A little fear

I walked through a house yesterday in Victoria which came available for $2.4 million. “This is a signature property,” Bruce the all-knowing realtor (and one of the few who will still talk to me) said, as we wound our way across three stories, five bedrooms and multiple staircases. “The people who own this place just finished putting $500,000 into it.”

Easy to tell. On a perfect block in a secluded, leafy neighbourhood, behind stone walls, surrounded by towering, stately trees and mature gardens. Inside, gleaming floors, chiseled fireplaces, stone-and-granite bathrooms, formal principal rooms plus a massive designer kitchen with an Aga stove big enough to crawl in.

It was a mansion, pure and simple. Gorgeous, precious, irreplaceable in its 80-year-old grandeur. And unloved. A year on the market, no offers, now selling for half a million less than the original ask – below appraised, below assessment, below replacement.

There are only 85,000 people in the capital city of BC, with about 330,000 in total in the urban area. And yet almost 200 houses languish for sale between $1 million and $2 million. Every day new listings and price reductions pour in. In less than a year, high-end homes have lost up to 20% of their value, most of that in the last 100 days. It’s been a long time, Bruce says, since he’s seen this many properties come available.

“There are places for sale now I have never seen on the market, as people realize their real estate exposure has got to come down.” In the space of a few hours, he shows me the evidence – ten, million-plus homes, from impeccable relics to gleaming magazine-quality West Coast contemporary cubes replete with windows feasting on mountains and waves. Some are empty. Some staged and coldly unlived in. A few are occupied. All have been on the market between two months and more than a year.

The market turned here, seriously turned, about March. Last month 293 SFHs changed hands in the region, down 18.75% from June, and there’s now a 10-month supply of homes. The average price is $580,563, which is still $100,000 more than in Toronto, with 20 times the population. But while the real estate board says things are balanced, nobody believes it.

Not the manager of the city’s big-talk radio station, for example. Before we hit the air he described the anxiety that’s everywhere now, as the local economy stutters and people doubt the holy grail of Victoria wealth – their houses. Looks like the Boomers have stopped coming from Etobicoke and Edmonton, he says. After all, how can anyone afford to move here now and retire?

Worse, the kids are leaving. His words were reinforced this week by a report that record numbers of recent university grads are abandoning the Lower Mainland, driven out by a cost of living badly out of sync with opportunity.

Bruce says it’s a mystery to him where the bottom might be. “I saw it fall apart when mortgage rates soared to 18% he says,” recalling a time three decades in the past, “and it collapsed again four years ago when the stock market crashed. Then people just went crazy with the cheap rates. I guess it’s time to pay up.”

We walk out of a just-built glass-walled masterpiece shouldered against the bluest sea. It’s $1.9 million, and comes with an anxious listing realtor in the living room who can’t stop himself from pushing too hard. “There was a time when I showed clients houses with dishes in the sink and rooms without lights,” Bruce says, “because agents and owners knew they didn’t have to do anything to get an offer.

“Now every house is perfect. The lights are on and the dog’s packed up. It’s interesting what a little fear will do.”

Victoria has more of this in its future. People in houses they thought were tickets to financial security are learning fast about illiquidity. New offerings pour on weekly, triggering a wave of reductions, extending days-on-market and turning old listings stale. The only weapon anxious sellers have is price, clad in disappointment and, I sense, shock.

Tomorrow I’m in Calgary. This will be like time-traveling to Vancouver, or Victoria, circa 2010. I hear it’s different there.

162 comments ↓

#1 Astute Poverty on 08.23.12 at 3:06 am

I hope you go coast to coast. Newfoundland needs a little wake up call too.

#2 Y is HWY 2 only two lanes ??? on 08.23.12 at 3:07 am

It IS different hear!

….we are one hour ahead of Pacific time.

Fin

#3 Derek R on 08.23.12 at 3:10 am

It’s time for the GarthFAQ again. If you have read something in Garth’s posts that you don’t understand, take a look at the GarthFAQ. You may find an explanation in there. It also contains the answers to a few common questions, so you might want to read it before asking something that’s been answered many times before.

Instead of pasting it into the comments I have put it on the web this time, so please follow the link.

https://docs.google.com/document/pub?id=1EVlDhkf7qkUsihOM5HdNfECc6sahkF2iOn7G8vXqiL4

Cheers

#4 Jay Currie on 08.23.12 at 3:25 am

Likely on the Dog Walk Index…If I had known you were here I could have offered you a cup of coffee.

To get to the 2.4 m Victoria house in the first place you had to be good with money. And being good with money you could see that RE was not a good long term bet even a year ago. The problem being that you – and the people who are – in a 100 yards away sort of sense – your neighbours all think you are living in 2.4 m houses.

What the Victoria market is saying, loud and clear, is that no one is buying the 2.4 m story.

So, slowly, the smart money is reducing the asking prices. Across the street: ask 1.2, sold at or below 800 after two years on the market. Down the street, 2.2m is now 1.9 after 7 months and four showings. Lots pulled off the market to allow the market to “come back”.

The problem with a 1/2 acre lot in a leafy suburb is autumn. All the damned leaves fall off the Garry Oaks. Green turns to grey and the moss creeps up the north side of the RE signs.

And next year will be worse than this was.

#5 blase on 08.23.12 at 3:27 am

Posting 5 hours later than usual is really throwing me for a loop! Will be glad to have you back East soon.

#6 Harlee on 08.23.12 at 3:43 am

Future ghettos.
People with no money for retirement.
Future crashes. Stores closing up.
Gad, this place can get depressing.
Where’s what’s- his -name with the poems when you really need him ?

#7 Just Say No on 08.23.12 at 4:12 am

I really enjoyed the “A little fear” edition for it just nails it.

#8 Chaddywack on 08.23.12 at 4:25 am

Late night eh Garth?

Hope there’s no photos leaked to TMZ of your escapades ;)

#9 Canuck Abroad on 08.23.12 at 4:48 am

Garth will you be anywhere in Southern Ontario first week of September? Will you be posting a schedule of your roadshow?

#10 T.O. Bubble Boy on 08.23.12 at 5:09 am

“The people who own this place just finished putting $500,000 into it.”

I guess that the Realtor/Contractor myth of “you get back the dollars you put into renos” isn’t actually real? (since the price dropped $500k anyway)

Next they’ll tell us that Canada isn’t actually running out of land!

#11 mikef on 08.23.12 at 5:35 am

Do you have an itinerary of the cities you are visiting
Garth?

As for the picture I hear the male lions (hairy)
are much less agressive than the females (hairless)

Correct me if I’m wrong

#12 John Pogom on 08.23.12 at 6:54 am

Half of mortgage borrowers under 40 are underwater

http://money.cnn.com/2012/08/23/real_estate/underwater-mortgage-borrowers/index.html?iid=HP_LN

#13 Scotty on 08.23.12 at 7:07 am

Will there be a Calgary speaking engagement like the one in Van? If so, where?

#14 David McDonald on 08.23.12 at 7:08 am

Hi Garth,

People do take unnecessary risks but your photo can’t be real. Nobody would be that dumb.

Logically you are right that Vancouver’s problems will drift east but so far there is little sign. One small note however; my barber says prices in Ottawa have dipped 7% or so over the last year. Barbers are usually pretty well informed.

#15 Scalgary on 08.23.12 at 7:46 am

Garth,

Glad to hear that you will be in Calgary. May I know whether you are planning for a public meet?

By the way, i am happy about your Van speech which helped some visitors to this blog to understand thatyour advises are genuine (no sales pitch)…

Warm Regards…!

#16 █ ♣ █ RENTER - REDEMPTION on 08.23.12 at 7:48 am

Hey Derek #3

Thanks for Manual how to read G-Blog.

>>Orange Guy’s shorts – ING Bank’s high interest savings account.<<

I always suspected that Orange guy is ING. But i read G-Blog only 2 years. and i keep my money in ING!
I mean read it before but waited to see if his predictions make sense.

Now i am follower.

ING vs. Garth Diversified portfolio?

ING is cheaper – Garth's portfolio have high Maintenance Fees,
Hidden costs,
Transfer cost,
Equity transfer Cost,
Garth'Fee,
Handling Fee,
Saving Option Fee
911 Fee
etc etc. gee

ING figured it out : just put it there, and it grows..
( too bad they are selling that gig in Canada)

NOW Garth Show us some light :
HOW MUCH your WAY COST?
I am so poor, no money to waste…

#17 Dave on 08.23.12 at 7:53 am

Gotta love this graph for the USA
Is there anything similar for Canada or better yet Toronto.

Thanks Garth for all the GREAT info

http://www.crgraphs.com/search?updated-max=2011-10-05T17:45:00-07:00&max-results=1&start=2&by-date=false

.

#18 TT on 08.23.12 at 8:02 am

Thanks #3 Derek R for the GarthFAQ doc/link. This is very helpful for the newbies like my wife. I come here for the cure for almost two years now. Some days are better than others but don’t tell my wife I do have the same lust for RE as her. I am keeping it all inside and its killing me. I need to see the G in person. When is the next conference in TO?

#19 TurnerNation on 08.23.12 at 8:02 am

Ha, that crazy 1.865m semi (marked down to 1.815 now) made the Toronto rag mag. There’s no parking but crowded on-street parking. For 1.8m I’d want a heated, covered garage with a heated driveway (no shovelling).

This house faces the a** end of a hotel condo (the service entrance, garbage bins, delivery & parking garages).
And, not 50 paces to the east a new lo-rise condo construction is underway.

http://www.torontolife.com/daily/informer/gimme-shelter/2012/08/22/house-of-the-week-50-stewart-street/?utm_source=rss&utm_medium=rss&utm_campaign=house-of-the-week-50-stewart-street

In the Mop & Pail:

http://www.theglobeandmail.com/life/home-and-garden/real-estate/home-of-the-week-a-victorian-stands-its-ground-in-condo-land/article4482672/

One of the article’s comments reads:

“cfm51
10:04 PM on August 19, 2012

this property listed in July 08 at 649,900. British or not, even the queen wouldn’t try to grab 1.165M in 4 yrs notwithstanding the zinc bar – which indeed sounds inviting… but still! someone needs to lead our friend here to Garth Turner.”

#20 jerry on 08.23.12 at 8:09 am

Having saved my kids from buying a condo in Toronto, they are now being confronted with “bidding wars” on rents!

Is this also a real estate agent pumped scam?

#21 Can it be? on 08.23.12 at 8:11 am

Real estate the most sensitive subject… Most don’t want to talk about it. Realtors and speculators are oh so confident things are just plateauing. Not sure how a $300000 price drop is a plateau is their mind… But whatever. People are still spending like crazy… At least on amusement parks, expensive items of clothing, personal care (ie. nails). Lots of single income families with 3+ kids. More and more people in the financial industry getting laid off. Good bye private school… And hello wives potentially having to look for work. Life is drastically changing. Speculators driving BMWs asking for hand me downs for their children. Things that I couldn’t have imagined happening are taking place
On a daily basis. Interesting times indeed. Stay financially smart people and live within your means.

#22 Victor on 08.23.12 at 8:21 am

The borrowing binge: Consumer debt hits eight-year high

Despite repeated warnings, Canadians have returned to their borrowing ways, pushing consumer debt levels to a new record high.

A report released Thursday by TransUnion shows that the average Canadian’s non-mortgage debt reached $26,221 in the second quarter of 2012, up $192 from the previous quarter. The $26,221 amount is the highest per person debt level since the credit bureau started tracking the data in 2004.

The increase is noteworthy because it is the second consecutive quarter of accelerated growth in personal debt levels, when comparing both quarterly and year-over-year numbers. That is a reversal from the previous two years, when the growth rate was consistently decelerating. The increase in average debt was spread out across Canada, although Saskatchewan saw a slight dip on a quarterly basis and Alberta experienced decreased annual debt growth.

http://www.theglobeandmail.com/globe-investor/personal-finance/home-cents/the-borrowing-binge-consumer-debt-hits-eight-year-high/article4493866/

#23 Victor on 08.23.12 at 8:23 am

What’s the rush, first-time buyers? Now’s the time to rent

Working title for the next phase of the housing market: Revenge of the first-time buyer.

Rookie home buyers have been whip-sawed in recent years. They’ve been fed a line that renting is disastrous behaviour, and they’ve been witness to steep price increases that suggest they need to immediately buy a house, any house, before they’re priced out of the market. Last month, the federal government piled on with new rules that will result in higher mortgage payments for many first-time buyers.

But first-timers are about to get some leverage. Housing markets in a few cities are cooling, and some forecasters see national prices falling 10 to 25 per cent. Meantime, interest rates are expected to more or less remain at today’s fantastically low levels for a while longer.

http://www.theglobeandmail.com/globe-investor/personal-finance/mortgages/whats-the-rush-first-time-buyers-nows-the-time-to-rent/article4493774/

#24 JSS on 08.23.12 at 8:27 am

These writeups are coming past my bedtime. Hate getting up at 2 in the morning to read. Oh well, I need to go pee around that time anyway.

#25 Jim Lahey, Sunnyvale Trailer Park Supervisor on 08.23.12 at 8:37 am

#3 Derek R

Thanks for you efforts on the FAQ for this blog and of course for including the FASTPGFBDCParty. I can assure the readers of this blog that the SASTPGFBDCParty will be even better!

#26 The Dude on 08.23.12 at 8:39 am

Will you make a recording of your Vancouver Talk available for those who are interested?

#27 CrowdedElevatorfartz on 08.23.12 at 8:55 am

where oh where is BPOE when you need someone to flog…..or is that golf?

#28 Tom from Mississauga on 08.23.12 at 8:57 am

Quick question, if somebody signed up to buy a new house or condo how far in advance would they get financing? There’s one person I know that closes on a new condo in T.O. for November that hasn’t yet. They bought when there was still a 35 y’er around. What happens with the contract if they can’t close?

#29 Francis on 08.23.12 at 9:03 am

Once more I am reminded of the terrible almost criminal behaviour of F, the peckerettes and the GOBOC.
Even worse, their heads are now stuck in the sand while they are giving the impression they are asking themselves “Who dun it ?”

#30 Francis on 08.23.12 at 9:11 am

They will go down in history as the individuals that wrecked life for thousands of Canadian families. It beats me that their boss appears to be so cool about the fact that these individuals created the approaching Canadian financial tsunami.

#31 Van guy on 08.23.12 at 9:23 am

Garth,

Did you get to do a cruise through Richmond to see all the overbuilding in the area? They are building all property types at full steam. I drive to Richmond everyday and I think the builders have gone crazy. One project that I drive by and noticed is on the corner of Steveston and Shell rd. Townhomes owned by Muktiar Sian. A 20 unit development on the market for over 1 year. Last month there were 14 left. There are 5 on the MLS, but there are actually more available. Sian Development just built more on Williams rd. This guy is heavily exposed to the TH market and is about to go down:)

#32 Sebee on 08.23.12 at 9:28 am

A little fear Garth? How about wholelotta fear? 50% of mortgages in U.S. held by those under 40 are under water. WOW! In-flippin’-credible!

http://money.cnn.com/2012/08/23/real_estate/underwater-mortgage-borrowers/index.html?iid=HP_LN

#33 Jim on 08.23.12 at 9:28 am

I lived in Victoria for 5 years, during which time I had access to selected data about the local residents for a research project. I was shocked at how many house rich cash poor families occupied magnificent properties in Oak Bay, Fairfield and the like. It was obvious that many of them were highly vulnerable to inflation, since fixed incomes were common.

Victoria is an employment backwater. Apart from Tourism, Uvic, Healthcare and Government, there is nothing. A glance at salary statistics reveals that the Island pays far lower than Vancouver, which is itself lower than economic powerhouses like Thunder Bay. True, many retirees come in from places like Alberta, but the amount of construction has probably outpaced the influx. (Bear Mountain or whatever it is called being a case in point).

It will be enjoyable to see the snotty locals in that city get hosed as these unsustainable prices come back to earth. Beautiful city, stupid residents.

#34 Buy? Curious? on 08.23.12 at 9:35 am

Bahahaha! Vancouver, the place where the dirty hippies from the rest of Canada go to transform themselves into cynical hipsters! They better hope that Harper legalizes pot in the next few months or they’re all going to be dishwashers at the local all-you-can-eat Chinese buffet or order taker at a Tim Horton’s drive through. It will be the first major city to go bankrupt.

I’m lovin’ it!

http://www.youtube.com/watch?v=GFELbgNS3lQ

#35 young & foolish on 08.23.12 at 9:36 am

Well, they took a gamble that they could sell at a profit …. bad timing I suppose. Same as in every market. Remember the equity market sell-off just 4 short years ago? So, there will be new, lower prices for RE. People will get interested again …. another bunch, in another time.

In these asset deflationary times, buy only things that pay you to own them.

#36 Adam on 08.23.12 at 9:44 am

Also interested to see if you will do a speaking engagement here, almost everyone here thinks oil=different

#37 Canada Watchdog on 08.23.12 at 9:55 am

#27 Market Bull

“Ontario mortgage arrears have declined steadily for over 3 years.”

Looks like you need a job. Here’s one just posted:

Genworth Mortgage Default Management
https://genworth.apply2jobs.com/ProfExt/index.cfm?fuseaction=mExternal.showJob&CurrentPage=1&RID=14427

#38 CP on 08.23.12 at 10:10 am

http://ca.finance.yahoo.com/news/cibc-economist-says-continuing-housing-131409401.html

Soft landing ahoy! lol

#39 lawboy on 08.23.12 at 10:13 am

#20

Yes, rental ‘bidding wars’ were first reported by BRAD LAMB about 6 months ago. All you need to know…

#40 Dave on 08.23.12 at 10:14 am

This is worth a read

http://www.huffingtonpost.ca/2012/08/23/canada-debt-load-rise_n_1824089.html

.

#41 Dave on 08.23.12 at 10:15 am

This is worth a read

http://www.huffingtonpost.ca/2012/08/23/canada-debt-load-rise_n_1824089.html

.

.

#42 renters rule on 08.23.12 at 10:22 am

@#38

direct hit!

#43 Victoria on 08.23.12 at 10:24 am

I wonder what my smug ex RE agent thinks now. He was always saying just got a call from a German couple – they want a big house and are paying cash. He said this when we said we could not afford certain houses he showed us. It was probably his office calling. He always said point blank that Victoria is only for the rich and the western communities will be for everyone else. Ha ha ha !

#44 Gord In Vancouver on 08.23.12 at 10:30 am

This will be like time-traveling to Vancouver, or Victoria, circa 2010. I hear it’s different there.

…it’s definitely different in Vancouver now.

Greater Vancouver Food Bank spending just to get by

http://www.news1130.com/news/local/article/394522–greater-vancouver-food-bank-spending-just-to-get-by

#45 grantmi on 08.23.12 at 10:37 am

Benjamin Tal is at it again! Ice Cream, Cotton Candy and Ponies for all!!

A senior economist at one of Canada’s major banks says a widely anticipated downturn in the housing market may not be as deep or as long-lasting as some fear.

Benjamin Tal, deputy chief economist at CIBC World Markets (TSX:CM), says demographic forces over the next decade will limit the damage.

Tal writes that there will be fewer Canadians under the age of 25 and between the ages of 45 and 54, but those groups account for a small portion of home buyers.

But Tal says the group aged between 25 and 34 _ the age group that makes up the vast majority of first-time buyers _ will continue to grow, and he says growth in the housing market could be even stronger due to immigration.

Overall, the CIBC economist says the next decade will see an annual population growth of 0.9 per cent, in line with growth seen in the past decade — a period of strong demand for residential real-estate and a sharp jump in housing prices.

http://bit.ly/SrlrGu

#46 kim on 08.23.12 at 10:39 am

lawboy on 08.23.12 at 10:13 am #20

Yes, rental ‘bidding wars’ were first reported by BRAD LAMB about 6 months ago. All you need to know…
———————————————————-

No such thing in Toronto where thousands and thousands of houses , condos and apartments sit empty …..sometimes these sit empty for months. My friend rented what would cost 500K one bedroom plus den condo in DT Toronto for $1400 a month and the condo fees are $380 for nothing. Owner taking a huge bath on that one.

#47 Beagle on 08.23.12 at 10:50 am

#34 Jim “Victoria is an employment backwater. Apart from Tourism, Uvic, Healthcare and Government, there is nothing”

What about the tech industry?

#48 Penny Henny on 08.23.12 at 10:55 am

“A senior economist at one of Canada’s major banks says a widely anticipated downturn in the housing market may not be as deep or as long-lasting as some fear.”
http://business.financialpost.com/2012/08/23/demograghics-will-take-edge-off-housing-downturn-cibc/

So maybe the sky isn’t falling after all.

Why are more affordable houses equated with ‘the sky is falling’? — Garth

#49 grantmi on 08.23.12 at 11:05 am

#48 Beagle on 08.23.12 at 10:50 am

#34 Jim “Victoria is an employment backwater. Apart from Tourism, Uvic, Healthcare and Government, there is nothing”

What about the tech industry?

You mean this one!! http://bit.ly/PeIKjc

#50 Lostinthewilderness on 08.23.12 at 11:08 am

Spotted a new Audi A6 delivering Pizza this past week end in the GVRD, with sign attached to the roof and a magnetic door decal.
30 something ex realtor type at the wheel.Shape of things to come.Nothing like the smell of cheese and pepperoni mixed with leather!

#51 Cowtown Refugee on 08.23.12 at 11:18 am

If you think about it logically, low cost for shelter is a good thing. It allows us to keep more $$ in our pockets and be more competitive in world markets.

Low cost food would be good too, and low cost energy.

But the Greenie-weenies are hell bent on driving UP the cost of fuel and saying that is a good thing.

I think we should drive DOWN the tax breaks and donations that these multibillion $$$ American eco-corporations get and see how they like living on less.

It’s what they want us to do, why don’t they want to do it themselves?

#52 Form Man on 08.23.12 at 11:19 am

#49

Why are more affordable houses equated with ‘the sky is falling’ ? – Garth

spoke with a Kelowna realtor yesterday. He figures people are less interested in buying in the Okanagan because prices are too high………..perhaps the notion that a correction is needed in order to heal the market will begin to dawn on some………

same realtor also said that after a bit of activity a couple of months ago, the market is now ‘worse than dead’

#53 Alberta Guy on 08.23.12 at 11:19 am

#38 Genworth Mortgage Default Management

“Responsibilities: ·Manage Homeowner Assistance program team ensuring the use of creative/innovative solutions to obtain customer co-operation…”

sounds like the sky is the limit to get people to pay up…send in the arm-benders!

#54 Toronto_CA on 08.23.12 at 11:20 am

#49 Penny Henny on 08.23.12 at 10:55 am

That article points to an argument by one of Canada’s major banks (red flag as biased) saying that demographics for the next ten years will be similar to the demographics of the last ten years, like that is proof that the demand/supply of housing will be constant.

But most people believe that the house prices have been increased by cheap/easy credit. Wage growth will be less strong in the next ten years, not as strong or stronger, and that is what truly drives housing price increases (along with supply and demand, which in some markets supply is being built way faster than population increases will absorb them – see Toronto condos).

Time will tell, but I see interest rate hikes down the road and at record breaking ~70% homeownership levels, where is the demand for new housing coming from? Will we reach 75 or 80%? I think not.

#55 John on 08.23.12 at 11:32 am

John Pogom wrote:

“Half of mortgage borrowers under 40 are underwater

http://money.cnn.com/2012/08/23/real_estate/underwater-mortgage-borrowers/index.html?iid=HP_LN
———

Yes…and take a look at another aspect of unsustainability:

Class division.

In third world countries there are class wars. Why? Certain sectors of society have “access” to a game…others don’t.

Like in Canada. Under 40 are underwater? 50%? The under 20′s in the same system would be zero percent underwater…even at a 50% haircut on Canadian real estate ( assuming the over 40′s got to keep their dmographic geo-political casino chip “earnings”).

The keeping of the chips would require something other than a democracy…kind of like South America in the 1970′s.

Let’s think positively. The only way of winning is to erase the digital “paper” blown into “real assets” like housing.

….all those up and comers plus the under 40′s paying for the casino winners aint gonna play.

Today is August 23 2012. Look at what is happening on the streets of Chile today. Thousands of high school students with nothing to lose are on the streets.

Housing went up 100% in some areas…the kids are in the same boat as Canadian kids. Why? Poor wages for them make it about even…like being in highschool in North Vancouver and looking at what’s going on.

Add 10 years. It’s a certainty that this is going to have to be dealt with.

This is from today. People without loans or access to them, and no interest in the deal of the past. None.

And new cars all over the place…

http://www.cubadebate.cu/noticias/2012/08/23/estudiantes-chilenos-vuelven-a-las-calles-hoy/

#56 Penny Henny on 08.23.12 at 11:43 am

@55 Toronto_CA
-certain areas of Toronto proper have gone up too quick, they will linger at those levels
-some areas have yet to see any “craziness” in pricing, they will still slowly climb
-at end of the day, 416 houses (with a lawn) are not going to be hit
-this is a normal summer slow down, a repeat of last year, see you in April

#57 Sherri on 08.23.12 at 11:54 am

Garth is bang on about Victoria and so are the other posters. Usually around this time of the year all rentals are eaten up by returning University students. Seems most are likely staying with mom and pop and taking online courses – smart. Lots of rental properties, lots of houses for rent also. A couple years back you would be lucky to get a rental in James Bay, but now there are tons. In addition, local uni and colleges are scaling back on course offerings.

As for those snotty residents – years and years of parents and their children comfortable in government jobs. Nepotism runs rampant in Victoria.

I think back to all those people who said I should get into the market. They quoted realtors, bankers, parents, friends etc. Nope I am liquid and ready to move for opportunities. Seriously, I could save and build for less than I can buy. In the last 15 years, people have been forced to specialized, what about learning and doing things for yourself. It amazes me that in an age where more information is at our finger tips people are apprehensive to try on their own.

Oh well, at least the real estate talk has ceased to exist and I guess I am no longer considered a conspiracy theorist as I believed in the inevitable decline in real estate values. To all those that still believe this is only a slight correction follow these instructions closely.

Litmus testing.
Find a place outside your $$$ house.
Preferably away from glass.
Take a rock and throw it into the air directly above your head and see what happens.

#58 BigBear on 08.23.12 at 12:01 pm

My Victoria story…
1997: No longer feeling welcome (maudit anglais) in my home province, and wanting to golf year round… We packed our car and headed west.

The first 3 years were hell, the economy was where it is headed now. Empty stores, Fast Ferries and the NDP under Glen Clark. I struggled to get a foot in the door at the golf club, at work and in a decent apartment. We took on loads of credit card debt and I finally managed to luck into a decent home improvements sales gig in 2001. Then 9/11 happened and low interest rates arrived. In a word… Amazing. The debt fuelled cycle from 2002-2008 was as good a ride as they come. My earnings double every year peaking at 140K in 2008.

I purchased a semi for 172K in 2002 and sold it for 400K in 2007. Too bad I wasn’t reading your blog then (you mysteriously disappeared from the Black Press during those days) as I then took my HGTV loving wife on a trip up the Malahat where I spontaneously purchased a dream home on 2.5 acres in Shawnigan Lake. She got her dream and I joined Royal Colwood. A few months later, Lehman hit. The phones stopped ringing at the office (that was the warning sign) then F launched the Home Improvment Tax Credit which helped for one year. Then when it ended in early 2010… crickets, and to put a cherry on top, the HST was due to arrive 5 months later. We were done. I couldn’t afford to gamble at the golf club so I wasn’t invited to play with the boys any more. I walked. (too bad I paid my initiation up front) It was spring 2010, F introduced new mortgage rules, and C started hiking rates. It was a bad time to sell and it took us 9 months.

We lost about 60K and this was in 2010. I brought up MLS the other day and a bigger much nicer home on twice the acreage is at a ‘new price’ lower than our selling price from 2 years ago. I’m sure they’re hearing crickets at night and their realtor is hearing crickets during the open houses during the day.

Trunk slammers working for cash have put an end to honest tradesmen looking to keep their heads above water since. Ironic, as I was one of them from 1997-2000 when I was trying to fit in. What comes around goes around, and history repeats itself. But it’s different this time, houses are in outerspace above the stratosphere and it will be ugly. Sorry I’ll miss the dance.

We are in London now, where the 585K house you describe in Victoria goes for about 250K. But we’re renting instead. 2200 sq ft back split completely reno’d from top to bottom… price? $1200/mo! Same house in Victoria? $2200

Put a fork in her (Victoria) she’s done.

#59 sm_yyc on 08.23.12 at 12:08 pm

Please break the surprise around your venue for Calgary, Garth!

Private event tonight. Public slugfest soon. — Garth

#60 Old Man on 08.23.12 at 12:27 pm

I decided to look around at mls listings in my city, and was shocked, as some condos are almost at the same price levels as 1992 – what? I then did a search at different prices levels for residential, and too many red dots for a price spread between 250K and 500K, and had to adjust all to a spread of 20K just to see all those red dots fit in; have no idea what is going on, but am paying attention to it all in a city of 360,000.

#61 Babblemaster on 08.23.12 at 12:32 pm

A balanced story by the Globe and Mail.

http://www.theglobeandmail.com/report-on-business/economy/housing/housing-downturn-wont-be-as-deep-as-some-fear-cibc/article4494733/

No need to worry.

#62 zeeman1 on 08.23.12 at 12:35 pm

#16 renter redemption.

ING is currently paying out 1.3% on saving which means your loosing almost 2% a year due to inflation.

#63 Reddy on 08.23.12 at 12:36 pm

re: #14 David, i’m sure the photo has been edited.

However, I did see this type of scenario in Jasper when a (stupid) woman took a picture of two rutting elk from about 5 feet way. I’m surprised she’s still alive.

#64 Canada Watchdog on 08.23.12 at 12:40 pm

Chart: Households by Age of Maintainer and Tenure, Canada, 1971-2006 http://i49.tinypic.com/30l12lc.png

#65 truth hammer on 08.23.12 at 12:41 pm

#32 VG….Re#’s of units stickered as ‘sold’ in projects is almost always false these days. VG…what these builders do is an old trick they were taught in the temple …….there will be a project of 24 ( for ex) and to juice the greed response of the buyers and to create the artifice of need the builders and agent will put several sold stickers across the windows of a few noticeable or streetfront units. It’s a builders scam….don’t think there are any sold. People that get sucked in to this are always pissed that they fell for the oldest enticement scam in the sales trade…..bait and switch.

Richmond is awash in projects….sales numbers are bone dry……it’ll be a total bust for the ethnic builders who have borrowed at higher rates than from the one temple bank credit union that fronts for the pot growers in the valley who launder their cash through real estate. I hear the clan mafia’s first threaten the relatives back in Khalistan when the payments are late to avoid the dirty buisness getting into the news here. It’s why families here are crapping themselves with this downturn and male members there are sleeping on the roof inside the compounds with shotguns for protection.

There are no bankruptcy or default stats coming out of the temple bank in the valley that launders dirty money for the pot mafia in the fraser valley under the nose of Canadian regulators and police …..in Khalistan the debts are settled with confiscation of ancestral lands if available and blood if not.

Now heres a smart idea for Canadians to pick up on….fire the civil servants…void the union legacy costs and hire another bureaucracy at new rates. Damn fine idea……I hope it catches on.

http://www.profitconfidential.com/debt-crisis/fire-the-teachers-and-police-and-re-hire-them/?subid=OUTBRAIN

#66 charles on 08.23.12 at 12:43 pm

Metals breaking out!
http://www.youtube.com/watch?v=OiB-MG49spw&feature=related

#67 T.O. Bubble Boy on 08.23.12 at 12:56 pm

@ #19 TurnerNation

Here’s a competitor to your crazy $1.8M semi:
http://www.realtor.ca/PropertyDetails.aspx?PropertyID=12335467&PidKey=-540886954

$1.4M custom build, 17ft wide lot (attached).

Yes, it’s a more private neighbourhood etc., but pretty much the same style of highly-priced too-skinny condo-style “designer” house.

(this one will probably sell first though)

#68 Form Man on 08.23.12 at 1:00 pm

# 64 truthchallenged

it is illegal to put sold stickers on unsold units. developers that do this should be reported.

#69 Word on 08.23.12 at 1:00 pm

http://www.thestar.com/business/article/1245856–continuing-demand-will-cushion-home-price-decline-cibc-economist-says

Whats everyone think of this article?

#70 Toronto_CA on 08.23.12 at 1:06 pm

#57 Penny Henny on 08.23.12 at 11:43 am

I agree with you that single family houses with lawns in Rosedale may see much less decline, than say, a City Place condo in terms of value percentage decline.

Other than that, time will tell. A lot of negative stats (sales) are from July 2011 to July 2012, so this “normal summer slow down, same as last year” if sales are much lower than last year is simply untrue. It may be “same sales as 2009 or 2010″ but saying same as last year, only true if you mean sales from Spring to Summer 2011 declined the same as Spring to Summer 2012. Things are different though with new mortgage rules and a media shift / perception that a correction is in the works that didn’t exist last year–Vancouver’s correction is irrefutable and making headlines.

I guess we’ll see, none of us can know we are right until this all plays out. So far the bulls have beaten the bears in Toronto, no question.

#71 Victoria on 08.23.12 at 1:18 pm

Very interesting article on Why the Middle Class is Broke…

http://finance.yahoo.com/blogs/daily-ticker/middle-class-broke-pew-study-reveals-real-problem-155018682.html

#72 PoorgEoisie on 08.23.12 at 1:18 pm

Interesting, we have Ben Tal at cibc making millions to blow smoke up our arses and truth hammer still wants to bust the unions. Fire the police? I didn’t have you pegged as an anarchist, truthfully I think after after a couple of days with no cops you’d probably be willing to give them a raise.

#73 Sebee on 08.23.12 at 1:22 pm

A report released Thursday by TransUnion shows that the average Canadian’s non-mortgage debt reached $26,221 in the second quarter of 2012.

My wife and I owe not a penny to anyone. Fess up if you’re the one holding the $52,442 that represents us.
Want to thank you for your good work.

#74 Westernman on 08.23.12 at 1:23 pm

Big Bear @ # 59,
Perfect picture of the average financially illiterate Canadian… lose big bucks trying to impress with chipboard Mcmansions – huge mortgages don’t bother them one bit…
But should something go wrong at the SACRED GOLF CLUB utter terror sets in…
These kind of dumbass Canadians are going to have their financial asses handed to them on a platter in the coming years and I say it couldn’t happen to a more deserving bunch of pretentious scumbags… looks good on ya!

#75 Inglorious Investor on 08.23.12 at 1:30 pm

#49 Penny Henny on 08.23.12 at 10:55 am

“So maybe the sky isn’t falling after all.”

I like Benjamin Tal, but the highlights of his report as outlined in the article you linked to are far to easy to pick apart.

For one thing, his great hope is that the parents of the 20- and 30-somethings who are supposed to fuel growth in the housing market will give them the money they need to make a house purchase feasible. Admittedly, this is happening, but since when is inheritance on a mass scale a good plan for the economy?

Tal says they will work and make money. No… Really?! I’m shocked. The question is: will they have enough money? He acknowledges they are loaded with debt, and recent stats show debt growth is actually getting worse, not better.

Tal acknowledges that this is the first generation to not be better off then their parents. OK, first, let’s understand that this whole trend of being better off then your parents is a relatively recent phenomenon in human history. And second, usually, this kind of seismic shift is not just a blip in the road, but a major turning point. In one word: globalization.

What is implicit in the article is the assumption that young people will actually WANT to own houses in the future. IMO this is by no means assured. If energy costs remain relatively low, such that mobility becomes the norm through necessity in our increasingly interdependent world, a house on some sleepy street in Mississauga could become a liability, rather than an asset.

Plus, with the real cost of living continuing to rise, huge debts, and less job/income security, huge piles of savings will become rare once we exhaust the inheritances of the older generations. Cash flows will be constrained and more people will live hand-to-mouth. The huge expenses of home ownership may not be feasible for many.

Already in the US we are seeing very low velocity of money even though there is no shortage of liquidity in the system. They say it’s because the banks don’t want to lend. How about: the people can’t afford to borrow more? The point is: as some point cheap credit will no longer fuel consumption and housing purchases. And if rates rise due to currency fears, forget it.

The best way to ensure a healthy housing market is with a robust economy where real, per capita wealth is actually rising and is widely distributed. Up until now, we have been on the other side of that trend.

#76 Old Man on 08.23.12 at 1:34 pm

New stats from Willow were released today for USA, and 48% of all mortgage borrowers under age 40 are underwater. Could this scenerio ever come to Canada? Well it is different here – right? The grim reaper has his eye on Canada for another kick at the can, as he is hungry.

#77 Vancouver_Bear on 08.23.12 at 1:35 pm

#27Market Bull on 08.23.12 at 8:51 am

That’s not necessarily a good news, Mr. Realtor. Cause ppl a paying mortgages with credit cards, HELOCs and lines of credit – http://www.torontosun.com/2012/08/23/consumer-debt-load-highest-since-2004-transunion
And BC as usual is in “best” position when it comes to debt – “The latest data shows British Columbia as having the highest average debt at $37,879, while Quebec has the lowest at $18,580.

Alberta is not far behind its western neighbour with an average $33,564 debt”

At least in AB they pay some good money, in BC……you will be lucky to find $12/hour job.

#78 dradak1 on 08.23.12 at 1:37 pm

” #50 grantmi on 08.23.12 at 11:05 am

#48 Beagle on 08.23.12 at 10:50 am

#34 Jim “Victoria is an employment backwater. Apart from Tourism, Uvic, Healthcare and Government, there is nothing”

What about the tech industry?

You mean this one!! http://bit.ly/PeIKjc

LOVE IT!!!

BTW – that can be one of the guys that most likely I and people like me where forced to tutor and they got our jobs. :-(
Now – out of work and on top of that stupid government consider us as “discouraged” for looking for work (as such not counted as unemployed) – what is far away from truth.

#79 Tony Right on 08.23.12 at 1:37 pm

Reading Benjamin Tal’s newest proclamation, I am wondering if anyone knows how many people aged 25-49 already own a house? And, what is the average amount of money an immigrant brings into Canada?

#80 Skip Breakfast on 08.23.12 at 1:43 pm

Can someone tell me–I’m out of the country and have been for a while. Is word about the recent Vancouver price corrections getting out? I mean, outside of this blog? Because I keep trying to find mention of it elsewhere, like the Vancouver Sun, to get a sense of what people are thinking. I don’t see any mention of it at all! I know it’s unwise to trust the mainstream press in these matters–after all, they have a lot to gain from the real estate bubble staying inflated (i.e., advertising!). But seriously, I’m finding nothing. Any links to some really juicy reports on Vancouver RE that do NOT come from Greater Fool? Thanks for any help!

#81 Steven Rowlandson on 08.23.12 at 1:45 pm

I do hope the error regarding the canadian dollar at the simpatico home page is fixed otherwise cross border shopping is going to be expensive and gold and silver in canadian dollars might be worth selling.
A few ounces of gold could buy a house.

Finance

S&P/TSX 12,041.49 -77.50(-0.64%)
Dow Jones 13,053.16 -119.60(-0.91%)
CAD Dollar 0.0069 -0.0018(-0.18%)

#82 Old Man on 08.23.12 at 1:47 pm

Correction: not Willow, but Zillow – sorry!

#83 Steven Rowlandson on 08.23.12 at 1:57 pm

This can’t be right. I clicked on the canadian dollar quote and got this. I knew the crappy dollar is worthless fiat but it is something else to see it on the screen. There must be a mistake.

FXCAU-I $0.01 -$0.00

Add to your Portfolio
Add to Watchlist

Index today Price History

Canadian Dollar ($US) – FXCAU-I Last Trade: Aug 23, 2012 12:27 PM

Last: 0.007 Net Change: -0.002 % Change:
Open 52-Week High 1.025
High 0.007 52-Week Low 0.948
Low 0.007 Volume

#84 Snowboid on 08.23.12 at 2:02 pm

#53 Form Man on 08.23.12 at 11:19 am…

“…the market is now ‘worse than dead’…”

Have to agree, and although a few sellers are still in denial holding their asking prices steady, there are an increasing number of price reductions.

This is especially evident in condos, with more reductions coming. Even in our current buildings’ sales inventory, the lowest priced condos sold new in 2008 are now at asking prices 22% less than they paid. The most expensive one is now listed privately at 30% less than they paid.

It also appears rents are coming down as well!

To paraphrase the great Okanagan seer, Le Mad Vlad – “Interesting times are coming”

#85 DM in C on 08.23.12 at 2:10 pm

Don’t forget your stainless steel truck nuts while you’re here!

It’s REALLY different here! Ayup!

#86 City Slicker on 08.23.12 at 2:11 pm

Garth I was invited to your private event but lost the address and time, could you give it too me one more time?
Thx, much appreciated.

#87 NYCer on 08.23.12 at 2:12 pm

#74 Sebee on 08.23.12 at 1:22 pm
A report released Thursday by TransUnion shows that the average Canadian’s non-mortgage debt reached $26,221 in the second quarter of 2012.

My wife and I owe not a penny to anyone. Fess up if you’re the one holding the $52,442 that represents us.
Want to thank you for your good work.

—————————-

Might want to brush up on some math. You and your wife are debt free = $0. If ONE person holds up the average between the THREE Of you then they have $78,663 in debt.

#88 house burden on 08.23.12 at 2:16 pm

Cheap money more debt. Carney is now face with the reality that low interest rate will eventually kill Canada.

Savers are punished and debt is easily attained by the most undesirable people whom probably never be able to get out of debt.

http://www.vancouversun.com/business/Canadian+consumer+debt+reaches+highest+level+eight+years/7133311/story.html

#89 Frank on 08.23.12 at 2:21 pm

RBC and Ben Tal have spoken, no crash. Do you feel like John the Baptist, the lone voice in the desert?

I don’t work for a bank. Figure it out. — Garth

#90 Debt Slave on 08.23.12 at 2:26 pm

Its sad when a family in Victoria earning over $80000 can’t afford a house but a single person in the USA can buy a newer ,bigger and nicer house makeing $20000 a year.

#91 Jim Lahey, Sunnyvale Trailer Park Supervisor on 08.23.12 at 2:42 pm

#6 Harlee

“Where’s what’s- his -name with the poems when you really need him ?”

That would be the one and only, blog dog poet FUUUURRRSSST! I second the motion Harlee. FUUUUUURSSST, we need one of your timely poems. Everyone in Sunnyvale keeps pestering me about the next reading of a poem by FUURRRSSST. Let let the poetic juices flow!

#92 Junius on 08.23.12 at 2:48 pm

#81 Skip Breakfast,

You asked, “Can someone tell me–I’m out of the country and have been for a while. Is word about the recent Vancouver price corrections getting out?”

Generally – no. Specifically – yes.

There is very little in the mainstream media although there have been quite a few articles in smaller local papers. Nothing in the television media as would be expected.

However a number of people I have spoken to are well aware of the situation. Most are more sophisticated and are either in the industry or around it. At minimum there is a consensus building that the gains are over and a correction is upon us.

#93 IM in C on 08.23.12 at 2:49 pm

Just when you thought the myth of HAM was finally debunked!

http://www.cbc.ca/news/business/story/2012/08/23/housing-market-cibc.html

#94 Old Man on 08.23.12 at 2:50 pm

I saw this report today by TransUnion, whereby, the average Canadian has a non-mortgage debt of $26,221, and the translation is that they are broke with car loans, credit cards, and whatever. I pay all my bills with cash directly and indirectly, and have two credit cards for convenience, and pay off the balance early to keep a AAA credit rating. If you can’t pay off a credit card balance monthly, then you cannot afford to buy, as there is no free lunch.

Now buying a car is a racket, as is an asset whose value falls like a rock. Buy a new car with patience and look for a national sale to clear the lots, as bought one for $17,500 that was listed for $24,000. Keep all records for the trade-in, and set a price, as went to buy a new car, and all was given to the used car manager, so he could see my price with a profit.

Now, a deal was made, but changed the terms for a 3 year lease with an option to buy using my trade-in value for the downpayment, and there was an interest component which I matched with an Investment Trust. I exercised my option to buy with GMAC, and gave then a cheque for $7,500 with 30k on the dial to clear the title – this is how you buy a new car.

#95 Sebee on 08.23.12 at 2:55 pm

#88 NYCer on 08.23.12 at 2:12 pm
Might want to brush up on some math. You and your wife are debt free = $0. If ONE person holds up the average between the THREE Of you then they have $78,663 in debt.

…as I said…
if you’re the one holding the $52,442 that represents us.

#96 salonist on 08.23.12 at 3:19 pm

Hamilton Down
Payment
Assistance Program

http://www.hamilton.ca/NR/rdonlyres/9CC0451D-0AC1-4F0D-884C-CA9649D4DC8F/0/DownPaymentAssistanceApplication.pdf

#97 AprilNewwest on 08.23.12 at 3:19 pm

#90 -Yes Frank, ” figure it out”. You ought to know by now anyone who wants or needs to pump up RE will say anything to keep the truth concealed.

#98 Nick on 08.23.12 at 3:27 pm

Great work Garth.
I think one way to pour cold water on the house-horniness syndrome of young virgins would be to tell them the majority of the mortgage payments they’ll give the bank in the first few years will barely make a dent on the principal bc the bank gets paid first. I think a lot of people don’t really get this until they look at their statements.
Also : would-be landlord need to know that rent revenue is treated like regular income and simply added to your salary, and maybe pushes you into a higher tax bracket. Oops. That’s not fun to hear.
A balanced portfolio is the way to go, even if you’re young and can only invest 25$ a month.

#99 really on 08.23.12 at 3:31 pm

Garth,

Can you write a post pre-exposing the moral hazard strategies that the government is likely to use to bail out irresponsible Canadians when RE declines hit the fan?

The public needs to educated about what to look for when the F starts to introduce policies that favor the irresponsible borrowers (because they are a majority) over the non-borrowers.

I am imagining not being able to take advantage of where the real market wants to take the value of RE, because when its gets bad enough, and it will, that F will make moves that bail out people instead of allowing them to feel the full force of thier decision.

The end result will punish the savers and people who lived within their means and reward the ones that were irresponsble.

#100 truth hammer on 08.23.12 at 3:40 pm

#69..FM…sadly there are no enforcable consumer protection laws regarding real estate bait and switch practice in Canada. The phony sold signs have been a fixture of real estate development for decades. In all my years I have never seen a single consumer protection officer going around developments checking on signs….or literature…or contract language….or even in the mass media offerings in major news organizations ‘Homes Sections’ or with other mainstream particapants like ‘Globular Media’ and their Six O’Clock News /infomercials.

#73 FM….you’d probably be surprised to know that Benjamin Tal makes far less than the millions you quote. You’ll also be surprised to know that civil servants are raking in far more than most realize. Look no further than the city of Vancrapper where staff is making 300K ++ p/a……and skytrain cops are paid over 200K with overtime and perks.

I never said ‘get rid’ of the cops…I said I agreed with the article and think we should fire the entire civil service and rehire them at market rates..stripped of all union afffiliation and after we void all legacy contracts.

99.999% of the civic louts know that they are paid far in excess of what they’re worth and would re sign at 50% of what they currently earn…and that is still more than generous. Any protests would be dealt with by sending the malcontents for re education in a basic civic economics class taught by working people who up until getting the teaching job would had a hard time putting food on the table. The elite unions are so out of touch with citizens that they need to be brought back to reality.

#94 IM…..you’ll never get Garth to agree to any public announcement that goes against his hard left Liberal principles………he’s a moon beam child of another generation….The Trudeaumaniacs of the 1970′s. It’s politically incorrect to even suggest that he is politically correct. Under the Liberals they would have sent a bus load of trudeau maniacs over to protest in front of your house….call you a racist and such….truth is not a principal the Libs care to advance. HAM may be as common as houseflies in July…but the die hard Libs will tell you you’re a xenophobe for closing the doors.

#101 Canada Watchdog on 08.23.12 at 3:45 pm

#97 salonist

“Hamilton Down Payment Assistance Program”

————

“Notice: Available funding has been used up, however, applications will still be accepted for the wait list”

#102 Inglorious Investor on 08.23.12 at 4:09 pm

#95 Old Man on 08.23.12 at 2:50 pm

I leased my first car (because I had no money but a good job and a promising future).

First, I did my homework on how to buy or lease a new car the smart way. After selecting the car I wanted, I negotiated price with several dealers concurrently to find the absolute bottom bid that they would accept (one salesman even hung up the phone on me).

(I never got caught up in the scam that the price doesn’t matter, only the monthly payment, like so many people today.)

After setting my bid and choosing which dealer would get my business, I negotiated a no-money down deal with no negative off-sets. The salesman tried every trick in the book to grease the deal in his favour, but I was prepared.

After settling on a deal, I applied GM points from my Visa, plus I got a special discount for being a recent university grad.

When I took deliver of my shiny, new vehicle, the dealership had to cut ME a cheque. Great feeling, let me tell you.

These days, I know it’s financially smarter to buy used, and now I can afford to pay cash (but won’t necessarily do so). Also, I know someone with the inside scoop on prices and manufacturer incentives, so before I even begin to talk with the salesperson, I know how low I can bid and the dealer makes a fair profit.

Recently, I almost picked up a barely driven, fully loaded, stunning 2011 Volvo S80 T6 for $40,000. Three for four more grand and they would have made the deal, but $40,000 was my absolute limit. Fixed the old car instead. Old, but still in very good shape and looks fine. My mechanic told me it would cost about as much to fix as the car is worth. Well, maybe to someone else the old car is worth only a few thousand, but to me it’s worth $40,000, ’cause that’s about how I much I saved by not buying a replacement and investing the money instead.

#103 Justsayin on 08.23.12 at 4:17 pm

Garth,
You should have let me know you were in Victoria. I would have invited you for drinks in my 12th floor corner unit apartment with a 270 degree view of the ocean, Olympic mountains, and Victoria Harbour. Rent is $965. I can’t even begin to wonder what a mortgage on a condo like this would be. I look down on David Fosters penthouse from up here!

#104 Ronaldo on 08.23.12 at 4:20 pm

http://www.postcity.com/Post-City-Magazines/April-2011/Real-Estate-Issue-2011-Roundtable/

Well, Sherri Cooper, it’s been a year and a half now. What do you have to say about things today?

#105 Canada Watchdog on 08.23.12 at 4:33 pm

#103 Market Bull

Keep staring at this table until you can quantify what it means to your net worth tied up in real estate.

#106 Nostradamus Le Mad Vlad on 08.23.12 at 4:33 pm

#3 Derek R — Thanks for the link, and it’s now bookmarked. Appreciate it!

#52 Cowtown Refugee — “Low cost food would be good too, and low cost energy.” — In a perfect world, they would be more than welcome but life, generally, is a bucket of shit for many.

Check out #45 Gord In Vancouver’s link, plus see the spiraling costs of energy in the UK, which will soon be here.

#62 Babblemaster — “A balanced story by the Globe and Mail. No need to worry.” — Not worrying, just laughing hysterically!

#53 Form Man and #85 Snowboid — Gennuloffsprings, talking with a realtor this morning. Said homes $500K and up were gone, but there was a little activity in the lower range. Little movement and no percentages, ‘tho.

#98 AprilNewwest — Well said.

#107 Elchavo on 08.23.12 at 4:42 pm

@#14 David MacDonald

“but your photo can’t be real. Nobody would be that dumb.”

no s*it sherlock. You’re one smart dude.

#108 Elchavo on 08.23.12 at 4:47 pm

my favourite furst poem was that little two-liner one about him posting first. furst, where are you? we miss you.

#109 Mark W on 08.23.12 at 4:47 pm

Victoria is a company town and the company is the Provincial Government.

If Queen Victoria had not decided to move the BC Provincial Capital from New Westminster to Victoria in 1889 there would have developed no city there.

New Westminster by the way still has a chip on it’s shoulder over that fact and still calls itself The Royal City.

I used to live in Victoria as a kid and graduated from the University of Victoria there.

Upon graduation you basically had two choices.

Get a job with the government or leave!

Outside of government there are very few jobs in Victoria that are any good.

Civil servants in the city live in neighbourhoods like Mount Douglas and not in the multi-million dollar homes you are talking about.

That money comes to Victoria from somewhere else, usually rich & retired money.

However, in the past few decades retirement communities up island in places like the Comox Valley have become hotspots for retired people.

So Victoria no longer has a hold on the retired market on Vancouver Island.

Victoria also has one of the highest crime rates in the country and all the social problems of Vancouver Island tend to drift down to Victoria.

So if you want to retire you would more likely move to some nice place up island like Comox with wide open spaces, lots of new golf courses and far less social problems than Victoria.

#110 Realtors and Bankers in an all out PANIC! on 08.23.12 at 4:56 pm

Wow…so many worried and out of work realtors who haven’t made a sale in months. Many realtors are on the brink of going bankrupt. Sales and prices continue to crash in Canada. It’s going to be a nasty crash realtors a nasty crash. Hey…if the market was doing well then why are out of work realtors posting on garth’s blog? lol ..post in a panic realtors!

#111 Darlene on 08.23.12 at 5:11 pm

truth hammer on 08.23.12 at 3:40 pm

“you’ll never get Garth to agree to any public announcement that goes against his hard left Liberal principles………he’s a moon beam child of another generation….”

Good grief, read Garth”s bio please. He’s a true Progressive Conservative. Federally non existent, and in Ontario being led by whack job Hudak. He was only Liberal by default as there is no longer any party that resembles the old P.C.

Man get over this stupid Liberal blame game. Power corrupts, that goes for every party ever in power, regardless of their political leanings.

Or at least get rid of the “truth” part of your name. You wouldn’t recognize truth if it hit you in the face.

#112 Can it be? on 08.23.12 at 5:20 pm

Lost respect for Cibc and Benjamin tal

#113 prairieperson on 08.23.12 at 5:28 pm

Love your comments, garth. I’m an avid reader. However, I just crossed the country from Manitoba to VanIsland. Biggest best crops I’ve ever seen. Massive grain trains for the coast. Even small town Manitoba with houses at 900k, 1,200k. Lotsa bldg. Multiple bidders in Wpg. No sign of hard times, at least not yet.

#114 IM in C on 08.23.12 at 5:28 pm

@102 truth hammer
Re my post #91
Can’t comment on how politically correct/incorrect Garth is. Or for that matter, how hard or soft left he is. I suspect that he doesn’t want the comments on this blog to turn into a racist rant thereby obscuring his message concerning real estate in particular, and personal financial planning in general .
It has now been shown that it wasn’t HAM, or any other nationality , driving the real estate bubble. It was cheap and easy money. It was ordinary people speculating on real estate, taking on obscene debt loads and using their houses as ATM machines.
Ultimately, when this bubble bursts or deflates, there will be nobody to blame but ourselves.
There is no ‘them’ ; there is only us.

#115 Steven Rowlandson on 08.23.12 at 5:41 pm

IT LOOKS LIKE THEY FIXED THE CDN DOLLAR QUOTE.
It is $1.0064 not $0.0069.

#116 Mithan on 08.23.12 at 6:17 pm

Sigh

Just came back from coffee with some friends who swear to god that Regina real estate is going to increase by 30-40% in the next 3 years…. A couple are even looking into buying a couple more $300k condos to rent out for $1600 a month. We have less than 1% vacancy for anybody who cares….

Garth, you really need to come to Regina and save your foolish countrymen.

#117 Industrial Guy on 08.23.12 at 6:25 pm

Garth, you buddy Benjamin Tal, deputy chief economist at CIBC World Markets went off the deep end today.

Tal said: “The student debt level is not significant enough to really kill the housing market.” Honestly, which planet is he living on?

http://www.thestar.com/business/article/1245856–continuing-demand-will-cushion-home-price-decline-cibc-economist-says

#118 Tom on 08.23.12 at 6:47 pm

Hi Garth. I sure enjoy your blog. You said you are in Calgary tomorrow. Did I miss something? Are you speaking here tomorrow? If so, I’d sure like to see you speak. Thanks. Tom.

Sorry, cowboy. Private event. Amazons only. — Garth

#119 Cory on 08.23.12 at 6:56 pm

It IS different in Calgary. Debt/credit runs rampant and the “wealth” effect has not subsided.

Insane. Marko Carney whining and complaining in the media about people spending too much, does nothing…most don’t even know who he is or what he does……

#120 Stupesing in Cabbagetown on 08.23.12 at 6:58 pm

#14 David McDonald – “Nobody would be that dumb”

Alas! If only that were true. I saw an idiot in Banff National Park trying to take a picture of his wife and child posing next to a young grizzly bear. The bear chased them away and they went back and tried to do it again! The second time the bear chased them right into their car. Some people don’t know the difference between a wild animal and a Disney cartoon I guess. Darwin awards get there material from these sorts of incidents.

#121 I stand corrected! on 08.23.12 at 6:58 pm

All this talk about Victoria and no (good) jobs I can relate to. I went to UVic, great university, and stayed and worked two more years after graduation. My signal to leave was when I was offered an accounting job, working directly under the controller for $26,000. This was 2006. I declined as I was making way more punting tourists out to see the Orcas. The money does come somewhere else and they can have Victoria. It’s nice, but I can think of a dozen other places I would rather be.

#122 Devore on 08.23.12 at 6:59 pm

#29 Tom from Mississauga

There’s one person I know that closes on a new condo in T.O. for November that hasn’t yet. They bought when there was still a 35 y’er around. What happens with the contract if they can’t close?

When were conditions removed? One of the conditions being securing financing. I doubt anyone would sell a house or condo giving 6 months to remove conditions. Possession is different, it happens after closing (all conditions removed), it’s usually 2 weeks – 2 months after closing.

#123 Devore on 08.23.12 at 7:08 pm

#45 Gord In Vancouver

Greater Vancouver Food Bank spending just to get by

http://www.news1130.com/news/local/article/394522–greater-vancouver-food-bank-spending-just-to-get-by

Right on the steps of

http://www.news1130.com/news/local/article/378659–calgary-food-bank-trucks-surplus-stock-to-kelowna-food-bank

Rich Albertans to the rescue of BC real estate.

#124 Devore on 08.23.12 at 7:13 pm

#48 Beagle

What about the tech industry?

Tiny. Every major city has “the tech industry”. Or is it different in Victoria because Microsoft has an office there and a couple dozen people make Facebook games?

#125 Can it be? on 08.23.12 at 7:22 pm

Epic summer of spending by the masses to vacation and fund their luxuries.

Toronto zoo is taking time for the animals to
Communicate with other animals through iPads.

Omg most interesting times that we live in.

#126 In GARTH Almighty not God we Trust on 08.23.12 at 7:33 pm

#90 Frank

“RBC and Ben Tal have spoken, no crash. Do you feel like John the Baptist, the lone voice in the desert?”

Have you never read my posts Frank? I have been repeatedly saying that the bearded mystic oracle, all knowing, all wise, financial prognosticator without equal, denouncer of parliamentarian peckerheads and peckerettes, former minister of national revenues, New York Times bestselling author is indeed the lone voice of financial reason crying out in the HELOC infested wasteland of Canada. AKA, a modern day financial John the Baptist.

#127 ken s on 08.23.12 at 7:54 pm

Timing is Everything huh? (no offense to the blogger
of the same name)
How about Intelligence (and its methodologies)
is Everything. Ditto Location….Location……etc
—When you screw up, you can shout: Timing! Location!
…….Othewise you have to say “I was S-t-u-p-i-d!
There is no such thing as Keynsianism, ( except in the minds of govt theoreticians) —unless you
want to reframe the language all the way back to
the great pyramid (make work ) construction.

Its an excuse to Blow a wad of money, then to rationalize with some gizmo excuse to your wife, the Electorate, and the IMF, ECB, etc. The medieval Money lenders Luv it: another excuse to shovel money at you.

I have blown a few thou on weekends, but I did not by Tues AM call it My Personal Keynsianism. No, I called it Dumb. Which it was. My B acct was damaged. but not my perception of Reality.

There is a whole industry, creating fantasy, euphemism, and BS for stupid broke people

Get a life Keynsians, Monetists, and the rest.
—other BS: Moral Hazard: Aww Poop: The debble made you do it?? No, you are a crook.

Unintended Consequences: Pooo 2.0 Only
idiots could not have forseen this. (But they paid you to shut up. ie = the Intended Consequence )
NOoneCouldaNode = ditto

Ken S. in La-La: [ Where it doesnt matter anyway]

#128 Nostradamus Le Mad Vlad on 08.23.12 at 8:03 pm

-
A thought, which resembled a massive dust cloud in Arizona, enveloped me a little while ago.

To help these tooth- and implantless boomers survive their boomer angst, plus move their McGICMansions on quickly, try this method:

Standing on the side of the road with nary a Speed-O or bikini covering their privates, all the while wildly gyrating hips, extending arms and legs into areas you’ve never heard of, when a family car pulls up to inquire why they are doing that, say in a seductively, deep, sexy, dark and L. Ron Hubbard type voice . . .

“I’m sek-see and you know it WiggleWiggleWiggleWiggleWiggle” tone, and take note if they are instantly attracted to the house or you. If the house, say it’s on special for $1.49, but only for today!
*
Globalization Economic confidence hits Skid Row, and 11:57 clip Sept. 12 — Collapse of the Euro? Two min. clip Nebraska farmers being taxed to the moon; Double Whammy for middle class; Conflicts Walmart, Target and others; Iceland “Iceland tossed the crooked bankers in prison, fired the government that was responsible, wrote off all debt created through fraud. Why isn’t the US doing the same?” wrh.com. Because the US and Cdn. govts. are controlled by external forces; Explosion of Credit Cards They make great ice scrapers on car windows; Russia “Anyone provoked to hilarity by the statement is no expert. But if Russia regains control of that central bank, then the US will try to invade the same way they did Libya and with the same goal; to erase any alternative system of banking from the face of the Earth. and then it really will be global thermonuclear war!” wrh.com; Goodbye Vietnam What’s going to replace the money? London Money laundering capital of the world, plus other links; Glencore Food Chief Drought good for business; Oz The Rothschilds tentacles extend far and wide; Local Food Renaissance Going green in Tampa.
*
1:16 clip China real target of US missile bases; Smoking Man – ‘Owzaboud this? It would give Obomba the leeway he needs to skip the election, impose martial law and drive the US into another quagmire, and DHS What would the DHS need a half-ton of high explosives for? Destabilizing Russia is what the US is doing. However, what one sows, must be reaped; Pat (Weirdo) Robertson “This guy is ate up. Retire Pat. DIRECT FROM THE 700 CLUB”; Farmers and Obesity If so, who makes the antibiotics? Monsanto, perhaps? Aluminum Best not to eat our tinfoil hats; Turmeric Major benefits (other than curry); Zuckerberg’s friends bailing; Emotionally Retarded Psychopaths Better description of the elite; Colon Cancer Finished his life at 44. Was it McDonald’s, or something else? 25:23 clip Anti-Iran rhetoric shows US – Israel’s internal weaknesses; Cops “As Israel trains more and more of our police forces, expect to be treated more and more like the Palestinians.” wrh.com.

#129 dradak1 on 08.23.12 at 8:07 pm

I rely do not understand how most of the “adults” are thinking (?!?) they are asking the kids to make there wishes on religious holidays and when they find themselves in position not to be able fulfill, they ask them to prioritize.
So it appears – is simpler to say than do it – or – “talk the talk” instead “walk the talk”.

#130 kam on 08.23.12 at 8:08 pm

http://www.huffingtonpost.com/huff-wires/20120823/as-new-zealand-housing-prices/

The Economist magazine this month rated New Zealand’s home prices as 66 percent overvalued when compared to rents, second only to Canada in the 21 markets measured. By comparison, the magazine concluded homes in China were 7 percent overvalued compared to rents, homes in the United States were 15 percent undervalued, and those in Japan were 37 percent undervalued. Using income as a measure, the magazine concluded New Zealand homes were 22 percent overvalued.

The Bank of New Zealand came to a similar conclusion, finding that homes were 25 percent overvalued when compared to long-term trends.

Record-low interest rates are helping fuel ever-larger mortgages, money that ultimately comes from offshore. New Zealand’s household debt levels are high by international standards and are a big part of the reason why two major credit agencies last year downgraded the country’s sovereign credit rating.

#131 Westernman on 08.23.12 at 8:10 pm

Darlene @ # 114,
Yes, it is true politicians are ( with the odd exception )
scumbags – but get this straight … some are less scumbagish than others.
NDP are at the top of the scumbag list with the Liberals a close second and the Conservatives are a distant third in the scumbag rankings…
Hope I cleared that up for you…

#132 };-) aka D.A. on 08.23.12 at 8:24 pm

Any REALTOR® who says “the market is dead” isn’t working hard enough.

#133 jess on 08.23.12 at 8:26 pm

123 Cory – exactly right

…The Bain Files:

“Gawker has obtained a massive cache of confidential financial documents that shed a great deal of light on those finances, and on the tax-dodging tricks available to the hyper-rich that [Romney] has used to keep his effective tax rate at roughly 13% over the last decade.

. . . Today, we are publishing more than 950 pages of internal audits, financial statements, and private investor letters for 21 cryptically named entities in which Romney had invested.
. . .
…” the problems have been festering for years. What is new is that Europe has turned on the international consensus, and the former voices in the wilderness have entered the mainstream. Public disgust at multinationals being excused from their civic responsibilities is real.”
==============
i wonder if mr carney read this

Contract Manufacturing

The person on the street already knows that manufacturing jobs and even machinery have been shipped off to China. She would be offended that multinational affiliates that are not even engaged in manufacturing are allowed to avoid U.S. tax by being deemed to be engaged in manufacturing (reg.section 1.954-3(a)(4)(iv)).
The popular image is of third-party contract manufacturers, but many of them are controlled foreign corporations. Existing manufacturing operations are converted into contract manufacturers to limit the income attributable to these operations.
The idea is to restrict the manufacturer’s local income to costs plus a markup, stripping out the profit from sales of the product.Nothing changes except the contracts between the group and its manufacturing affiliates. The principal company, which is usually located in a tax haven, assumes ownership of the raw materials and responsibility for quality, credit, and marketing risks. The manufacturer retains only the risk that it failed to follow instructions. If the manufacturer does not own the product it is working on, it hasessentially been reduced to getting a fee for services.The principal company is charged with supervisionof the manufacturing, so it can say that itsincome is active income for subpart F purposes. Yes,the IRS is prepared to believe that a Swiss principalcompany can effectively supervise manufacturing at a Chinese contract manufacturer. It is deemed tomake a ‘‘substantial contribution’’ to the manufacturing by supervising, in return for which the groupgets to defer tax on the income.The Chinese are not interested in these fine contractual distinctions. Their auditors strive toimpute some of the profit on the sale of the product right back to the Chinese manufacturer.China wants to reclaim some of the advantages of the China price as taxes. It uses its own apportionmentfactors, like compensation for labor advantages and access to market, to increaseallocation of income to Chinese affiliates. China alsouses profit-split methods. The frightening thing about the shifting of incomefrom relatively simple manufacturing operations
to tax haven principal companies is how cheap it is. Contracts are redrafted, lawyers babysit,and a few people are assigned to mind things in Switzerland. The OECD transfer pricing guidelines tell tax examiners to respect these self-serving contracts.
(For JCX-37-10, see Doc 2010-16144 or 2010 TNT 139-13.
Aug 23, 2012 – Highlight: Tax Analysts, Is Transfer Pricing Worth Salvaging? Lee Sheppard’s devastating critique of global transfer pricing rules
By Lee A. Sheppard — [email protected]

#134 Herb on 08.23.12 at 8:33 pm

#102 Truth Hammerer,

keep hammering away, my friend. You are an object lesson of what’s wrong with the Right Wing, and serve as a great deterent to that cause.

#135 Herb on 08.23.12 at 8:36 pm

Is that the ShamWow Guy with the camera? Lion, be my guest.

#136 Daisy Mae on 08.23.12 at 9:05 pm

#45 Gord in Vancouver:

“…it’s definitely different in Vancouver now.

Greater Vancouver Food Bank spending just to get by.”

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

It’s never ‘different’. I remember as a little kid in Vancouver during the 1940′s — a truck slowing driving down the street picking up canned goods for the needy….

#137 Mike Rotch on 08.23.12 at 9:10 pm

#51 Lostinthewilderness on 08.23.12 at 11:08 am
Spotted a new Audi A6 delivering Pizza this past week end……

Growing up, a close friend’s father used to deliver pizzas part time. He cleaned up on tips. Folks saw this ~50 year old driving an old beater and they felt sorry for him, so they were generous. He was a white collar banker, just doing something to get him out of the house and make a few bucks.

The funny thing was, by weekday he was a white collar banker probably doing as well or better than most of his customers.

The guy in the A6 isn’t going to have the same luck – they’re going to figure it’s the wealthy store owner just filling in for someone who called in sick, and they’ll stiff him.

#138 happy renters in Victoria on 08.23.12 at 9:19 pm

In February our family of five decided to sell our mortgage-free house (north of 60) and move to Victoria. Garth’s blog was key in our decision to rent and we had some striking Victoria experiences that solidified the decision.

The first was a 56 year old woman whose large, run-down, Oak Bay house appraised at $880K was up for rent. She told me I should buy something because houses in Oak Bay “never go down and are a great investment.” Hers was her retirement plan. In the next breath she told me how, due to underemployment, her 20-something children can’t pay their rent or student loan payments and she admitted they can’t afford to live in Victoria. I was puzzled by who she thinks will buy her house.

On that trip I stayed at the Super 8. There was a road crew staying in the hotel. When I asked the receptionist why there was a crew staying there she told me they have to bring all of the road crew in from elsewhere because there are no workers in Victoria – they can’t afford to live there. She personally lives in Sooke and commutes daily.

As we looked for a rental house it became obvious that things weren’t selling. One house I looked at was owned by a young professional family run out of town due to underemployment. Their Oak Bay house had languished on the market so they rented it.

I touch wood and try to avoid sounding smug as I admit to the math on the rental we found. House purchased one year ago for $1.1M as an investment by an Asian family. We pay $2.5K/month for a beautiful 3600 sq ft Oak Bay home complete with granite, stainless and a home theater. Mortgage and property tax on the same house with a 20% down payment would be close to $5K/month.

The house money is in the bank waiting for us to get it invested. The kids are a bit irritated that we don’t own the house and I have pangs of concern that maybe we have to move before we want to, but overall I thank my lucky stars that we heeded good advice and fought the impulse to buy when the signs were there that things are falling.

And we wait for Garth to give the green light on buying in Victoria. :-)

#139 ANONYMOUS on 08.23.12 at 9:21 pm

It’s different hear: That’s what I hear in Newmarket Ontario, everyone says that home prices 30 miles North of Toronto are cheap, and that $1-MILLION + for a home on a tiny lot is totally normal.

People who I talk to, who have one, expect to get $20 Million for their houses in about 10 years time.

I seriously don’t know what drugs they are on!

#140 Mike Rotch on 08.23.12 at 9:37 pm

#95 Old Man on 08.23.12 at 2:50 pm
“……– this is how you buy a new car.”

Looks like you did everything the smart way…..except for the fact that you bought a second tier GM product

#141 Mike Rotch on 08.23.12 at 9:42 pm

#101 Market Bull on 08.23.12 at 3:33 pm
“……All the while draw-downs from HELOCS are ALSO declining.”

Maybe…..But could part of this be due to many hitting the wall and finding themselves completely unable to borrow any further (except from the guys that break thumbs)?

#142 █ ♣ █ ANONYMOUS on 08.23.12 at 9:51 pm

#125 : $26,000 for an accounting job?
You mean $62,000 , right?

#143 Gunboat Denier on 08.23.12 at 9:57 pm

Derek R and Skip from the other day – sorry I didnt get a chance earlier to explain what I was after. Here is Garths comment

“What we all require isn’t a house, but money”

Blogger taxhaven provided a good comment. He has lots of time to think while living in Port Alberni. Responses followed, and money was defined as currency and credit (with acknowledgement of the evil receiprocal twin of debt).

To insert this in Garth’s comment gives:

“What we all require isn’t a house, but currency and credit”

The disconnect happens is that increasing currency and credit leads to inflation and asset bubbles, including RE.

This is not what we all need. So either Garth is wrong, or his definition of money includes something more.

#144 Gunboat Denier on 08.23.12 at 10:07 pm

Old man/II. How gunboat denier buys a car.

First he decides what kind of car and or features he needs (or wants) and the price he is happy with.

He calls one or two of his favourites sales reps and tells them what he wants (no price mentioned).

If they find a suitable vehicle, and the price is good, I write the cheque.

I’m in business in a small town. I dont deal with people who grind me, so I dont grind people. If the price they come back with is too high, I just say no thanks. Ya know what? It hasnt happened. They dont want to risk losing
me or my company’s business.

Read the chapter in “The Millionaire next door”.

#145 Tim on 08.23.12 at 10:10 pm

We sure haven’t seen reductions in Vancouver–OK maybe 5%. There are few jobs in Victoria and folks from the praries can no longer afford to retire there. It is much cheaper to stay in a winter climate and fly south for 5 months of the year than to move to Victoria. I guess there is always the Surrey of the interior–Kelowna…

#146 John on 08.23.12 at 10:15 pm

Inglorious Investor wrote:

“a house on some sleepy street in Mississauga could become a liability, rather than an asset.”
—–

So true. It’s really odd how things here don’t break out into dealing with the changes that come from a paradigm shift.

Mississauga. Well…that could work out as long as there is a community. In Mississauga various communities have don well by creating a network for installing mini-societies. Perhaps this may even by what “Canadian” means. Although Mississauga only works as a something adminstered by bankers without that network.

The weird blurb in time where people lived in boxes without community, together with foreign cultures networked together in a community requires international bankers ( the mortgage game) to keep rolling. It’s most certainly no guarantee. Much could change…and may have to.

On the front page of today’s national newspaper is some unreadable nonsense about Forbes and the top 100 most powerful women on the planet. You can see Michelle Bachelet ( now in the UN) and Merkel. And Brasil’s leader.

Even a fluff piece like that is connected to Mississauga. You have to buy the whole tale and all the aspects of the narrative.

Numbers came out of Gallup today…only 21% have strong confidence in the news now. It has to be understood that experiments like Mississauga exist in their current form due to a belief in the “news”.

The form is likely to shift with the results of different beliefs. People make decisions based on what they believe.

#147 Mel on 08.23.12 at 10:36 pm

Yes, I also heard by optimistic Albertans that they are special. At least when it comes to real estate.

Mind you, all of them forget that oil does not go up forever! Have they not heard that demand for oil is falling? Oh, China will be always there to buy it from them. Mind you, Chinese economy is slowing fast.

Yes, time will tell how different Alberta truly is.

#148 Difficult on 08.23.12 at 11:13 pm

I dont care if goes up or down but it is difficult to believe when a bubble has been predicted for the last 12 years. Me just saying.

#149 PoorgEoisie on 08.23.12 at 11:51 pm

TH, I could not find mr. Tal’s salary and made a guess (CEO made some 9 mil, perhaps a chief economist is worth a fourth?). I understand it was a crude estimate however my point was simply that he gets paid far more than I do and makes estimates that are beyond crude.
I would assert that the people raking in these executive salaries have a more severe impact on the economy than the skytrain cops (who still can’t afford a house).

#150 Drugs and Debt on 08.24.12 at 12:04 am

#143 ANONYMOUS

expensive ones.

#151 Snowboid on 08.24.12 at 12:23 am

#102 truth hammer on 08.23.12 at 3:40 pm…

Your honey-wagon overfloweth…

#152 Dylan on 08.24.12 at 12:31 am

http://moneytalks.net/pdfs/europacific0815.pdf

Excellent report on housing in Canada

#153 bill on 08.24.12 at 12:32 am

da said:
”Any REALTURD® who says “the market is undead” is a zombie”
well you should know eh?

#154 Jon B on 08.24.12 at 12:39 am

Used to live in swanky Oak Bay. Victoria is a strange place. Other than the provincial government civil servants, most island jobs pay low wages. Yet the city is paved with gold and wealth is flaunted everywhere. One must understand that money is brought to Victoria from elsewhere, it’s not created there.

#155 Nostradamus Le Mad Vlad on 08.24.12 at 12:51 am

-
Well, whaddaya know? Get a piece of this! Mtge. Rates Higher than inflation? This Will End Badly explained easily with nice charts; Illegals = Higher unemployment; Ownership of Water is an issue not getting very much airtime. We can’t drink money or gold; Bankrupting a country 101; UK employment market broken but Germany can fix it; Stimulating Party as world growth stagnates; China’s concern and EZone Recess- Depression; Qantas G’day Bruce; UK QE benefits a handful; Financial breaking point; UK becoming renters?

Gold “The FT’s Robin Harding and Anna Fifield report the GOP is set to formally include adopting a gold standard as a pillar of their updated platform.” If the Rethuglikans win; US incomes fell more in recovery, and US trade gap with China cost jobs; GM halts production at two German plants; Currency Crisis Should play out nicely with inflation creeping up; John Mauldin Neat idea; Map of underwater homeowners; Eight Economic Threats that have surfaced since summer; Cdn. Pensioners who own Britain? Don’t think so.
*
Brain Burgers Not from Monsanto; Hot Shots Two holes-in-one, same hole, two players; Heavenly Clouds Nice pix; Musical Cucumber I know what musical fruits are (farts), but this? Nine years for speeding? The Sun Active next year, 2:37 clip Solar storms increasing, and The Universe isn’t fractal; Sound Of A Dying Star; The NMF, the giant sinkhole in Louisiana and the oil and gas pipelines which criss-cross it. and Tropical Storm Isaac “The Corporate media are ecstatic that ISAAC is now projected to pass west of Tampa and not interfere with the GOP convention. Left unsaid; the new track aims the storm at Louisiana, the still-recovering-from-Katrina New Orleans, and that sink hole near the salt cavern full of radioactive waste!” wrh.com; 4:23 clip Retroshare — new software for emails, chat and the like; New Learjet 85 Take it for a spin? The TPP and what’s not to not like about it; Bad For The Brain? Depends how one looks at it.

#156 Island renters on 08.24.12 at 12:59 am

Thank you Garth! Just back from a week’s holiday with smug Albertans. They went on and on endlessly about how it’s different in calgary (they have energy resources), to the point that they cashed out their rrsps to buy a mega-house in some back eddy of calgary’s ceaseless maze of sprawl. Really give it to Calgary tomorrow Garth. Spare nothing!

#157 Happy NOT to be Smoking Man on 08.24.12 at 1:27 am

Junius,

Give your monkey a bear hug, it looks like the crash is unfolding as Garth predicted.

Drink up, old buddy.

#158 Blue Monster Lover of Meats and Vegetables on 08.24.12 at 2:55 am

#53 Form Man on 08.23.12 at 11:19 am

#49

Why are more affordable houses equated with ‘the sky is falling’ ? – Garth

spoke with a Kelowna realtor yesterday. He figures people are less interested in buying in the Okanagan because prices are too high………..perhaps the notion that a correction is needed in order to heal the market will begin to dawn on some………

same realtor also said that after a bit of activity a couple of months ago, the market is now ‘worse than dead’
——-
What could be worse than dead….?

Decayed and distended like a bloated hippo.

Still love that analogy from Garth.

PS, hope you sold gold at $1900 and bought back again at $1530. That would be epic.

Me, I’m turning into a trader. It’s fun and lucrative. weeee…..hooooo…..

#159 Tony on 08.24.12 at 3:03 am

Re: #120 Mithan on 08.23.12 at 6:17 pm

They got the 30 to 40 right except property values will *decrease* not increase some 30 to 40 percent.

#160 Herb on 08.24.12 at 7:12 am

#135 Westernmoron,

NDP are at the top of the scumbag list with the Liberals a close second and the Conservatives are a distant third in the scumbag rankings…

Now let me see: NDP – never been in power, so in no position to abuse it – on the top of your scumbag list? Interesting, but wait a minute: NDP is the only potential threat to Harper, second-place Liberals still way out in the wilderness, CPC distant third on your list …

You’re a CPC shill! Quel surprise!

#161 Skip Breakfast on 08.24.12 at 1:26 pm

Gunboat Denier,

Going back to Garth’s post, he wrote, regarding our insatiable house-horniness:

“Most people can’t accept [that renting is a better deal than owning right now]. While some people came out last night to challenge me, most came to find out when they’ll be able to afford a house. The emotional tug is simply too much. People think they need houses when they leave their parents. When they get married. When they get pregnant. When they have babies. When they retire. But they don’t. It’s a want, not a need. And right now, dangerous. What we all require isn’t a house, but money. And while 70% of families own real estate, half of us have no savings. What the hell are we thinking?”

Far as I can tell, Garth is saying we’re broke (i.e., we don’t save and don’t invest very wisely and haven’t been that productive as workers either). And getting a house just makes us more broke for all the reasons he talks about. What we really need is money, not more houses.

It seems you’re interpreting Garth’s comment to mean our government should to print more money or something. Because you claim in your comment that “increasing currency and credit leads to inflation and asset bubbles, including RE”. But Garth is not saying we need more money as in we need to print more. He’s saying that individuals don’t have enough, and the smart ones would do very well to start considering how they could conserve more of this rare stuff called money rather than blowing it on a house. For example, rent your place instead, and put that money you SAVE into your SAVINGS, rather than flushing it down the toilet of a mortgage (funny how the tables have turned in that metaphor eh?).

I talked about the definition of money, not really to give a lecture, because I’m not especially qualified to do that! But because people don’t seem to understand what money is these days, which might be partly why we have so little of it in our pockets. And knowing what money is becomes even more important as we move deeper into a deflationary period.

The fact you need more money doesnb’t mean there is more money OUT THERE to be had. It means that the smart ones (like those who actually listen to Garth in this regard) should do the opposite of the house-horny couples and take this opportunity to grab/preserve some of these increasingly rare things known as dollar bills. Buying a house isn’t how you do that! For a start you sell your house, pocket the cash and rent.

Sorry this got long. Hope it’s helpful Gunboat. And hope Garth doesn’t blast me with a three-word stinger in case I misquoted him. I don’t even know the guy. I do know I’m more of a deflationist, while Garth is a “quasi-deflationist”.

#162 Gunboat Denier on 08.24.12 at 7:48 pm

166 Skip – that is a well-reasoned, nicely composed explanation. Thanks.