The trick

Two years ago it seemed, well, reasonable. After all, $529,000 for a perfectly-restored, 3,000-square-foot heritage home on a double lot in a bustling tourist town 45 minutes from the city was not a stretch. But in this part of the country, Nova Scotia, the market was already softening. So it sat. Lots of showings. A few lowball offers. No deal.

Eventually the price dropped to $489,000, then $475,000, and finally to $399,000. It sold this month for $385,000. The discount off original asking: 27%.

Five thousand, nine hundred clicks to the west, where the wrinkly people go to die, a similar story. Here’s a two-year-old rancher with a three-car garage on half an acre nestled beside a prestigious golf course, stuffed with granite, cedar beams and stainless. Listed 11 months ago at $929,000 (market value at the time), it’s now $789,000. The Vancouver Island agent who took the listing tells me the vendor would be orgiastic to get $750,000. And that would be a discount from original listing of 19%.

This week CIBC said not to worry. “When it comes to jitters regarding a US-type meltdown here at home,” a new bank report concluded, “the only thing we have to fear is fear itself.”

Economist Benny Tal, sounding like a guy who works for a bank in the mortgage business (oh, wait…) says Canadian real estate will have a soft landing. That’s because we have better quality mortgages than in the States, where Okies buy McMansions so they have a place to go after they marry their sisters. As well, there are fewer speculators here, which is news to Toronto condo developers who sell 80% of their units to flippers.

Tal does admit that two main arguments used by house-humpers and desperate realtors are junk. A low mortgage default rate is no indication of housing health or family finances, he points out. And forget about the myth of Americans being able to walk away from mortgages we must pay. Only a dozen US states are non-recourse, and this didn’t save their real estate markets from blowing up.

But where the bank, and all housing apologists, fail is with this ‘US-type meltdown’ denial talk.

The implication is that because we won’t have a ‘US-style’ housing correction there won’t be one at all – life will just go on. The Spring 2013 market will be sunshine and ponies. Prices and sales will restore. The beat will go on because, of course, it’s different here.

But it’s not.

The two small examples mentioned above are not atypical. As this depressing and irrelevant blog has shown of late, sales levels have tumbled in almost every major Canadian market, while prices are already rolling back in many. Hell, a feature in the Wall Street Journal yesterday carried the headline, “In Vancouver, Home Sales Hit the Brakes.”

Said the piece: “The average home price in Vancouver stood at 722,681 Canadian dollars ($721,958) last month, down more than 11% from the market’s peak of C$815,252 in April 2011, according to the Canadian Real Estate Association. Home sales are falling, suggesting more price drops may be on the way. Home sales in Vancouver and the surrounding metropolitan area dropped 33% this September from a year ago, according to the Vancouver real-estate board, while the total number of listings rose 14%… In Toronto, where average home-sales prices rose 8.2% in September from a year ago, the condo market has seen a sharp slowdown. Condo and apartment sales fell 21% in the third quarter, compared with 2011, according to Greater Toronto Area Realtors.”

Gee, when they can see this stuff on Wall Street you’d think it would be obvious on Bay. Sales fall first. Prices thereafter. And it’s not different anywhere.

I like Benny Tal. Always have, and we’ve met often. But I think he needs to get out more. When the mortgage brokers state categorically the average down payment in Canada is less than 10%, Tal is swimming naked telling the media that, “In Canada, only 15 to 20 per cent of new mortgages have less than 15 per cent equity, and the negative equity position is nil.” Fact is nine of 10 new mortgages are CMHC-insured because they are high-ratio and high-risk. And any correction puts folks under water.

But, he’s right. There won’t be a ‘US-type meltdown’ in Canada. It will be a Canadian-type meltdown. Prices will be lower this time next year, sales fewer and real estate more illiquid. The correction’s already taking place, as every seller longing for a buyer knows. Asking prices are no longer demands, but wishes. Toronto houses that went for 115% of list last year now sell for 90% – which is a drop in street value of a quarter. Once the masses discover this, game over. People only crave stuff that’s rising in value.

Economists need to know this. Should we tell them?

188 comments ↓

#1 Mike on 10.30.12 at 9:03 pm

Fun times in Vancouver, I’m dressing up as a Real Estate agent tomorrow :)

#2 T.O. Bubble Boy on 10.30.12 at 9:13 pm

How about an Australian-style meltdown? We share all of the same logic for “bubble deniers”:

http://www.independentaustralia.net/2011/business/property/australia-does-have-a-housing-market-bubble/

(and we both have resource-driven economies that are in the middle of a major slowdown)

#3 25Alpha on 10.30.12 at 9:13 pm

Strange and I just read an article today suggesting Carney is “hinting as raising the rates”. I keep hearing that but it never materializes. I know it will happen.

#4 Retire in Languedoc on 10.30.12 at 9:16 pm

Caught your seminar in the Big Smoke last week. It caused me to rethink my plans to buy real estate in the south of France over the next 3-6 months. Instead, my husband and I will open TFSA accounts in January, deposit 25K each and build a diversified portfolio using ETFs that will hopefully yield 7%. Man, what a 360!
You’re responsible for me building a diversified, balanced portfolio. I’ll let the magic of compounding work its magic and build up a nice nest egg for the purchase in 7-9 years.
Thanks,

#5 Marco from Van on 10.30.12 at 9:21 pm

Please, one wish – can the comments stay on subject? The personal agendas being peddled by some habitual posters are making it a really painful process to weed out the nonsense so to zero in on the debate on the subject of the day’s post.

All those with other agendas, promoting a mistargeted personal ego, climate change, anti-conservative, anti-liberal, anti-establishment, conspiracy theories etc. Start your own blogs and post the links – trust the reader to follow you there – you will even have the liberty to set the conversation, instead of stealing it.

Garth, today’s post illustrates the vicious circle of negative news stoking negative sentiment, stoking negative growth. As the old abode goes, bad news travels faster than good news and sticks around for longer (we’re wired to defend ourselves more than be aggressors) then I think the potential for a more protracted negative cycle outweight any further upside gains.

I really fear for the victims of the “bear trap”.

Thanks again for your work.

MfV

#6 T.O. Bubble Boy on 10.30.12 at 9:24 pm

Is David Rosenberg any more believable than Benny Tal?

http://business.financialpost.com/2012/10/30/five-reasons-canadas-household-debt-panic-is-overblown-david-rosenbergs-5-reasons-canadas-household-debt-panic-is-overblown/

#7 gladiator on 10.30.12 at 9:26 pm

Smoking Man, you’re my hero and from your previous post’s comments I would make the conclusion that:
“Paying someone else’s mortgage sucks, but working for someone else sucks even more.”
Now I’m in process of making my wife work for herself, and then I’ll make the bold move to be independent of the bi-weekly slave’s wage.
Entrepreneurship rulezzzzz!

#8 Toon Town Boomer on 10.30.12 at 9:27 pm

When I hear sales are falling I silently cheer for the little guy because he can’t afford to buy at these prices.
Don’t buy little guy! Beat them at thier own game.

#9 Silver on 10.30.12 at 9:29 pm

First and most important.
Thanks for all the time and effort you put in Garth.
You have a reasonable voice and great dialog on your blog. My respect.

People hate to see the truth whether socialist or conservative. Every one thinks that the real estate is a something always increasing value. that property value will always increase.
From flippers to the Municiple tax departments. If the values drop….and we know this will happen. All things achieve balance at the end of the day.The financial holes will become quite apparent.
Silver

#10 25Alpha on 10.30.12 at 9:32 pm

The wall street journal article was interesting.

They went on and on about chinese buyers. The article leaves the impression that locals aren’t the ones driving the vancouver market.

Oh wait that is true.

Garth i know you dispute it, care to comment?

Show me stats. — Garth

#11 Fleabitten Monkey on 10.30.12 at 9:37 pm

I remember seeing something in the FP maybe a 10 days ago about whether we’re worrying ourselves into a housing crash. Moshe Milevsky was also in there commenting on behavioural economics. Funny place we’re at now relative to the headlines and news stories when real estate was on the way up. How can these so called educated economists such as Tal look at us and say not to worry?

#12 Canadian Watchdog on 10.30.12 at 9:41 pm

Here’s a trick: How does one send the TSX soaring into the green on closing bell? BoC Repo Window

Carney buying up equities again. Yawn.

#13 25Alpha on 10.30.12 at 9:45 pm

Show me stats. — Garth

All you had to do is show up for any grand opening sale for a given high rise tower and you could count them all and create your own stats.

There is truth to the fact that they were driving a lot of it.

You mean those Asian people who live in Canada? — Garth

#14 Smoking Man on 10.30.12 at 9:47 pm

7 gladiator.

Yes I’m finally getting somewhere hers. Go for man.

Some advice.

Rich people are gamblers, they make bets. Poor people are cowards. Before you sink your tax farm slave wages into this thing. Approach a few people with loot, run
it by by them. Ask for their loot. Give them a piece of the action.

Use them, make sure you keep control. look in the mirror, you and wife. Tell yourselves you are awesome.

Then find schoold idiots to run the show for you. Just manage them.

It’s so f-en easy to do. If you can shake the years of schooling that trains you to be the slave.

Good luck man keep me posted

#15 JR on 10.30.12 at 9:47 pm

There can be no doubt a cliff exists for a raging swarm of house buying lemmings. Is there another for the growing herd of professional bubble deniers?

#16 Devore on 10.30.12 at 9:48 pm

Listed 11 months ago at $929,000 (market value at the time), it’s now $789,000. The Vancouver Island agent who took the listing tells me the vendor would be orgiastic to get $750,000. And that would be a discount from original listing of 19%.

What’s funny is 11 months ago it would have probably sold for $850,000 easy after one weekend open house. But of course, no realtor would dare present such an offer, for fear of “offending” the sellers with a low price. Seller greed and terrible pricing advice of a terrible agent who did not see his market changing. Now they’re racing to the bottom, chasing the rest of the market a step behind.

Well priced houses are always selling, and realistic home owners with plenty of equity have no trouble. There are always lots of people who don’t care how much they pay for a house, and lots of knife catchers looking for early deals.

#17 DaleFromCalgary on 10.30.12 at 9:52 pm

I live in central Calgary (not the far distant suburbs) a few blocks from a McMansion that was completed just in time for the Panic of 2008. Nonetheless, it was listed for $1.2 million, about double the prevailing values of the neighbourhood. Went through three realtors over the next 18 months, then sat empty while the bank repossessed it. Because it was built during the boom mostly by unsupervised apprentices and cash-only handymen, the bank then had to gut the house, re-roof it, and put on fresh stucco. It is now privately listed (no MLS) but still above market.

Whenever someone says Calgary real estate is different because Alberta has oil, I tell them about this house. By the way, the majority of oilsands design and engineering is done overseas, not in Cowtown. That’s why there won’t be a flood of incoming well-paid housebuyers.

#18 John on 10.30.12 at 9:52 pm

“But, he’s right. There won’t be a ‘US-type meltdown’ in Canada. It will be a Canadian-type meltdown. Prices will be lower this time next year, sales fewer and real estate more illiquid. The correction’s already taking place, as every seller longing for a buyer knows. Asking prices are no longer demands, but wishes. Toronto houses that went for 115% of list last year now sell for 90% – which is a drop in street value of a quarter. Once the masses discover this, game over. People only crave stuff that’s rising in value.”
———-

You continue to have basic unresolved problems in your analysis. At no time have you addressed the source of the real estate crisis…even now.

You have confidence in Canadian institutions such as national banks and the Bank of Canada. Are you aware of the fact that they are no longer Canadian? Do you feel this is open to debate?

The best I’ve seen in response to this serious problem of analysis is a throwaway comment and continuing to hide behind popular opinion.

Once again, imagine the kind of draconian measures required to keep an unsustainable “Canadian” banking system in place…with an awful lot of ripped off people suddenly under water…and that system exposed for the ponzi it is. You barely address the social realities that would supposedly not touch institutions. At best, this is naive.

Snap off a comment ( without explanation) about “not missing a dividend”, because a statement like that only floats with non-critical thinking.

Start from the beginning. How did the Canadian real estate debacle happen? You start in reverse….with the unsupported “banks never missing a dividend” nonsense. Today’s scenario is wildly unprecedented. You’re pretending this is not so.

It makes for weak analysis.

The banking system is fine. It’s you I’m worried about. — Garth

#19 X on 10.30.12 at 9:53 pm

Economists do know this, they just won’t publicly state it to the sheep. Something to do with keeping their job, rather than doing what is in the best interest of the public.

Garth, you of all people would not understand that. ;)

#20 LJ on 10.30.12 at 9:54 pm

There was a clip played on the radio this afternoon that stated, “the Canadian housing market is different because we don’t have sub-prime mortgages here.”

I thought it was understood that basically ALL Canadian mortgages were equivalent to sub-prime due to the 5 year re-set we all take for granted here. Never mind the interest only HELOC loans that the banks have dished out to homeowners so that they can finance their BMW’s.

#21 25Alpha on 10.30.12 at 9:54 pm

You mean those Asian people who live in Canada? — Garth

I mean those who might be living here but are not canadians. I sold my apartment in 2011 and only asians showed up. They were all from overseas.

There were two girls from china who were only going to school here who ended up buying my apartment. They had to phone home to china and send the pictures, video and sale details to mom and dad before they would receive the money.

I don’t have much of a problem with it, hell they did my place at the asking price.

I think what bugs me is your harsh politically correct attitude and inability to face the facts. No doubt having been a public servant for so long that will do it to you eh Garth?

Oh dear, did I expose your racism? — Garth

#22 Alberta Ed on 10.30.12 at 9:58 pm

If prices of cottage/recreational properties on the Gulf Islands are any indication of things to come, Vancouver Island RE has a long way to come down.

#23 Weedeater on 10.30.12 at 9:59 pm

Home ownership is saddled with all the emotional baggage Garth writes about, combined with an almost primal association of property ownership bestowing rights and prestige not enjoyed by the tenant class. How economists assessing housing in Canada miss the historical significance of past housing bubbles is mystifying. Or stubborn denial. Could they be unaware of the Herengracht house index? Could they miss the significance of Canadian house prices averaging 1.11X household income in 1979 versus 4.9X today (8+ for Toronto and 10+ for Vancouver)? Will be interesting to read the spin as house prices decline over the next three years.

#24 Smoking Man on 10.30.12 at 10:04 pm

And gladiator a bad business is 1000 times better than a good job.

I forgot to mention something important. I don’t know how this works. It’s a feeling. When ever I sit down for a poker game or make a bet on the markets, I have a feeling in my gut, I know before the game starts if I’m going to win big, lose my shirt, be neutral. I can’t explane it, it can’t be explained logically. But it works. When the feeling is positive bet more. When losses mode bet small, neutral, it don’t matter.

I call it the force.

Advice from a mad man drunk

O well. May the force be with you

#25 Derek R on 10.30.12 at 10:08 pm

Garth wrote:
Economists need to know this. Should we tell them?

Nah, let’s not. At the moment it’s easy to spot the clueless ones by reading what they think about housing. Another great test, is to ask, “Did this economist see the GFC coming ?” There are only a handful of economists who pass both tests. They are the ones truly worth listening to.

#26 MJG on 10.30.12 at 10:10 pm

Garth, Nice chat at the hotel, loved it. My MPAC envelope arrived today, why do these people always seem to think my unrebuilt 1949 manse is worth about 30% more than I think it is? 2,000 sq ft of mouldy old block and flaking stucco with a wonky garage in beautiful downtown south Etobicoke is worth almost $700K? Suspect not! What is the proper response to these people in a falling market?

Tell them your dog ate it. — Garth

#27 young & foolish on 10.30.12 at 10:11 pm

It seems some folks waited too long to sell … now they must accept less. Yes, the tide is one determined by sentiment (and maybe demographics too). And now, fear and doubt are seeping in.

Was this not how it was during the 90s when everybody was buying dot-com stocks and shunning RE?

It’s never the same, but patterns do emerge, and being a contrarian just means being ahead of the herd.

#28 Timbo on 10.30.12 at 10:17 pm

http://www.grreporter.info/en/syriza_submitted_parliamentary_question_publication_lagarde_list_kostas_vaxevanis/8021

“At the same time, however, he writes, “in ancient Greece mythology, justice is presented as blind. In modern Greece, it is merely winking and nodding. A study of the Lagarde list is highly revealing. Publishers, businessmen, shipowners, the entire system of power is shown to have transferred money abroad. And this is information from only one bank. Meanwhile in Greece, people are going through dumpsters for food. What was an assumption in people’s minds has become a reality with the publication of the list.”

Eyes are opening and not liking what they are seeing…

http://www.bloomberg.com/news/2012-10-30/spanish-contraction-continues-as-austerity-spur-inflation.html

“Spain’s economy contracted for a fifth quarter, undermining efforts to plug the budget deficit that’s pushing the nation closer to a bailout, while austerity measures kept inflation at a 17-month high. ”

You can only squeeze that lemon so much…….

#29 TurnerNation on 10.30.12 at 10:20 pm

I happened to catch IE`s paper edition, Garth. It listed your AUM at at the old firm. Impressive!! So many blog dogs. (I get IE`s email edition, but I`m sell-side, go figure. Former IR). Acronyms.

#30 disciple on 10.30.12 at 10:23 pm

Benny ain’t swimming, he’s lying for his criminal overlord banker masters. He’s in the financial business, no? He should know that he is lying, making it a crime (assault on the public good). Oh yeah, but you like him, so that makes it okay, I guess…

#31 Jay Currie on 10.30.12 at 10:25 pm

The drop is already in play.

It will not likely ring up the foreclosure stats because, unlike our American friends, our banks keep the mortgages they write on their own books (rather than bundling them and selling them on) and it is very much in their interest to keep the homeowner servicing the mortgage. Even if that means coming up with a work out deal.

If you bought a house for 800K and it is now worth 650 the bank still wants you to pay your mortgage and it will make that as easy as possible. You might be an idiot but you are your bank’s own idiot.

At the same time, banks will not be too terribly keen to bring on new business until the market has stabilized. The elf has given them the tools to say “No”.

The drop is here, the melt is for Spring.

#32 Hoof-Hearted on 10.30.12 at 10:27 pm

WTF is this..

a Miami Snow person?

#33 Trader on 10.30.12 at 10:31 pm

I’m sure the BC housing decline must only be because HST is repealed, and gone from new housing in a few months…. Oh wait, did I scoop the real estate board?

#34 Bottoms_Up on 10.30.12 at 10:35 pm

#10 25Alpha on 10.30.12 at 9:32 pm
————————————–
We’ve been there before on this blog, and broken down who exactly is buying Vancouver real estate. I forget the exact numbers, but it was somewhere around 90% is bought by CANADIAN CITIZENS.

#35 Realtors and bankers in an all out panic on 10.30.12 at 10:36 pm

The housing crash in Canada is going from bad to worse. As Garth pointed out prices are falling 10-25% as people who need to sell can not sell unless they drop their prices by 10-25% and over time sellers will have to drop prices by 30-50% of summer of 2012 prices or it will not sell. It’s going to be a NASTY CRASH realtors a Nasty Crash!

#36 Smoking Man on 10.30.12 at 10:41 pm

Writers block going back to e-legable posts and bozze

#37 Edmonton Nick on 10.30.12 at 10:44 pm

Garth – what is your opinion on flow-throughs? Not relevant to this article, but would love to hear your opinion! Perhaps in a future article?

#38 visorman30 on 10.30.12 at 10:49 pm

@ 25Alpha, I can see where your personal experience reinforces the idea that HAM drives the Vancouver market. However, without some solid stats, at best you’re looking at anecdotal evidence. I think human experience tends to focus in on the extreme and blur out the normal.

Personally, I have a friend who does qualify as HAM (I’ve since been able to hold him off for at least a year from buying in Toronto) and he would have been one of those mainlanders-who-put-in-a-crazy-offer type of stories. Thing is, he doesn’t drive the average price increase and when I think about it, it’s more of my regular coworkers (who get house horny and in my mind, house blind) that drove prices up and up.

Your experience is just that, and I am not going to dispute what you have seen, just know that oftentimes memory, anecdotes and extrapolation have a low capability to actually reflect reality.

Accurate, unbiased and thorough information is the key to making well-informed decisions.

#39 Snowboid on 10.30.12 at 10:54 pm

#22 Alberta Ed on 10.30.12 at 9:58 pm…

Recreational properties in the Okanagan and Shuswap are also tanking, please tell your fellow Albertans to help us. I know, I know, you have already sent food to our Kelowna food bank, but we need you to buy our silver sand!!!

#40 25Alpha on 10.30.12 at 11:06 pm

Oh dear, did I expose your racism? — Garth

Ah yes a classic bread and butter retort straight from the PC fanatics tool box. Immediately accuse someone of racism and that should put to them, and their arguments, to bed!

No Garth.

You have exposed your ignorance and your puzzling refusal to face and admit facts.

Allow me to hold your hand.

Admitting that the Vancouver real estate market is/was driven largely by people from China does not constitute racism. It is simply a fact.

Take a deep breath and admit it. Don’t be afraid of the truth.

I repeat, show me stats. — Garth

#41 Al on 10.30.12 at 11:07 pm

I was laughing aloud when I read the CIBC article today.
Wages are stagnant in Calgary. The double income people at work snear because I buy my salad for lunch, imagine not bringing your lunch. Yet they are rich because their house is a gold mine, no cash on hand though. No desire to go back to Toronto, it will be the same all over.
This cannot end well. Next stop Saskatchewan.

#42 Oakvillian on 10.30.12 at 11:11 pm

Things are changing in my hood. I am seeing more and more houses for sale with no offers in Oakville. I saw at least 3 housed moved from ‘for sale’ to ‘leased’. – Ouch!

One house was listed at $799k recently dropped to $729 k . no offer at all. Another house in a desirable street. selling for $549 k with more than a month on market. If this was last year, both houses would have been sold within days. Oakville is in bad shape.. :(

#43 Ayn Rand Army on 10.30.12 at 11:31 pm

Glad my dollars are gaining in value from deflation eh? Maybe someone should tell my property manger…

I just got another rent increase notice, fifth one in five years and this one is for the maximum amount at 2.5% or $20+, so that’s now a total of $100 increase over five years from $730 to now at $830 per month starting in Feburary.

If this is deflation, I’m sure glad it ain’t inflation. snicker

#44 renters rule on 10.30.12 at 11:43 pm

@#18 John

shoo fly, shoo

#45 Jeff in Moose Jaw on 10.30.12 at 11:44 pm

Hey,

Looking around I found a current video which takes a macro look at a lot of todays issues and links them together.
Interesting….
http://www.youtube.com/watch?v=pMgOTQ7D_lk&feature=related

#46 Big Bear on 10.30.12 at 11:45 pm

It’s pretty simple. Incomes can’t sustain Vancouver Island prices. All those wise wrinkled folks need guys like me to do their maintenance and repairs but the younger tradespeople can’t afford to live there on what those farting dust are willing to pay.

Hey sonny, how much if I pay you cash? Thanks Gordo, the HST and its bumbling intro/fail was the final nail in the coffin…

I had a good run from 2004-2008 while everyone was happy to borrow (cuz prices would go up forever right?) It stuttered around this time in 08 but recovered somewhat thanks to the home renovation tax credit. (Why they don’t keep this self supporting job creating beauty alive and well is beyond me, but I’m not that smart to begin with)

09 was decent because of the HRTC but then F took it away and Gordo told us the HST would arrive in summer 2010. Then crickets.

Give them credit, as the wise old tax avoiding crowd wouldn’t have it, and they rallied around their hero Van der Zalm (did I spell it right?) to give it the boot.

Christy Clark has no answers and in all likelihood she’ll slap the PST on renos anywayz. Bottom line, the reno market was waiting for the HST to go away next spring but now deflation will take care of those still dreaming of recovery. It won’t be pretty.

I for one couldn’t afford to wait it out and now I know I was right to bail earlier this year.

Good luck Van Isle, you’re getting the trifecta now. Tonnes of radioactive waste on the way, a whole lotta shaking goin on just north, and man made bankster drama unfolding in a slow motion emergency trainwreck.

Very sad and somewhat avoidable, too bad greed got in the way on #3…

#47 Victor on 10.30.12 at 11:47 pm

Why interest rates must rise

http://ca.finance.yahoo.com/news/why-interest-rates-must-rise-074500175.html

#48 bob on 10.30.12 at 11:50 pm

can you stop this smoking man idiot from using this forum as his own self-aggrandizing blog

enuff already with this dude goof

#49 Cows on 10.30.12 at 11:53 pm

Garth, I live in Calgary. I can’t help it right now – it is what it is.

I’ve been reading your blog, and it rings true. Real estate speculation has cursed this country. The crash is a blessing to every poor man who looks longingly at the possibility of true home ownership.

The problem is that you have to live somewhere. And in Calgary, finding a decent rental for a reasonable price is like finding the Atocha. Rental prices are 30-50% higher than a mortgage payment, but there are more restrictions and the accomodations aren’t nearly as nice.

Every family man who dreams of real home ownership (not pretend home ownership where you make believe your name on title means you own it, in spite of that big fat mortgage).

But you have to live somewhere. What are people supposed to do in town like Calgary?

#50 Jim on 10.30.12 at 11:58 pm

#18 John,

I have to agree with Garth that the banks are not at risk of default. We have seen recently that states will go to any lengths to protect their financial institutions, probably because governments are in large part captured by them. (e.g., Geithner being a government official).

I rather suspect they will print money at will, rather than letting the banks themselves fail. Complete and utter moral hazard, and morally obscene to boot.

#51 Canadian in Malaysia on 10.31.12 at 12:15 am

#7 if you’re looking for a good entrepreneurial job for your wife and you like to travel, check this out.

http://www.excitevacations.com

#52 Canadian in Malaysia on 10.31.12 at 12:16 am

ooops,

it’s a Canadian company, so http://www.excitevacations.ca

#53 Harlee on 10.31.12 at 12:16 am

#145 W.M. (the big D)
When have I EVER “boosted” anything ? Hah ?
I don’t boost stocks.
I don’t boost gold.
I don’t boost bonds.
I don’t boost real estate.
I don’t even boost ‘Boost’.
Damn, where’s Furst to turn this into a work of poetry when ya need him ?
Anything I write …I’m just telling da truth.
And S. M.’s son should try again to get out here to Toon Town so I can buy him an ‘Original 16′ . Life is good !
I agree with our Host that no Canadian bank will collapse. Silly doomers. Go away.
I took another look at that pumpkin man in the photo. He’s scary. Kinda looks like Mr. F . Or a Real Estate agent. Somebody…
Happy Halloween ! (Too bad it’s cancelled in New Jersey).

#54 Interesting Times on 10.31.12 at 12:18 am

HGTV Virgins get out there and start low balling these realtards by 50 percent. Don’t waste your time going to open houses when you could just sit on MLS and low ball these used car salespeople by email. Get out there and get your revenge, show them that you are not as stupid as the show portrays you!

- jobs being lost everywhere still.

- austerity starting already in Canada. Many in government jobs will be bye, bye.

- all manufacturing jobs have moved to Asia and back to the US.

- 70 percent of CDN living pay cheque to pay cheque and have no savings.

- empty condos being built everywhere.

- Canadians are 163 percent in debt! More than the US, Ireland, and UK when they had there crash.

The 50 percent crash is here my virgins get out there and start low balling as the time is now for your revenge. Don’t sign up for bank slavery like the other 70 percent of the virgins in Canada. They are screwed for life now as they were sold the Koolaid by the RE industry!

#55 };-) aka D.A. on 10.31.12 at 12:23 am

#222Snowboid on 10.30.12 at 10:50 pm
#189 Kelowna down 5 years in a row on 10.30.12 at 6:04 pm…

If you haven’t received a raise since 2007, you would likely say that the buying power of your salary was down about 11.5%

If you look at average SFH September prices as published by OMREB, from 2007 to 2012 prices fell from $ 512,649 to $ 488,788.

But wait, that’s not including inflation – so although some desperate realtors may point out that in 2011 average prices were $ 517,864 – the bottom line is prices are down almost 17% from 2007.

So in the real world your blog name is perfect, in the fourth dimension where some RE pumpers still live, it’s not.

Seriously? Are you really going to go there? Because if you are going to start factoring in allowances for inflation, or deflation as Garth might argue, then you really need to accept that fancy schmancy new CREA MLS® HPI home pricing index thingamagig too. Didn’t your mother ever tell you, you can’t have your cake and eat it too.

#56 Canadian Watchdog on 10.31.12 at 12:24 am

Happy Halloween from Turner & Carney

#57 OwlEyes on 10.31.12 at 12:29 am

Well… this next tidbit is kinda shocking to read in the Star:
http://www.thestar.com/specialsections/article/1280002–baby-boomers-risk-retirement-stress-by-looking-to-houses-as-nest-eggs-bmo-report
Best quote: “Baby boomers are facing unique challenges that previous generations did not that could impact house prices.” – yah, challenges like thinking they deserve to live in a mansion and drive a BMW!

#58 house burden on 10.31.12 at 12:33 am

Thats right Garth, there are no two crashes that are alike, they appear the same, but never identical.

Canadian should think and compare.

1) USA crash, the world thought it hit bottom in 2009, 2010, now 2012. After several years of fall, how much more can it come down.

2) While the US was crashing, Canadian bought into US real-estate, thinking they will cash out in several years after it recovers (but it hasn’t happened yet)

3) As the US as crashing, the world including China was in good shape.

NOW!!

4) China, Europe, US and the rest of the world looks shakey at its best. Who will buy Canadian real estate is a fool. Not when the rest of the world look cheap and Canadian overpriced. Especially when the rest of the world is broke and may go to war soon.

5) Canada is slowing, we are also broke. Declining house prices means less taxes collect.

Slowdown in the world economy mean less raw resources sold, meaning less taxes collected.

Meaning greater unemployment. Less taxes, more unemployment and even less taxes collected. Its a vicious circle.

It’s surely not going to end well. I only wish the media would tell the truth to the sheeples, instead of herding them over the cliff!

#59 Mr Buyer on 10.31.12 at 12:35 am

Dearest Smoking man, being a programmer type I think you should automate your posts and have them throw themselves up without your precious time being consumed. Lets see, a database with a tables entitled school_is_bad, people_are_stupid, i_am_great, garth_is_repeating. A few columns I would suggest for the school_is_bad table would be bad_curriculum, bad_results, bad_teachers and just go through your past posts and fill each cell with phrases in the spirit of the particular column id. Some suggestions for columns for the people_are_stupid table could be limited_perception, lack_of_courage, lack_of_moral_terpitude. A few good columns for the i_am_great table would be i_made_a_kaka, i_buy_women, i_see_more_than_you, i_figured_it_out. There might be call for another table called welding_phases_together with columns such as opening_insults, end_of_thought, beginning_of_thought, closing_shots, and status_of_altered_state. Since your persona is the of a renegade financial markets code-smith you should have no problems hammering out a randomized comment parser maybe even in HASKEL and you will be able to maintain your fan base while making money hand over fist in your financial pursuits. Just a thought.

#60 Devore on 10.31.12 at 12:42 am

But where the bank, and all housing apologists, fail is with this ‘US-type meltdown’ denial talk.

I’ve noticed this kind of behaviour before. I think it comes from a tendency of people to see things in black and white. Us vs them. There’s us, and there’s everyone else. Everyone else is a single entity. US style housing collapse vs today’s Canadian market. US style health care system vs Canadian health care system. There’s no shades of grey, no continuum, no in-between, no other options. A and B. Black and white. It’s like a half dozen logical fallacies wrapped into one idea. Makes it really simple to stick to status quo and to hug your safe beliefs, because change sucks.

#61 The trick : The Retiring Boomer on 10.31.12 at 12:55 am

[...]   Continue Reading [...]

#62 Anthony Mayfield on 10.31.12 at 12:59 am

CIBC says there’s nothing to be concerned about, but are they to be trusted?

Please join me for additional commentary on the collapse of the Canadian Housing Bubble:

http://youtu.be/8dAV8C2GssE

#63 The end is nigh on 10.31.12 at 1:11 am

Show me the stats. – Garth
So who’s buying up all the condos in
Toronto and Vancouver?

#64 Derek R on 10.31.12 at 1:12 am

#43 Ayn Rand Army on 10.30.12 at 11:31 pm wrote
I just got another rent increase notice, fifth one in five years and this one is for the maximum amount at 2.5% or $20+, so that’s now a total of $100 increase over five years from $730 to now at $830 per month starting in Feburary.

If this is deflation, I’m sure glad it ain’t inflation. snicker

Yeah, one of the weird things that happens with mild deflation is that luxuries get cheaper but necessities get more expensive.

And wouldn’t you know it! Rent and Food is right up there in the necessities bracket.

#65 Devore on 10.31.12 at 1:27 am

#21 25Alpha

The singular of “anecdote” is not “data”. But grats on selling your place.

#66 Soylent Green is People on 10.31.12 at 1:28 am

sunshine and ponies?

Something to look forward as i try to survive storm harpentstein

http://Www.unseatharper.ca
.
.
.
.
.

#67 meslippery on 10.31.12 at 1:33 am

The cost of land, materials and labour to build the house.
Pencil and a calculator.
It is only the cost of land that is the wild card.(Or gas and time) if you must commute. So how much do you
have to earn to justify $500,000 to $800,000 for not
much of a house. Perhaps the land in some parts of
Canada maybe over priced??

At least for most of us.

nada

#68 Another Vancity Renter on 10.31.12 at 1:38 am

So I’ve been reading this pathetic blog for a few weeks now, drinking your kool-aid. And to this wanna-be owner (someday) in Vancouver, this kool-aid tastes pretty good. But it is kool-aid nonetheless, i.e. the stats and stories are cherry-picked to support one side of the argument. But it’s made me more aware of how the kool-aid drinkers on the RE boosters side of the divide sound these days and I’m starting to think they sound a bit absurd in light of some real statistics, like the fall in sales that really has occurred here in Vancity. For example: a mortgage broker the other day acknowledged the slowdown in sales and then waved it away, quickly saying that prices haven’t dropped (not quite true) and that there’s “NO REASON” for prices to drop! Well, I can think of a few, but the main one is that RE is fundamentally too expensive here. Like wacko too expensive for people who haven’t made their fortune elsewhere. Which is why I’m not buying yet, even though I have enough cash for a 50% down payment on a decent condo. My mother raised me to not pay too much for something. And her mother lived through the Great Depression.

In another recent case, a friend also acknowledged the sales drop and proceeded to predict a rapid price rise in the coming months because “this is such a great place to live!” I agree on that point – that it’s a great place to live – but should that guarantee exponential growth in housing prices? I hope not. I hope that fundamentals will prevail.

Oh, and one other thing the mortgage broker said was that the slight slowdown was pretty much only due to the media talking it up. How ironic – if only the media would shut up, right?!

#69 The end is nigh on 10.31.12 at 1:40 am

25 Alpha, I’m with you all the way.
If Garth would pay more attention to the Chinese media, he’d have a better understanding of the extent of Chinese investment in RE in Canada.
I’m tired of people being labelled racist for pointing out what is happening to this Country.
I’m from European background, and I would have the same issue if hordes of European investors would drive up RE to make it unaffordable for the average Canadian family.

#70 Zamphir on 10.31.12 at 1:43 am

No reason to worry about our finances. One third of us believe we will simply win our way out of our mess:

http://www.theglobeandmail.com/globe-investor/personal-finance/household-finances/feeling-lucky-lottery-inheritance-part-of-many-canadians-financial-plan-poll/article4777260/

#71 Devore on 10.31.12 at 2:57 am

Here we go again:

Hotel Georgia condo buyers sue to opt out of presale contracts as Vancouver real estate market sags

http://www.biv.com/article/20121030/BIV0111/310309943/hotel-georgia-condo-buyers-sue-to-opt-out-of-presale-contracts-as

#72 daystar on 10.31.12 at 3:09 am

#5 Marco from Van on 10.30.12 at 9:21 pm

Please, one wish – can the comments stay on subject? The personal agendas… – MfV

Like your own personal agenda? (ass kissin’ front of the classers, they’re all the same) You mentioned climate change as off topic. The last time it was discussed by a long time blogger (me) was on this post from Garth. (don’t look at me slow poke, you brought this up and I believe, ignorantly so):

http://www.greaterfool.ca/2012/10/26/flatlanders/

Read Garth’s post, Marco. Climate change wasn’t topical enough for you? I’m partly at a loss for words (rare although shortlived) because I come from an agricultural background that is 3 generations in Saskatchewan (was setting a grain bin up earlier today) and we are right near the border. Farm land has taken a big pop in value in Sask as bumper yields and high prices have combined driving up affordability. (ever heard the expression buy low, sell high? Its a bit late to buy low and unwise at these prices now, especially when crop failures are made by more than nature) Unfortunately, just as it is with real estate elsewhere, folks think these new high values and revenues are the “new norm” and finance accordingly until the next crop failure and/or interest rates triple and payments double within a decade and oops and wups, “why didn’t we see that coming”? The realtor said God stopped making land. Same old yawning same o. No theft here thread cop, I was only furthering Garth’s point.

You know what happened this year below that border Marco? It all started to grow great guns and then heat hit and everything stopped growing green and turned a sick tan brown. Unfortunately it wasn’t just Montana but everywhere in over 38 states. There is one word to describe this year’s drought in the U.S. . Unprecidented. Just like Frankenstorm. Unprecidented.

Readers might want to think twice before buying land in Saskatchewan. Think latitudes if you do or more importantly, think about what can truly create another GFC. It might not be fiat currency crisis or debt or war folks, it could be much, much worse than that and sadly, people at the front of the class like yourself there Marco, either can’t or won’t see it coming because you really do have those blinders on.

So here Marco, some unsolicited advice just for you. When long time bloggers tend to wander off the economy because they’ve already talked about it a few thousand times, try cutting them some slack. Should long time bloggers talk about the European debt crisis or the U.S. housing meltdown or U.S. elections that seemingly doesn’t relate to Canadian housing enough for you even though its future impacts on Canadian economy/housing are undeniable, yes, even something as elephant in the room as climate change, cut them some slack. You might actually learn something. Should long time bloggers address the nutty behaviors of others with a jaded and jagged psychological edge, (didn’t things improve just a tad later on? I have no regrets even though the innoculation may have caused a bit of a rash) cut them some friggin’ slack. You might actually need their input some day regardless of what your own control freaked semi nutless bloated ego is telling you now.

And right. I almost forgot Marco. In case you haven’t got it figured out, things have just become adversarial and as such, you get my extra special attention from here on in. :D (this is your future)

Garth, today’s post illustrates the vicious circle of negative news stoking negative sentiment, stoking negative growth. – Marco from Van

Sorry slowpoke, Garth’s post illustrates what paid shills fluff with positive propaganda in a desperate bid to stoke positive sentiment hoping for positive growth. Its a description of a front man prop to soften a “correction” with lies it appears, they’ve told so many times before they actually believe some of it themselves. Its an illustration of the blind leading the blind and/or bs’ers leading with bs and Garth exposes this well.

https://www.cibc.com/ca/media-centre/bio/tal.html

Benny might be a cool cat to clink drinks with but his economics is predictably bought. He’s a front man, nothing more and we should all sadly expect no less.

“As the old abode goes, bad news travels faster than good news and sticks around for longer” – MfV

No, slowpoke, its just another bank making up stories with the media’s blessing because they can’t use the real news and for a while, it actually works. (the U.S. housing crash is a perfect example, it worked for a full year until financials instead of people began to go broke, yoy #’s couldn’t be fudged and then the gig was up. When all was said and done, it took 2 full years for the bad news to really break)

(we’re wired to defend ourselves more than be aggressors) – Marco

Aren’t you a fine example. Another load of crap btw if anyone wants to swallow it.

then I think the potential for a more protracted negative cycle outweight any further upside gains. I really fear for the victims of the “bear trap”. – Marco

Lol, you actually think there will be upside gains and a bear trap during this correction? (wait for it folks… Marco’s from Vancouver) And can readers just “feel” the empathy. You can just tell Marco really “fears” for the “victims”, oh, the sincerity. Someone give him a red ribbon and a gold star.

#73 THE CELIAC HUSBAND on 10.31.12 at 3:10 am

#4 RETIRE IN LANGUEDOC

Though I agree with the need of a balanced and safe portfolio, France is a good option. If you don’t retire for another 8 years, you have time.
Europe has hit the skids hard and I am not sure when and how they get out of it.

However. However.
We bought into the French market 8 month ago at a huge discount. After (almost north american standard) renovations we are in it for less than 125.00 CAD$/sqft. In a small market town, next to Cognac, one hour to Bordeaux, 2 1/2 by train to Paris.
As a bonus we also got a 90m2 retail space in the deal that is going to create a return eventually one way or another (we started renos on it).
Add to that another 35m2 space that is renovated and ready for holiday rentals in March. There is an upside to buying when there is blood in the streets, despite the great unknown future of Europe. 80 million tourists a year in this country.

France also recalibrates your wants and needs, yes gas is at two bucks/litre, but you won’t have to drive 10 clicks round trip to get your groceries.

#74 martin9999 on 10.31.12 at 3:22 am

hei jimmi are we gonna make 200pip on the eur before elction or what. trade safe

#75 dosouth on 10.31.12 at 3:23 am

#16- Devore, actually two months ago – late August it was $824,900 – Good call.

BC Assessment shows it at $751k so it’s getting there, maybe another 25% off and it will attract some lookers.

Just click on the link in this tweet to find the discounted price Garth speaks of now…

http://tinyurl.com/8jtuj5v

This is getting to be fun!

#76 martin9999 on 10.31.12 at 3:24 am

dayse me

you are sweet and tender. as always

#77 martin9999 on 10.31.12 at 3:34 am

#14Smoking Man on 10.30.12 at 9:47 pm
7 gladiator.

Rich people are gamblers, they make bets
——
wrong!!! every one can be a gambler or make a bet.

smart is the one that makes a well calculated one

cheers

euro goin down bro. next year tho

#78 The Real Jimbo on 10.31.12 at 3:39 am

>You mean those Asian people who live in Canada? — Garth

Yes, those born-in-China people who all moved here with much greater wealth and displaced Canadians and Canadian culture just as we did to the First Nations. But what we did a century ago is viewed as bad. But what they’re doing is viewed a good. You can’t have it both ways.

Poor subjugated, displaced Jimbo. Grow a set. — Garth

#79 Buy? Curious? on 10.31.12 at 4:29 am

“Here I am! Rock me like a hurricane!”

Garth, I’m surprised I’m the first one to reference the hurricane. Did you see all the damage it has done in a major city centre? And that’s a tough town. Can you imagine something like that in Toronto? Stores would be sold out of tissues and adult diapers for the amount of whiny adults that live there. However, on a more serious side of things, what if the weather really does become dangerous or worse, a natural disaster hit? Vancouver had a earthquake a few days ago. Ottawa, surprisingly is hit by several minor one a year. They have about 450 per year!

http://www.earthquakescanada.nrcan.gc.ca/zones/eastcan-eng.php

I wonder if those superstitious Asians are beginning to second guess their purchases (I don’t have any stats if ALL Asians are superstitious but can provide a Wiki link, it’s just that every one I’ve met in my lifetime have put all their faith on signs of Luck. I hope that isn’t considered racist).

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

http://www.youtube.com/watch?v=N9qYF9DZPdw

#80 Dr. WAYNE on 10.31.12 at 7:21 am

#71 daystar on 10.31.12 at 3:09 am

WOW … do you really think anybody but you actually read your encyclopedic comment??

#81 Smoking Man on 10.31.12 at 7:28 am

#48 bob

out of all the name in the universe to post with. you select bob.

need i say more. creativity not your for-ta

#82 Smoking Man on 10.31.12 at 7:30 am

#58 Mr Buyer.

easaly do able . where would the fun in that be.

#83 Smoking Man on 10.31.12 at 7:32 am

#76 martin9999

a bet is a bet. you would be supprised at how many stupid hands win the pot.

luck way more important than smart

#84 Toon Town Boomer on 10.31.12 at 7:43 am

Marco from Van on 10.30.12 at 9:21 pm wrote
Please, one wish – can the comments stay on subject?

I couldn’t agree more.

#85 Victor on 10.31.12 at 7:52 am

http://ca.finance.yahoo.com/news/many-canadians-relying-home-values-retirement-nest-egg-040510459.html

TORONTO – About four-in-ten respondents to a new BMO study say they aren’t confident in their ability to save for retirement and the same amount are relying on the value of their home to help fund their retirement.

The BMO Retirement Institute survey conducted by Harris Decima also finds that one-third believe living comfortably in retirement is the most important financial goal.

However, the findings of the poll of 1,002 Canadian respondents suggests that many don’t think they’re doing enough to reach that dream.

About 40 per cent say they’re not confident they can save enough to fund their ideal retirement plans, while 29 per cent expect to have to delay retirement or work part-time due to a shortfall in savings.

And 41 per cent consider the equity they are building in their homes as an alternative source of funding their post-work plans.

BMO warns that using a home as a nest egg is a risky idea and that personal savings must play a role in retirement planning.

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

This will not end well.

#86 T.O. Bubble Boy on 10.31.12 at 7:58 am

Even getting the stats on the Vancouver market wouldn’t reveal the true % of houses bought with offshore money… how many Vancouverites get money transferred over from the mainland, and are the buyer in name only?

That being said, even with the “secret funding”, offshore buyers are not driving 100% of the market, even for spec condos.

The one segment where I don’t think anyone (even Garth) can dispute the influence of offshore $$$ is the high-end ($2M+) Vancouver market.

#87 House Horny Housewife on 10.31.12 at 8:02 am

Good morning Garth,

So all that you are saying is that what goes up unrealistically fast, must come down. Well that just makes plain old sense, doesn’t it ?

And I think that even with the correction in prices, houses in the larger cities will STILL be overpriced. When I compare what my parents can get for their tiny bungalow in Mississauga with what I am selling my two storey, heritage, fully restored brick home in Sherbrooke for, I am reeling. I happen to think that my sale price is closer to reality than what my parents can get for their place.

So any correction in prices in any of the larger Canadian cities is absolutely no surprise to me. No surprise at all. Prices were built up by consumer expectations and fairy dust and that is exactly how they will come back down.

What I STILL have a problem comprehending is how people in their late twenties and early thirties can afford to drive around in beemers and audis and own properties that it took my husband and I decades to afford (and I drive a Subaru). Are starter homes a thing of the past and is heaping loads of debt the only answer to this question ? No way, no how could anyone with nothing be able to acquire and support loans of this magnitude …

Homes correcting in price, no surprise to me. Young adults buying mansions, expensive renos and fancy cars … big honking surprise !

HHHW

#88 EIT on 10.31.12 at 8:19 am

Garth, tell F&C to privatize CMHC, cut it up, make derivatives/product/whatever, stamp it AAA, and sell to foreign markets… how about Europe. Let’s do the socially responsible thing and spread the risk (by exporting it). What is taking these guys so long?

#89 John on 10.31.12 at 8:40 am

Jim wrote:

#18 John,

“I have to agree with Garth that the banks are not at risk of default. We have seen recently that states will go to any lengths to protect their financial institutions, probably because governments are in large part captured by them. (e.g., Geithner being a government official).

I rather suspect they will print money at will, rather than letting the banks themselves fail. Complete and utter moral hazard, and morally obscene to boot.”
——-
I think you are technically right of course. But we’re talking about a very long build up of other dynamics.

My complaint is that the banks are being painted as invulnerable simply because they always have been. But they have reached much further this time, and there arw many unknowns. The scenario is not clear.

Good risk analysis and debate is not one which makes banks an absolute…with absolute power. That can’t be willed. So I disagree.

#90 Silver on 10.31.12 at 8:47 am

Two city if vancouver barristers yesterday.
“… the constitution is irrelevant … we only deal with administrative law… and we do not have to provide the legal rulings governing our actions…its up to you to disprove it.”

“…file a constitutional challenge. You don’t own your property nor land.. the B.C. Crown does….”

B.C. crown council…if you have a problem with the system go to Ottawa and file a complaint with the supreme court in Ottawa…
4 of the B.C. and Vancouver council and barristers I talked to had not even …”read the constitution of Canada.”
Said it was”irrelevant to them…”

Silver

#91 Dupcheck on 10.31.12 at 8:50 am

Does anyone think that the Gov timed the melt down start right after the 2012 housing assessment? This way they will gather high property taxes for the next 4 years based on high home evaluations? I think they did.

#92 JustTryingToProtectEquity on 10.31.12 at 8:53 am

Online bullying has been deemed inappropriate, so I won’t say anything excessively mean about Smoking Man. But surely he can be limited to posts that are on topic? As for John, get a grip man. Your conspiracist theories are outlandish. The IMF doesn’t have a single member that would be astute enough to carry out the magnitude of collusion you’re suggesting. The issue is simple, historic low interest rates caused people the world over to go into debt. In an effort to ward off an economic collapse here in Canada, our federal finance minister monkeyed with amortization rates… and the price of homes (and our indebtedness) sky-rocketed. No collusion. Just a ridiculous mistake that sits squarely on Mr. Flaherty’s shoulders. That said, we all must make every effort to keep our own finances in order. Let’s stay
on topic. This is a wonderful blog, a gift that keeps on giving. Let’s not reduce it to something less meaningful.

#93 rosie on 10.31.12 at 9:15 am

#57

Beware Ross Taylor, Susan Pigg and the Star.

#94 Herb on 10.31.12 at 9:25 am

#26 MJG,

Suggestion for you: 1.) make an inventory of the problems of your house; 2.) get written estimates of what it would cost to fix them; 3.) add up the “cost to fix” and put in a commensurate “Request for Reconsideration”. Condition of the house – if substantiated – is good justification for a lowered assessment. Been there, done that, it works.

The only other workable reasons for reconsideration are factual error by MPAC (square footage, number of bedrooms etc.) and solid “comparables” that are lower in assessment or better in features than yours. MPAC’s “About My Property” site is a gold mine.

BTW, MPAC does not use six comparables to come up with your assessment. They start to look for comparables to justify their assessment after you have challenged it. They don’t like doing unnecessary work, and that includes fighting a case they are liable to lose.

#95 Ward on 10.31.12 at 9:45 am

Garth, your website attracts a huge number of readers ona weekly basis. Can you incorporate a poll at the bottom of the daily blog entry asking one simple question:

Will home prices be higher or lower by December 31, 2017?

Readers can click on the appropriate box to i) Higher or ii) Lower and a running tally can be tracked. This is a kind of a grassroots market survey.

#96 John on 10.31.12 at 9:47 am

“>You mean those Asian people who live in Canada? — Garth

Yes, those born-in-China people who all moved here with much greater wealth and displaced Canadians and Canadian culture just as we did to the First Nations. But what we did a century ago is viewed as bad. But what they’re doing is viewed a good. You can’t have it both ways.

Poor subjugated, displaced Jimbo. Grow a set. — Garth”
———–

Yes, you’re right, Jimbo isn’t interested in a solution or reality. He’s angry and looking for a target. But that isn’t the whole story.

I see the “multiculturalism holy temple” broad brush as the deepest cut of racism. It is extraordinarily patronizing because it pretends to “protect” a group that doesn’t need that kind of protection. It’s an attack on their dignity.

I live in a non-multicultural homogenous South American country ( compared to Canada), and I remember the cover of a national magazine in 1999 with two twenty something Asian kids in their 20′s with spiked, dyed blond hair ( and gel) in a BMW…with the headline…”Vancouver? No, es Hongcouver”. And the number one Chilean tennis player of 1999: “Chino” Rios. His eyes were more indigenous. I couldn’t believe it. Bottom line? They were much less racist than Canadians. Drastically less.

The issue is patronization and not saying what’s what. If human dignity and commonality are real, differences and conflict is celebrated. True tolerance. And as real human beings we all struggle with this. Even in our own families. It’s not wrong to feel it and to say it. It’s there.

You seem to like to “will” things by pushing reality under the rug. If it’s not banks, it’s the truth about the very difficult task of real integration-contact with other races-culture. If it’s not that, it’s a complete brush off if social dynamics in Canadian culture…especially gender. You’re proposing a very powerless impersonal and isolated society ( which is how the global real estate fraud worked).

It adds up to a bit of a dog’s breakfast. The humor, being a good person and strong “technical” financial advice are another thing…it’s separate.

I think you should be challenged on these points, because you’re talking “transparency” on one hand…but not demonstrating it enough in some really important areas.

#97 Mike Leblond on 10.31.12 at 9:55 am

From today’s G&M: Statistics Canada says: “….In a sign of the times in Canada’s cooling housing market, construction dipped, while “the output of real estate agents and brokers fell 6.6 per cent in August, down for a fourth consecutive month,”

http://www.theglobeandmail.com/report-on-business/economy/growth/canadas-economy-stalls-in-august-hit-by-one-two-punch/article4789528/

#98 Grantmi on 10.31.12 at 10:08 am

http://ca.reuters.com/article/businessNews/idCABRE89U0PB20121031

Here we go… Contraction in Canadian economy. And these are August numbers. 3 months old.

#99 Herb on 10.31.12 at 10:09 am

Full disclosure for Marco from Van: my agenda is for good government, against Harper government, and for people, against plutocracy.

http://www.ipolitics.ca/2012/10/31/frances-russell-stephen-harper-and-the-triumph-of-the-corporation-state/

#100 };-) aka D.A. on 10.31.12 at 10:09 am

#81Smoking Man on 10.31.12 at 7:28 am
#48 bob

out of all the name in the universe to post with. you select bob.

need i say more. creativity not your for-ta

Don’t be so quick to judge there my smoking friend. Google “my name is ‘Bob’” and I think you will be quite surprised at the results.

#101 CalgaryRocks on 10.31.12 at 10:09 am

#4 Retire in Languedoc on 10.30.12 at 9:16 pm
Caught your seminar in the Big Smoke last week. It caused me to rethink my plans to buy real estate in the south of France over the next 3-6 months. Instead, my husband and I will open TFSA accounts in January, deposit 25K each and build a diversified portfolio using ETFs that will hopefully yield 7%. Man, what a 360!
You’re responsible for me building a diversified, balanced portfolio. I’ll let the magic of compounding work its magic and build up a nice nest egg for the purchase in 7-9 years.
Thanks,

Hopefully earn 7%? Even if it does (the odds that a beginner can get this return over the long term are probably 3%), and you contribute the maximum for the next 10 years, that’s only around 60K in earnings over that time frame.

Hardly an amount that’s worth putting your life on hold for a decade IMHO

#102 Form Man on 10.31.12 at 10:14 am

#91 dupchek

once again. property taxes are set by the mill rate. dropping property values do not mean dropping property taxes. I am amazed at the number of supposedly intelligent landowners who seem unable to grasp this.

#103 patiently Waiting on 10.31.12 at 10:15 am

What I STILL have a problem comprehending is how people in their late twenties and early thirties can afford to drive around in beemers and audis and own properties that it took my husband and I decades to afford (and I drive a Subaru). Are starter homes a thing of the past and is heaping loads of debt the only answer to this question ? No way, no how could anyone with nothing be able to acquire and support loans of this magnitude …

Homes correcting in price, no surprise to me. Young adults buying mansions, expensive renos and fancy cars … big honking surprise !

HHHW
—————————————————————-

I agree HHHW . . . my wife and I spent the past 20 years building up our equity, and within the last few years looked around to see all these young couples buying million dollar homes and driving beemers & escaldes. That’s why I started doing a little research on BCOnline to find out if my suspicions were true. And what I did find shocked me to no end . . . the amount of people that had 1 to 1.5 million dollar mortgages, the number that had 2nd & 3rd mortgages, moirtgages of prime plus 7%, mortgages of 14%, mortgages of even 20%, the number that had mortgages that are about the same value as their inflated home value is simply jaw dropping . . . even a mild correction could put many of these people deeply under water . . . this is insanity X’s 10 . . .

pw

#104 Eaglebay - Parksville on 10.31.12 at 10:18 am

#5 Marco from Van on 10.30.12 at 9:21 pm
“Please, one wish – can the comments stay on subject?”
____________________

Your post has nothing to do with today’s subject.
Why?

#105 Smoking Man on 10.31.12 at 10:56 am

#95 ward

the only thing a poll will show is how many are owners and how many rent

not usefull

#106 Dan on 10.31.12 at 11:01 am

I am curious what your opinion is on Genworth Mortgage Insurance Canada. It just reported earnings about the same as last year and increased its dividend by 10%, and is now yielding 6.2%. It is very well capitalized and thinks it can maintain profitability through either a large drop in prices OR a significant increase in delinquincies (but not both). I just bought some stock (I rent, so I figure as long as I don’t own real estate I’m ok to take risk via this stock).

#107 M G on 10.31.12 at 11:01 am

Carney’s next move is down boys and girls. GDP soft soft soft. This will be JApan for next few years – interest rates down to 0.

#108 Eaglebay - Parksville on 10.31.12 at 11:04 am

#79 Buy? Curious? on 10.31.12 at 4:29 am

Vancouver did not have an earthquake a few days ago.
Try Haida Gwai.

#109 Realtors and bankers in an all out panic on 10.31.12 at 11:10 am

Look at the realtors and bankers in an all out panic as the housing crash is starting to crash and crash HARD! RE is in a monster housing bubble backed by sub-prime loan lender CHMC. Without CHMC RE prices would go back to 3 times income or a 50-70% crash over night. Realtors and bankers know Canada is in a ponzi housing bubble. It’s going to be a nasty housing crash realtors and cry baby bankers who many go bankrupt a NASTY crash!

http://www.theglobeandmail.com/report-on-business/top-business-stories/cibc-warns-canadian-government-on-housing-market-careful-what-you-wish-for/article4789875/

#110 Daisy Mae on 10.31.12 at 11:11 am

#76martin9999
dayse me

you are sweet and tender. as always

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

Apology (?) accepted.

#111 Eaglebay - Parksville on 10.31.12 at 11:14 am

#86 T.O. Bubble Boy on 10.31.12 at 7:58 am
“Even getting the stats on the Vancouver market wouldn’t reveal the true % of houses bought with offshore money… how many Vancouverites get money transferred over from the mainland, and are the buyer in name only?”
________________
Europeans, Indians and Asians should send their money to Canada. This money gets recycled in the Canadian economy. This is great.
Most people on this blog are immigrants or maybe a generation or two away.
This country, like it or not, was built on immigration.
Guess who built the Trans Canadian railroad eons ago.

#112 AprilNewwest on 10.31.12 at 11:16 am

#80 Dr Wayne – Fully agree. I skip right past.
#84 Toon Town Boomer. Fully agree.

#113 kreditanstalt on 10.31.12 at 11:24 am

There has to be some punishment for the craven risk-averse “investor” fleeing to bonds, investment trusts, ETFs and the like…because there is NO way to avoid risk.

Ironically, if one wants to be a contrarian now, it’s time to be a jump ahead of the mob. “Above the crowd” as your fave RE outfit says.

SOMETHING must have scared the fixed-income addicts – the “gold price” looks sprightly this morning.

This guy has been getting a fair bit of online exposure lately and makes a good case that stocks are fairly priced right about now and that fixed-income of any kind is a loser:

http://www.zerohedge.com/contributed/2012-10-31/value-eye-storm

And he doesn’t even MENTION that the longer-term contains nothing but price inflation…

#114 Eaglebay - Parksville on 10.31.12 at 11:26 am

#99 Herb on 10.31.12 at 10:09 am
“Full disclosure for Marco from Van: my agenda is for good government, against Harper government, and for people, against plutocracy.”
________________
Who would you replace Harper with?
Ha, ha, ha…

#115 Ward on 10.31.12 at 11:27 am

#115 Smoking Man

the only thing a poll will show is how many are owners and how many rent

not usefull

Yes, voting one way or another would disclose one’s current bias towards housing mode – own vs. rent.

The thing about owners is that it’s often hard to induce them to sell and rent. Estimations of how much equity they might lose in a price correction are simply just that. Also, calculations of potential lost equity are weighed against the intrinsic and emotional benefits of ownership and, in many cases, the latter wins. Hindsight will be the only way for many of them to see what they should have done several years earlier and by then it’s too late, the gas is out of the bag.

#116 Form Man on 10.31.12 at 11:29 am

#221 will ( yesterday )

No one said there was a problem with increasing productivity. On the contrary, we are emphasizing this as a reason for investing in these companies………

reading comprehension classes are available……….

#117 Bottoms_Up on 10.31.12 at 11:39 am

#87 House Horny Housewife on 10.31.12 at 8:02 am
—————————————————–
They’re able to do that because of access to debt, and the cheapness of that debt. Imagine if we all had to pay cash in order to buy a vehicle? Most of us would be driving beaters. Imagine if we had to pay cash to buy a house? Prices would likely drop at least 50% (75%?) overnight. I’m not saying it’s right, but debt is fuelling these lifestyles.

#118 Just Park It on 10.31.12 at 11:42 am

Smoking Man qouted “Rich people are gamblers, they make bets. Poor people are cowards”

Though the remark is abit harsh – it’s reality – I actually got pumped reading your post. I have been a entrepreneur all my life – that is – as a kid I could sell a red icecream cone to a eskimo (sorry, not politically correct) – but as I grew older – I was brainwashed through school and feared being my own boss – I would head to work each day with misery – wake up, drive to work – work until I was nearly done – drive home, eat, and do it all over again! What kind of existance is that.

I am working on a new business idea that ozzes with potential – your post seemed to have pushed me in the right direction. I may have to thank you for opening my mind to a fact that I pushed back in the closest.

Love your blog Garth – at least I don’t feel like the only guy on the block who questions how prices are insanely overvalued.

#119 Ronaldo on 10.31.12 at 11:45 am

http://www.moneyville.ca/article/1280002–baby-boomers-risk-retirement-stress-by-looking-to-houses-as-nest-eggs-bmo-report

Soooo, baby boomers in their 50′s figure that buying the most expensive home now will save them in their retirement. Is this going to be the new trend? Good luck with that.

#120 Bottoms_Up on 10.31.12 at 11:47 am

#68 Another Vancity Renter on 10.31.12 at 1:38 am
————————————————–
There are a lot of great places to live in Canada–doesn’t mean the price of real estate is skyrocketing in each.

And, there are a lot of Canadians that would never want to live in Vancouver, due to the inclement weather. The absurd housing prices are just icing on the cake. Why are young families leaving in droves? That speaks volumes.

#121 Penny Henny on 10.31.12 at 11:51 am

“There is going to be continuing demand for housing as long as we bring in 250,000 immigrants a year,” says Doug Norris, chief demographer at Environics Analytics.
http://business.financialpost.com/2012/10/31/boomers-warned-using-home-sale-to-fund-retirement-could-backfire/

#122 Bottoms_Up on 10.31.12 at 11:53 am

#40 25Alpha on 10.30.12 at 11:06 pm
————————————
As I said previously, we’ve discussed this on the blog before, with stats, and you’re wrong.

#123 Smoking Man on 10.31.12 at 11:56 am

#107 MG

calling it now is obvious. now calling it six months a go would be amazing. hum; Any one remember my posts.

i have a gift

#124 Gypsy Kid on 10.31.12 at 11:59 am

Good gracious…what is all this multiculturalism talk going on today? Have you been abroad folks? “White” Americans and the English almost always create their own “ghetto” wherever they go…they rarely try to understand or try to adapt to their new/temporary homeland.

I agree Canadian multiculturalism has issues, but really, are we turning into Greek neo-nazi nationalists here??? Blame everything on the foreigners?? This is again what is wrong with Canada right now. No accountability for our own actions, laziness, and stupidity.
If foreigners, ASian , European or Africans, are buying up Canadian property, ummmm, who allowed them??? Us, via our lovely government. Who voted them in? Ummm, us???
Grow up people…

#125 Jas on 10.31.12 at 12:03 pm

Hi Garth:
What is your view on US $ in the coming weeks.

#126 Burnt Norton on 10.31.12 at 12:20 pm

25Alpha:

Vancouver prices have much more to do with people making $75-150k getting approved for $750-1.5k mortgages. Numerous friends and family members have done so.

Daystar:

Well done re calling out Marco. Thanks for taking the time to write what I was thinking.

#127 wes coast on 10.31.12 at 12:30 pm

Saw Tal on Lang and Oleary Exchange last night. Every question posed to him ended with “… But it won’t be a US style meltdown.”

He did admit to housing facing headwinds and a correction of 15 percent was in the cards. Considering a year ago these same economists called for flatline growth (which now equals 15 percent decline). One could argue an economists prediction of 15 percent decline equals 30 percent in reality.

#128 LuckyRenter on 10.31.12 at 12:31 pm

According to OSFI data, chartered financial institutions in Canada hold proportionally significant more HELOC debt than their U.S. counterparts. Outstanding HELOC debt in Canada is $206 billion, or roughly 12 per cent of GDP. That compares to an estimated $649 billions of equivalent outstanding debt in the U.S. in 2010, according to consumer reporting agency Equifax, or roughly four per cent of U.S. GDP.

According to Capital Economics, there is “a good chance” that the housing market will become “a significant drag on overall GDP growth in both 2013 and 2014.”

Just-in real GDP numbers for the month of August show a 0.1 per cent contraction in construction activity despite strong housing starts that month. Meanwhile, the output for real estate agents and brokers was down 6.6 per cent, the fourth straight monthly fall.

“August’s disappointing GDP numbers underscore our forecast of paltry growth in the third quarter,” IHS Global Insight wrote in a note this morning, noting that “contracting residential construction and declining output from real estate agents and brokers points to a weakening housing market.”

http://www2.macleans.ca/2012/10/31/canadas-housing-market-is-it-a-cooling-is-it-a-crash/

#129 bailing in bc on 10.31.12 at 12:36 pm

#80 Dr. WAYNE

I read his post. It was worth it. Why would you attack something you can’t be bothered to read? Is it really so irksome for you to just scroll down and skip it?

Kudos to you though for finally posting something other than a comment about how someone who posts “first” is an arsehole. Apparently reading the word “First” is a massive waste of your precious time, where as “Arsehole” is deserving of my attention.

#130 KommyKim on 10.31.12 at 12:41 pm

RE: #97 Mike Leblond on 10.31.12 at 9:55 am
From today’s G&M: Statistics Canada says: “….In a sign of the times in Canada’s cooling housing market, construction dipped, while “the output of real estate agents and brokers fell 6.6 per cent in August, down for a fourth consecutive month,”

I wonder what they mean by “output” when they are talking about realtors?
Flatulence?
BS?

The tradesperson who actually builds a house has output. A realtor doesn’t produce anything. Makes you wonder about the MSM sometimes…

#131 Buy? Curious? on 10.31.12 at 12:55 pm

Eagle Bay @108, um, ever hear of something called a Fault Lines? The tectonic plates meet at said lines that can go either way for hundreds of miles. Holy shit I just PWN’D some loser using my Grade 11 geography! Hey Smoking Man, what do you think of my high school education now? Don’t make me use my First Year Stats course on you. I just might scare you with what the average lifespan of a douche with a lifestyle like yours has left.

#132 Albert on 10.31.12 at 1:04 pm

BMW

Mercedes

Audi

Porsche

1 Million House

you can’t see it anywhere other than vancouver

#133 broadway skytrain on 10.31.12 at 1:11 pm

jobs? what jobs?

ADP’s new calculations put the monthly job creation at just 88,2000, down from the 162,000 the firm originally reported earlier this month
http://www.cnbc.com/id/49620569

ps: still waiting for some warmer winters in canada, someone tell china we need more CO2, pronto!

#134 Devore on 10.31.12 at 1:15 pm

#83 Smoking Man

Oh, so to be rich all I have to do is increase my luck? Gambling without luck just means the house wins. For every big winner, there are hundreds of small losers.

The only thing you can say about this is that some rich people are gamblers, and some gamblers are rich. Not much correlation between the two groups.

What you probably mean is rich people take well calculated risks, but somehow I don’t think that fits your style. You’re more like DA; do something today that has worked in the past, because it has worked in the past, and don’t worry about the details too much, things always work out in the long run. I suppose they do, but what this ignores is they work out much better the more initial conditions you control.

You’re taking how things “appear” to work, and assuming that’s how they work; rich people appear to be big gamblers and get very lucky. In fact, the vast majority of the time that is not so, hence a calculated gamble/calculated risk.

If you got rich primarily through luck and lucky timing, you should just admit it, instead of advocating this as some sort of repeatable strategy cloaked in some nonsense train station analogies making fun of people “too stupid” to roll the dice with their lives or “too programmed” to push away the grandma in their way.

#135 Victoria on 10.31.12 at 1:15 pm

I have said this before and I will say it again – I am on the front lines.

4 kids in 4 different schools. Middle – Upper Middle Class neighborhoods – One private school (some people have more money than God – 90 percent are average people but sacrifice plenty to keep their kids in the school).

People are paying 7 times their salary in housing. People are stretched to the max. Why? because of RE. Add food prices in the equation.

Just have to hang around a few playgrounds and chat with the moms. They will tell you.

#136 Victor on 10.31.12 at 1:18 pm

http://business.financialpost.com/2012/10/31/boomers-warned-using-home-sale-to-fund-retirement-could-backfire/

About a third of Baby Boomers plan to sell their home to fund their retirement, according to a study that questions whether buyers will dry up as that massive segment of the population downsizes.

Bank of Montreal is warning Boomers not to count on that nest egg, while other observers suggest that even if prices don’t plunge, big increases in property values are a thing of the past.

“They shouldn’t be relying on their homes because there are risks,” says Marlena Pospiech, a retirement strategist at the BMO Retirement Institute.

The bank suggests the following risky scenario: As Canada’s population ages, more Boomers will be retiring and selling their homes, putting downward pressure on prices.

#137 broadway skytrain on 10.31.12 at 1:21 pm

63 The end is nigh on 10.31.12 at 1:11 am
Show me the stats. – Garth
So who’s buying up all the condos in
Toronto and Vancouver?
————————————-
stats are not kept – ergo you can’t see any!

HAM is very real in HAMmy areas. HAM is non-existant in non HAMmy areas.

SFH (no condos)local HAMmy score ….(%of offshore $ deals)
newton 0
langley 0
mission/mr/pm 0
capital hill, bby 0
cloverdale 0
ladner 0
lonsdale 1
commercial dr 2
main st 3
ambleside 7

upper w van 15
richmond 25
choice west side 45

of course, all #s are pulled from my pumpkin entrails

#138 house burden on 10.31.12 at 1:26 pm

Hurricane Sandy is going to cost 60 Billion in the US alone.
With zero percent interest for the insurance companies, I can totally see premiums doubling in price.

http://business.time.com/2012/10/31/hurricane-sandy-estimated-to-cost-60-billion/

ONe thing I realize over time. If the government wanted more money they can raise taxes. But that only pushes a bigger underground economy and a greater tax evasion nightmare..

There is one thing they can safely tax and there isn’t a freakin thing you can do about it. Yes its property taxes.
It’s just double over the past year and now translink and all the government agencies are talking about another raise to get their fingers into the piehole. Where else are they going to get more money to keep their jobs and screw the masses

#139 };-) aka D.A. on 10.31.12 at 1:36 pm

#102Form Man on 10.31.12 at 10:14 am
#91 dupchek

once again. property taxes are set by the mill rate. dropping property values do not mean dropping property taxes. I am amazed at the number of supposedly intelligent landowners who seem unable to grasp this.

As nor does a property’s rising value necessarily mean the owner will be faced with an inevitable proportionate increase in the property taxes attributable to it.

You must have had to know I would spin that along another tangent albeit the same general direction. };-)

For those who do not know… all others please be patient or move along

Simply put; a city needs to take in so much revenue to meet its anticipated budgetary expenses for the next fiscal year. That revenue need is equally distributed, for the most part, across the tax base proportionate to each properties assessed value. The ‘MIL’ rate is the multiplier by which the assessed property value is multiplied to determine the owners due contribution in property tax.

But, that being said, I do want to point out that the ‘assessed value’ for tax purpose is no good indication of the actual ‘market value’ a property might have as many examples can be provided where a property has sold well in excess, or less, than that which it is assessed for tax purposes. It is not unusual to see a property sell for $100,000 less or more than it’s assessed value.

#140 Shane on 10.31.12 at 1:43 pm

Garth, do you think Canada will go into a reccesion if the housing market corrects?

Housing will have nothing to do with it. — Garth

#141 45north on 10.31.12 at 2:02 pm

house burden: Hurricane Sandy is going to cost $60 Billion. With zero percent interest for the insurance companies, I can totally see premiums doubling in price.

interesting comment house burden. The model of the insurance industry is that premiums are invested and make a decent return, when it comes time to pay out a good portion represent return on investment. With zero percent interest the industry is not viable.

Obviously the Federal Reserve needs me. Please contact:

[email protected]

#142 Bruce on 10.31.12 at 2:06 pm

Thanks for your tips. One thing we have noticed is the fact that banks along with financial institutions know the dimensions and spending behavior of consumers and as well understand that most people max out their cards around the getaways. They properly take advantage of that fact and commence flooding your current inbox plus snail-mail box together with hundreds of 0 APR credit cards offers just after the holiday season closes. Knowing that in case you are like 98% in the American general public, you’ll hop at the opportunity to consolidate consumer credit card debt and shift balances towards 0 rate credit cards.

#143 falsedata on 10.31.12 at 2:21 pm

Sorry, job numbers are cooked…..shake & bake.

http://www.zerohedge.com/news/2012-10-31/adp-cancels-365000-private-jobs-created-2012

#144 Blacksheep on 10.31.12 at 2:29 pm

JustTryingToProtectEquity # 92,

“The issue is simple, historic low interest rates caused people the WORLD OVER to go into debt.”

“No COLLUSION”

“Just a RIDICULOUS MISTAKE that sits squarely on Mr. Flaherty’s shoulders.”
—————————————————————-
JTTPE,
Your post reveals too much insight, removing any chance of naivety. When you cut away the chaff, your unrealistic reasoning, becomes apparent.

Yours and others (MfV & Daystar) posts attempts to disparage open conversation, call into question any whom partake, while guiding back to the traditional topic of this blog being, RE and Investment. Problem is we all know house prices, will fall. We all know about, 7% returns and TFSAs. We all know, Garth was right. We all know, it’s not different here.

If Garth desires this medium and audience to grow, I believe, conversations will have to advance.

John’s message is sometimes delivered in a abrupt, semi dyslexic format, but raises questions most fear to discuss in public. Many events in our history and life, are not as represented. This is usually labelled as conspiracy. I choose not to have closed mind, invite the brilliant people of this site to share and as long as it’s respectful, let the Dogs judge for themselves. If you don’t like what your reading, skip it.

Thanks Garth.

ps: caps is not me yelling, can’t highlight, as comp. ignant : )

take care
Blacksheep

#145 Smoking Man on 10.31.12 at 2:46 pm

#83 devore

what dont you understand. you got to put skin in the game then get up to bat. some times a strike out. some times a double. then every now and then you hit one out of the park.

so if you guess right. fast ball coming and you swing for a fast ball and it a homer. luck was at play. you guessed right.

now the point is poor people or cowards will never put up the anti for a shot at bat. they just sit in the stands and bitch.

and the reason they do is because that what school trained them to do.

#146 Form Man on 10.31.12 at 2:55 pm

#139 DA

exactly. by the same reasonimg , rising property values does not necessarily mean rising property taxes. ( property taxes will go up with inflation regardless of the ups and downs of the market value )

#147 jess on 10.31.12 at 3:10 pm

follow the mailboxes

Chinese Economy Lost $3.79 Trillion in Illicit Financial Outflows Since 2000, Reveals New GFI ReportFraudulent Mispricing of Trade Accounted for $3.20 Trillion in Illicit Outflows from 2000-2011
Serious Ramifications for “Social and Political Stability
October 25, 2012
Clark Gascoigne, +1 202 293 0740 x222

WASHINGTON, DC – The Chinese economy hemorrhaged US$3.79 trillion in illicit financial outflows from 2000 through 2011, according to a new report released today by Global Financial Integrity (GFI), a Washington, DC-based research and advocacy organization. Amidst increased domestic concern over inequality and corruption, GFI’s study raises serious questions about the stability of the Chinese economy merely two weeks before the once-in-a-decade leadership transition.

I’ve studied the proceeds of crime, corruption, and tax evasion for decades, and the magnitude of illicit money flowing out of China is astonishing,” said GFI Director Raymond Baker. “There’s no other developing or emerging economy that even comes close to suffering as much in illicit financial outflows.”

The research, conducted by GFI Lead Economist Dev Kar and GFI Economist Sarah Freitas, found that the illegal outflows—the proceeds of crime, corruption, and tax evasion—were largely due to a trade-based money laundering technique known as ‘trade misinvoicing ,’ which accounted for US$3.2 trillion, or 86.2%, of the total outflow of illegal capital over the 11 years studied. The trade misinvoicing figures were provided exclusively to The Economist, and appear in the latest edition of the magazine which hits newsstands tomorrow.
…Further Key Findings

Other key findings from the report include:

•Misinvoiced trade between Chinese companies and the United States increased from US$48.8 billion in 2000 to US$59.0 billion in 2011. The volume of trade misinvoicing between mainland China and the United States rose to US$72.0 billion before the financial crisis of 2008, but has declined since then, probably as a result of lower growth in bilateral trade between the countries.
•The commodity groupings most susceptible to trade misinvoicing include nuclear reactors, boilers, machinery, etc. and electrical and electronic equipment, with the sub-group for electronic circuits showing the largest cumulative illicit outflows (US$84.0 billion). Trade misinvoicing related to the sub-group for mobile phones increased at the fastest pace from 2007-2011.
•Of the roughly US$2.83 trillion that flowed illicitly out of China from 2005-2011, US$595.8 billion wound up as cash deposits or financial assets (such as stocks, bonds, mutual funds, and derivatives) in tax havens.

#148 Tom from Mississauga on 10.31.12 at 3:11 pm

Was in disbelief as I read this. Did they not realize it was there own buying driving the market?

http://www.moneyville.ca/article/1280002–baby-boomers-risk-retirement-stress-by-looking-to-houses-as-nest-eggs-bmo-report

#149 Tom from Mississauga on 10.31.12 at 3:12 pm

Garth, do you think Canada will go into a reccesion if the housing market corrects?

Housing will have nothing to do with it. — Garth

The 64.5% drop in new home sales will, won’t it? What could fill that in?

Not the stuff a national recession is made of. — Garth

#150 Franke le Skank on 10.31.12 at 3:17 pm

Its no wonder most people are in denial of the status of Real Estate. The CIBC consumer watch report is laughable, but I can see how most people would not be able to see through the missive holes in its logic. It basically list the old arguments that the pro-RE crowd rants about, debunks the those myths (recourse vs non-recourse and tax deductable mortgages). Fear not though, he provides a new list of BS excuses which I’m sure he will back peddle on in the future when RE drops even further.

He goes on to compare the speed at which the dept to income ratio is increasing. He says Canada’s velocity is far less than the Us and therefore not a factor. He provides made up numbers for the amount of high ration mortgages to prove that if prices fall, we will not have a high ratio of negative equity borrowers. He says that in Canada, we are curbing the risk of our sensitivity to increasing interest rates by reducing the amount of variable mortgages we have. He indicates that in the US, variable type mortgages increased prior to the crash. He doesn’t mention what happens when these 5 year term mortgages reset to higher rates. Anyways, given the fact that most people don’t know that the max amortization was changed to 25 years, you can understand how they would believe this garble.

#151 Awesome on 10.31.12 at 3:25 pm

I think prices are still at a standstill. People don’t want to
Drop them and agents are still smirking. Everyone is hoping for a strong spring market.

#152 Cowpie on 10.31.12 at 3:33 pm

#72 daystar on 10.31.12 at 3:09 am

Yep. Ditto, just what I was thinkin too. (Daystar, you sure can “get down to the GIT – DOWN” )

Marco: This blog is valuable because it’s so diverse. Like
a box o’ chocolates, Forrest.

We need EVERYONE’S 2 cents! LOVE THE LONG TIME POSTERS and feel ripped off if SmokinMan has not been deleted at least once a night. Garth may be the main dish, but EVERYONE here adds flavour.

#153 jess on 10.31.12 at 3:34 pm

not so different

ficha limpa – brazil – Mensalão case
http://www.bdci.tv/story_details.php?id=1902

public funds to pay members of Congress for support in crucial votes.

http://www.ft.com/cms/s/0/1b686ccc-21b1-11e2-b5d2-00144feabdc0.html#axzz2As8Qw1xE=
==============================
http://wallstreetonparade.com/2012/10/nathan-sproul-this-is-what-a-shell-company-looks-like/

http://www.pbs.org/wgbh/pages/frontline/government-elections-politics/big-sky-big-money/live-chat-230-p-m-et-how-is-big-money-changing-our-elections/

#154 };-) aka D.A. on 10.31.12 at 3:36 pm

#145Form Man on 10.31.12 at 2:55 pm
#139 DA

exactly. by the same reasonimg , rising property values does not necessarily mean rising property taxes. ( property taxes will go up with inflation regardless of the ups and downs of the market value )

Exactly right back at ya Form Man. For why would taxes rise as a consequence of inflation and the cost of shelter not?

Where in this country is a municipal government rolling back property taxes? Not Kelowna we’ve recently been told.

#155 Gregor Samsa on 10.31.12 at 3:38 pm

Mish paints a gloomy picture of the Canadian Economy:

http://globaleconomicanalysis.blogspot.ca/2012/10/canada-gdp-unexpectedly-shrinks_31.html

From my perspective, the job market in Canada is terrible right now. Lots of jobs at Tim Hortons, or possibly working in a mine on the tundra, but a white collar job in a city? Forget about it.

#156 Herb on 10.31.12 at 3:40 pm

#114 Eaglebay – Parksville,

anybody who is not a Neandercon.

#157 Franke le Skank on 10.31.12 at 3:41 pm

My house Horny wife asked me why we wouldn’t buy in Keswick (North of Toronto) when a real estate agent told her that prices will increase 24% in the next 3 years afer the 404 highways extension is completed. I shook my head and walked away!!

#158 JustTryingToProtectEquity on 10.31.12 at 3:42 pm

Blacksheep #143

Well said, Blacksheep. I will indeed skip over future posts from both Smoking Man and John as they are increasingly becoming total wastes of time.

Thank you for your well worded and considerate advice.

#159 Cowpie on 10.31.12 at 3:43 pm

Daystar. You may want to change your handle to: GrainBinMovinStar, MyEyesAreUponU, or something a bit more butch.

I thought you were a fairy princess, dude. No offense to fairies. Or princesses.

#160 Herb on 10.31.12 at 3:53 pm

#117 Bottoms_Up,

“… debt is fuelling these lifestyles.”

you are absolutely right! No one forced debtors to pump the economy. They allowed themselves to be seduced by marketing, so it’s their own damn fault if they have to bear the consequences.

After all, you can’t blame the seducer if a lady becomes pregnant, but isn’t it strange that the law doesn’t see it that way in actual paternity cases?

#161 Saskatoon Housing Bubble on 10.31.12 at 4:12 pm

Garth,
some household credit updates as of Sept 2012

Total outstanding household credit -$1.66 trillion
Total outstanding household mortgage credit-$1.16 trillion
Total outstanding household consumer credit-$497 billion

Canadian household credit measures in graph form
http://2.bp.blogspot.com/-W9S0PiO_YKg/UJFbWKh-XbI/AAAAAAAAD7g/Z4WK2U1deyw/s1600/Canadian+Household+Credit+Measures.jpg

Year over year growth in household credit has slowed to 5.4%.
http://2.bp.blogspot.com/-p3nxMRmA64s/UJFcR-YzQ8I/AAAAAAAAD7o/EpD2M9fSkUM/s1600/Year+Over+Year+Growth+Of+Canadian+Household+Debt.jpg

But the slow down in outstanding household debt growth is not all because consumers are more cautious. Interest rates over the last 4 years are at the lowest levels dating back to the 50′s. Most people who have new mortgages or have recently renewed over the past 4 years have done so with all time low rates. This has allowed Canadians to pay their debt down faster as more of their monthly payment goes towards the principal and less goes to interest payments. I don’t believe that the amount of new borrowing has changed much in the last 4 years, it is just that all time low interest rates have skewed the real growth rate of outstanding household debt. We can only guess at how high household debt growth would be if interest rates were between 5% and 6% and not between 3% and 4%

Another way to look at this is that outstanding household debt is a great big reservoir that has always been growing in size. This reservoir (outstanding household debt) has a river feeding it (new debt) and it has a creek with chutes ( interest rates) letting water out ( debt paid down). Now in the last 4 years, the river feeding (new debt) the reservoir (outstanding household debt) has not really slowed down much, but what has happened, is that the water leaving the reservoir (outstanding household debt) via the creek (debt paid down) has had chutes opened full blast ( all time low interest rates). Now if the chutes ( interest rates) were put at levels experienced from the last 10, 15 or even 20 years , we would see that the reservoir would be growing at a clip faster than 5.4% per year. And even at 5.4% per year, it is still faster than income growth, so we will continue to see the debt to income ratio of 165.8% from the 2nd quarter edge higher.

http://2.bp.blogspot.com/-BNgH_ODvHNM/UJFXQtULFfI/AAAAAAAAD6g/83Usp-3ALZ0/s1600/Household+Debt+to+Personal+Disposable+Income+new.jpg

#162 Shane on 10.31.12 at 4:30 pm

Garth, do you think Ontario or Canada is going into a recession? The economy contracted in august?

#163 };-) aka D.A. on 10.31.12 at 4:35 pm

#148Tom from Mississauga on 10.31.12 at 3:12 pm
Garth, do you think Canada will go into a reccesion if the housing market corrects?

Housing will have nothing to do with it. — Garth

The 64.5% drop in new home sales will, won’t it? What could fill that in?

Not the stuff a national recession is made of. — Garth

Nah, that would take a 64.5% drop in new car sales.

But seriously, new home and resale home sales teeter-totter back and forth all the time. What matters is an aggregate consistent level of home sales – both new and resale. Garth must be implying something that escapes me, none-the-less too many homes sales tends to be a sure sign things will slow down and too few is a sure sign things will eventually pick up. Right now, here in Kelowna anyway, we have a consistent number of homes selling and are coming off a mix wherein there have been recently more resale than new as trades lower their prices to attract more work back to that new home segment of the mix.

Want proof? Well here it is

So far this month (October 2012) there have been 284 sales of all types of which 138 were single family residences, 96 were strata units and 24 were vacant lot sales. Last year for the same period there were 281 listings of all types sold in the month of October of which 154 were single family residences, 95 were strata units and just 12 were vacant lot sales ready to be built upon.

So clearly you can see from the preceding that there is a shift back in that aggregate mix toward a higher contingent of new over resale. This month to date a 100% increase over last year and the month ain’t over yet. Granted a vacant lot sale is but an indication of a future new home sale. But hey, spin it as you may, it represents confidence if nothing else.

#164 Retire in Languedoc on 10.31.12 at 4:44 pm

#110 Calgary Rocks
“Hopefully earn 7%? Even if it does (the odds that a beginner can get this return over the long term are probably 3%)

and you contribute the maximum for the next 10 years, that’s only around 60K in earnings over that time frame.

Hardly an amount that’s worth putting your life on hold for a decade IMHO”

Who said I was a beginner?
$60,000 x 2 (hubby and I) = 120,000 of capital
Retirement date is fixed (8 years hence), date of real estate purchase is not.
I am not putting my life on hold.
I have determined that I will be further ahead if I let our France “mad money” grow tax-free in a TFSA for a period of time, rather than purchase a property at this time.
It’s good to have a plan (and EU citizenship)!
No Smyrna Beach condo for this girl.
Cheers

#165 broadway skytrain on 10.31.12 at 4:52 pm

When the mortgage brokers state categorically the average down payment in Canada is less than 10%
—————————————
mtge brokers? aren’t they for ppl with no money?
don’t ppl with money just go to their bank?

seriously, don’t brokers exist for the 0 down crowd only?
do brokers know the private banking going on between rbc and me?

#166 broadway skytrain on 10.31.12 at 4:54 pm

oh, and i vote for daystar to STFU about CC too.

#167 Old Man on 10.31.12 at 5:00 pm

#161 Shane – worry not as you are in good hands with Caesar which reminds me of the Insurance Company moto. This was Allstate, as they said, ” You Are In Good Hands With Us.” Now the problem came about with a claim, and they were reluctant to produce the green, as said you didn’t read the fine print.

#168 DM in C on 10.31.12 at 5:12 pm

Cows;

apropo name, as I smell cowpies.

“Rental prices are 30-50% higher than a mortgage payment, but there are more restrictions and the accomodations aren’t nearly as nice. ”

My rental house in the NW costs $1,000 less than to purchase, not including taxes and maintenance — no restrictions, we have a dog and a chinchilla. 4bdr/3.5bath, 2 car attached garage.

Wait, I’ll try again. This time I smell realtor.

#169 Old Man on 10.31.12 at 5:13 pm

#161 Shane – do not panic, as hear that F is now at a bar with some economic students asking for advice to correct his downfall, and Shane the one and only Caesar was a message for you.

” No one is so brave that he is not disturbed by something unexpected. ”

- Julius Caesar

#170 Smoking Man on 10.31.12 at 5:44 pm

#157 JustTryingToProtectEquity on 10.31.12 at 3:42 pm

I’m crushed and you know what, cause you despise me so, you will read every post, you can’t help yourself.

I know track 6ers better than they know themselves

My next post, charts and all will finally enlighten all of you.

Even Gartho will go, damn he’s right.

Breathless. — Garth

#171 Old Man on 10.31.12 at 6:38 pm

Tonight is halloween and the kids are coming early for candy, but will be splitting for a party at 9:30 PM to the Foxes Den Bar and Grill on Bay Street. My Amish housekeeper will dress in her traditional garb; my beloved dog Gertrude is the pub mascot wearing a nice outfit to the roar of the crowd; no dogs allowed you say, well just tell that to the last official who tried his hand, as he was chased down the street. Smoking Man come to me for a few lessons where the real action is, and as have much to learn. All have a fun tonight with the kids, and remember always the past when you too had this fun event.

#172 CowTown Geer' on 10.31.12 at 6:39 pm

#17 DaleFromCalgary:

You are wrong about Oil and Gas design engineering. The majority of the work IS performed in Alberta. The need to be in close proximity to the vendors, suppliers and actual work force requires most of the engineering to be done in Calgary. Most engineering firms cannot find enough people to fill the man-hour requirements of approved work.

The only work that is done offshore is the R&D and product development by huge multinational corporations.

Also, salaries in this industry have increased steadily since the blip in 08/09 where there was a wage freeze.

That said, I do believe real estate in Calgary has topped. Not everyone is in a high paying job and everyone I know already owns or is waiting for a price reduction.

#173 Westernman on 10.31.12 at 7:13 pm

General note:
Garth is 100% right about Canadian banks not failing.
Our glorious leaders in Ottawa will see that every single red cent is forcibly, if necessary, pried from the hands of Canadians to keep these monstrosities afloat no matter what…
Then again, knowing the Canadian mindset I wouldn’t be surprised if the sheeple voluntarily emptied their pockets for them…

#174 Renting4now on 10.31.12 at 7:25 pm

Care to comment on this, Garth? I’m not seeing a slowdown in Calgary as is often talked about on your blog. Could it be you underestimated the market here?

http://www.calgaryherald.com/Calgary+house+prices+flirting+with+2007+peak+level/7477684/story.html#ixzz2AvDYAJmi

#175 a prairie dawg on 10.31.12 at 7:28 pm

HappY HalloweeN you spooky people. lol

And kudos on the blog pic. Too funny.

#176 CalgaryRocks on 10.31.12 at 7:35 pm

Who said I was a beginner?
$60,000 x 2 (hubby and I) = 120,000 of capital

60K is for both of you not each.

#177 Cowpie on 10.31.12 at 7:53 pm

#167 DM in C on 10.31.12 at 5:12 pm

Leave the cowpies out of this. Cowpies smell much better than realtor, I assure you.

#178 ccen on 10.31.12 at 8:13 pm

The banking system is fine. It’s you I’m worried about. — Garth
That’s why they are on the Moody’s list to be downgraded. Now I understand how your system works… you have to be fine to be downgraded. wow

There is no downgrade at the moment and if one occurs, it will be utterly inconsequential. — Garth

#179 Daisy Mae on 10.31.12 at 8:34 pm

#114Eaglebay – Parksville on 10.31.12 at 11:26 am
#99 Herb on 10.31.12 at 10:09 am
“Full disclosure for Marco from Van: my agenda is for good government, against Harper government, and for people, against plutocracy.”
________________
Who would you replace Harper with?
Ha, ha, ha…

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

I dunno. But we gotta find SOMEONE! :)

#180 Eaglebay - Parksville on 10.31.12 at 8:57 pm

#138 house burden on 10.31.12 at 1:26 pm
“Hurricane Sandy is going to cost 60 Billion in the US alone.
With zero percent interest for the insurance companies, I can totally see premiums doubling in price.”
__________________
The $60 billion cost is a boon to the economy.
It’s creating thousands of jobs from cleaners, truck drivers, repairman, and people catching up on their grocery shopping, transportation and what have you.
This idea that these storms are hurting the economy is BS. more business and businesses catching up.

#181 happy renter on 10.31.12 at 9:09 pm

Hey Garth,why not stop foriegn ownership of houses in Canada?Many thousands of famillies in Canada are priced out of the market and we are overly in debted because of this problem.Its not racism its reality.Its very sad that most young famillies won’t ever own a house depending on what city they live in.

Nobody has a right to own a house. — Garth

#182 Yel on 10.31.12 at 9:11 pm

#173 Renting4now on 10.31.12 at 7:25 pm

It’s true. I just found out that a condo that changed hands for 435k in early 2009 I’d now being sold for 595.
Amazing!

#183 Tony on 11.01.12 at 12:46 am

Re: #4 Retire in Languedoc on 10.30.12 at 9:16 pm

I guarantee in 7 to 9 years you’ll have less than you started with. Even real estate in France would have been a better investment.

#184 Tony on 11.01.12 at 12:52 am

Re: #173 Renting4now on 10.31.12 at 7:25 pm

Calgary will get pulverized and there won’t be enough crying towels to go around as just about everyone walks away from what used to be their house only to be now be bank owned. Get used to it, oh and i see the price of oil is still on the slippery slope.

#185 Tony on 11.01.12 at 1:18 am

Re: #163 Retire in Languedoc on 10.31.12 at 4:44 pm

Post back here in 7 to 9 years to tell everyone what your initial investment has shrunk to. Did you ever consider stocks and commodities may fall every year for the next decade?

#186 Retire in Languedoc on 11.01.12 at 10:05 am

Re: 184#
“stocks and commodities may fall every year for the next decade”
wow…serious doomsdayer
I guess I should just hide under the bed in fear and not leave the house

re 175#
“60,000 is for both of you”
duh…
a little beginner math:

2013: (catch up contribution of $25,000 each= 50,000)
2014: (5,000 contribution each =10,000)
2015: (5,000 contribution each =10,000)
2016: (5,000 contribution each =10,000)
2017: (5,000 contribution each =10,000)
2018: (5,000 contribution each =10,000)
2019: (5,000 contribution each =10,000)
2020: (5,000 contribution each =10,000)

total: $120,000 in contributions (likely more, because the Feds will probably increase the limit to 5,500 eventually)

#187 Old Man on 11.01.12 at 4:46 pm

There will be big changes in the near future, as have been through two Real Estate crashes over the years in Toronto during the 1970′s and 1980′s. In one case a mortgage broker was placing family private money on seconds, and was shocked over all the fraud, as took a big hit. In the other case, all business came to a halt, so he just closed down, but had assets.

I said to Al what are you going to do? He surprised me as at one time was a highschool teacher teaching all business related subjects. He had no problem being hired as a supply teacher for $140.00 a day, and then obtained a permanent contract with one school board.

Real Estate goes through cycles of boom and bust, and this is a historical fact in Toronto. The key is to get in at the bottom to ride the wave, and then cash out before the bust. This time is different, as the bubble is huge, so based on Newton’s 3rd Law, the bust will be a surprise to all, and those with a condo in 416 are in for a shock, as when all rush to the door at the same time in a collapse – it will be too late.

#188 Toronto guy on 11.01.12 at 5:40 pm

Beware of radioactive granite countertops:
http://www.hc-sc.gc.ca/ewh-semt/radiation/radon/faq_fq-eng.php#home