The economist

Some days ago the realtors’ chief economist in BC (Cameron Muir) wrote this about a housing bubble and (I guess) me:

“It has taken the form of idolatry in the blogosphere, where any countervailing narrative is demonized. It has catapulted university dropouts into media darlings because of a hackneyed webpage and an opinion. It has been tarted up by so-called experts who predict impending doom year after year, despite being completely wrong every time.”

In the last thirty days, this is what transpired in the Vancouver real estate market. (Official numbers will be released tomorrow.)

  • The price of the average detached home was $1.053 million, about the same as the low hit in July. It has now declined 12.25%, or $147,000 since the Spring. Right on track.
  • Detached homes prices have retreated to 2010 levels. This means if you bought in the last two years, well, Cameron is sorry.
  • In all of the metro area last month only 635 detached homes changed hands – a significant 30% decline from the same month a year ago.
  • Let’s not forget that November, 2011 sales were 12.8% below those of the same month in 2010. In fact the number of deals last month was 40% lower than two years ago.
  • At the same time there are 6,775 single-family homes for sale, up 18% from last November. So there’s an 11-month supply, putting buyers firmly in control.

Note the numbers here are not in contrast to the traditionally frothy spring months, but give an accurate snapshot of how current conditions compare with Novembers past. Not well. Demand’s way down, listings are up. Prices have retreated significantly. This is the portrait of a market in distress, both unaffordable and losing momentum. Suddenly people who felt shut out of their own city can see an emerging strategy: wait.

The news in Victoria will likely be worse. Sales there have been running about 30% a month below 2011 levels, with a dismal sales-to-list ratio. Meanwhile the latest news about the Canadian economy, released just hours before I suffered through a Justin Bieber concert in Toronto (the Amazons stood on their seats and jiggled – so embarrassing), was anemic. Growth in GDP of a measly 0.1% in their third quarter with a big dive in exports.

If it weren’t for household consumption (up 3.1%) then growth would be negative. And where are families getting the money to spend on iPhone 5s and disposable Kia minivans? Right, they’re borrowing it. Consumer credit continues to rise, as every consecutive month we set a record for the debt-to-income ratio.

This is why people like Cameron Muir have lost public trust. I suspect he knows that. Anyone who resorts to ad hominem arguments has usually dried the wells of logic and fact. There has been nothing supporting the real estate balloon in major Canadian cities since 2009 but cheap money, lax lending standards, a growing wall of debt and self-promoting hyperbole from the housing lobby.

Now that debt has crested, lending rules tightened and the economy slowed to a crawl, it’s rational and realistic to expect real estate to correct. These are exactly the conditions this pathetic blog warned about two years ago, when Mr. Muir was offering no caution whatsoever. Even today, with interest rates destined to rise and years of consumer deleveraging ahead of us, leading inevitably to lower real estate prices, the guy’s still at it.

“In a market that has a well-diversified economy and expanding population, fire sales are extremely uncommon,” Muir says. “Unless there is household financial catastrophe on a large scale, potential home sellers simply wait until market conditions improve.”

Nice theory. But it didn’t apply in the US when a well-diversified economy and expanding population (plus low mortgage rates) could not keep a housing bubble from erupting in 2006. Real estate popped first, and two years later the ripples caused a financial and household crisis, not the other way ‘round. You’d think an economist would know that.

Cameron Muir has a role to play, supporting the industry association which employs him. We understand that. As a public figure and media source, he also has influence. Understand that, too. I may have a little myself.

We can only hope he learns to use his talents better.

140 comments ↓

#1 george on 12.02.12 at 7:44 pm

Good documentary on the life and economic theory of F.A. Hayek:

http://www.youtube.com/watch?v=Bd4svreSWko

#2 danny on 12.02.12 at 7:56 pm

your post has the wrong photo. Cameron Muir’s mouth is worse than a jackass’ rear end – at least what comes out of a jackass only goes one way but Cameron Muir swallows whatever comes out.

#3 pathcontrolmonk on 12.02.12 at 8:01 pm

Hardly what you would call an economist, “Muir began his career in 1986 as a Realtor with the Fraser Valley Real Estate Board. After six years in real estate sales and development, Muir shifted his focus to academic pursuits, obtaining diplomas from Kwantlen University College and the University of British Columbia, a degree from Simon Fraser University and graduate work in economics and property theory.”

http://www.remonline.com/?p=241

#4 Heinz Skitzvelvett on 12.02.12 at 8:06 pm

Please forgive Mr. Lareah, er, I mean Mr. Muir, Garth.

The rarefied air in the ivory tower can get a little thin from time-to-time. Perhaps his oxygen supply to his noodle is not at optimum levels.

As Galbraith said, “economics is extremely useful as a form of employment for economists.”

#5 Old Man on 12.02.12 at 8:09 pm

Garth you protest too much about a Justine Bieber concert, as I got hooped into Cher’s farewell tour in 2002 with the best seats surrounded by highend professionals and the wives with most averaging in their 50′s. Well, I was freaked out, as these wives went nuts around me dancing, and grabbed me to stand up to shout and scream with them about the old times gone forever. They all went nuts! So gave in to sway back and forth with some singing :)

#6 Meteghan on 12.02.12 at 8:11 pm

Garth, what’s your preferred strategy to get money out of RRSPs, in a tax efficient manner?

It’s patience. Have some. — Garth

#7 Mithan on 12.02.12 at 8:18 pm

“It has taken the form of idolatry in the blogosphere, where any countervailing narrative is demonized.”

Huh???? Um, it’s the other way around. The idolatry is focused on the cult of “it can only go up, buy now or you will never buy”. Anything against that view is what is demonized.

What gets me is how these people don’t care about the damage they are doing to families. Do these people REALLY think huge mortgages are good for us?

Of course not, which makes me wonder why the government goes after teens running an illegal lemonade stand but ignore the real estate industry and all it’s rhetoric. Money….

Oh we’ll, when it implodes, the bums will get tossed out.

#8 Heinz Skitzvelvett on 12.02.12 at 8:20 pm

My mistake; Mr. Lareah has a Ph.D.

#9 prairieperson on 12.02.12 at 8:22 pm

It is glacial but it moves. Went to get groceries and where there had been no real estate signs, there now were what seemed like endless open houses. Up until now, there were two SFH for sale, both very nice. Divided lot, the old, rather elegant house and a new house, nicely done in a similar style, both for sale. Except for the realtor, nary a car. No cars evident at the other open houses on the way to and from. This is the first evidence of owners wanting to sell before this spring. Maybe they’re all reading your blog. Dec is usually slow. No sold signs up. The word “seeping”comes to mind. As in, house prices aren’t going to keep going up, slowly seeping into people’s minds. Went to the store, bought groc for one person, me. 101.00. I can imagine that couples with kids who’ve maxed out buying a SFH are being beaten up at the groc store. Throw in car payments. The turn of the screw. What happens when no one wants your house? At first, the would be clever will snap some up, certain they’ve got a bargain but when the buyers don’t appear, the would-be-clever will face the problem of what do you do when no one wants your house?

#10 PermaBear on 12.02.12 at 8:22 pm

It’s still raining here in the Vancouver rainforest.
Buildings with stucco siding are sponging it up.

#11 Victor V on 12.02.12 at 8:28 pm

Let’s not forget that November, 2011 sales were 12.8% below those of the same month in 2010. In fact the number of deals last month was 40% lower than two years ago.

Did you mean to compare 2012/2011 YOY numbers?

As stated. — Garth

#12 Knucklewalker on 12.02.12 at 8:34 pm

DELETED

#13 renters rule on 12.02.12 at 8:36 pm

Anecdotal tidbit:

Colleague at work bought a new 2BR 1200 sq ft townhouse in North Delta (Van suburb) for $330K. Now has 2 kids under 3 and has decided said townhouse is too small for his growing family; they want to rent for a couple of years and then “vultch” a house after prices have come off current peaks. Back in March this year he listed his place at $399K. On the market for a couple of months, only one serious offer, I believe $379K or so, they turned down that “insulting lowball offer”. Pulled the listing to try again later in the year.

Re-listed after Labour Day — this time at $409K. I know, why do they list (doesn’t sell), pull, then re-list later at a higher price?! Well, here is his and his realtor’s reasoning: felt in part that the place didn’t sell/attract offers last time for what it was “worth” because they had low-balled on price and therefore were attracting the “wrong perspective buyer” and were cheating themselves out of a deal at what the place was really “worth”. This is how these people think! And my colleague has a math and accouting background, totally understands numbers……

The townhouse is still on the market today — price drops to $405K, $399K, and currently $389K have not attracted any offers. Some young-ish couples have I gather expressed an interest in the high $370s (the price they poo-poo’d in March!), but in all cases (3-4 times I think), the parents of those folks, who are apparently ponying up the downpayment money, have said they think the price is too high for the location — specifically, within a block or so of a major arterial highway (which one might think would be a selling point given the traffic in the Van area – my colleague’s place does not actually hear traffic apparently).

There are so many units listed, buyers do really have a lot more time and options to shop around. I did try to talk to my colleague (he asked for my view as he knows I follow the RE market, even though I am a renter!) about getting ahead of the price reduction curve, to avoid chasing the price down, languishing on the market and STILL not getting a deal…. when it didn’t get any sniffs back at $409K, I said, given what he had told me about last March’s experience — drop the price to $379K, you want to sell, something “drastic” like that could precipitate an offer, multiple offers maybe and perhaps a price in the low $380s? He does have significant equity in the place about a third, depending on what the place actually is “worth”, so he is nto at risk of being underwater….needless to say, he did the slow water torture price changes instead…..

I think he will not be lucky to sell in the $360s…. and if this goes on until the spring, which it looks like it will if he is still listed, he will be looking at something in the $350s or eve lower….which with breaking the term on his mortgage and paying the commission and transactions costs will leave him at net proceeds likely below what he got in at…he bought new in spring 2009…he is very frustrated that he can’t get a sale, but does not think that the problem is price! He thinks he just hasn’t found the right buyer yet…..

#14 Grim Reaper/Crypt Speculator on 12.02.12 at 8:38 pm

Dr. Wanker….

Game …Set ……Match..

bwhahahahahahaah

#15 Ralph Cramdown on 12.02.12 at 8:41 pm

Repent! Phil Soper (CEO, Royal LePage) has: “I think the impact of mortgage regulation is being blamed far too often these days in what is clearly just a natural cyclical slowdown in the market driven by overpriced homes. We were due for a slowdown.” — http://business.financialpost.com/2012/11/26/as-tougher-mortgage-rules-slow-housing-market-critics-call-for-a-reversal

#16 Steven Rowlandson on 12.02.12 at 8:44 pm

In my view the real estate cultists, global warmists, anti austerity people and other politically correct fanatics are just getting to be too much a waste of time
to listen to ,educate or reason with.
Such fanatics have to learn the hard way and that is all there is to it.
At the very least watching them learn will be entertaining.

#17 John Prine on 12.02.12 at 8:44 pm

The realtors I know out here in BC are well aware of what is going on, Victoria, Nanaimo and Vancouver. Cameron Muir is an embarrassment to the industry, anybody that is paying attention to the market can see this. His desperation is so apparent. Bear Mountain has 71 homes listed and 1 sale in all of November (for $300k)

#18 Ronaldo on 12.02.12 at 8:47 pm

Great photo. Economists, keep your blinders on. Wrong 9 times out of 10. Dear Sherry as an example.

#19 Daisy Mae on 12.02.12 at 8:55 pm

“….that was an 18-year-old kid who didn’t necessarily know nor care that Stephen Harper was going show up backstage at his show in Ottawa last Friday looking to shake his hand for a photo op and then good-naturedly absorbed a subsequent torrent of idiotic Internet outrage because he dared wear overalls to meet the Prime Minister….”

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

Good for Justin! LOL

#20 Taxc on 12.02.12 at 9:00 pm

KABOOM Vancouver and Victoria!!!

Toronto and Montreal will follow very soon…

Only financial illiterate first buyers will enter in the Canadian Real Estate in 2013!!!

#21 Old Man on 12.02.12 at 9:13 pm

#5 Old Man – need to make a point about this all with a sense of wisdom. I was all alone with no date, and was surrounded with married couples of great wealth to see Cher’s so-called final show performance. There was a trigger mechanism with the women, and they went ballistic about the past; the husbands all stood down. They were women of society, but in the end all were just like everyone else as the veil came down to become any woman; rich or poor, as the past joys in life were more important than the present. Just some food for thought.

#22 Victor V on 12.02.12 at 9:22 pm

http://business.time.com/2012/11/30/oh-no-canada-as-household-debt-skyrockets-will-canadians-face-a-2007-style-crisis/

Of course, few analysts in America predicted that the U.S. real estate market would blow up in the spectacular fashion it did in 2007, either. As financial blogger Pater Tenebrarum puts it:

“This kind of thinking has things exactly the wrong way around. It is precisely because such a state-owned guarantor of mortgages exists that the vaunted lending standards of Canada’s banks have increasingly gone out of the window as the bubble has grown. Today some $500 billion, or 50% of Canada’s outstanding mortgages are considered ‘high risk’ according to the Financial Post . . . Through CMHC and government guarantees for privately held mortgage insurers Genworth Capital and Canada Guarantee, Canadian tax payers are on the hook for more than C$1 trillion in mortgages. In other words, there is no practical difference to the role played by the once nominally private GSE’s and credit insurers in the US and the Canadian version of them: in both instances these institutions have enabled vast growth in ever more risky lending, while ultimately tax payers are picking up the tab when things go wrong – as they invariably must.”

That is to say, the difference between a soft landing and a meltdown could boil down to the financial integrity of the CMHC. A report from the agency released yesterday stresses its health and ability to stay solvent in the event of a downturn, and the conventional wisdom is that the Canadian real estate market will go through a rough patch and nothing more. But anybody who was paying attention during the American housing crisis can remember similar assurances, which turned out to be just plain wrong.

#23 Fartweezel on 12.02.12 at 9:25 pm

Justin Beiber????? LMFAO!!!!!

#24 Freedom First on 12.02.12 at 9:26 pm

Garth, thank you for your post, I really appreciate your almost daily blog of the truth.

Sadly, I have noticed more than ever before, that before, during, and since the GFC, every whistle blower/messenger of the truth has been shot. Luckily, the shooters, like Cameron, have no lead in their pencil, so to speak.

#25 45north on 12.02.12 at 9:29 pm

I suffered through a Justin Bieber concert in Toronto

Neil Young in Ottawa: the most epic celebration of Canadian culture

http://www.ottawacitizen.com/entertainment/Review+Neil+Young+show+most+epic+celebration+Canadian+culture/7606782/story.html

we left early

#26 FTP - First Time Poster on 12.02.12 at 9:36 pm

Zero Hedge has once again posted an article reflecting the prescient observations of those who are paying attention:

http://www.zerohedge.com/news/2012-12-01/guest-post-mark-carnage

#27 X on 12.02.12 at 9:38 pm

Any thoughts of what C may do prior to leaving in the summer, to limit/reduce household debt levels. The BOC seems intent on low rates at this point.

And yes, waiting seems to be the in thing. Waiting and seeing even a 5% drop in RE prices (on a $500,000 home) more than offsets what you would pay to rent similar housing here in Toronto. Now that bidding wars have ended for the most part, you can get that off of asking prices. If RE continues to drop more than 5% it is even more beneficial to wait this out for another year or two.

#28 AK on 12.02.12 at 9:39 pm

Idolatry – Until today, I never knew the meaning of this word. LOL.

“Idolatry is a pejorative term for the worship of an idol, a physical object such as a cult image, as a god, or practices believed to verge on worship, such as giving undue honour and regard to created forms other than God.”

#29 tony b on 12.02.12 at 9:50 pm

Interest rates are NOT going up—why you and everyone throws that canard out there all the time is beyond me–1-all the world is in deep debt-2-locally we don’t want the Canadian $ to rise-3–we don’t want to kill any consumer spending-

-if interest rates moved even 0.5 in the next couple of years , I would be surprised

Stop telling people interst rates are going to move up—maybe in 10 years but not for a long long time

R.E. Markets that have moved up too fast (B.C) or overbuilt (condos everywhere) will need to pull back and this is what is taking place

Take a look in most cities other than the 2 situations mentioned above, houses are still going up–maybe not by 10% a year but show me other than BC and TO condos where they are dropping as you seem to state every day

I’m not a RE agent or anything to do with the biz–I live in Hamilton and have been flipping houses for about 30 years

the US bubble was based on giving balloon martgages to folks who could not even afford the first parts of the deal—they got stuck in situations that were truly criminal—greedy bankers lending to anyone because they knew they could insure their loan with either the FDIC or by selling the exposure in some corrupt stock manipulation—this is not going on in Canada-

-so please don’t compare us to them

so Garth–I read you stuff every day but- truly –stop with the sky is falling-the sky is falling crap–

there are too many sheep here that buy this stuff hook line and sinker–
-buying and owning your own home ( with the bank) is something that is as natural as getting a job–having kids–it’s still evolution in this part of the world—

By the I went to the Metric concert last weeekend–that was a great show

#30 Hearrt on 12.02.12 at 9:57 pm

“Ad hominem” –(arguement aimed at the man and not the issue)–I had to Google it but its a new one for my vocabulary Garth thanks!

#31 Guy1 on 12.02.12 at 9:58 pm

This paragraph really hit me…

“But it didn’t apply in the US when a well-diversified and expanding population (plus low mortgage rates) could not keep a housing bubble from erupting in 2006. Real estate popped first, and two years later the ripples caused a financial and household crisis, not the other way ‘round. You’d think an economist would know that.”

You wrote a couple of weeks ago “Close your eyes. This is America, circa 2006.” Can we then deduce that the housing correction in Canada will ripple into a sudden dramatic decline of stock prices on the TSX in, say, October, 2014? Sorry, if I sound a bit naive, but we sold our two homes as per your recommendation, and my wife and I are about to discuss our investment options with a BMO financial planner (I would like to invest in REITS, ETFs, and Preferred Shares with an online broker as you once suggested, but online trading is still beyond me… maybe in the future… so, for now I’m relying on a BMO financial planner… I hope this is ok i.e., I’m not always too sure who to trust beyond you… and I trust you because you are an evidence-based analyst and most of what you’ve said over the past two years has come true). Thank-you, as always, for your wisdom, discernment, frankness, integrity, and humility.

I do not expect nor anticipate a stock slide. Hope that BMO guy is not a salesman in drag. Be careful. — Garth

#32 Joe on 12.02.12 at 9:59 pm

Hey Garth, do these Trump condo buyers have a real chance to get out of these deals they signed? Does the OSC even care to investigate like the buyers want them to. IMHO I knew this Trump condo was all hype and the suckers would get skinned. Don’t feel sorry for them at all or any other dumbass in Toronto losing money on another spec condo sold by Trump or Brad lamb.

http://m.thestar.com/business/article/1293074–disgruntled-hotel-condo-buyers-seeking-osc-probe

#33 T.O. Bubble Boy on 12.02.12 at 9:59 pm

The funny part is that the realtors and “economists” also point to 2008-2009 as proof that a 10%-15% price drop will certainly rebound next year… Too bad interest rates are already near-zero, and CMHC isn’t in position to start scraping together another sub-prime explosion like 2009 when approval standards were relaxed.

Do tell Mr. Muir: where will the spring buyers magically appear from?

Maybe it will be HAM invasion to the rescue?

#34 Marie on 12.02.12 at 10:01 pm

For anyone who is interested including @DaisyMae about the flip side of the Bieber/Harper meeting situation read this article posted by a Canadian entertainment blogger who also works for ETalk.

http://www.laineygossip.com/Justin-Bieber-wears-overalls-to-meet-Prime-Minister-Stephen-Harper/25273

Personally I agree with the blogger as I have friends in the industry who know and agree these type of meet and greets are not spontaneous. Very little in that industry is not pre-planned and controlled.

Anyway, apologies to Garth for going (way) off topic. I was bored and thought I’d play devils advocate. FYI Garth do you think the our Cdn daytime talk shows will ever be brave enough to go off script enough to have you on? I’m thinking no, but I’d love to see it.

#35 coastal on 12.02.12 at 10:03 pm

“In a market that has a well-diversified economy and expanding population, fire sales are extremely uncommon,” Muir says. “Unless there is household financial catastrophe on a large scale, potential home sellers simply wait until market conditions improve.”

Guess Muir also forgot about the early 80′s and 90′s when 30% plus fire sales were very common and the first couple of points in interest rate hikes did the most damage and cut the market off at the knees. F’s plan is doing the same as we speak. Between Muir and Pastrick, they form the most dangerous tandem of financial disaster advice one could ever encounter.

Muir’s comments are the same we read all over the Victoria and Vancouver house blogs by the agents who keep up the same juvenile statements of “so-called experts who predict impending doom year after year, despite being completely wrong every time.” while ignoring all the signs of a tanking market. I guess when they feed the blog sheep their inside house numbers, they all kiss your ass.

#36 JSS on 12.02.12 at 10:07 pm

“…disposable Kia’s”

so, what’s wrong with Kia’s? You get a good warranty, better than the houses being built these days.

#37 Mr Buyer on 12.02.12 at 10:09 pm

There has been nothing supporting the real estate balloon in major Canadian cities since 2009 but cheap money, lax lending standards, a growing wall of debt and self-promoting hyperbole from the housing lobby.
………………………………………………………………
Nice try on the accidental or not insinuation that 2009 may be a reasonable landing pad thing. Looking from the outside in I would say the 3x income benchmark is far far below 2009 levels and a more likely landing pad (not absolutely likely, just more likely). Crafty.

2009 was the year emergency interest rates were initiated. — Garth

#38 Marie on 12.02.12 at 10:15 pm

@AK…thanks for adding to the minutiae in my brain on a Sunday night.

Garth, do you think the U.S. will extend the current break for home owners by the Mortgage Forgiveness Debt Relief Act from 2007, which allows taxpayers to exclude from their income the discharge of debt on their principal residence? It’s currently due to end in 2013. What effect if any do you think it will have on their economy? I know foreclosures and short sales can often take months.

Thx, enjoy the blog.

I expect continuation. — Garth

#39 Mr Buyer on 12.02.12 at 10:24 pm

In my view the real estate cultists, global warmists,
……………………………………………………..
Well I do not see how these groups of people share anything that would return them both in a single SQL query unless some bizarre sort of JOIN is employed. One group are confidence men (people, sorry) and the other group are bringing to the fore that a warming trend on a global scale is afoot. Whether or not that warming is cyclical remains to be seen but the insulative effect of green house gasses is an observable phenomenon and it is reasonable to assume increases in concentrations of such gasses impact equilibrium (even termite and cow flatulence has global impacts upon airborne methane levels). As warming continues vast stores of greenhouse gases previously sequestered in natural sinks will and are being released into the atmosphere daily. One of the greatest short comings of popular consciousness is a limited appreciation of exponential growth. To put it bluntly, hey what is the problem there is is still half of what ever left and a single doubling period later there is none. One moment plenty, the next moment nothing.

#40 Marie on 12.02.12 at 10:26 pm

@OldMan. LOL…I know and have met many men who relive their so called glory days over and over. Sadly, they have many years ahead of them that could be even better. Aging and needing to relive past good times doesn’t discriminate by gender. Have you thought that maybe they were just having a really great time and ignoring their need to put on airs or ‘act their age?’ My husband has gone out with friends after a great game of baseball..and yes they are well established professionals…who as he puts just put the crap aside for awhile and laugh their a$$ off.

Again, apologies Garth for the detour. Like I said, a bit bored tonight and the IPad is portable.

Take care all!

#41 Mr Buyer on 12.02.12 at 10:31 pm

#34 Mr Buyer on 12.02.12 at 10:09 pm
There has been nothing supporting the real estate balloon in major Canadian cities since 2009

2009 was the year emergency interest rates were initiated. — Garth
…………………………………………………………
Message received and understood. It seems I have fallen into the old ‘you know what they say about assume’ trap. Let me paraphrase…
Sharing of my assumptions makes clear what an ass I am. I think I over simplified but you know what I mean.

#42 Smoking Man on 12.02.12 at 10:42 pm

Marie. Let’s face it you’re bored cause I’m not around.

I got stuck staring at the refelection pool. Trowing stones at it only to discover I Like what I see after the waves diaper.

#43 Scott (GVRD) on 12.02.12 at 10:47 pm

Garth et al, where do you see the prices of items like cars in the near future? My family is in need of a vehicle and I’m wondering if I should wait 4-6 months for the economy to dip before buying, or buy now if nothing will happen.

Any advice is appreciated. Thank you.

#44 renters rule on 12.02.12 at 10:49 pm

@#29 tonyb

you are clueless. Interest rates are NOT decided by what borrowers are willing to pay/can afford — they are decided by those who have money to lend.

We are now in QE3 nad the third round of flush, easy money (increase in mony supply with no underlying increase in economic activity) and it is having almost no impact, which is to be expected at this point. Interest rates HAVE to go up, as if you do not compensate those with money for lending that money, they will not lend it — because once risk is factored in, they are experiencing a negative return on their money.

The game of musical chairs is over — all of that debt is not going anywhere, as Garth says, we are in for a prolonged period of de-leveraging (Joe and Josephine Canadian will start to dig away at all that credot card, LOC, HELOC and mortgage debt) — those who experience job or other shocks will go bankrupt, housing prices are in for a long long swoon…. it is so over. time to rethink your RE “career”…..

#45 Sebee on 12.02.12 at 10:55 pm

Please read blogs twice before posting.

Please read blogs twice before posting.

Every darn blog has comments where people are clearly not absorbing the text. It is written. Take your time. Read slowly. Read twice. Enough with the comments which Garth has to ask you read what is written just above. Every article without fail. If you can’t read perhaps there is a more pressing issue than financial advice?

Thanks for letting me rant.

#46 Teulon on 12.02.12 at 11:04 pm

#31 Guy1
Online investing should not intimidate you – it’s easy and has reasonable transaction costs. Start with some Cdn bank preferred shares yielding around 5.5% (BMO,BNS,TD,RY).
Your BMO “financial advisor” will likely point you to the bank’s mutual funds which don’t yield much or worse yet their GIC’s
Good luck!

#47 45north on 12.02.12 at 11:05 pm

tony b: I live in Hamilton and have been flipping houses for about 30 years

30 years that’s a long time, tony you got to know people that are seriously in debt, but that’s alright you say the banks know what they’re doing. They do and you don’t.

JSS: what’s wrong with Kia’s? You get a good warranty, better than the houses being built these days.

true enough, if your battery needs replacing, KIA will replace it. More importantly people don’t buy KIAs with the idea they will be worth more in 5 years.

Mr Buyer: Well I do not see how these groups of people share anything that would return them both in a single SQL query

your best line ever

#48 renters rule on 12.02.12 at 11:05 pm

p.s. tonyb

I am assuming you are posting today because that flipping business is not going so well these days… karma is a bee-atch…..

#49 raider on 12.02.12 at 11:06 pm

#29, thanks to people like you I’m getting paid on my preferreds and bonds.
#43 if rates go up, I have a reason to load even up more on this stuff :)

And thanks to Garth informative posts, I didn’t commit financial suicide by actually following #29s ideal.

To really understand finance, you have to speak French:
‘Mortgage – a financial engagement until death’ (from “la mort” … check Wikipedia if you don’t believe it).

#50 Mr Buyer on 12.02.12 at 11:15 pm

I should point out that water vapor itself can behave like a greenhouse gas (its a little more complex but a similar effect none the less) so warming makes for increased levels of gaseous water (increased humidity) a cute little feed back loop if there ever was one.
I WILL DEFER ANY FURTHER INSIGHTS REGARDING THE INSULATIVE (not showing up as a word) CAPACITIES OF GREENHOUSE GASES TO PEOPLE THAT ACTUALLY KNOW WHAT THEY ARE TALKING ABOUT.

#51 Grim Reaper/Crypt Speculator on 12.02.12 at 11:18 pm

Listen…Canada

UR a DEMON-Ocrpcy

You have a Choice

(i) Justin Trudeau

(ii) Justin Bieber

(iii) Justin..Tyme…(FedEx)

choose WYzlee

#52 Old Man on 12.02.12 at 11:18 pm

#40 Marie – will respond as there is as difference between men and women. I see women in my walk in life as the stronger partner in a relationship, and just know men will trash me. The female has a different focus on life, whereby, they have a perception that involves a much deeper meaning. All women want a security in marriage ; they will take care of the kids; and pamper the husband. Now when all is said and done they will put all this aside, to remember the joys of the past, as that has meaning for them more than anything else in life. Might be a farm girl at heart who is now living the good life, but with a woman they will never forget.

#53 Waterloo Resident on 12.02.12 at 11:25 pm

Garth, relax and take life ‘not-so-seriously’.

Frankly I think you are a very intelligent person and I respect you very much, but in today’s weird world everyone gets picked on for no reason, its just not fair. So please don’t let these vultures get to you, just try to ignore them and know that a great majority of us totally support you !

Take care.

#54 45north on 12.02.12 at 11:29 pm

oh and Marie: I know and have met many men who relive their so called glory days over and over.

http://www.youtube.com/watch?v=6vQpW9XRiyM

#55 Rene on 12.02.12 at 11:30 pm

http://www.youtube.com/watch?v=bNmcf4Y3lGM

The greatest parody I’ve seen using Hitler’s rant, to talk about how he was taken in the US housing bubble. The parallels with our housing market is rather astonishing. Enjoy!

#56 Realtors in an all out PANIC! on 12.02.12 at 11:30 pm

It’s going to be a NASTY housing crash realtor, A NASTY crash!

It’s going to be a NASTY housing crash builders, A NASTY crash!

It’s going to be a NASTY housing crash mortgage brokers, A NASTY crash!

It’s going to be a NASTY housing crash bankers, A NASTY crash!

It’s going to be a NASTY housing crash flippers, A NASTY crash!

It’s going to be a NASTY crash T.O condo owers, A NASTY crash!

It’s going to be a NASTY housing CRASH, A NASTY crash!

#57 Guy1 on 12.02.12 at 11:34 pm

Re. I do not expect nor anticipate a stock slide. Hope that BMO guy is not a salesman in drag. Be careful. — Garth

The BMO guy has a finance degree from SFU… young guy but certainly quick… I gave him a list of the things you’ve recommended over the years, and he said “the person who gave you this advice is spot on.” The guy seems honest… looks like a straight arrow and was very polite… and, he even recommended that we invest in a competing bank: TD. And, I noticed on the net that he donated his time to a major charity… which tells me that he has some sort of values framework. But, I will study more before my appointment on the 14th… and I’ll nevertheless be careful as you say. Many thanks…

#58 2centsCdn on 12.02.12 at 11:54 pm

BC Realtors’ chief economist Cameron Muir’s words …. blaw blaw blaw. Mr. Muir gets paid to keep a happy face on BC RE and make noise for MSM and the lemming masses. Through sites like this (and some of the intelligent people who contribute) we can learn what is really going on, how to stay one step ahead, and how to avoid tricks and traps (in all forms of investing). It’s perfect. Some say this blog is negative … but it seeks and speaks the truth. An absolute gift in this world of ever increasing deception and propaganda. No one can be a dumb ass and live a decent life anymore. We have to become wise to this stuff.

#59 periwinkles on 12.03.12 at 12:11 am

DELETED

#60 Ralph Cramdown on 12.03.12 at 12:14 am

#44 renters rule — Interest rates HAVE to go up, as if you do not compensate those with money for lending that money, they will not lend it — because once risk is factored in, they are experiencing a negative return on their money.

This theory seems to have been superceded by the facts. While I agree that interest rates will likely eventually go up, it appears that some debtors (ahem Japan) can borrow at extremely low rates for very long periods of time.

#61 hangfire on 12.03.12 at 12:16 am

Mr. Muir and the rest have made hay from not having to disclose the source of funding that supports them. The lax disclosure laws in Canada/British Columbia do not support the consumer or the truth. The media has no scruples in running ‘Real Estate ‘ sections disguised as quality reportage when in fact the articles are undisclosed advertising……in many parts of the world…including the entie US of A…..this practise is illegal….why has Canada or the Provincial legislatures not moved to protect consumers by forcing the media to issue warning headers on every for profit advertising before hiding it behind viel of ‘journalism’?

Real Estate Boards masquerade as if they are public bodies representing the public interest through quasi legal legislation apparatus….they do not……nothing of the kind. RE Boards represent themselves….they profit from the public ignorance.

Touts-Salesmen-Credit Union and Bank spokesmen/women- University Trainers supported by developers-Media pumping development-spouting nonsense….fine…..I’m a big believer in capitalism….but non-disclosure is tantamount to lying. Why doesn’t BC take a page from Washington State consumer protection legislation and require persons the likes of Mr Muir to disclose his position clearly to the public atop the masthead of every publication and announced clearly before and after every ‘infomercial’?

Shame on the politicians who have turned a blind eye to consumer protection.

#62 Edmn Here on 12.03.12 at 12:27 am

Good Article.
Coming from Alberta where I believe our Premier is a liar, and she is running a huge deficit higher than basket-case Quebec! SHe really is “allison in wonderland” and she proved the opposition to be right-again!

#63 Stu on 12.03.12 at 12:30 am

Garth why did your boy Carney go? Because he is such a great guy ? England loves him? Maybe. But the real reason, Flaherty did “his part” to “control the Bubble.”

Flaherty wants to look good. But he knows money has to stay cheap. Let Carney go, stick in your puppet who follows Helicopter ben Bernanke’s school of thought, and keep interest rates low. We will have a lovely dove run the Bank of Canada meanwhile the elfin deity can have his cake and eat it too. He does not want housing to go down because then the economy will roll over. But hea also wants to ‘control the bubble” and be the messiah. Your buddy Harper knows this too. yeah the angels that kicked ur ass out.

Garth u seem like a good guy, out for a buck like anyone else. But those nice guys in Ottawa know the politico playbook much better.

#64 Keith in Calgary on 12.03.12 at 12:41 am

I just spent the last week in Sechelt, BC, on a business trip……..they call this area “The Sunshine Coast”…….

It was foggy and clouded over for the first two days, and rained now stop the last three days of the trip.

Marketers get away with all kinds of things……..

#65 Johnny D on 12.03.12 at 12:49 am

“It has been tarted up by so-called experts who predict impending doom year after year…”

So sick of the real estate industry saying that people who call for a RE correction are calling for “doom”.

Does ‘doom’ mean average people being able to afford a roof over their heads???

Enough with the greed jerks!

#66 Barry Lainof on 12.03.12 at 12:51 am

Tony B

the US bubble was based on giving balloon martgages to folks who could not even afford the first parts of the deal—they got stuck in situations that were truly criminal—greedy bankers lending to anyone because they knew they could insure their loan with either the FDIC or by selling the exposure in some corrupt stock manipulation—this is not going on in Canada

Really ! What do you call 3, 4, & 5 year terms but faux balloon mortgages. CMHC should only insure 25 year fixed mortgages, then the banks would be a bit more cautious with their lending.

#67 robert on 12.03.12 at 1:07 am

I have said for sometime now that just as Davidson predicted in the Great Reckoning it will all end with blood in the streets. Well much of what he predicted some 20 years ago has come to pass. The CNBC and local cheerleader types will be exposed and will live in fear for lives when the the greatest ever redistribution of wealth is complete. Do you really think that marketing guru of Vancouvers condos and the Vancouvers voice on real estate care about what they have done to people? In time they will be viewed as just common criminals no better than the penny stock promoters of the past. Add to this these idiots that stand in front of the cameras everyday and spew out their lies and deceit. I understand that Jurock is going to be tested in the courts soon by some of his investors and i for one hope he is exposed. Here is a man considered one of the experts in the real estate prediction game pumping the daylights out of it with a development company selling condos out the backdoor. Does this sound like the Murray Pezim days when while pumping the virtues of the stock, they are selling it out the backdoor and getting rich while the little guy is left with worthless paper and a dream. Dictators have fallen across the world at the hands of the masses and if you think the masses will not revolt in North America you are fooling yourself. As a friend of mine recently commented on Meth. These gangs that make and sell Meth ruining the lives of our children everyday are very public. He maintains that 500 average men armed and angry could put an end to these guys by walking into a couple of clubhouses and taking care of business. The gangs would get the picture quickly that if you make and sell Meth you will pay with your life. I know this all sounds extreme but so would of an interest rate of 0% some 5 years ago or an 800 square foot tear down for over a million.

#68 Nostradamus Le Mad Vlad on 12.03.12 at 1:25 am

-
It is rather odd to have two animal pix in consecutive posts. Is this turning into an Animal Husbandry blog? Has a direct scientific correlation been made between Justin Bieber, Mark Carney and Two Mules For Sister Sarah? If so, I guess I’m on the wrong blog!

Second para., eloquent prose courtesy of Bernie Madoffwithallyourmoney Inc. sums you and most bloggers up well — we’re all Rebels Without A Clue, mainly because none of us know what we’re talking about!
*
China catching up to US on global trading; Banker created leadership crisis. Well, Obomba won because Ron Paul’s supporters didn’t vote for Romney; Agenda 21 Another fine job; Chart that keeps Billy Benny Bob awake; Secret Service protecting Blankfein; Banana Ice The world’s economies are teetering without the fiscal cliff, but Fiscal Cliff Trojan? plus No Dice; Five ETF Myths; Who is worse off? Gen X, Y or BBs.

Gold appears to have risen; Fading / failing economy This is more likely the cause for Israel’s belligerence against Iran’s nuke power plants; Everything is becoming an abject failure; FHA Turning homeowners into squatters; Global Slowdown with a big colorful chart; UK’s debt failure?
*
Russia – EU merger? Interesting hypothesis if it happens; Remember Smashmouth’s Walking On The Sun? Slightly different version; Dolphin Biting the hand that’s feeding it; E-mails Outsiders, like the FBI, CIA and CSIS (I guess) read others’ e-mails, but here’s The Other Side of the Coin; Damn GW It’s a nuisance; Under Population With NAmerica’s birth rate declining, we need more immigrants; CIA Part Deux It’s in the works; Boeing’s EMF Drone can take out a nation’s grid; 1:52 clip Rare sight — doe with antlers; Mayans and Solar Activity and Solar Storm with neat pix.

#69 Victorianna on 12.03.12 at 2:24 am

Actually, getting a little tired of the snide remarks about Kia. Kia/Hyndai minivans aren’t made anymore; they were too good a deal and the company didn’t make enough profit on them. Those of us lucky enough to get one (they didn’t make all that many) got a vehicle that is far superior to the overpriced Honda/Toyota alternatives. We also got the only van that has ever been recommended by the Insurance Institute for Highway Safety–it is, in fact, the safest minivan ever made, and the only one I would drive my children around in. My mechanic says it’s the best made van he’s ever worked on, and should last many years. The fact that I drive one (and paid cash for a one-year-old 2007) is consistent with the fact that I live in Victoria and don’t own a piece of overpriced Victoria real estate. I do my research and act accordingly. If you’re going to talk about the West Coast, money, and cars, have a look at the BMWs and Land Rovers roaming around here, all bought on credit. Kias are for the practical, budget conscious and responsible who have no desire to impress others with their vehicles.

#70 Cristian on 12.03.12 at 2:27 am

I rent – because I want to, not because I cannot buy.
This being said, a couple of weeks ago I went to have a look at a rental half-duplex in Burnaby, BC. When I arrived there I saw a For Sale sign in front of the house. I asked the owner what’s with the sign if he tries to rent out the house.
His answer? The market is so bad now that he changed his mind and instead of selling wants to rent out the house for long term. My guess is that at this point he already has a loss on his “investment” and doesn’t want to take the loss and move on, hoping that the market will recover soon.

#71 MichelleEdmonton on 12.03.12 at 2:28 am

In Edmonton we’ve already seen the average condo 30 day selling price go down $18,000 since this years peak in May. That’s down $3000 a month! Plus taxes and condo fees, that’s a loss of over $10,000 versus renting-and I’m not even including the mortgage payments. And here in Alberta we’ve lost hundreds of millions of dollars in oil revenues at the demand form the US plunges must faster than the demand from China increases. We’re looking and having a 1.1 billion dollar loan for unneeded roadwork form the province to try to keep the job rate from contracting, in addition to blowing another 2-3 billion from our saving account from the 1980′s when we used to have a government that would think about our future, and not just themselves at the moment…

#72 new canadian on 12.03.12 at 2:29 am

#43 Scott
Year end deals are here, there won’t be many deals during summer. A friend just got a new car for a few grand more than used price.

#73 kilby on 12.03.12 at 2:52 am

#35 Coastal

Between Muir and Pastrick, they form the most dangerous tandem of financial disaster advice one could ever encounter.

Muir’s comments are the same we read all over the Victoria and Vancouver house blogs by the agents who keep up the same juvenile statements of “so-called experts who predict impending doom year after year, despite being completely wrong every time.” while ignoring all the signs of a tanking market.
——————————————————————
Well stated, really naive statements made while the change has already started happening in earnest..

#74 dosouth on 12.03.12 at 2:59 am

Bit quiet without the old Okanagan AKA D.A. piping up…..?

#75 Miya on 12.03.12 at 3:27 am

I ran into a realtor today, asked how is his business, turned out, he is working on a second job now. I really want to tell all the realtards, get a real job!

#76 Buy? Curious? on 12.03.12 at 3:32 am

Just finishing the Brad Lamb video. Will I now have to do one Cameron Muir?

#77 Aussie Roy on 12.03.12 at 3:42 am

Aussie Update

When realtors decide which houses should be for sale.

SYDNEYSIDERS are unknowingly having their homes put up for sale by unscrupulous real estate agents hoping to attract cashed-up foreign buyers.
Among properties listed on Coldwell Banker’s US website without the written consent of owners was a Point Piper mansion with a $56 million price tag.

http://www.news.com.au/realestate/selling/owners-in-the-dark-as-homes-listed-on-web-in-sydney/story-fndbawks-1226528350001

Yet again RE industry calls the bottom, BUY NOW !!!!

AUSTRALIAN housing is at the bottom of the market

Capital city home values are currently -5.6 per cent lower than their historic highs of November 2010. But further evidence that the market is at the bottom comes from the latest data showing housing prices are now up 2 per cent nationally from their low of late May 2012.

http://www.news.com.au/realestate/buying/only-way-is-up-for-home-prices/story-fndban6l-1226529012067

Only hope remains from the phantom housing recovery after the RBA released credit growth aggregates for October. Growth for housing credit has fallen to a positive 0.3 per cent, down from 0.4 per cent the month earlier. Over the 12 month period, housing credit is growing at just 4.7 per cent the worst figure on record.

http://www.whocrashedtheeconomy.com/blog/2012/12/housing-recovery-only-hope-remains/

#78 jess on 12.03.12 at 3:43 am

fake director bubble
– sell their signatures on official company documents, sometimes thousands of times

reckless offshore bank loans
http://www.icij.org/offshore

#79 Soylent Green is People on 12.03.12 at 3:53 am

The occasion qualifies as medicinal use. It eases the pain that stems from touching @pmharper blindgossip.com/?p=48838 #cdnpoli @justinbieber

.

#80 Soylent Green is People on 12.03.12 at 4:01 am

Harper and his unelected goons have been chasing justin bieber for years for a photo opp

Harper was forced to go to justin at the hockey arena, justin would not go to him

Justin dissed our fascist dictator by not wearing nice clothes, i am proud he did that

Justin took to twitter to mock ou pm but steve is too stupid to realize, or maybe he did, who knows

Where was harper,s dotter rachel for this one minute meet and greet? She perfect age for justin,s fan??.

How many celebs allow themselves to be photographed with hair harper, i only remember nickle back, nuff said

http://Www.unseatharper.ca

.

#81 eagle eyes on 12.03.12 at 5:39 am

Been watching my regular Sunday night TV lineup and noticed this commercial – $10,000 for 1st time Home Buyers. It came on every commercial break. Why does the Government need to advertise this so much “in your face?” Strange, do they want to stimulate a rush of buying?

#82 daystar on 12.03.12 at 6:42 am

So Cam reads descriptive expository writing here at Greater fool. Too bad he can’t recognize or produce it hisself. Wuzzup Cameron, why the long face, its only horse play.

http://vreaa.files.wordpress.com/2011/02/muir.jpg

We know the 25 reasons why you do it, don’t wanna get in the way of consumption, gotsa get paid. Its just business nothing personal right Cam, moving product that sells itself whats a lil’ fiction ’cause there’s no tomarra’, gots ta zoot the suits on their 25 floors and the dose is in for the doe and the hoe with your 25 lighters in your dresser, dressin’, yessin’, (just 3 short) ’cause you gotsa get paid, the next fool would do the same right?

Right…

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

One can only hope his “talents” aren’t too stunted to understand metaphors.

#83 mark on 12.03.12 at 8:15 am

“where any countervailing narrative is demonized.”

Excellent example of why the economist’s primary role is that of propagandist because in reality what Muir has said is the complete opposite.

Economists are the way government and business justify ripping you off. Economists baffle the peasants with BS and provide the smoke screen needed to part you from your hard earned.

#84 blase on 12.03.12 at 8:26 am

#80 Soylent Green is People: Where was harper,s dotter rachel.

dotter?

Is that the aide who tells Harper where to sign on the dotted line?

#85 Bigrider on 12.03.12 at 9:04 am

Tony b-#29.

You Calabrese , right?

#86 maxx on 12.03.12 at 10:06 am

Great post, Garth.

Now, as for the following statement:

“Unless there is household financial catastrophe on a large scale, potential home sellers simply wait until market conditions improve.”

Serious downward pressure on hyper-inflated RE has started. Market conditions ARE improving for buyers, but nowhere near where they’ll be over the next years.
Dysfunctional household budgets due to unmanageable levels of debt, and a crush of cash-poor boomers are here on massive and increasing scales….and potential home buyers will “simply wait”. The real estate carrot is rotting in the ground.
Buy now and fund/supplement boomer retirement? No thank you!

#87 JohnnyBoy on 12.03.12 at 10:10 am

#42 Smoking Man on 12.02.12 at 10:42 pm

WTF is smoking man on Vacation or just passed out? Where are all the rants?
Missing your gusto!

#88 Regan on 12.03.12 at 10:18 am

One small sign the Toronto RE market is cooling – it’s been months now since we’ve had flyers dropped in our mailbox soliciting us to sell our house. Even last spring there were fewer of them, but they used to be a daily drop-off by realtors looking for more inventory. Apparently, they’ve got enough inventory now, and the sales they are making are actually taking some work. I’m very curious to see what happens this spring.

#89 LoveMyKia on 12.03.12 at 10:40 am

“…disposable Kia’s”

my 2005 Kia Spectra EX (bought in 2004) has over 330,000km’s, bought with zero % interest for under $20,000, have spent less than 4000.00 total in repairs and maintenance for the past 8 years, still get free oil changes and still going strong.

#90 Ronaldo on 12.03.12 at 10:42 am

#60 Ralph Cramdown -

”This theory seems to have been superceded by the facts. While I agree that interest rates will likely eventually go up, it appears that some debtors (ahem Japan) can borrow at extremely low rates for very long periods of time.”

http://japanese.lingualift.com/blog/japanese-national-debt/

The thing with Japan is that most of the debt is held by its citizens. Not as the States where a good portion of it is held by China.

Here is an essay I pulled off the web which I found quite interesting.

http://web.mit.edu/krugman/www/nikkei.htm

I believe it was written in 1997.

An interesting link on Japan and QE 8. Seems the U.S. is pretty much doing the same as they have for the past 11 or so years.

http://www.telegraph.co.uk/finance/economics/9554131/Japan-launches-QE8-as-20-year-slump-drags-on.html

#91 hangfire on 12.03.12 at 11:07 am

This is rich…Brad Lamb says that home ownership is a nightmare……..understands that many of the buildings he’s been involved with are money pits…..has zero empathy for the people who bought condo’s only to find that they’re falling apart and have to pay condo fees of over $800 per month for mistakes the realtor hasn’t properly disclose due to Canada’s lax laws.

http://business.financialpost.com/2012/12/03/condo-buyers-unfazed-by-rising-fees/

Is criminal behaviour just another name for ‘real estate broker’?

#92 Chickenlittle on 12.03.12 at 11:16 am

Where can I watch this Smoking Man tribute?

#93 NoOneOfConsequence on 12.03.12 at 11:17 am

There is so little mention of the CMHC almost reaching it’s 600 billion cap…..

This event will have further ramifications on the housing market.

The bankers are not stupid. The reason they lend to risky people is because the CMHC (taxpayer) protects them. (and because everyone solid already has a mortgage)

If the CMHC isn’t going to back the risky mortgages, then the bank will not lend to the people. It’s pretty simple.

The CMHC has roughly 30 billion in assets to cover 600 billion in insurance it has provided. I doubt that it will be increasing it’s limit.

So where does that leave us? Tighter lending standards on the remaining 30% of canadians who do not own a home.

That just seems like a small number of new entrants to the market to me.

#94 tony b on 12.03.12 at 11:30 am

To Big rider

not Calabrese–born here by Dutch parents

Funny asI look out

Hamilton went up 12% as Garth mentioned a few blogs ago

But the sky is falling–get out–rent-rent-rent–

Toronto is up 6.5% year on year–excluding condos

check out Oakville Miss-Burlington–they are all up year on year–when oh when is the sky actually going to fall–not for a few more years folks
its more demographics than anythng else–the baby boomers’ kids are now buying–as well as the monied immigrants—the actual boomers may downsize but we won’t rent until we are basically useless to ourselves

And sorry to the idiot who said this but—interest rates are not set by those who have the money– they are set by banks and govt who have a vested interest in keeping the economy going–in Canada its called the bank of Canada rate

Now keep smiling to all –but Garth how about a little less drama–because you have been saying this for 3 years now–and like I mentioned other than over biult (condos) and over-reached (BC) the market is pretty good

#95 Nemesis on 12.03.12 at 11:36 am

…”catapulted university dropouts into media darlings”…

What? Is he talking about Gates? Zuckerberg? Jobs? Jagger? Geffen? Turner [The one that married Fonda, not you]?

It’s utterly amazing how long a cohort jealous of your stint in a brewery can/will bear a grudge.

#96 Daisy Mae on 12.03.12 at 11:49 am

#61 Hangfire: “….non-disclosure is tantamount to lying.”

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

Right. It’s referred to as ‘lying by omission’.

#97 Bobby on 12.03.12 at 11:54 am

Looking around here in oh so wet Victoria, there are certainly not many sold signs. There are however lots of reduced and new price signs. Or, the for sale sign is just taken down.

Maybe the BOC will raise interest rates, just as the head of the Victoria real estate board suggested last month, to stimulate the economy. Lol.

No you can’t make this stuff up.

#98 Daisy Mae on 12.03.12 at 11:58 am

#63 Stu: “Flaherty…..let Carney go…”

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

You believe that little twerp has more ‘power’ than Carney?

The ‘elfin deity’ has done too much damage — he hasn’t a hope in hell.

#99 Have to Speak Up on 12.03.12 at 12:02 pm

Garth, what do you think of the covered call ETFs?

#100 Smoking Man on 12.03.12 at 12:24 pm

Doing my monthly analysis of the red dots on mls. Ca
On sfh
Inventory about the same, asking prices up. Dots missing due to sales.

LaughingCon. For you.

It’s going to be a long wait basement dweller, a long wait. :)

#101 JohnnyBoy on 12.03.12 at 12:32 pm

#42 Smoking Man on 12.02.12 at 10:42 pm
WTF only one rant in two days? Is Smokin man on vacation or just got a bad hangover?
Missing his posts!

#102 Devore on 12.03.12 at 12:37 pm

Real estate popped first, and two years later the ripples caused a financial and household crisis, not the other way ‘round. You’d think an economist would know that.

Of course he knows. One minute of research would show the facts. But most people do not know this (nor how to use Google apparently) as dozens of apologists are rewriting history on TV news daily in an effort to push their agendas. Is truth not always the first victim? We must strive to keep the basic facts straight. As I keep hammering, you cannot learn from history if you do not learn history.

#103 DM in C on 12.03.12 at 12:58 pm

Hahahaha Kia-drivers getting all butt hurt about their choice of ride.

Way to miss the point of the blog.

#104 Grim Reaper/Crypt Speculator on 12.03.12 at 1:13 pm

Smoking Man wants Justin Bieber to challenge Justin Trudeau

#105 Hearrt on 12.03.12 at 1:25 pm

Mr. Muir (Economist?) is just one of several star spin doctors employed by the real estate boards. The VREB (Victoria bunch) are masters at spinning a nice story out of a desperate market that is developing there.

I would be ashamed to be a “real economist” and see the bias and narrow view constantly put forward by these bandits.

But why are these same people complaining to F that they are hurting so much now? If I was F I would just direct them back to read their own rosy materials and say what gives, you guys are saying everything is wonderful right??!!!

#106 Bigrider on 12.03.12 at 1:39 pm

#93 Tony B

Cool, you’re not Italian.

It’s just with the house flipping for 30 years thing you’ve been engaged in by your own admission and a name like Tony, it would have been a near certainity that it would be your heritage.

All due respect for your opposing point of view.

#107 Editor on 12.03.12 at 1:53 pm

#9 What do you do when know one wants your house? Ah, that’s the big question. People who have never known what it is like to be stuck, completely unable to move on with their lives, saddled with something they no longer want or need, are in for a nasty awakening. There isn’t that much to do: You stay (which may affect your work and family choices), you rent it out (an increasing number of amateur landlords, increasing supply if not necessarily skill), or you try to sell — by lowering the price. And this last is what we are just beginning to see.

#108 Editor on 12.03.12 at 1:54 pm

Sorry, NO one not KNOW one. Self to self: Wake up!

#109 Editor on 12.03.12 at 1:57 pm

#13 A very successful realtor told me, “Price overcomes many objections.” Too bad people have to learn this the hard way.

#110 Vancouver_Bear on 12.03.12 at 2:05 pm

#29tony b on 12.02.12 at 9:50 pm

You are not a realturd you are even worse… a RE specuvestor. You are talking up RE because you have a huge vested interest in it, aren’t you? Put as much lipstick as you like on pig’s butt, but it’s still a dirty pig’s butt.
It’s not different in Canada…right now CMHC is holding more liability on it’s books relatively to what Fannie and Freddie had before US imploded. Call it whatever, but CMHC is the biggest subprime lender in the world! Should we be proud or sorry now?

#111 PoorgEoisie on 12.03.12 at 2:10 pm

I was looking for a nice YouTube compilation of pro’s talking about there not being a bubble in the states. There was the usual bernanke and news pundits, but I came across this one from 2011 and thought it was an accurate vision what 70% of us will sound like soon.

http://m.youtube.com/watch?v=engKtLw0JTM

#112 :) :( Ying Yang on 12.03.12 at 2:21 pm

I wonder if this CHMC release is going to pan out by the end of the year? Hmmmm
Date Released: Spring 2012
Housing market intelligence you can count on

„„Both resale and new home construction activity will reach high annual levels
in 2012; however momentum will slow in the second half of the year and
into 2013.
„„MLS sales will total 95,000 this year at an average price of $500,000.
„„New home construction will reach 44,500 units in 2012 due to increased
condominium apartment starts.
„„Employment and net migration will slow in 2012, but are set to improve in
2013.
http://www.cmhc-schl.gc.ca/odpub/esub/64319/64319_2012_B01.pdf

#113 Canadian in Malaysia on 12.03.12 at 2:47 pm

I know gold isn’t related to this post … but,

The main paper in Malaysia ran a front page story on the Gold Bull market … Fools Gold, or a Fool not to, they called it.

Had a guy talking about how gold should go to $2200 next year and has 10 – 20 years left in the bull market (which should be about 30 years in total, starting in 2002).

Just thought it is interesting to see what people from different parts of the world are reading in their media.

#114 tony b on 12.03.12 at 2:53 pm

Vancouver Bear–I’m not talking up RE—I’m just giving an opposing point of view–Vancouver is stuck between a rock and a hard place right now if you want to sell or buy
Where I am its just not so–anywhere insouthern Ontatrio

and you aren’t really thinking the the federal govt is going to pull the plug on CHMC–they just tightened the rules

you -sky is falling types –always resort to either name calling or scare tactics to try to prove your point–

rational discussion went the way of the dodo bird—for you as its –the don’t cloud the issue with the facts time for you–
read you reply and tell me it made any sense

Like I said in my first remark–RE is suffering if you own in BC or basically a condo anywhere else– but the rest is doing fine

#115 PERPLEXED on 12.03.12 at 2:53 pm

HEY GARTHY – LETS HEAR A BIT ABOUT THE SITUATION IN EDMONTON.

SEE COMMENT #71 – WE

ALL I CAN FIND IS THIS AND IT’S A LOAD:

http://edmontonrealestateblog.com/

THEY USE A FOUR WEEK RUNNING AVERAGE.

I’D LIKE TO SEE SOMETHING SOME A BIT LONGER RANGE AND YOU’RE THE GUY.

Before you called me Garthy I might have considered replying. — Garth

#116 IM in C on 12.03.12 at 2:58 pm

http://www.americanthinker.com/2012/11/approaching_crunch_time_on_the_student_loan_debacle.html?source=Patrick.net

Interesting article. Note that -American – tuition rates are being driven up for that same reason that housing prices were driven up – cheap and easy credit! With the same price/ debt bubble developing. Leads to the question , “Who will the baby boomers be selling to?!”

#117 daystar on 12.03.12 at 3:08 pm

#76 Buy? Curious? on 12.03.12 at 3:32 am

I’ve got some solicited advice for you if you don’t mind. :) Glad you’ve resolved things with SM (revealed a humble nature in the process as well as other comments on site, heart’s in the right place, evidence of an evolved soul here. Accordingly, I have high hopes) and I had some laughs from your last product but the first was produced in infancy and i would think about scrubbing it. It goes without saying that practice is needed but I would start much higher up the chain this time ’round. Cam is a boring bagman:

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

…and there isn’t much material to work with. I think you’re ready for F as he’s just so topical (and has stated lately he won’t retire until 2015). There’s a wealth of videos and quotes with F, each effort will bear more fruits than the last and I guarantee it will be much more fun.

A word of caution though should you take my advice. As Anonymous would say, “you’re up against the big boys now”. They’ll try to track and hack once you’ve got their attention so a second computer offline will likely be necessary. My guess is you are exposed so watch your back.

Peace.

#118 oceanside on 12.03.12 at 3:43 pm

106 Editor on 12.03.12 at 1:53 pm
#9 What do you do when know one wants your house? Ah, that’s the big question.
——————————————————————–
20 months ago in the Okanagan we were faced with this, after six months and four $20,000 price drops,we sold for $100K under our original asking (which was $17K below assessed market value at the time). As we had been in the house for many years and wanted to move on with our lives we came out OK financially. There were 15 similar view homes for sale at that time and most are still for sale, some empty…..”A bird in the hand”

#119 DonDWest on 12.03.12 at 3:48 pm

#113 tony b

The rantings of a butt heart realtor, music to my ears. . .

#120 LaughingCon on 12.03.12 at 4:12 pm

RE: #99 Smoking Man on 12.03.12 at 12:24 pm
Doing my monthly analysis of the red dots on mls. Ca
On sfh Inventory about the same, asking prices up. Dots missing due to sales.
LaughingCon. For you.
=====================================

Whazzup, you sure about that???

This was just posted in the RFD:
http://goo.gl/TLMJC

“I’m thinking of selling our house but the market is kinda low now. [B]Houses nearby aren’t selling[/B], though I’m not sure if they are overpriced.
I’m wondering how to go about getting a competent and honest real estate agent. …

I live in Etobicoke so should I get someone in my area?…”

Can you provide some advice to the poor lad?

Respectfully waiting for the official REBGV, FVREB and TREB news releases due anytime now.

It is going to be a nasty crash realtors, a nasty crash!!!

#121 prairieperson on 12.03.12 at 4:20 pm

There is a claim on the board that outside of Van and TO, everything is fine. I’m not sure about what everything encompasses. Victoria isn’t fine. In my last treck across the prairies everything, especially commercial property, wasn’t fine. Commercial bldgs that have been on the mkt for more than a year, in some cases, more than two years. Price reductions not bringing in buyers. The potential buyers aren’t buying because the big box stores have killed business. Profits have been replaced by employees earning minimum wage. Not only have wages not kept pace with house prices but, in many cases, income has declined. Entrepenurial opportunities have declined. People went to WalMart because it was cheap. Now, they are going to WalMart becausethey have to. One of the best furniture storesin Victoria just went out of business. Others will soon follow. Earlier, I asked what happens when no one wants your house and there was a good reply with various alternatives. The goverments, federal and provincial, want people to be more flexible, move to where the jobs are. No can do if you can’t sell your house, condo. Or can’t risk, as in the house down the street, it turning into a grow op and being destroyed by mould. When house prices were going up, it was all easy. You never lost money. There was always a buyer. No buyers? Options just got very narrow. It’s not just about houses. It’s about a hard future for a lot of people.

#122 JB on 12.03.12 at 4:37 pm

Saskatoon hitting new price highs in….. November?! It wasn’t a warm one either… Thus far it is different here…

#123 Old Man on 12.03.12 at 4:49 pm

I have a quote to dedicate to Cameron Muir, and is a bit crude, but might pass censorship with Mr. Turner.

” Did you ever think that making a speech on economics is a lot like pissing down your leg? It seems hot to you, but it never does to anyone else. ”

- Lyndon B. Johnson: President

#124 all_we_need_is_mortgage on 12.03.12 at 4:51 pm

/Growth in GDP of a measly 0.1% in their third quarter with a big dive in exports.
If it weren’t for household consumption (up 3.1%) then growth would be negative.
/

The consumer consumption is generally maintained with credit money. If the credit intervention shrinks – consumer consumption collapses what will make GDP negative and living standard lower.
Then inflation will be low, of course, – what is good – but it seems that inflation is a the last government concern.
So it looks that government still wants (and needs) more borrowers but doesn’t want the household debt to grow. How that contradiction can be resolved? Will the government go for introduction of austerity measures and lowering standard of living?

#125 renters rule on 12.03.12 at 4:53 pm

Japan has had low interest rates for over a decade, and has also had no economic growth for over a decade.

To think that housing markets in southern ontario, away from T.O. and Van, won’t be affacted is delusional — one way or the other, the entire housing market IS linked; while areas that had the greatest runups will liekly correct the most, all areas have seen increases, and all are going to experience the long residential RE swoon/hibernation to come.

You should spend more time studying Japan — check out what has happened to THEIR house prices during their long spell of low interest rates (hint: some properties are off 90% from peak).

#126 Zoronqueen on 12.03.12 at 5:19 pm

George thanks for sharing re: Hayek….

People are not predictable….

We will not see a free market in our times…..

#127 GTA Engineer on 12.03.12 at 5:21 pm

I do not expect nor anticipate a stock slide. Hope that BMO guy is not a salesman in drag. Be careful. — Garth

—————-

Perhaps not due to the real estate correction that is no doubt coming, as was the context under which this statement was made. However, we *will* see a stock slide in the coming months – corporate revenues are rolling over, and earnings/profits will follow (meaning dropping share prices).

Markets continuously rise and fall. But there is nothing on the horizon other than a normal correction, which yields the usual buying opportunity. — Garth

#128 Buy? Curious? on 12.03.12 at 5:24 pm

Daystar @116, that was the best advice I’ve had in years! Great points!

I’m going to print this out and put it up in the corner of my white board as guidance when doing a story.

Will be publishing the Brad Lamb video for tonight’s new post by Garth. It took me a while to figure out what was funny about Mr Lamb but got something together. I’m just need a soundtrack. I’m thinking something by Barbra Streisand.

#129 Editor on 12.03.12 at 5:26 pm

#117 Congratulations! The key is you could get on with your life. Here’s another bit of wisdom from yet another realtor in my life (I’m not one – far from it): The first offer you get is likely to be the best offer. Given the “things always go up” atmosphere, many sellers are likely to refuse the first offer still — and regret it.

#130 JohnS on 12.03.12 at 5:33 pm

Reporting from Ottawa,

Location – At a house in an affluent neighbourhood around carlingwood mall

Assessed price – $750K
Listed price – $630K
Sold price – $595K

over n end……….

#131 Old Man on 12.03.12 at 5:55 pm

#126 GTA Engineer – I freaked out with the crash 2008/2009, but had lots of cash, so looked around to make some buys with blue chips, as had the attitude if all is going down the crapper will roll the dice to hoop some bargains. I went all in, and made a fortune with capital gains and high yields on dividends in just a few years, and was afraid by it all, but took a chance.

#132 Sebee on 12.03.12 at 6:15 pm

Hey, check it out, The Star now has a new Comedy section!

Staring with this little gem – TREB helping young buyers navigate Canada’s housing market. That’s the article they have about homes while BC is making huge adjustments toward reality. At least we learn that there is no shortage of virgins for TREB, with 70% of 18-29 year olds ready to learn that RE always goes up, up, up.

http://www.thestar.com/living/realestate/article/1296874–treb-helping-to-navigate-canada-s-housing-market

#133 GTA Engineer on 12.03.12 at 6:35 pm

Markets continuously rise and fall. But there is nothing on the horizon other than a normal correction, which yields the usual buying opportunity. — Garth

—————
Agreed! Just saying that the opportunities are coming soon…
—————

#130 Old Man on 12.03.12 at 5:55 pm
#126 GTA Engineer – I freaked out with the crash 2008/2009, but had lots of cash, so looked around to make some buys with blue chips, as had the attitude if all is going down the crapper will roll the dice to hoop some bargains. I went all in, and made a fortune with capital gains and high yields on dividends in just a few years, and was afraid by it all, but took a chance.

—————
Yep – did the same thing in ’08/’09 – felt like a fool shoveling what I thought was good money after bad into a sinking ship. But I knew it was the right thing to do, and I look forward to future corrections so we can take advantage of those same opportunities once again!

Timing it is tricky – so the goal is not to buy at the absolute trough and sell at the absolute peak – but if you can dollar average on the way down and sell on the way up, it makes beating the market averages not too difficult..

#134 DM in C on 12.03.12 at 6:55 pm

Pssst DonDW

It’s butt hurt, not butt heart. Wrong blog for that. ;-)

#135 Suede on 12.03.12 at 8:14 pm

#122 Old Man

What a great quote. That is being committed to memory! It has more applications than just economics of course.

Side note

France has decreased pension age from 62 to 60. If you’re feeling entitled and like to pay a lot of income tax, Le pays de petits bonheurs is the place for you.

I’m still shaking my head wondering how their 0.15% annual growth rate will fund this. Luckily their government debt to GDP is only around 86%, about the same as Canada according to my tabular source.

#136 Tony on 12.03.12 at 8:43 pm

Re: #126 GTA Engineer on 12.03.12 at 5:21 pm

The public has already figured it out this time that’s how obvious it is. Trading volumes will continue to decrease. When the pumpers stop trading stocks with each other then we should see worldwide markets tank another 50 to 80 percent. The German Dax could lose 90 percent.

#137 Tony on 12.03.12 at 9:02 pm

Re: #114 PERPLEXED on 12.03.12 at 2:53 pm

Here’s an older one but he mostly correctly predicted the future for Edmonton real estate.

http://edmontonhousingbust.com/2010/02/payroll-employment-update/

#138 Kingarthur on 12.04.12 at 12:19 am

Yo Permabear: I agree it’s still raining, on and off (mostly on) here in East Van. But my 81 year old stucco bungalow is still standing strong. (Good roof with plenty of overhangs) And not snowing (yet)!

#139 Old Man on 12.04.12 at 1:14 am

#135 Suede – merci beaucoup.

#140 Valerie Keefe on 12.05.12 at 1:25 pm

It has catapulted university dropouts into media darlings because of a hackneyed webpage and an opinion.

Ah, Cameron Muir, forgetting that Paul Krugman has already called out this tactic for what it is. The left indroduces evidence. The right responds by invoking credentials.