me I’m not stupid? lol

In reality the majority of people are not stupid. I think they lack common sense. I think that’s the difference between smart people and dumb people. If something is not logical it must be wrong. It’s that simple.

#206 nathan on 05.02.12 at 6:55 pm

He is including mortgage principle paid on the expense side of the equation as well (since he’s looking at the full mortgage payment, not just interest), so it does make sense to include it as part of the gain as well. (The two cancel out.) Not to say that his assumptions and conclusions aren’t ridiculous, which they are.

#207 Keith in Calgary on 05.02.12 at 6:57 pm

Re: The 8th and 10th condo ad……

I live here and know exactly where that is…..absolutely NO ONE WITH HALF A BRAIN will pay $1,450 a month to live there, or in “ANY” tiny one bedroom condo in Calgary. Especially when you can rent a sweet luxury one bedroom on or one block away from the river in Mission for $200-400 less per month.

Forget about the FRAUD in the ad suggesting that this building will go up in value 4% a year for 10 years in a row. If he was selling vehicles or a licensed investment fund for example, he’d be prosecuted by the government for misleading advertising and unethical business practices.

Man does the REIC need serious regulation, and now !!!!!

#208 nathan on 05.02.12 at 6:58 pm

Also, this is just misleading. As you know, preferred shares carry a great deal of interest rate risk, as well as some credit risk. I’m not commenting on their risk compared to real estate, but “no risk” is certainly not true:

“In contrast, just sticking the down payment money in bank preferred shares paying only 5% and claiming the dividend tax credit would give a better after-tax return. And no risk.”

Bank preferreds have zero credit risk. The interest rate risk is more than manageable in a world where we all know rates will not spike. But feel free not to buy them. — Garth

#209 Keith in Calgary on 05.02.12 at 7:00 pm

Forgot to add. His new development is about a block away from a huge bottle depot where all the street people line up every day to get cash for their recycling efforts.

#210 vic_guy on 05.02.12 at 7:19 pm

@ Ballingsford – 6:18 PM

“It was the lowest for April sales since 2001, and 16.9 per cent below the 10-year average.”

Vancouver housing slows to a crawl, says Globe and Mail : http://www.theglobeandmail.com/report-on-business/economy/housing/vancouver-housing-slows-to-a-crawl/article2420431/

BPOE$
I’m so confused, did the last plane from China get lost ? It sounds like GT is correct and you’re wrong ?
Where is the HAM ? Tons of inventory that could be snapped up it seems, maybe you should buy it ?

#211 vic_guy on 05.02.12 at 7:27 pm

And another interesting link.

“Is Ottawa about to burst the housing bubble?”

“According to data collected by the Canadian Real Estate Association, the ongoing housing boom is increasingly funded by mortgage debt that’s not coming from Canada’s highly regulated banks.

The act of pushing borrowers further out of the mainstream — it’s currently estimated that banks are rejecting as much as 20 per cent of the mortgage applications they receive because they’re no longer insurable by CMHC — is potentially troublesome.”

“The market effects of those disciplinary steps have been quick to register: mortgage re-financings are down 40 per cent since CMHC rules got tougher.”

http://money.ca.msn.com/investing/deirdre-mcmurdy/is-ottawa-about-to-burst-the-housing-bubble?page=1

#212 Nostradamus Le Mad Vlad on 05.02.12 at 7:34 pm


Bank of NY Mellon chief resigns, along with the 600+ resignations; Credit Card #’s Look for any unexplained charges; 9:35 clip Austerity bombs destroying west; EZone How bad is it? As Good As It Gets; Bank Loans Big vs. Small; Paul Krugman is good at telling fibs; Phoney Tony Blair Like Harper, dubya, Obomba, Sarkozy etc., he does his job well.
*
4:43 clip Ron Paul — FYI; Royal Society The obvious answer is for the entire world to become a republic. Royalty is no longer necessary; 2:46 clip Real anarchists? Big biz, lobbbyists and politicos; The US is running outta tourists. Possibly eliminating the TSA and DHS would be a good start to getting them back; Atheism – Religion Choose wisely; Bolivia and Argentina Something in common; Sonic Warfare against the homeless; Suicide? Junior Seau was a great defensive player in the NFL; Fig Newt Gingrich’s won’t run again.

#213 Slim Jim on 05.02.12 at 7:41 pm

#204 Ballingsford

Here is the article you were referring to.

http://www.theglobeandmail.com/report-on-business/economy/housing/vancouver-housing-slows-to-a-crawl/article2420431/

#214 45north on 05.02.12 at 7:50 pm

Ballingsford: Vancouver is in trouble. Activity for April is at it’s lowest in 10 years.

Does anyone remember reading that article earlier today?

Yatkowsky says that sales of single detached houses in Vancouver have dropped 19% year-over-year

http://www.yattermatters.com/2012/05/its-cold-outside-for-vancouver-real-estate/

Garth says the drop is 30%

Smoking Man says Toronto sales are up

#215 John G. Young on 05.02.12 at 7:56 pm

#183 Beach Girl on 05.02.12 at 3:14 pm

Welcome back, I always enjoy reading your posts.

OK Western”man”, I’m waiting for your hate-filled response — and I know you won’t — can’t — disappoint!

#216 Harlee on 05.02.12 at 7:56 pm

#195 Nostra..
Who cares about the GFC ? May 28 is my birthday, a day before the End of the World.
I don’t get to celebrate it ?? I’m so mad I’m going to Occupy something… (but what ?!)
Leather: okay…What then is the appeal to a woman of a man in a leather jacket then ? What does he smell like ? Years ago I had a Jamacian gal drooling all over me and my black leather jacket ,Mostly the jacket I think as I wasn’t as sexy back then as I am now. What’s up with that?
Speaking of “sauce”..is Beach Girl (#183) too early into her’s today ?

#217 Cory on 05.02.12 at 7:59 pm

wtf was wrong with my post?

Try using the send button. — Garth

#218 Westernman on 05.02.12 at 8:09 pm

John G. Young @ # 219,
Well, in ref. to you and Beach Girl I guess you sexually confused, bi-polar disorder, schizophrenics have to stick together…

#219 Herb on 05.02.12 at 8:09 pm

Bank bailout claim pure propaganda

Read all about it: http://www.torontosun.com/2012/05/01/bank-bailout-claim-pure-propaganda

Proof that The Sun really does shine out of Harper’s ass. (Pardon my French, Beach Girl, Soylent Green and our other ladies.)

#220 Harlee on 05.02.12 at 8:13 pm

Mea Culpa : I meant that the End of the World is a day BEFORE my Birthday….That’s why I don’t get to celebrate it.
Yes, that sounds better…

#221 John G. Young on 05.02.12 at 8:27 pm

#221 Westernman on 05.02.12 at 8:09 pm

Thanks sweetie, I knew you’d come through… although I have to tell you, that message was kind of lame… not up to the standards of your previous efforts IMHO.
So here’s the deal — I’m just leaving now to go to the Hot Docs documentary festival here in downtown Toronto — I have a 9:30 ticket to a doc about AIDS activism. Should be lots of “sexually confused, bipolar, schizophrenic” people there — I can’t wait! Sadly, however, I don’t imagine there will be any submoronic Western”men” there to really get things going by yelling about how faggots deserve to die etc. etc. etc.
So do me a favour: I won’t be back online until about 11:30 (or even later if I get lucky ;)), so that should give you lots of time to work up a real head of steam and shoot off one of your classic posts.
I can’t wait to see it — don’t disappoint!!

XOXO

#222 Crystal Ball Gazer on 05.02.12 at 8:29 pm

#157 Big Rider

Very funny Big Rider!

#223 disciple on 05.02.12 at 8:36 pm

#190 zeeman1… Yes, really. Deal with it in your own way. What will you do when I tell you that Peter Schiff is actually Paul Reubens (yes, pee-wee herman)…

#216 Nostra… You’re not going to believe who else Newt Gingrich plays…

#224 Daisy Mae on 05.02.12 at 9:00 pm

“Agreed. I respect his success and entrepreneurship. — Garth”

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

“If Mr. Lamb were selling a stock, mutual fund or any other regulated financial asset, this ad would be the end of him. He guarantees future capital gains. He fibs about cash flow. He ignores interest risk and market risk. And nowhere a word of caution on the use of 75% leverage to buy an asset a modest correction could destroy.”

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

Isn’t this contradictory? We ARE talking about the same Brad Lamb?

Did I say I admired his ethics? — Garth

#225 cramar on 05.02.12 at 9:05 pm

#209 I’m stupid on 05.02.12 at 6:52 pm
#60 Canada’s housing crash under way on 05.01.12 at 10:38 pm

You mean to tell me I’m not stupid? lol

In reality the majority of people are not stupid. I think they lack common sense. I think that’s the difference between smart people and dumb people. If something is not logical it must be wrong. It’s that simple.

——————-

Trouble with common sense is that it is not really that common! But just because something is not logical does not make it wrong. Example: Quantum Mechanics is not logical.

#226 Daisy Mae on 05.02.12 at 9:07 pm

Nosty, that’s a real ‘groaner’. LOL

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

Women in Leather Dresses
Do you know that when a woman wears a leather dress, a man’s heart beats quicker, his throat gets dry, he gets weak in the knees and he thinks irrationally?
Ever wonder why?
It’s because she smells like a N e w T r u c k.

#227 Carlyle on 05.02.12 at 9:29 pm

#178 Uxbridge Reader on 05.02.12 at 2:54 pm
#99 Carlyle

“I’m just waiting I know it’s coming. The “box” downtown will likely drop in lease price, and outside of the “box” I think you will see a calamitous drop in what people are willing to pay in rent for a home in the sky.”
____________________________________________

You exemplify the herd mentality in your posts, from a renters perspective. I applaud you for choosing to rent instead of purchasing a condo at these peak times, however your argument is flawed. You state that areas outside of “the box” will be hit harder than areas within “the box”. This is flawed, since the areas outside of “the box” that are still within walking distance of downtown offer many more amenities than areas within “the box”. Take for example, Queen and Broadview or Queen and Carlaw in the east end of Toronto. These are neighborhoods outside of your “box” but yet very accessible to downtown and yet also have better access to unique shops, community centres, the beaches and transit. The herds are flocking to the concrete jungle within the “box” failing to realize that just east of the DVP offers some of the better neighborhoods in Toronto with much less supply of Condo’s.

This could all change in time, but in the upcoming year/years, the uniqueness of the supply of low rise condo’s will not keep up with demand.

I’m not disputing that renting is the right idea at this time, only disputing that there are areas outside the “box” that may not be hit as hard as within the “box” , due simply to supply.

Keep your head up high!
————————————————

Oh I think all areas of the city will be hit hard. I do beleive though there will always be a slightly higher demand for rental units in “the box” (which really is a tiny area).

The beaches area you mention is another small area that will likely see higher than average prices … Lots of hipsters around there :p

I’m not saying there aren’t going to be big drops across the board … There are. Certain areas however will always demand higher rent (in comparison to others) due to location. I hope I’m wrong though and the glut of condos in “the box” drops their rental prices far lower than my wildest dreams.

I win in that scenario too. :D

#228 Canadian Watchdog on 05.02.12 at 9:33 pm

#223 Herb

I never read such utter garbage in my life. Seriously.

#229 TurnerNation on 05.02.12 at 10:03 pm

Well I punched out of ETF.TO while it was close to 19 this morning. Close enuff for me. See you all now on Track 5??

#230 disciple on 05.02.12 at 10:21 pm

#233 Turnernation… good move. Oil and gas sector in Canada is a dead man walking…

#231 jess on 05.02.12 at 10:35 pm

Reframing
Herb be happy we were all saved from what MIGHT have happened. ;^>

Here is a more concise report
http://www.fin.gc.ca/pub/report-rapport/2011-7/ceap-paec-2f-eng.asp

#232 Beach Girl on 05.02.12 at 11:46 pm

#219 John G. Young on 05.02.12 at 7:56 pm

#183 Beach Girl on 05.02.12 at 3:14 pm

Welcome back, I always enjoy reading your posts.

OK Western”man”, I’m waiting for your hate-filled response — and I know you won’t — can’t — disappoint!

____

I actually missed Brokeback Westernman. What spawned that creature? I am sure his mother is in hiding.

But, John G. Young, I am sure he has disappointed many, or he wouldn’t have such an attitude.

Daisy Mae, that was funny about the new car smell.

#233 Beach Girl on 05.02.12 at 11:58 pm

Harlee

Speaking of “sauce”..is Beach Girl (#183) too early into her’s today ?

____

Are you a biker wanna be? Or Brokeback’s sidekick. Oh, don’t buy a house now. If you ever could. Are you people employable or ever have been?

#234 John G. Young on 05.03.12 at 12:07 am

#228 Daisy Mae on 05.02.12 at 9:00 pm

“Isn’t this contradictory?

Did I say I admired his ethics? — Garth”

I admit I am also having trouble reconciling the two — do his success and entrepreneurship not derive from his (apparent lack of) ethics?

#235 Mr Buyer on 05.03.12 at 6:50 am

#233 TurnerNation on 05.02.12 at 10:03 pm
See you all now on Track 5??
……………………………………………………………………..
Unless there are two different trains I believe a train engineer pointed out that it should be platform 5 if I am not mistaken (good chance I am mistaken though)

#236 Spot The Speculator #84 – “I live in Vancouver and own a condo in the heart of downtown. Bought it for $515K and only seen a slight increase in value in two years. Quite depressing. Is it a stupid idea to buy another?” | Vancouver Real Estate An on 05.03.12 at 9:00 am

[…] “I live in Vancouver and own a condo in the heart of downtown. Bought it for $515K and only seen a slight increase in value in two years. Quite depressing… If what you say is true about a 30% reduction, I would indeed lose almost all the equity I have which is made up of my down payment and two years of mortgage payments. Is it a stupid idea to buy another property, maybe sub-500 sq ft for roughly $280K to rent out, with a 20% down payment and a locked in 3.29% 5-year fixed rate? With rate and market adjustments to come, if I am not borrowing 95% (though still 80% debt), am I in the same risk category? Or should I just wait until 2015 to snatch something up when prices are down?” – Sharon, as quoted by Garth Turner at greaterfool.ca 1 May 2012 […]

#237 long gold on 05.03.12 at 11:09 am

if you bought Gold at $1900 an ounce you still have one oz. of gold—smart people value their wealth in ounces, not funny money valuations.

I wont care when my gold ounce is valued at $7000 funny money dollars per oz. either. The weight scale is the barometer of wealth, thats something Garth doesnt understand yet.

I understand how much gas I can buy with money, which gold isn’t. — Garth

#238 long gold on 05.03.12 at 12:07 pm

I understand how much gas I can buy with money, which gold isn’t. — Garth

that same gas/oil that india/china is buying from iran…with GOLD!

gold is no longer just money, but it is emerging as a currency.
grams and ounces …get use to it

So move to Iran. Should be a riot. — Garth

#239 josh on 05.03.12 at 12:56 pm

This article should be labled, how to make a 5% return look like 282% return. First add leverage of 5:1. Then quote the 10 year return number so you get the power of exponents working in your favour. Then neglect to even mention maintenance or selling costs. What you’re left with is a similar (worse?) return than just buying a RET. And that’s before considering the time spent chasing down rent checks and getting a new tennant every year.