Now or never

maturity

A year ago this week scores of people lined up outside a sales trailer in a distant GTA burb to buy million-dollar houses. They jostled and competed for lots which were $190,000 more than companion ones had been a year earlier. Some people had been there all night, running back to warm up for a while in the idling Audi or BMW.

On average, buyers spent $1,000,000 in less than ten minutes. The developer cleared $80 million in sales in a day.

Said this blog’s correspondent: “This is clearly out of control and people bought these houses in a matter of minutes! It’s almost like they have a fear that no other opportunity will exist to buy a home and it’s now or never.”

riot

It was early April, 2012. You could still buy a seven-figure home with 5% down and get government mortgage insurance on a 30-year amortization. The entire GTA housing market was on steroids. In March a stunning 9,690 properties changed hands, up 8% from 2011 with the average price rising 10%. Bidding wars were everywhere, in all price ranges. It was the pinnacle moment for Canadian real estate, in Toronto as in Vancouver, Halifax, Montreal and the prairie cities.

This week we’ll get the latest numbers. Looks like sales in Toronto could be lower by about 25%, based on mid-month numbers. Listings are scarce and action in the hottest part of the market – between $700,000 and a million – has pushed the average price higher by about $30,000. Condos are a wasteland, thanks to F’s murdering of long mortgages, and action above $1,000,000 is anemic, since buyers now have to cough up 20% plus closing costs. Mortgages are still cheap, but the thrill’s gone. We’re entering an entirely new era of investing.

In Vancouver, realtor Sam Wyatt is telling his clients (mostly high-end sellers) to face reality; “The trend since the run-up after the credit crisis has been declining sales volumes in which both the high and low seasons (Spring and Winter) have generally seen progressively fewer sales each year.”

Despite weak listings and cheap financing (you can still get 2.74% five-year money), months of inventory continue to swell. “The bottom line continues to be that prices are falling.  The Real Estate Board of Greater Vancouver’s Westside detached home HPI index is down over 10% from its high point last Spring.  By end of summer I expect this to have fallen another 10%.”

In Halifax sales are down 28%. In Montreal, a 22% drop. In Saskatoon, down 12%. Victoria, off 18%. Vancouver, 29% lower. Only Alberta’s bucking the trend, even as that economy weakens with commodity prices.

In short, the housing correction progresses, but far too slowly for Patrick.

“I’m a blog reader and huge fan. We live in Vancouver and are both almost 30. We’re tired of renting and waiting for the market to hit the bottom. Okay, I get all the stuff you keep telling us about falling sales and yadda, yadda. But this sucks waiting. Tell us when to buy, Garth!”

Well, Pat, houses will get cheaper but not necessarily more affordable in places like Vancouver or 416. Sure, a 30% haircut in Van SFHs is possible by the time we hit the bottom of the trough (it won’t be this year), but that’ll still leave them languishing in the $700,000 range. Meanwhile mortgage rates are not (repeat, not) staying at current levels forever, nor are 30-year loans coming back.

This means buyers need to have about $50,000 to close on the average detached, and an income of $130,000 just to carry the place. But the average household income in Vancouver is currently $68,000. This suggests unless the skies fill again with Airbuses full of horny HAM, real estate in Vancouver is in for a long, secular decline.

In fact, it might already be happening in Victoria, Canada’s other hotbed of real estate delusion. Look at this:

chart

- House Hunt Victoria blog

As I mentioned a few days ago, a lot of younger people are beginning to understand they may never own. Royal LePage’s latest self-serving survey  found 72% of people born between 1980 and 1994 think they’ll be reamed out of home ownership. About half of them blame F’s tighter mortgage rules and want them eased. LePage, of course, agrees.

Ironically, though, it’s cheap money, lax lending, lack of oversight and the fact people without money could buy houses that have propelled real estate values higher. A generation ago (when the Boomers still had hormones and hair) a 5% downpayment was unimaginable and mortgages were 11%. But, houses cost less than $100,000.

We’re on the path back down. But, Patrick, you’re not entitled to real estate. If you can’t afford it in Van, move to Hope. If buying a house takes 90% of your after-tax income, you’re a fool to even consider it. Why trade youth for debt, when you can rent?

Meanwhile in the million-dollar moose pastures of subarctic GTA, ample proof the parents are equally smitten. Some things, we refuse to learn. Now or never.

205 comments ↓

#1 Derek R on 03.31.13 at 7:56 pm

Patience, folks. Prices are dropping in most places but it takes time.

#2 george on 03.31.13 at 7:57 pm

The following quote is from a recent op-ed by David Stockman (former U.S. President Ronald Reagan’s budget director from 1981 to 1985) in the New York Times:

“Over the last 13 years, the stock market has twice crashed and touched off a recession: American households lost $5 trillion in the 2000 dot-com bust and more than $7 trillion in the 2007 housing crash. Sooner or later — within a few years, I predict — this latest Wall Street bubble, inflated by an egregious flood of phony money from the Federal Reserve rather than real economic gains, will explode, too.”

http://www.nytimes.com/2013/03/31/opinion/sunday/sundown-in-america.html?pagewanted=1&_r=1&ref=opinion&pagewanted=all&

The stock market did not cause the ensuing recession in either case. — Garth

#3 X on 03.31.13 at 7:58 pm

Patrick – when…start thinking more like 2015 or so.

#4 Furio on 03.31.13 at 7:59 pm

Meanwhile mortgage rates are not (repeat, not) staying at current levels forever, nor are 30-year loans coming back.

when will they go up?

#5 GTA Girl on 03.31.13 at 8:00 pm

Sub-artic GTA has gone glacial. Many realtor signs on street corners mashed in w/developer signs. One condo pre-construction. In hinterlands of Vaughan near King City has audacity to advertise 700sqft condos for the deal of just over $500k.

One of the big elephants passed. Fred Desgasperis. A Titan, who had his fist on every penny and every deal.

Remember what I said about idiot sons and sycophants ? All about to be played out. Blood may be thicker than water, but does it matter when family is ripping each other apart when they find out the bulk share is going to the corporate “accountants” lawyers.

#6 chopper on 03.31.13 at 8:01 pm

I am gonna wait this out because it is the wise thing to do. I see some fools paying way too much for crap on Brampton I guess is because there are few listings. I can’t understand why there are more for lease signs than for sale signs.

#7 AK on 03.31.13 at 8:02 pm

#222 GG on 03.31.13 at 5:17 pm
“The us creats plenty of exports – debt. Selling to one another within the country creates no real wealth. The US is still is betting that the consumer will pull it out of the recession. Debt and consumerism doesnt trump investment and production.”
——————————————————————-
Dude, You need to get out of your basement. Go out there and get some fresh air.

#8 Shrit4brawns on 03.31.13 at 8:04 pm

Garth, you appear to be softening your stance on Vancouver’s housing market.

The question is – why?

How is a 30% price drop ‘softening’? — Garth

#9 AK on 03.31.13 at 8:10 pm

The lineup in the photo reminds me of January 1980, when people were lined up around the block in Downtown Toronto to buy Gold for $850.00. :-)

#10 Min in Mission on 03.31.13 at 8:19 pm

I don’t live in VCR, but, close enough.

While I have noticed a slight decrease in pricing in my area, it looks like the “asking” prices are staying firm. Of course, there may not be many sales!! I don’t have the connections to monitor that.

I do have to agree that it just seems wrong for “average” people to be spending so much for a place to live. I bought mine during a unique little downward “blip”, and, we stayed below the fundamentals for our purchase.

There are going to be lots of younger people being disappointed when they find that home ownership could be just a dream.

#11 Victor V on 03.31.13 at 8:31 pm

http://www.thestar.com/business/personal_finance/retirement/2013/03/24/debt_in_retirement_means_a_lean_time_and_tough_choices.html

The implications of Canadians carrying debt into retirement are dire. First, retirees will likely stop or reduce work in retirement, so their income will drop. Second, people tend to develop health issues in later life and not all costs are covered by OHIP. Third, although interest rates are low now, if they rise, increased payments could cause retirees undue hardship.

At the end of the day, many Canadians face the prospect of a declining standard of living in retirement, according to the TD Economics report. Many Canadians won’t have the kind of retirement they imagined, and they won’t have a retirement as good at that of their parents.

What is causing the debt burden of Canada’s retirees and soon-to-be retirees?

The first answer is real estate. Average holdings in the 65-plus group have doubled since 2002. Not being able to get much interest on bonds or GICs, older Canadians and others have taken advantage of low interest rates and ploughed their money into real estate and appreciating home prices.

The second answer is lines of credit, which have seen the biggest growth increase. Since 2007, Canadians have been using lines of credit to consolidate other debts, such as from multiple credit cards, or upgrading the cars they drive.

“Mortgage growth has been steady, as people re-finance and roll their credit card debt into a new, bigger mortgage,” says Burleton. “Some seniors have been using credit for income replacement, which is particularly worrisome.”

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

This will end badly and sadly.

#12 Bargains everywhere on 03.31.13 at 8:34 pm

Prices may be coming down in Toronto but not everywhere. In my neighbourhood, things are still absolutely crazy. Here are a couple of listings in Bayview Village (around Bayview and Sheppard).

This house sold in May of 2012 for $855,000. They did a couple of quick renos and it’s now listed for $1,346,800.

http://www.realtor.ca/PropertyDetails.aspx?PropertyID=12957589&PidKey=1588426979

This house sold in January 2012 for $1,871,000 and it was in beautiful condition. They put stucco and brick on the outside and it’s now listed for $2,599,000.

http://www.realtor.ca/propertyDetails.aspx?propertyId=12915124&PidKey=-374362308

Another smaller bungalow in the neighbourhood just sold for $1,330,000 which is more than a similar house would have sold for last year.

I sold my house last year at what I thought was the peak but now I am getting a little scared. We are currently renting (I hate it because I have no garden) and are waiting to downsize to a smaller bungalow but I wish prices would start to come down a little more. I am beginning to think we made a mistake by selling too soon.

Listings are not sales. — Garth

#13 periwinkles on 03.31.13 at 8:39 pm

I live in a rental 70′s non-descript. I’m not the smartest and have always been McJob. When I’m riding my bicycle to work or I’m on two feet, Moore Park snots whiz up and down Jarvis in their luxury rides. I have enough of those rides saved-up in RSP’s & TFSA to last a lifetime. Am I to understand that a working stiff like me could be fiscally smarter than the smart set?

You are a god among them. — Garth

#14 JSS on 03.31.13 at 8:44 pm

Garth – will Winnipeg prices drop too?

Especially Winnipeg. — Garth

#15 Victor V on 03.31.13 at 8:48 pm

#13 There are a few folks out there that rent, have lots of dough stashed in RRSP, TFSA, RESP, non-regs…have no debts AND who happen to like driving their luxury ride down Jarvis ;)

#16 Toronto RE Price changes for Active properties on 03.31.13 at 8:49 pm

This is the heat map for price changes. Data was collected for houses only. It covers the last three months of activity

http://recharts.blogspot.ca/2013/03/toronto-re-price-changes-for-active.html

For Toronto Bidding wars Heat map see the previous post on this

http://recharts.blogspot.ca/2013/03/toronto-bidding-wars-map.html

#17 Victoria on 03.31.13 at 8:51 pm

The prices for any kind of single family dwelling in GTA (detached, semi or freehold townhouse) have grown in the last three-four months, according to TREB numbers – both in 416 and in 905. For detached house in 905 in particular the average price has grown from mid-500K in December to over 600K in mid-March. Can you comment on this, Garth?

Dec 565K, March 603K. Mostly seasonal. — Garth

#18 Wise guy on 03.31.13 at 8:56 pm

I guess SFHs in Toronto will not be dropping much or at all. An associate of mine last week bid on a home just north of Bloor West Village that was selling for 500K, which is really cheap in that area. It went for we’ll above that price. Looks like people are selling condos and moving into whatever homes are selling between the 500K-1 million dollar range in Toronto.

#19 TurnerNation on 03.31.13 at 8:58 pm

Oh, all the weekend doomers – if your brokerage house or clearing firm goes belly up, awaiting liquidation, what to do. You immediately open an account elsewhere and hedge like mad. Delta hedge with LEAP options. More adventurously may sell index futures, or single stock futures (in the US). It’ll cost thousands plus carry, commissions but worth it. Unwind when ready.

(On that note Penson Clearing – USA & Canada – nearly did. Backed by illiquid paper, finally marked to market too late. 2012 brought a backoffice exodus away. I first heard the rumors, no-one would trade with them. Symbol PNSN.US. Knew a few people there from my retail days, who scattered.)

Old man re. O’Leary: saw him talk out west, small event, and he signed his books. Found it odd one-on-one he would not engage.
Brett Wilson on the other hand was the opposite way. Asked about people. I happen to know his original brokerage firm and some trading folks there, but these days, he’s not really involved now.

#20 Freebird on 03.31.13 at 9:00 pm

#13@periwnkles

Kudos! My guess is you also have more true self confidence and self respect…something those who rely on their so called status symbols (what they own, title, do who they know etc) sorely lack. They will name drop, money drop (perceived or other wise) in an effort to impress others. Keep on biking and laughing all the way to bank! We know those who are leveraging a very impressive looking/ sounding lifestyle with good cashflow but little in net worth. As Garth says, it won’t end well.

#21 espressobob on 03.31.13 at 9:01 pm

There was a time when real estate was no big deal. It was a matter of having a family and definitely not considered an investment!

Hopefully we retrace that path!

#22 Sasquatch on 03.31.13 at 9:02 pm

Funny how not being able to own is seen as horrible. All I want is a 2 stall garage to work on my vehicle and pet projects. Don’t bother me if I’m renting or owning it. As long as I can use it, I’m cool.

#23 Curious! on 03.31.13 at 9:02 pm

Garth, when is Mississauga start its meltdown?

#24 NotaGreaterFool on 03.31.13 at 9:04 pm

Garth, still sticking to a 10-15% correction for Toronto?

Depends on the hood. — Garth

#25 Realtor # 1 on 03.31.13 at 9:04 pm

sounds like everyone is getting impatient or nervous about whether there will be a price drop in the GTA . A year ago is sounded like everyone reading this blog predicted a crash in prices would be evident Q1 and Q2. Nothing yet.
The media is not picking up the story.

Healthy Market -
1. everyone in 2012 is renewing and least half point cheaper on their mortgage

2. there was no early rush in listing . Listings are looking slim

3. No significant job losses

Maybe next year everyone!

#26 Julie on 03.31.13 at 9:06 pm

We are hoping one of these “cash strapped wrinklies” will need to sell a “cheap” log home in the Fraser Valley to…..us. Like Garth says…..patience.

#27 Victoria on 03.31.13 at 9:07 pm

I get it, seasonal. Still, the detached house in 905 is 7.7% more than last year same month??? It doesn’t seem like the RE market is falling, to be honest with you.

Sales first, prices second. How is this confusing? — Garth

#28 Freebird on 03.31.13 at 9:10 pm

@#15

Agreed. I don’t begrudge others their luxuries…we only live once. I just avoid comparing myself to others who seem to have more because what I’ve learned is it may be an illusion or house of cards built solely in attempt to impress. For those who have the income and their financial house in great order I say go for it! And for those who don’t….I just wish them luck.

#29 mortgagebrokeron on 03.31.13 at 9:14 pm

garth is right, just because its listed doesn’t mean that is asking price,

out in southern ontario someone bought home to fix and flip, they listed it for 289000 then 279000 now 259000, it is still overpriced, probably won’t sell for asking price, i bet it sells for 235000, that is 82% of the original list price,

so just because it is listed that price is just the starting point for negotiations

#30 Hey Patrick on 03.31.13 at 9:15 pm

I can relate, been looking at homes in Surrey and Delta and I cant believe what people want for the ugly run down homes. Even town houses are way over priced. My rent is cheap but my lease runs out next year and the owner is moving back in. I have three little kids and a wife that doesn’t want to keep moving. I have been waiting about 5 years for prices to crash but the reality is its going to be a long way down. So I know how you feel, in a capitalist economy its better for governments not to interfere and let things run its course. America has its problems finally behind them and with some bumps have a positive future a head of them, but Canadas problems (GDP, unemployment, debt) are just beginning.

#31 Randy on 03.31.13 at 9:17 pm

Garth…are you seeing any deals in Cyprus yet ?

#32 dutch4505 on 03.31.13 at 9:20 pm

to my Canadian friends…..welcome to USA 2006!

#33 espressobob on 03.31.13 at 9:22 pm

#9 AK

Good point! Just imagine the same scenario when their lined up to sell below $850 an ounce! Cheers.

#34 Victor V on 03.31.13 at 9:26 pm

#25 Realtor # 1

Per Garth’s commentary, appears that sales are going to be down about 25% YOY. This certainly has an impact on the wallets of the 55,000 real estate professionals in this province, no?

Do you think realtors are getting impatient or nervous?

#35 GG on 03.31.13 at 9:27 pm

#7 AK,
I will get out of the basement and take a walk around the hood – over looking Calgary Downtown. LOL.

#36 Toronto_CA on 03.31.13 at 9:29 pm

http://www.thestar.com/business/personal_finance/2013/03/29/on_a_fixed_income_should_she_rent_or_should_she_buy.html

A woman on disability is worried about throwing away money on rent, even though she will never work again and lives in downtown Toronto (and likes where she lives and can easily afford the rent while still saving).

Thank god the advisor has a brain in their head and warns her about rising interest rates and the possibility of a condo crash.

Nice to see the word is getting out in the MSM here and there that renting is not throwing away money; anymore than property taxes, condo fees, and property insuranc are throwing away money.

#37 City that smells like it sounds on 03.31.13 at 9:39 pm

Garth, what type of pricing decline do you expect in Regina over the next 2-3 years if any?

#38 neo on 03.31.13 at 9:44 pm

Garth,

Speaking of million dollar homes. We now have our first entry into the $1,000,000 cookie cutter Mattamy listing in Milton.

http://www.realtor.ca/propertyDetails.aspx?propertyId=12989496&PidKey=-1480359909

I guess Milton never got the memo…

#39 Lee on 03.31.13 at 9:49 pm

‘Why trade youth for debt?’ Well said.

#40 Chopper on 03.31.13 at 9:53 pm

#12 Bargains everywhere

Listings are not sales. — Garth

Got that right, until it sells then you can count it.
I think sellers are playing hard to get and holding out as long as they can, but eventually if the buyers can wait then they will be rewarded.

But I can see some buyers getting the itch to commit and thus bring upon themselves financial hardships later when everything blows up….interest rates climb, job loss, health problems, weak economy etc.

Those who wait will be rewarded.

#41 Realtor # 1 on 03.31.13 at 9:54 pm

sales first , then prices. Not so fast…

During the latter half of 2010 and the first half of 2011
y/y sales were down 10% to 25% and prices always continued upward to this day.

Check the TREB website under Market Watch

Don’t be so confident everyone but it sounds like
“next year” the prices will correct.

#42 George on 03.31.13 at 9:59 pm

Total household credit numbers in Canada up to the end of February 2013 from the Bank of Canada:

http://credit.bankofcanada.ca/householdcredit

Total business credit numbers in Canada up to the end of February 2013 from the Bank of Canada:

http://credit.bankofcanada.ca/businesscredit

#43 Smoking Man on 03.31.13 at 10:00 pm

I just learned from an options trader, that had I used options as apposed to a naked short, I would have made 5 mil…. On my notional.

Does this make sense. If so can someone teach me options, ah screw it.

University of google

#44 Freedom First on 03.31.13 at 10:08 pm

Best advice I could give anyone considering buying RE in Canada right now, is to make sure you have a minimum 30% down payment + closing costs. That way you avoid the CMHC insurance, and when housing prices drop 30% or less, you won’t be underwater on your mortgage. Of course, that won’t protect you if you also become unemployed at the same time, as that is exactly what happened in the U.S, Japan, and Europe.

#45 Now or never — Greater Fool – Authored by Garth Turner – The Troubled Future of Real Estate | The Affluent Boomer™ on 03.31.13 at 10:09 pm

[...] A year ago this week scores of people lined up outside a sales trailer in a distant GTA burb to buy million-dollar houses. They jostled and competed for lots which were $190,000 more than companion ones had been a year earlier. Some people had been there all night, running back to warm up for a while in the idling Audi or BMW. Continue reading → [...]

#46 totalinvestor.com on 03.31.13 at 10:10 pm

Happy Easter.

#47 Ralph Cramdown Ⓤ on 03.31.13 at 10:11 pm

“Good point! Just imagine the same scenario when their lined up to sell below $850 an ounce!”

There’s never a line up to sell. “Men go crazy in congregations but they only get better one by one.”

#48 Chickenlittle on 03.31.13 at 10:13 pm

I’m a ’79er, so I won’t be buying a house either apparently! Who cares? It’s not worth having such a huge amount of money over my head all the time just so I can say “This house is mine” even though it isn’t until I pay it off.
And I don’t blame the mortgage rules. The prices are too high! Anyone who says otherwise is delusional.

I agree with Garth when he says some areas in the 416 will not go down.
Here in Mississauga at Rathwood Village (I hate how everything is “Village”), my landlord has had the place up for almost 4 months in total and has had zero offers. There’s a place down the road I went to look at that is 100k cheaper than this one and is exactly the same size and style.

This is not looking good for my landlord. But, hey, I’m happy! I can go where ever the hell I want without paying any crazy RE commissions, or waiting for someone to buy my house.

The only thing that will suck for us is that our parents and grandparents will always be asking us when we plan on buying…

#49 Freedom First on 03.31.13 at 10:17 pm

#43 SM

Doesn’t really matter. With a gambling addict it is not about the money, it is the rush. That is why all gambling addicts eventually lose everything. No exception. Not that I believe anything you write SM, as you have posted 500+ times on Garth’s free blog that you have no ethics and are a liar, much to everyone’s annoyance. (except for your imaginary “fans”.)

#50 Smoking Man on 03.31.13 at 10:18 pm

The biggest crusher of youth, tuition debt.

In order to get a low paying cube dwelling job, obidanice certificate required , better off flipping burgers in Windsor.

I would love to own a university,, constant replenishing stock of idiots

#51 Stupesing in Cabbagetown on 03.31.13 at 10:21 pm

“Royal LePage’s latest self-serving survey found 72% of people born between 1980 and 1994 think they’ll be reamed out of home ownership”

I remember the histrionic headlines in Edmonton in the 1970s that young people were now, forever, permanently banished from ever owning homes. Then the crash. Same thing in B.C. In the early 80s and ditto in Ontario in the late 80s. Somehow, that prediction never comes to pass.

#52 Victoria on 03.31.13 at 10:21 pm

So, how much longer do you expect prices should go up, despite sales being down? And if prices do go down again in June-July, let’s say, after they have gone up another 5-10% in the spring, will that mean the real decline has started or will it just be another “seasonal” decline? It seems that year after year you use up the summer’s decline in prices as indication that the downward spiral has started and dismiss the spring increase as merely seasonal. Am I wrong?
Sorry, of course, I am. What was I thinking.

#53 Chickenlittle on 03.31.13 at 10:22 pm

#40 Chopper: “Those who wait will be rewarded.”

I think all of those people who bought RE right now because the couldn’t wait are the ones who failed the marshmallow test..

http://www.youtube.com/watch?v=KPZ5R9EA968

#54 not 1st on 03.31.13 at 10:24 pm

Why trade freedom for soul crushing debt? We need to value freedom more than stuff. And the in the words of any financial rep, if it appreciates, own it, if it depreciates, rent it.

After I went to work for my first employer, I was surprised that they had in house financing assistance for employees through one of the major banks. I thought that seems odd and nice of them at the same time, until I realized, they want to get you stuck down with a mortgage as soon as possible because then they have you locked in. Your options to quit or move or take a break become more limited. Golden handcuffs.

#55 UrbanCowboy on 03.31.13 at 10:26 pm

I’m still seeing sold on for sale signs in Calgary. Is this the blow off top or are people not understanding the oil situation and deficit facing the economy here?
Well boom and bust as they say for commodity towns, the higher she goes the harder she falls.

#56 Smoking Man on 03.31.13 at 10:29 pm

Freedom First on 03.31.13 at 10:17 pm#43 SM

Doesn’t really matter. With a gambling addict it is not about the money, it is the rush. That is why all gambling addicts eventually lose everything. No exception. Not that I believe anything you write SM, as you have posted 500+ times on Garth’s free blog that you have no ethics and are a liar, much to everyone’s annoyance. (except for your imaginary “fans”.)
…………

Your an idiot, all investing is gambling.. It’s risk vs reward, your statement of gamblers eventually lose is a myth, there are good gamblers and bad ones. TED ROGERS bet the farm several times.

Life is all about gambling, my wife going to work out. Will this new job pay out….

Ultimately, we have at best 100 years on this planet. Grow someballs go all in once in a while… It’s a rush, if you lose so what…. Your alive…

#57 Geeks on 03.31.13 at 10:41 pm

RE in Canada especially in Vancouver reminds me of the hysteria that led to the DOT-COM crash here in Sillicon Valley in 2000.

In 1998-1999, you just needed to know how to hold a mouse in order to get a 6 figure income and those who had a salary of less than $40K were living in shelters because they couldn’t afford to rent an apartment.

Publishing a website such as http://www.Pet.Com would launch the company’s share price to the stratosphere. Investors had no clue of what they were doing, just buying a bubble that they were unable to see. When the bubble finally exploded $5+ trillion vanished overnight.

I see people in Canada behaving like the DOT-COM investors, this time in RE.

Like Pat I am waiting for them to continue their folly and I’ll be back after the crash to buy a home.

BTW I won’t stay south of the boarder forever.

Bonsoir!

#58 Smoking Man on 03.31.13 at 10:42 pm

Freedom first, it’s all about probability, when I go to the casino, hell I’m here now… I know the odds are not in my favor, I know that I can’t make money here. Why do I come, it’s fun……

But when I bet stocks, for example. I know I have a better that 50 precent chance of winning. WHY I understand human nature. I know when early ins will take profit, when idiot bet the middle.

Life is camel toe and batman…. Stocks, real estate, baseball cards or what ever……

Stop making stupid generalizations.

#59 Joe Calgary on 03.31.13 at 10:46 pm

House across the street in Calgary went for sale Friday morning, a line up of cars showed up for viewing and house sold for full asking price within 24hrs.

You would not know that if you were not a realtor. BTW, the address? — Garth

#60 Angela on 03.31.13 at 10:50 pm

I still don’t get it. So Vancouver will be 30% down in the trough. I don’t have illusions of ever owning in Vancouver proper, much like if I was in Ontario I wouldn’t think owning in Toronto would be a reality for us, but we have a well above average family income and I am bewildered at the cost to rent a decent place. If you use the rule of thumb that the roof over your head, including utilities and insurance, shouldn’t cost more than 25% of your income then shouldn’t a full house be around $1,400 a month to rent? It’s more like $2,000 excluding utilities and you’re still usually dealing with other tenants in the house, downstairs, upstairs, over the garage, in the garden shed.

I don’t care if I rent or own, I just want a place where we’re the only people on the property. I think that’s where a lot of people are coming from, sick of living in a basement above footsteps, sick of hearing your neighbours turn over in bed or the aftermath of a Mexican fiesta. Owning isn’t alluring, but peace and quiet sure are.

So move to a city where people live that way. — Garth

#61 Ralph Cramdown Ⓤ on 03.31.13 at 11:03 pm

#25 Realtor # 1

I have to say that in my time watching the real estate market, I’ve never seen so much sell side BS. This isn’t an industry that ever had a reputation for scrupulous honesty, and I can remember when the monthly TREB stats would just highlight the best performing district (“Agincourt is on FIRE with sales up 40% from last year and prices up 27%!”).

But in the last six months or so, pretty much every last word out of the industry has been bullshit. Stories get planted in the media with fake buyers, fake properties, fake owners, fake stats and plenty of just plain outright lies.

On the other hand, the banks’ economics departments are tripping over themselves to define “soft landing” in ways your industry does not want to hear, the mortgage brokers are running to Ottawa saying if amortizations don’t go back to 30 years, it’ll nuke an entire Oakville worth of jobs, and the finance minister is kicking anyone who dares try to trade margin for share in the shins. Your own brothers, the downtown condo specialists, are passing out cards in the food banks and soup kitchens — and they’re NOT there to volunteer.

Given the gross misrepresentations being served up right now, I’m not ‘impatient’ or ‘nervous’. The fact that the majority of real estate stories in the media contain such easily disproved representations tells me all I need to know. Your own post said “listings are looking slim,” but there’s more inventory and fewer sales than last year, and your brother agents are complaining about a lack of QUALITY listings or urging buyers to get out there and lowball on the imperfect stuff. Oh, I’ve got to go… the popcorn’s ready. See you in the fall!

#62 ag on 03.31.13 at 11:05 pm

breitbart run this article today about Canadian banks and the possibility of Cyprus style solution, I hope it is not true.

DOCUMENT: CANADA CONSIDERING CYPRUS-STYLE ‘BAIL-IN REGIME’ http://www.breitbart.com/Big-Peace/2013/03/30/Document-Canada-Considering-A-Cyprus-Style-Bail-In-Regime

Don’t believe everything you read, unless it’s my post of two days ago. — Garth

#63 45north on 03.31.13 at 11:05 pm

Neo said here is a $1 million listing in Milton.

the commute from 403 Mickey Crt, Milton to 315 Huron Street Toronto is 61.7 km, 49 minutes. (at one time I worked at 315 Huron Street) I figure Tuesday morning the commute will be over an hour and a half. So figure a mortgage of $900,000 you need an income of $200,000. To put it another way the closer you get to Milton the less likely you will find a job paying $200,000 a year. Or another way, if you had $1 million cash why work at all? Buy a nice house in Truro Nova Scotia and invest the difference. The Milton house is not worth $1 million.

#64 prairie person on 03.31.13 at 11:08 pm

If Victoria sales are down 18%, it is because the flippers are out of the market because they can’t make a quick buck anymore. Flippers are the same as the day traders of the stock market. I know one bldg where nearly all the units were taken by people intending to flip them, not live in them. To do that prices have got to be going up more than the cost of the buy and sale. So her buying units were sales and her selling them were sales. Nothing to do with people buying units to live in. These are a bit like wash trades on the stock market. The fact that those stop means what beyond some individuals have got stuck with a bunch units? With the day traders mostly out of the stock market how much does it mean to the overall market?

#65 sales_and_prices on 03.31.13 at 11:09 pm

Garth, what do you see for Montreal, a 10-15% correction? more? less? (let’s say good hoods in the South Shore)

Even in the current and the foreseen scenario, I don’t think prices will really follow sales… too many people wanting to buy and willing to jump into debt. There is no common sense, I think there may be something in the water…

#66 Smoking Man on 03.31.13 at 11:17 pm

Freedom first imaginary fans, ha

I guess no one told you I have 22000 fans a month, do you not understand that bay street bets huge on my insanity here, Msm, Amanda lang gets here ques from me, I’m a rock star who has retained under the radar. I still go to the rub and toug threw the front door.

#67 HAWK on 03.31.13 at 11:18 pm

This guy a famous columnist in America is an ex-Canadian. Here are his and his colleagues view on what lies ahead for America and the rest of us.

http://www.nationalreview.com/corner/344336/end-stage-metastasis-mark-steyn

Krugman demolishes the guy in his response. — Garth

#68 Shawn on 03.31.13 at 11:20 pm

STOCKS ARE A WINNING BET

Smoking man at 58 said:

But when I bet stocks, for example. I know I have a better that 50 precent chance of winning. WHY I understand human nature.

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

Everyone buying stocks has better than a 50% chance of winning because profits flow from customers of businesses to the owners. Stock “holders” are company owners. Not just traders.

#69 Investx on 03.31.13 at 11:30 pm

“Sure, a 30% haircut in Van SFHs is possible by the time we hit the bottom of the trough”

That’s it? So Vancouver will drop to earlier inflated levels. Debt to income, price to income don’t matter? Vancouver market is immune to reverting to the mean?

Why is it different there?

#70 Godth on 03.31.13 at 11:30 pm

To anyone 40 or younger I would suggest leaving the country. Move somewhere that still has community as a core value. Get out while you can, the values you’ve been brought up on are worthless. Leave all these vapid, hollow beings that pretend to be your elders to wipe their own a$$es with their digital wealth. The party is truly over, the pigs have had their fill (almost, you’re next).

#71 HAWK on 03.31.13 at 11:30 pm

Here’s Krugman’s post on Stockman………must always have both sides of an argument :-)

http://krugman.blogs.nytimes.com/2013/03/31/cranky-old-men/?smid=tw-NytimesKrugman&seid=auto

#72 Garthvader on 03.31.13 at 11:31 pm

Maestro Gartho, where will canadian economic growth come from in the next couple of years, assuming the deflating housing bubble will not artificially be reinflated again?

There won’t be much. — Garth

#73 Vancouver Hipster on 03.31.13 at 11:35 pm

Please don’t mind my saying so but Canadians have the worst sheeple mentality.

There is so my much exaggeration and glossing over, be it RE, Nortel or Blackberry or winter Olympics in Vancouver.

#74 Smoking Man on 03.31.13 at 11:36 pm

Shawn to shit faced to try and figure out what your saying.

Ultimately I’m a genius, the world knows it. But because I brag, the thing you teacher taught you was bad… They are mandated to make happy slaves, heaven help you one day becoming self assertive confident, and becoming an owner rather than slave.

Just saying

#75 Smoking Man on 03.31.13 at 11:42 pm

Did you dumb dogs know that you can fly to fort Lauderdale the for 25 bucks from nf airport……

No only the great one the smoking man buys supper low

#76 Mocha on 04.01.13 at 12:04 am

Easter post? Such a diligent blogger. I love to read ya, but don’t be afraid to take a little time to stop and smell the turkey.

#77 Garthvader on 04.01.13 at 12:12 am

“Maestro Gartho, where will canadian economic growth come from in the next couple of years, assuming the deflating housing bubble will not artificially be reinflated again?”

– There won’t be much. — Garth –

If so, would the government not start looking to create some artificial growth to prevent the economy from going into a long recession? It would be reasonable to assume they would be looking at the same tools that have been and are being used in the US, no? That is, lowering interest rates even further, possibly more of canada’s own QE version – resulting perhaps in a lower CAD and a booming stock market, no?

#78 Fed-up on 04.01.13 at 12:18 am

WTF is wrong with us in Canada? Why should anyone that makes a decent living and that has also saved up a significant down payment have to rent or even wait to buy in this baron and sparsely populated meat locker that we live in? Housing should have never reached anywhere near these peaks in any city or any neighborhood within this (at best) 2nd rate country. 34 million unskilled paper pushers and speculators hacking away on the world’s second biggest land mass and a young couple is expected to pay almost $2 million by the time it’s all paid off (30 years later) to live in a prime located home in one of our “major” cities…absolutely insane. 10-15% drop in “selected” areas of the GTA? 30% drops in Swampcouver? Those projections don’t even begin to cover the decreases that truly need to take place, in every city and in every neighborhood. I bought my 3200 sqft home down near the lake in east end of Toronto in 1999 for $335,000 complete with solarium and a beautifully finished basement, 2 car garage, unilock everywhere, ect ect. I was netting about $80k per year running my own small business at the time and had the house paid off in less than 7 years as I had a $100,000 down payment. A mere decade later I’d need to borrow nearly a million bucks and have to cough up twice the down payment while earning the same poke and paying twice as much for everything. Why the hell would I be entitled to over $800,000 appreciation and that kind of affordability in only 12 or 13 years? What is it about Toronto that became so much more desirable since then??? The insane traffic becoming even more chaotic? Absolutely no new road, freeway, infrastructure or rapid transit improvements? An non-stop influx of hundreds of thousands of the world’s “finest” and fresh off the boat pizza delivery specialists? The whole thing needs to crash and crash hard and become the world’s #1 cautionary tale in the category of sheer stupidity, manipulation and mind bending greed. It will be healthy for all of us trust me. Oh, and screw every Canadian Bank, mortgage broker, realturd, pressed cornflake pusher and CMHC that facilitated a financial nightmare that just doesn’t want to end.

#79 Waterloo Resident on 04.01.13 at 12:23 am

CRUSHING STUDENT DEBT !!!

- If anyone wonders ‘who is going to buy Baby Boomer’s houses’, you can be assured that its less and less likely to be todays youth, as the amount of student debt they have is absolutely KILLING them.

At the same time, they are graduating into a job market where finding even a $11 /hr career / job is all but impossible. Even professional CMA accountants with 15 years experience are now having a hard time finding $30,000 / yr job postings! Yes, you heard it; Accountants wtih 15 years experience are now earning $15 / hr or less! So really, what chance does a new grad have against that? NONE.

And it looks as if things are not going to be getting better anytime soon.

#80 J. Roy on 04.01.13 at 12:35 am

#73 Vancouver Hipster on 03.31.13 at 11:35 pm
Please don’t mind my saying so but Canadians have the worst sheeple mentality.

There is so my much exaggeration and glossing over, be it RE, Nortel or Blackberry or winter Olympics in Vancouver.

No. Hipster. It’s human nature. We are attracted to what causes emotions: religions, sports, bidding wars, fads, Bitcoins, Gangnam style,…

The irony is that people will spend time to shop around to buy a brand of toothpaste, something of little financial consequences yet will buy a car or house on a feeling without thinking about the car payments or mortgage payment for the next 25 years.

Scotia bank is airing ads about and showing people paying their last mortgage payments and how happy and liberated they are!

They do so, of course, to sell more mortgages… Go figure!

#81 Tom Vu on 04.01.13 at 12:39 am

#59 Joe Calgary on 03.31.13 at 10:46 pm

House across the street in Calgary went for sale Friday morning, a line up of cars showed up for viewing and house sold for full asking price within 24hrs.

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

How much did dog want ? Throw in water dish?

#82 Tom Vu on 04.01.13 at 12:40 am

It is Easter, and Smoking man has arisen from the ….umm….bed….

#83 Investx on 04.01.13 at 12:43 am

Garth, anywhere else besides Vancouver and Toronto where regular market forces and economics won’t apply?

#84 rp1 on 04.01.13 at 12:44 am

Gee Garth, quite a different message from before. So no crash, no real opportunity to buy, just a different kind of permanently unaffordable?

Same message. Housing isn’t a right. If you can’t afford it, don’t try. — Garth

#85 Waterloo Resident on 04.01.13 at 1:08 am

Kids today cannot buy houses, not with the massive student debt they have:

http://www.financialpost.com/personal-finance/young-money/Student+debt+bankrupting+generation/4874861/story.html

#86 Turtle on 04.01.13 at 1:08 am

RE: #54 not 1st

Why trade freedom for soul crushing debt?

……………………………………………….

Absolutely agree.

Would you go for pizza if it cost $50 instead of $20? Maybe you just wait, or go to different place, or maybe even different food… There is no problem if you have enough money to afford any pizza, but it works very rare with the real estate. So why people are so persistent, so stubborn and so short on patience?

The way I see it … real estate always cost the maximum dollar that people want to pay for it. No need to chase the price… it will come down to you if you just stay still.

Move to another city. Earn more money. Buy cheap RE. Pay it off. Sell it. Move back to buy your dream house… Be flexible. Be patient.

It is not a race.

#87 hungry for money realtors in a panic on 04.01.13 at 1:17 am

Driving around the city many for sale signs and very few sold signs. I have noticed a couple of houses that were for lease for the past two to three months and now up for sale. I heard many Realtors haven’t made a single sale in almost a year. A Lot of “in fighting” at the Realtors office . whatever that means. In any case Realtors are in major trouble.

#88 VanPerfecto on 04.01.13 at 1:17 am

Taking advice from Realtor Sam Wyatt?
Not paying attention to massive immigration from around the world. HUGE immigration coming to Vancouver. Are these immigrants going to rent? Read todays Vancouver Sun and get hip.
When do I buy you ask. Wait 10, 20 years and you are now old. Looking at the market on a day to day basis instead of over the next 30 years.
Ask yourself this question. Long term how many homeowners do you know that are not well off? Ask yourself how can I ensure my children have financial security without a home. Every parent in the world wants their children to own a home. It’s why we go to school, its why we work and sacrifice. Home ownership is the essence the zenith of living and everyone in their heart knows this is true. Renting makes one feel bad about him/herself. Right now Vancouver is having a pause, a brief pause that refreshes. It has been proven over and over again that interest rates are not being raised. Buy what you can afford with your eye on the long term not day or month to month fluctuations.
Amen

#89 Tom from Mississauga on 04.01.13 at 1:44 am

When Garth? When Garth? When? When? When?

People, its about direction, not when!

#90 Van guy on 04.01.13 at 3:54 am

Garth, you appear to be softening your stance on Vancouver’s housing market.

The question is – why?

How is a 30% price drop ‘softening’? — Garth

It’s definitely softer than what you’ve predict for Van last year. I feel the same way, I thought this market would correct by now, but it hasn’t really changed that much unless you’re buying a 2 million and up home.

#91 Buy? Curious? on 04.01.13 at 4:43 am

Will that Mastercard advertising slogan ever die? See what I mean about Canadians being the cultural equivalent to vanilla ice cream? And those nerds holding up those signs are gawddamn Habs fans to boot!

#92 BenF on 04.01.13 at 5:04 am

Realtor #1 You are right, but not how you think. In the UK sales volume drops did see *average* prices rise. When volume drops “average” houses have trouble selling. Only the better houses sell, as the rich are less effected by credit constraints. This means the majority of houses selling are from more expensive stock, forcing the median up.

However from the perspective of the seller, you are stuck with whatever house you have. If you have an average house then you will have trouble shifting it unless you drop the price.

This is why house price indices are not a good indicator in isolation.

#93 twpt on 04.01.13 at 6:13 am

So if Garth is right about housing based on people purchasing more than they can afford how is the impending implosion of jobs and government spending not the same? Not holding a core position of 5 to 10% of gold in your diversified portfolio is irresponsible. It’s insurance just in case. And can someone tell me why men who sport a beard think they are smarter than history suggests, Bernanke, Krugman and every other clueless professor of economics. Sorry Garth I’m still on the fence with you.

There is no implosion of jobs and public spending coming. Hold gold if you want, but it’s dead money. — Garth

#94 Blais on 04.01.13 at 6:33 am

Sales are down, inventory is up !

Lets starts the low balling season (with no intention of buying) to drive Realtor crazy.

This is the only way at some point price will drop.

#95 Alliston on 04.01.13 at 7:26 am

Rules to live by – When everyone else is lined up for hours to do something, you should do the opposite. I never line-up, my time is more important than money

#96 neo on 04.01.13 at 7:34 am

At #63 45North

You are right and I agree with you. I was just trying to point out how delusional Miltonians are.

Exhibit B:

This listing.

http://www.realtor.ca/propertyDetails.aspx?propertyId=12968712&PidKey=1108876967

This house was sold last year for $689,000. It was listed originally for $730,000. It is now on the market again this year by the new owner with the SAME agent for $769,000. Hmmmm.

#97 maxx on 04.01.13 at 7:47 am

#2 george on 03.31.13 at 7:57 pm

“Over the last 13 years, the stock market has twice crashed and touched off a recession: American households lost $5 trillion in the 2000 dot-com bust and more than $7 trillion in the 2007 housing crash. Sooner or later — within a few years, I predict — this latest Wall Street bubble, inflated by an egregious flood of phony money from the Federal Reserve rather than real economic gains, will explode, too.”

“The stock market did not cause the ensuing recession in either case.” — Garth

Perhaps…..however, unbridled and opaque Finance Industry creativity in producing flawed investment “products” caused these outrageous losses of private wealth.

Economic rally indeed.

Wrong again. The dot-com mania/bust was the product of human greed and avarice, shoving stocks to unsustainable, speculative valuations. Similarly the 2008 crash had its genesis is a speculative ballooning of US real estate values. The mortgage mess and banking errors surrounding it would never have occurred if Mr. & Mrs. Frontporch had not lusted for granite. — Garth

#98 TurnerNation on 04.01.13 at 8:05 am

All – today April 1st the government announced immediate confiscation of physical metals!
Quickly bury it in the backyard hole. No.
The gold-sniffing dogs and drones will find it.
Better in the toilet tank. Do it now.

#99 T.O. Bubble Boy on 04.01.13 at 8:11 am

The Motley Fool out with a clever April Fool post that I will now share with The Greater Fool…

The Hugest Bubble in History Set to Explode:
http://www.fool.com/special-alert–the-hugest-bubble-in-history-set-to-explode-/index.aspx

Look for DOW 3600 on April 17th!

#100 blase on 04.01.13 at 8:12 am

#78 Fed up

Well said. Imagine going back to 2003 and explaining what Canada would be like in 2013, and what we’ve gone to get to this point. Soft landing? How do they sleep at night.

#101 Ret on 04.01.13 at 8:12 am

#42 Thanks for the links. The first link is eye-popping. Chartered bank mortgage lending for household credit up 5.9% Y/Y. Total household credit up 4.5% Y/Y. It is a wonder that prices are dropping at all with those loan increases.

Residential mortgage credit now 66.6% of household credit. That can’t be good in a declining market.

#102 Weedeater on 04.01.13 at 8:26 am

Look at Garth’s graph and note the mid-80s. Interest rates soared as high as 19% for mortgages. Garth repeatedly mentions the impact of rising interest rates on mortgages. While it’s unlikely in the extreme to ever go that high again, be aware that there is a significant impact from interest rates on house prices.

#103 Marquis de Sale on 04.01.13 at 8:28 am

Cyprus…….it already happened here. The OAS grab from those born in 1960 and earlier. Fossils and blue Tory coffin-dodgers can collect forever but late boomers are pickpocketed at Harpeur’s whim!

OAS is pure government largesse without any direct contribution by those who receive it. You have no right to complain when it’s taken. — Garth

#104 IM in C on 04.01.13 at 8:28 am

More realtor shenanigans
http://www.thestar.com/business/personal_finance/2013/03/28/real_estate_law_edmonton_couple_sues_over_realtors_cottage_profit.html

#105 torontorocks on 04.01.13 at 8:41 am

Smoking Man, I do enjoy your posts and insights, however, how the heck can someone who purports or professes to be this astute market reader “batman” superstar NOT know how to leverage his trades with options?

And this market, to me, is unbelievable. Is it all debt? Is it equity rolls from a sale of one overpriced asset into a new, higher valued asset? What sustains this, unless everyone in Toronto is making a $130 or higher? Are we at a new level from where we start making purchases?

I’m also of the mind that during this period, net net the equity return from the house couldn’t have beaten a diversified portfolio, so I should technically be indifferent or slightly better off (say indifferent, to be conservative) between what I’ve netted and what the equity return to ownership (net) has been over say the past 3-6 years.

#106 torontorocks on 04.01.13 at 8:42 am

Oh and Garth, was a pleasure meeting you the other day.

You sell Kias? — Garth

#107 T.O. Bubble Boy on 04.01.13 at 8:50 am

@ #96 neo

You are right and I agree with you. I was just trying to point out how delusional Miltonians are.

Exhibit B:

This listing.

http://www.realtor.ca/propertyDetails.aspx?propertyId=12968712&PidKey=1108876967

This house was sold last year for $689,000. It was listed originally for $730,000. It is now on the market again this year by the new owner with the SAME agent for $769,000. Hmmmm.

That agent looks desparate – so desparate that the CAPS LOCK KEY STAYS ON while writing up the listing. Maybe the agent was the one that bought the house last year?

A $770k Mattamy house is scary, but that $1M Mattamy house posted earlier still takes the cake.

I thought that people moved to Milton because the homes were more affordable?

#108 Stickler on 04.01.13 at 9:00 am

“The mortgage mess and banking errors surrounding it would never have occurred if Mr. & Mrs. Frontporch had not lusted for granite. — Garth”

…It would not have happened if rating agencies had not giving investment grade ratings to bunk pools of mortgage backed securities.

If the banks could not sell vast quantities of mortgages internationally then those mortgages would not have been given.

The only reason they COULD sell vast quantities of them is because of their [false] high investment grade ratings.

Mortgages only exist to sell after they have been created. Theer’s enough blame to spread over everyone, but it started with house lust. — Garth

#109 afraidit allmightend on 04.01.13 at 9:14 am

Hmmmmmmm…in denial again about the effects of horny ham…..when the fact is that is exactly whats happening….someone…..not mentioning any names…bwahahahahaha just can’t see the forest for the trees through his liberally ajusted politically correct rose colored glasses.

http://www.vancouversun.com/technology/Whites+become+minority+Metro+Vancouver+2031/8175821/story.html

HAM = Hot Asian (offshore) Money. It does not mean non-whites. You sound racist. — Garth

#110 Pr on 04.01.13 at 9:18 am

Quebec province -15% sales. Thanks to a gift before Christmas of 50 BILLIONS to Genworth MI Canada’s and schl and a new war among banks like 2,5% Interest rate.

Stupidity is the new trends among rulers and people who are rushing to buy realestate at those prices.

#111 Raven on 04.01.13 at 9:27 am

Real Estate doesn’t correct it over corrects!

Once a neighborhood listing on the market for 120 days can’t sell the owners “new price” goes to market. Once the home lingers another 60 days with no offers, the first lowball offer is accepted. The owners didn’t want to take such a loss but the loss of a job or a relocation or a multitude of other factors forced them to have to sell at a loss. This new low for the neighborhood sets the “com parables ” for this area. Realtors list as low as possible for a quick sale regardless of having obtained your highest price. Listing for 20K or 50K more is a small percentage of their total commission that they will have to work a lot harder to obtain with ads and open houses.
Not worth their effort for the extra commission.

Once someone is forced to sell at a “loss, in their mind” then the pain of the loss is pushed down to the new purchase. A viral downward auger is set in motion.

There will be a tipping point where ” it’s not a RE crash if my house value hasn’t dropped but a RE depression once my house value drops”. This tipping point will be reached when we have a uniform drop in sales of 50%. We are quickly approaching these national levels. The sales drop at those levels will last for 60 days then it becomes a free for all!

My best estimate for re entry into the market would be the spring or summer of 2014. Prices , location and amenities will be for the smart and patient purchasers.

Events are called enivitable only after they have occurred!

#112 HogtownIndebted on 04.01.13 at 9:32 am

#104 IM in C

I just saw that article myself. My favourite line is this:

“So, the real estate agents won and the sellers lost.”

Few industries, and certainly no ‘professions’ tolerate such astonishing and blatant conflicts of interest as does real estate.

Underlying in this article is the precarious valuation of cottage properties everywhere. This cottage inflated from $59,000 to $110,000 in five years, then to $225,000 in only four months more.

As I have suggested earlier on this blog, the support for recreational property valuation is almost entirely based on emotion and a bubble economy mentality, and demographics will only weaken this sector.

Anyone who does not live full-time in a cottage and makes it more than a comfy shack is truly a greater fool. Keep the granite in the Canadian Shield where it belongs, not on the counters of a place you visit a few weeks a year.

#113 Toronto_CA on 04.01.13 at 9:33 am

Nice job #78! You captured a lot of thoughts common to this blog with one rant. I didn’t even mind the wall of text.

It’s pretty sad when someone like me, who earns a very good salary somewhere close to the top 1% (of 2010 tax filers, per a recent article) at the ripe old age of 35 is stuck to buying either a condo or a shitty looking bungalow/townhouse in a bad hood that I would have been embarrassed to grow up in as a kid. In any other North American city (outside of Toronto and Vancouver) I’d be looking at very very nice places to live.

Was it like this for my parents? No.

There’s something awful about that, considering Toronto is very livable apart from real estate but it’s not exactly Paris (or London or Sydney or Manhattan or Tokyo or Shanghai or Hong Kong or even as nice as Chicago or Austin).

#114 Shawn on 04.01.13 at 9:38 am

The Extant Cause of the Housing Meltdown and financial crisis was…

The mortgage mess and banking errors surrounding it would never have occurred if Mr. & Mrs. Frontporch had not lusted for granite. — Garth”

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

And especially would never have occurred if so many buyers had not been deadbeats and failed to meet their payment obligations.

#115 OnlyTHeBankersLaugh on 04.01.13 at 9:40 am

Smokin Man, Pull it together, dude. Have another drink. You’re still #1 and our unofficial Greater Fool Superhero and then Village Idiot when you’re loaded in our books. Don’t panic and lash out. The teacher from grade 6 is not telling you big,bad things despite your worry about their ongoing mind control. You’re better than them – although I might be just saying that to save you from pushing yourself off the mental health precipice you’re hovering over. We know you’re out there watching for camel toes, walking into rub and tugs with your head held high, playing options without a clue, boozing and gambling and berating those less fortunate than you – you got game, man. Challenging “the man” and understanding the herd – oh, stop, big boy surrounded by stripper. Oh, how those hookers must love your stories and your wife must appreciate your commitment and dedication. You chastise those who compliment Garth and yet you yearn to have a drink with him as if you are old dressing room buddies – talk about a suck up. You can fool the fans but you can’t fool the players, Smokie. Hope your day goes well today in NF. Figure a “genius” like Sheldon would have better things to do every weekend. One of your many redeeming qualities is you picked a good blog. Well, sort of, if it weren’t so pathetic.

OnlyTheBankersLaugh

#116 Pr on 04.01.13 at 9:48 am

…..but it’s dead money. — Garth

Ask Cyprus what they think of that!

This is not Cyprus. — Garth

#117 Daisy Mae on 04.01.13 at 10:10 am

#2 George: “…the stock market has twice crashed and touched off a recession….”

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

I would say dips in the stock market are not the cause, but rather, the result of.

#118 Penny Henny on 04.01.13 at 10:12 am

meanwhile in Etobicoke,
prices are up almost 10% over last year for your average unspectacular bugalow.
I can see that the million plus homes will see lower numbers and thus the average price may not show much improvement from last year, but don’t be fooled.
Prices are still trending UP!
Penny Henny

#119 Shaan on 04.01.13 at 10:12 am

HAM = Hot Asian (offshore) Money. It does not mean non-whites. You sound racist. — Garth

Yes I agree with you Garth, segregation is racist.

#120 Spiltbongwater on 04.01.13 at 10:27 am

Sales first, prices second. How is this confusing? — Garth

It is confusing because this is the 4th year in a row you have said “first sales slow, then prices come down”. What year do you anticipate this correction to start?

Untrue. Last year I clearly documented the market’s excessive apex. This is the consequence. — Garth

#121 Daisy Mae on 04.01.13 at 10:38 am

#24 Bargains: “Prices may be coming down in Toronto but not everywhere. In my neighbourhood, things are still absolutely crazy….”

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

Peoples’ motivation is simply greed. Their listing price means nothing. Actual sales are what count.

#122 RP McMurphy on 04.01.13 at 10:44 am

Phone rings. Garth answers.

Garth (to Amazon): “It’s Patrick. He took out life insurance.”

#123 qestioning on 04.01.13 at 10:51 am

—#59 Joe Calgary on 03.31.13 at 10:46 pm House across the street in Calgary went for sale Friday morning, a line up of cars showed up for viewing and house sold for full asking price within 24hrs.—

This is truely happening in Calgary… cow-town is different!

#124 Gunboat Denier on 04.01.13 at 10:55 am

78 Fed-up. You sound grouchy. Time to sell and move on.
You can even sell 25% below market if you feel ashamed. Go ahead. Do it.

#125 afraidit allmightend on 04.01.13 at 10:59 am

Ahhhh dude……the Sun wrote the article….not me…..did you design the liberal attack policy of deny, demonize and disrespect? This particular demographic truth was written in the back rooms of the liberal party braintrust……why do continue to spite the nose on your face? Whats racist about truth telling? Me thinks that calling people names who disagree with your liberal agenda is getting old.

You wrote: “Hmmmmmmm…in denial again about the effects of horny ham…..when the fact is that is exactly whats happening….someone…..not mentioning any names…bwahahahahaha just can’t see the forest for the trees through his liberally ajusted politically correct rose colored glasses,” and referenced a story about white people becoming a minority. Speaks for itself. — Garth

#126 rosie "moving backwards" on 04.01.13 at 11:05 am

These youngsters are on to it. Took a while though. http://thethirtiesgrind.com/2013/03/27/absurd-vancouver-property-march-27-2013/#more-2874

#127 HAWK on 04.01.13 at 11:06 am

#104 IM in C on 04.01.13 at 8:28 am

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

There’s nothing wrong on the part of Realtor’s in that article (I’m not one).

What is wrong is the disease that exists in our society whereby grown up adults refuse to accept that risk is an inherent part of life and want wrongful compensation from others for making poor deals or simply deals that are not even poor, but just perhaps unlucky.

In any market, (stock market, bond market, whatever) people do not lose the right to trade in the very items they sell and real estate should not be any different.

#128 neo on 04.01.13 at 11:08 am

#107 T.O. Bubble Boy on 04.01.13 at 8:50 am
@ #96 neo

You are right and I agree with you. I was just trying to point out how delusional Miltonians are.

Exhibit B:

This listing.

http://www.realtor.ca/propertyDetails.aspx?propertyId=12968712&PidKey=1108876967

This house was sold last year for $689,000. It was listed originally for $730,000. It is now on the market again this year by the new owner with the SAME agent for $769,000. Hmmmm.

That agent looks desparate – so desparate that the CAPS LOCK KEY STAYS ON while writing up the listing. Maybe the agent was the one that bought the house last year?

A $770k Mattamy house is scary, but that $1M Mattamy house posted earlier still takes the cake.

I thought that people moved to Milton because the homes were more affordable?

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

Simple. It was affordable in the early to mid 2000′s. But it is now turning into Oakville North and Miltonians now think they are Oakville. A sleepy bedroom community with poor infrastructure and delusions of grandeur. It’s not even a city. It’s a town.

#129 Old Man on 04.01.13 at 11:21 am

I have seen this buying pattern a few times in Toronto over the years, and when the herd acts with panic to buy a home against all rational investment odds it signals that the end is very near, and down she falls off the cliff suddenly. It is like having a clear blue sky and out of nowhere the storm clouds move in with a hell of a storm.

#130 Joe Cocker on 04.01.13 at 11:25 am

25 Realtor # 1,
Maybe next year everyone.
——————————————–
It is not a question of wishing house crash so one can buy the ‘dream house’ cheap.
It is about the reality that people started using their homes as investment vehicles driven by unnecessary government incentives and guarantees and debt. Which led to capital misallocation and miss-investment and significantly changed the economy that became grossly non-productive. These are not free markets but rather hugely manipulated markets, the manipulations very likely to cause system failure once people realize what is happening.

Whether this policy itself screwed the economy or whether the monstrous housing bubble, part of the even larger credit bubble was the last attempt to prop-up the economy that was already falling apart due to the outsourcing and free trade agreements is not relevant any more.

The predicament that we are faced with:
- Higher prices and significant inflation coming down the road due to loose fiscal policies
- Stagnant and even declining in terms of real purchasing power household incomes
- Governments, municipalities left with no room for future debt accumulation
- Record household debt
- Retiring baby boomers with no savings that needs to be rescued while their rescuers need a rescue themselves
- Future significant cut of benefits (somebody has to pay for F’s and CMHC follies)
Unfortunately will make most of North America practically unlivable except some pockets (maybe Texas for example) and except some job types for quite a while.

I have friends from Brazil, Turkey and can frankly tell that the middle class in such ‘developing’ countries already lives much better life than the middle class in North America.
The fact that 60-70 % of Canadians cannot afford to retire is significant.

So realtor, it is not about your commission for quite a while now but rather about the lifestyle of your children. Prepare 140 k for university tuition (it is free in Germany), for privatization of health care and similar ‘nice’ surprises.

#131 Rainclouds on 04.01.13 at 11:29 am

#88 Vanperfecto

Your moniker smells like a realtor so I’ll bite

-Net out migration from BC so you are incorrect.
-Craigslist has several pages of 100 per pg rentals SEVERAL
-” Home ownership is the essence the zenith of living” Uhh does health make your list? Excessive debt also the “zenith”?
-” Renting makes one feel bad about him/herself”. I rent and can retire tomorrow with the funds so feel pretty good actually…..

Your comments are silly and condescending, they reflect more about you than those you attempt to generalize about

#132 GTA Girl on 04.01.13 at 11:30 am

After the many stories of condo sales falling & dissection of living conditions in any building over 20 stories….has Toronto jumped the shark?

http://www.bloomberg.com/news/2013-04-01/luxury-developer-proposes-largest-mixed-use-project.html

80+ story residential? Who will buy it? Please don’t say more Russian oligarch money or Persians.

Just on a architectural bases,infastructure and esthetics, this makes no sense. Factor in economics, over saturation you have to wonder if illicit money is the only reason why this continues.

#133 Victor V on 04.01.13 at 11:38 am

If you missed this from the other day, worth watching how the realtor using misinformation to make it seem like the house sold over asking:

http://www.theglobeandmail.com/life/home-and-garden/real-estate/video-how-to-sell-a-toronto-house-fast-and-for-over-asking/article10522947/

Make sure to visit the comments section to see how the realtor got caught red-handed.

#134 Post Haste on 04.01.13 at 11:39 am

I am very surprised when people blog Garth on “when” is the right time to buy – are they serious – it’s as silly as someone asking when is a good time to take a dump. People, geez, how can Garth possibly know when the market hits bottom, what your personal financial situation is – go see a financial advisor, spend a few quality dollars and get some sound advice – stop using the internet to make major decisions…

There may just be the perfect home – you may have to pay a premium – so may variables – why the nonsense questions!!

#135 Frank le skank on 04.01.13 at 11:40 am

#111 Raven on 04.01.13 at 9:27 am
Its so difficult to predict what will happen. Some people sitting on the sidelines with cash are expecting a decline in the 20-30% range while others are more cautious and predict 10-20% decline in prices. Of course you have the proverbial optimist who are comfortably numb in their ignorance and unaware of any potential problem. I see falling sales since June 2012 and if this continues, even with these rock bottom interest rates, I think in the end we will see around 30% decline. Of course this is a generalization but to me the writing is on the wall for Canadian Real Estate. I do think it will take a little longer than 2014 to materialize. Maybe the decline will prick up speed once its obvious that prices are going down.

#136 IM in C on 04.01.13 at 11:41 am

Mr. Turner
He is an article for all the metal heads that infest this blog:
http://www.mining.com/its-official-the-gold-market-is-in-recession-heres-why-60695/?utm_source=digest-en-mining-130331&utm_medium=email&utm_campaign=digest

#137 Old Man on 04.01.13 at 11:54 am

Here is the question, and it is why? Why are those rolling the dice in Toronto to buy a home at the top of the market, as the outcome with all the expenses cannot have a happy ending. Are they trading up, speculating, or does cheap money fuel their greed?

This is the very reason that one needs a qualified financial advisor to review the total situation with those that have big money, so they do not make a mistake going blindly with the herd. Some of these idiots will lose big money sooner or later by buying Real Estate buried in quicksand with no way out.

My interpretation of this last photo is simple: Look at the fools in the crowd, and be it not you!

#138 DreaqmingInTechnicolour on 04.01.13 at 12:09 pm

Why have the banks been able to lower the interest rates paid out to bank account depositors for so long while giving out rock bottom interest rates and reaping huge profits and dividends ? Look at the interest rates in other UK countries such as Australia and New Zealand which are much, much higher for its bank depositors. Us Canadians are being taken to the cleaners. Money travels very well with the click of a computer mouse.

#139 Fed-up on 04.01.13 at 12:14 pm

@ #124 Gunboat Denier
——————————————————————-

Not grouchy Gboat, just sad and disgusted at the state of affairs, and I certainly hope you’re not OK with our situation in this country.

I have already bought homes in sunnier climates in the last 3 years without having sell my home in Toronto, but it does sound tempting, trust me. Unfortunately, I run a business in Toronto and most of my friends and family reside here as well. I never saw the roof over my head as a poker chip nor as a tool to speculate my way to enslave a young family to a 7 figure debt load. It’s where I park my cars and motorcycles, eat, sleep and s%^t.

#140 Fed-up on 04.01.13 at 12:52 pm

@ #113 Toronto_CA

Was it like this for my parents? No.

————————————————————————–

Do you want to know what’s truly sad?

I was 30 going on 31 when I bought this home in 1999. Oh and starting at the ripe old age of 24, I had already bought and sold a condo and then a smaller home prior to this as I finally upgraded to what I felt was something that I could be comfortable in for the rest of my life.

The point is, you don’t have to go anywhere close to your parents’ generation to draw comparisons. Nice huh?

#141 benchwarmers on 04.01.13 at 1:02 pm

A lot of open houses in Calgary about the only thing moving though is Iginla, oh!
Last Wednesday the Iginla trade stole the front page from both papers and the first 20min of every news cast in town. Not sure if anyone in Cowtown heard the big news that the Voyager project has been cancelled and that Transcanada pipeline had their toll price increase rejected.
Oh well what does that stuff matter anyways.
Its different here alright.

#142 benchwarmers on 04.01.13 at 1:04 pm

Oops, the Iginla trade was Thursday. How could I have messed up one of the most important dates in Calgary’s history.

#143 Frank le skank on 04.01.13 at 1:07 pm

In 2005 and 2006, sensing a protential downspiral in RE as observed in the US, CMHC begains to insure 30 and 35 year ams. In 2007 they allow people to purchase a home with 0 down and 40 year amoritization to avoid an america type crash. They start scaling back these changes in October 2008 and changed amoritization from 40 to 35 years. April 19, 2010 saw some changes to borrowing regulations. Amoritization was lowered again in March 2011 from 35 – 30 years and then finally
lowered to 25 years in July 2012. The drastic measure to increase amoritization periods was to boost the economy by encouraging people to buy houses. It worked as it was intended but it also caused house prices to skyrocket, making them unaffordable to most when you impose traditional lending standards (imgine if you jack up interests rates). On a $400,000 mortgage, the difference between 40 and 25 years is about $450 per month if they have the same interest rate. Regarding Toronto, the above changes in lending rules cannot be corelated to consecutive monthly sales drops with the exception of the July 2012 change. Sales haven’t rebounded from this change and it would seem that it is the last straw.

#144 maxx on 04.01.13 at 1:26 pm

#97 maxx on 04.01.13 at 7:47 am

Wrong again. The dot-com mania/bust was the product of human greed and avarice, shoving stocks to unsustainable, speculative valuations. Similarly the 2008 crash had its genesis is a speculative ballooning of US real estate values. The mortgage mess and banking errors surrounding it would never have occurred if Mr. & Mrs. Frontporch had not lusted for granite. — Garth

Sorry Garth. You cannot blame people for being human- and using “genesis” is really not a strong support for your argument.
You can however blame big finance for its orgiastic exploitation of this “weakness”.

Oh, you mean like religion? — Garth

#145 Fed-up on 04.01.13 at 1:30 pm

@ #138 DreaqmingInTechnicolour

Why have the banks been able to lower the interest rates paid out to bank account depositors for so long while giving out rock bottom interest rates and reaping huge profits and dividends ?

—————————————————————————-

That answer, is quite simple my good man. Our brilliant banks enjoy lending your hard earned savings to debt crazed borrowers at rock bottom interest rates so they can live pay cheque to pay cheque while living the “dream” with your money. This way, the banks get to lend out 10 times what they used to and still make their 2% compounding spread, all while downloading the risk back down to you, the taxpayer.

Aren’t Canadian banks awesome?

#146 Julie on 04.01.13 at 1:40 pm

Oh and by the way……for all you Public Sector workers out there? THANKS for making us work a BIT HARDER today for your FAKE HOLIDAY.

THERE IS NO SUCH THING AS EASTER MONDAY !!

Welcome to Canada…..

#147 Andrew on 04.01.13 at 1:54 pm

Sales first, prices second. How is this confusing? — Garth

Granted that’s how its suppose to work. what about lack of supply out tehre seems to be keeping prices over inflated. even in teh mist of fewer sales ther supply factor is still an issue. only thing I noticed is when demand picks up we get bidding wars in demand areas.

#148 Old Man on 04.01.13 at 2:04 pm

I have my modest penthouse in life with about 1,300 sq.ft., and pay my rent on time which is not much that includes all with underground parking, basic utilities, no taxes or condo fees to pay and life is well. What is the definition of a home or residence? Just a place to kickback with a roof over my head to come and go.

Now for you horny couples that want to buy at the top of a Real Estate market, why not wait for a few years and save your money instead to hoop a bargain when the time is right? If you go in too early you will lose a lot of capital, and this meltdown will take time, and in the core of Toronto the condo market is going to take a bath bigtime; not to mention the GTA.

This bubble is the biggest in history, and the correction will take at least a decade to break even, so be patient about it all and enjoy renting; save your money; and play a game to explore areas for the next few years to see if the ambience is right for you at some future time, and when the time is right make your move for a buy at a huge discount.

#149 Frizzzz on 04.01.13 at 2:11 pm

So buy gold, a condo, and a Kia!

Happy April Fools all!

#150 Dr. Hoof - Hearted on 04.01.13 at 2:14 pm

I would submit we are in a sort of economic earthquake zone….and currently stuck in neutral. No major movement yet….but….????

We know RE is overpriced…but you still have house horny types that aren’t getting younger and must be feeling now or never…say those in their 30′s.

I sympathize with them…. if I were in their shoes, it is tough.

However, having lived through a few boom and busts myself..I would advise either wait…or maintain liquidity and mobility…crunch some realistic numbers.

Renting may be the new owning.

#151 blinded on 04.01.13 at 2:14 pm

The US stock market gain is a mirage, built on ever increasing debt. The source of massive debt is from the central bank. The fed cannot print the USA into prosperity, real job increases, or corporate prosperity.

Hypothesis should be backed by facts with links to sources.

Just type “fed admits stock market gains” in Google, it’s all there.

#152 joe calgary on 04.01.13 at 2:16 pm

Actually I am not a realtor Garth, just going based on what the neighbors told me after talking to the realtor that sold it. I have never seen so many sold signs here ever. Everything that goes for sale sells right away, its scary. I am not suggesting its a good time to buy, I am simply observing whats happening and not understanding how this game of musical chairs is still going. Sales are ever increasing and listings are down, if listings went up sales would go up as well. Sales are at the same level y/y but listings are down dramatically, which also shows whatever comes up sells right away as long as its sanely priced. No indication of a slow down in Calgary what so ever.

Address? — Garth

#153 blinded on 04.01.13 at 2:25 pm

Cyprus-style “bail-ins” are actually proposed in the new 2013 Canadian government budget:

Facts, pages 144-145:

http://www.budget.gc.ca/2013/doc/plan/budget2013-eng.pdf

Why would the Canadian gov put this forward if the Canadian banks are so safe?

This is a global plan integrated with the Financial Stability Board planning, chaired by Mark Carney Governor of the Bank of Canada, which penned Key Attributes of Effective Resolution Regimes for Financial Institutions, which in effect has the same bail in approach and was put together in 2011.

http://www.financialstabilityboard.org/publications/r_111104cc.pdf

Why is that?

They view your deposits in a bank as their property, you loaned your money to them. Leading banks within a given country have greater liabilities than the country itself, thanks to 10:1 leverage and global hypothecation multiple times, and derivative liabilities in the quadrillions.

So when the dominoes start to fall, once again the losses will be socialized by the little guy.

Yes, you are blinded. Read my weekend post on this. — Garth

#154 Tony on 04.01.13 at 2:32 pm

Albertans finally figured it out gee, life actually exists outside of Alberta. They look at Ontario where new houses and old houses and new condos and old condos only have a price difference of about 10 percent not 50 percent like in Alberta. It took Albertans decades to finally realize gee we might be wrong and the rest of Canada might be right. That’s the reason sales went up in Alberta. The peons finally figured out maybe we should be buying resales instead of new duh…??!!

#155 Joe Cocker on 04.01.13 at 2:33 pm

# 132 Beach Girl:

Just on a architectural bases, infrastructure and esthetics, this makes no sense. Factor in economics, over saturation you have to wonder if illicit money is the only reason why this continues.
————————————————
The ONLY reason is the stupidity of F who puts all taxpayers on the hook for irresponsible bank loaning. If it was not for CMHC ‘insurance’ there would be no sales in that building. They call it affordable housing – where people without money spend millions on houses they can’t afford guaranteed by the prudent taxpayers. It is utter distortion of the free markets that detaches the profit from the risk, that fact that it is legal speaks volumes of our legal and government system. The ONLY PLACES where such stupidity with insuring and guarantees on subprime mortgages occurs is the US and Canada. At least in the states people don’t live in basements! I am sick and tired of the collective stupidly that allows for and does not punish such behavior. I highly doubt that such schemes can function in other countries, the only explanation is the degree of compliance by the media, an astonishing degree of irresponsibility. The fact that a mediocre lawyer playing the role of minister can singlehandedly decide to guarantee hundreds of billions, close to a trillion of mainly non-prime mortgages is disturbing. This guy can single handedly ruin the country.

#156 Mark on 04.01.13 at 2:36 pm

Krugman demolishes the guy in his response. — Garth

Peter Schiff demolishes Krugman regularly. Nothing Krugman says has any creditability anymore since he’s one of the “endless stimulus” clowns.

But that’s the Keyensian way isn’t it, fake, government induced, paper based “growth”.

#157 Old Man on 04.01.13 at 2:43 pm

I have expressed my concern about seeing the biggest Real Estate bubble that has ever been seen in Canada. Now will give you the formula, whereby, I have made a modest amount of money in my life. This all involves Newton’s Third Law, and will quote, ” For every action, there is an equal and opposite reaction. ”

This Law will apply to all life that involves money, a marriage, investments, or Real Estate, and give it all a bit of thought to ponder upon.

#158 Tyrone Asauras on 04.01.13 at 2:44 pm

I’m piling on this guy as well:

88VanPerfecto

“……..Ask yourself this question. Long term how many homeowners do you know that are not well off?….”

Mr. Realtor, I personally know several and I am certain you do as well.

If the broad numbers in several recent financial columns and blogs are any indication, everyone else does as well.

-70 odd percent own a home.

-Amazing percentage of population will retire with mortgages that will never be discharged on this side of the afterlife,

-Amazing percentage of soon to be retirement age folks that don’t even have, like, $40,000.

-Amazing percentage of folks that would struggle to find, like, $2500 to cover an emergency…..crap, will that even repair a transmission for a KIA??

No, sir, lots of homeowners are anything but well off.

#159 Tony on 04.01.13 at 2:46 pm

Re: #152 joe calgary on 04.01.13 at 2:16 pm

That’s because the sold sign stays on the lawn about twelve times longer than the for sale sign. So many of the sold signs are still there from early last year. So in a balanced market you should see 12 times more sold signs than for sale signs. Also they don’t like to slap foreclosure signs on lawns like in America. I’m sure the figure is quite high because all i see on mls is foreclosures, price reductions and expired listings.

#160 IM in C on 04.01.13 at 3:04 pm

@joe Calgary and others
Well, actually it is different in Calgary. Unlike the other Canadian real estate markets, Calgary’s can experience metioric rises, and sickening crashes.
The trouble with the Calgary market, it , even more than the rest of Canada, is not a free market supply and demand. And the home owners of Calgary are going to find this out sooner rather than later

#161 Old Man on 04.01.13 at 3:06 pm

#152 joe calgary – you just gave me the best laugh I have had all day, so saddle up cowboy and ride into the sunset with a babe to watch the sun go down, and have her make a nice basket of food to eat on a stop, and called it the last supper.

#162 Tom Vu on 04.01.13 at 3:15 pm

#146 Julie on 04.01.13 at 1:40 pm

Oh and by the way……for all you Public Sector workers out there? THANKS for making us work a BIT HARDER today for your FAKE HOLIDAY.

THERE IS NO SUCH THING AS EASTER MONDAY !!

Welcome to Canada…..

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

Civil Service find religion if they get day off.

#163 Canadian Watchdog on 04.01.13 at 3:21 pm

Pimco’s Gross tweets it straight out:

“No foolin folks: Capitl controls r evrywhere not just Cyprus. Globl int-rates/currenc/stk mkts all controled. Make sure jokes not on u”

#164 comments101 on 04.01.13 at 3:21 pm

Came across this doc through the Globe and Mail comments section: https://docs.google.com/file/d/0ByrPFSoPLahJSE56TmxZN0RqdUE/edit?pli=1

#165 Post Haste on 04.01.13 at 3:23 pm

It’s probably right at my face and I missed it – does anyone have any stats on New Home Construction in Ontario –

I see Garth has posted resale figures …

Once the new home construction gets chewed to bits – by A-hole neighbour who’s bread and butter is gained towards that field – will be forced to move – (and I will help him pack) – one way ticket to hell -

#166 Real Estate Savvy on 04.01.13 at 3:25 pm

I don’t see how Canadian real estate cannot collapse under its own weight.

Where seemingly ordinary people buy ordinary houses for above $1 million is beyond reality. What are they thinking?

I don’t think they are thinking.

#167 Canadian Watchdog on 04.01.13 at 3:40 pm

Check out Canadian banks’ subprime MBS imploding on the BoC’s balance sheet (SPRA)

Oh ya, it’s different here.

#168 Real Estate Savvy on 04.01.13 at 3:52 pm

This is an interesting article.

http://www2.macleans.ca/2013/01/09/crash-and-burn/

#169 Dr. Hoof Hearted on 04.01.13 at 4:04 pm

Check this one out….

#8 ) Address:29488 58TH AV, Bradner, Abbotsford

This is one of the largest homes in Canada at 44 THOUSAND square feet… no that is not the lot size, that is finished square footage! The price is down over $3 million in the 2.5 years it has been listed and at its current price it is under $90/sqft not including the very significant land size. A previous description indicated that the current owner put $15 million into the home and that it had been assessed by a bank for over $13 million. For the last 6 months they haven’t even bothered to include a description… For anyone looking for a 44 thousand square foot home this has got to be one of the better deals on the planet.

http://vancouverpricedrop.wordpress.com/2013/03/26/weekly-drop-suburbs-march-25-2013/

44 ,000 sq ft home?
Waaaaaaay over the top……..Now asking $3,888,000

#170 Gunboat Denier on 04.01.13 at 4:24 pm

139 Fed-up

” It’s where I park my cars and motorcycles, eat, sleep
and s%^t.”

So you can rent and do all that. Go ahead. Sell. 25% off becuz you feel guilty. And you own 3 other properties
elsewhere in the world. Your rich. Frickin loaded. And
FOS.

#171 blinded on 04.01.13 at 4:28 pm

Canada’s big six banks are termed systemically important because in 2008 they had to be bailed out of $70 billion mortgages by CHMC, and whether or not you want to call it a liquidity problem or solvency problem leading to failure they were also backstopped by billions from the USA central bank. After that Canada’s top insurance companies took billions from the banks. Thus, it has been proven a Canadian bank does not need to fail itself to be taken down.

“Systemic” means system wide, global, aka the above past example.

“Important” means they are so big because of their use of customer funds to play with derivatives hypothecated and rehypothecated multiple times systemically in their off balance sheets where no regulations exist. That means they can bring down other financial institutions. Just look at what tiny Cyprus did to the EU.

14% reserves is a joke. If a bank takes 1K and leverages it to 8K and loses 20% on the 8K they are insolvent when lenders want their money back. And that is just what is on their public reported balance sheets. It does not include derivatives in their off balance sheets which have no regulation.

Global debt has grown so big it can no longer be paid off by traditional means.

The Canada Economic Action Plan does not define what type of liabilities will be used to save systemically important banks, it does not state YES-or-NO on savings accounts, TFSA’s, bonds, etc.

But, in the last 10 years unprecedented decisions have been made regarding financial institutional losses that push losses to the little guy, from Argentina, to Greece, to Japan, to USA, PIIGS, Cyprus, etc.

And now we can read about their plans and some insist it will be different this time, different in Canada…

Give it up. No bank will fail. No deposit will be taxed. — Garth

#172 Herb on 04.01.13 at 4:28 pm

#146 Julie,

if there is no Easter Monday for anyone else, why is Ottawa closed up tighter than a bull’s hole in flytime? Think of all those poor federal public servicants running around with no place to spend their ill-gotten gains except museums and galleries!

#173 this is wonderland on 04.01.13 at 4:45 pm

129 Old Man

Ya Old Man….but when!

For all that is holly! W H E N !!!!!

#174 Bill Gable on 04.01.13 at 4:46 pm

Think this quote from Victor V. says it all, Mr. Turner:

“Some seniors have been using credit for income replacement, which is particularly worrisome.”

I can say with alacrity, this is very common among my Boomer buddies. I have a friend with a TON of debt, a job in media (ask Mr. Turner about job security in Media), 2 kids and is so broke he uses his HELOC to pay his Mortgage and feed the family.

His wages from the Radio Station are gone by every payday, so he has to dip further into the condo equity. His West End Condo is in a building with 11 units for sale, and so you have to know that the value of his 2 bedroom piece of life, is dropping in price. The Bank will call. The game will be up.

We were having dinner and as he was telling me this, I started to get really concerned.

I asked him if he realized that HELOCS are ‘demand’ loans’. He had no idea what I meant.

This scares the pants off me, and as those lovely cheerful ads on National TV say “The Last ten years of most people’s lives are spent in ill health”; well, we might as well add – and BROKE.

This, and Victor said it – “will not end well”.

#175 Evangeline on 04.01.13 at 4:47 pm

((Look at Garth’s graph and note the mid-80s. Interest rates soared as high as 19% for mortgages. ))

were the prices low back then? low home prices, high interest rates vs. high home prices, low interest rates, seems to be 6 of one, 1/2 dozen of another.

#176 johnnny on 04.01.13 at 5:00 pm

#60-Angela-
Lived in T.O.(Victoria and Shuter).Studio=$1600
Lived in Van.(Pacific and Thurlow).1bdr=$1590
Late night drunken drama guaranteed,bldg or street.
Now live in Moncton NB.2bdr,quiet,mature bldg.=$895 &util’s.Close to parks and ammenities.washer& dryer in apartment.
Modern,real size rooms.(No dressers in living room).
My 1st post here was also bitching about loud,dramatic neighbours,pitbulls and funky smells.
So,as suggested to you by Garth,I moved.
Lovin it!!! Semi retired though,so able to.

#177 Old Man on 04.01.13 at 5:22 pm

#172 this is wonderland – the when has no time or date, so sit back and watch the play as there will be act 1,2, and 3, so watch when the curtain comes down for act 3. We are in act 1 at this time approaching act 2 with an intermission, so be patient, as this has become a dark drama, so pay attention as when the curtain for act 3 comes down that might be the time to make a move for a huge discount.

#178 Tom Vu on 04.01.13 at 5:32 pm

Smoking Old Man been giving advice since Garden of Eden.

That did not end well.

#179 Old Man on 04.01.13 at 6:02 pm

#178 Tom Vu have no idea what your gig is all about, as you spend too much time putting people down, as suspect you are a sicko in life, and for the record get a life with positive postings for a change. It is one thing to do such in jest, but another to put others down, as this is a fine line, as do not like you at all.

#180 Ralph Cramdown Ⓤ on 04.01.13 at 6:03 pm

#175 Evangeline — “low home prices, high interest rates vs. high home prices, low interest rates, seems to be 6 of one, 1/2 dozen of another.”

It is, in the USA with a 30 year fixed interest rate mortgage. But here where most people renew every 5 years, some may end up buying at a time of high prices and low rates and then having to (or unable to) renew their still substantial mortgages at a time of high rates.

#181 Mike on 04.01.13 at 6:34 pm

@147 Very well put.

Emergency measures kept the economy rolling, with the side-effect of screwing anyone who was saving hard to make a good downpayment, or a whole generation who was too young to buy.

#182 vancouverite on 04.01.13 at 6:47 pm

Julie on 04.01.13 at 1:40 pm
Oh and by the way……for all you Public Sector workers out there? THANKS for making us work a BIT HARDER today for your FAKE HOLIDAY.

THERE IS NO SUCH THING AS EASTER MONDAY !!

Welcome to Canada…..
————————————-
Julie,

When you went to school in Canada, did you complain that Easter Monday was a day off?

#183 Shawn on 04.01.13 at 6:57 pm

Blind, Blind, Blind (subtle David Copperfield Reference)

Number 171 Blind (ed) said:

Canada’s big six banks are termed systemically important because in 2008 they had to be bailed out of $70 billion mortgages by CHMC, and whether or not you want to call it a liquidity problem or solvency problem leading to failure they were also backstopped by billions from the USA central bank.

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

Well CMHC buying mortgages that they already guaranteed and paying market price for them was NO bailout. Canadian Center for Policy Alternatives has lost all credibility when they suggest that was a bail out. ‘Twas not.

Also your reference to 14% reserves is wrong as cash is reserves, but you appear to speak of capital ratio of 14%. Which is generally plenty.

In fact it is plenty given much of the loans are government guaranteed.

Doomers have seen huge lost opportunities in the past number of years and will continue to lose opportunity.

Even Smoking Man knows… be an owner… buy stocks. Buffett did and I did.

Who you gonna listen to? Blind(ed) or Buffett?

#184 Rob Smith on 04.01.13 at 7:07 pm

#75 Smoking Man on 03.31.13 at 11:42 pm

Did you dumb dogs know that you can fly to fort Lauderdale the for 25 bucks from nf airport……

No only the great one the smoking man buys supper low

———————————-

Where is your second personality beach girl, haven’t heard from her in a while you may want to bring her to even out the idiot in you, do you use that miniscule mental capacity to bring her forward or is it natural after you forget to take your pills?

just woderin…………..

#185 Smoking Man on 04.01.13 at 7:30 pm

Old man you got tickets to the machine next Friday.

Seneca your a regular are you not? Or just went to see grass roots

#186 Who Cares on 04.01.13 at 7:32 pm

“Ultimately I’m a genius”

That’s just another of his mis-spellings, he meant genuine ass.

#187 Kumar on 04.01.13 at 7:58 pm

My neighbor keeps telling me the home price in Surrey is undervalue, that the boom time will come again. I think he is stupid. There are multi-generational families / 30 member households living here all across Surrey, and they think that this alone will feed future behavior like times shares and quarter ownership schemes. That it takes 30 member households to support the borrowing costs is shameful, and will in fact have a negative effect on the economy sooner rather than later.

#188 45north on 04.01.13 at 8:13 pm

Bill Gable: His wages from the Radio Station are gone by every payday, so he has to dip further into the condo equity. His West End Condo is in a building with 11 units for sale, and so you have to know that the value of his 2 bedroom piece of life, is dropping in price. The Bank will call. The game will be up.

yeah the bank will call. He is probably about the same age as my children. When they were young my wages were constantly rising, so was the value of my house. Oh well. Maybe his best option is to spend money on a lawyer.

#189 Shawn on 04.01.13 at 8:15 pm

30 Year Fixed Mortgage WITH option to refinance…

Ralph Cramdown at 180 said:

It is, in the USA with a 30 year fixed interest rate mortgage.
****************************************

Even better, in the U.S. that 30-year fixed rate comes with a cost-free (or very low cost) option to refinance for a small fee if rates decline. Fannie and Freddy, I believe, cover the cost or some of it. It’s been a bonanza for many borrowers. Imagine how many more repossessions there would have been if people were stuck at 7% or more for 30 years while rates plummeted to 3% or so. For Fannie and Freddy it has not been such a good idea. Little or nothing is ever said about this burden on Fannie and Freddy and whether it helped take them down.

Or maybe it was the mortgaged back securities buyers who took this risk and got shafted when rates fell. Either way the homeowner benefits and the mortgage banks are not hurt by refinancing’s. In fact they earn fees on the refinancing’s. Homeowners face nothing close to interest differential type penalties.

It’s great to be an American…

#190 Herb on 04.01.13 at 8:29 pm

#179 Old Man,

as [you] know all, I’ve been meaning to ask you: between you and Smoking Man, who is the ventriloquist and who’s the dummy?

#191 Fed-up on 04.01.13 at 8:29 pm

@ #170 Gunboat Denier
———————————————————————–

You are so tough behind your keyboard aren’t you Tugboat? Rich and loaded, nope, never claimed to be anything like that. Just a hard working stiff like many in this country. FOS, not on your life pal, but your brain certainly seems to be DOA.

And why the heck would I take any financial advice from a cheap shot taking moron like you? I certainly never asked for it. We all entitled to our opinion and views on this blog. You never seem to have anything of substance to offer. Anyways it’s probably not your fault, I’m sure it’s a genetic defect.

Stop it. — Garth

#192 Old Man on 04.01.13 at 8:32 pm

#185 Smoking Man – give me a break as have my hands filled with young women that is costing me money, and one day will share with you, as will in a weak moment give you a few for a night of glorious entertainment.

#193 Daisy Mae on 04.01.13 at 8:38 pm

#76Mocha: “Easter post? Such a diligent blogger. I love to read ya, but don’t be afraid to take a little time to stop and smell the turkey.”

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

Too dedicated. Too caring.

#194 Old Man on 04.01.13 at 9:09 pm

#190 Herb – have no clue, so address your concerns to Smoking Man :).

#195 Fed-up on 04.01.13 at 9:19 pm

#191

Stop it. — Garth

———————————————————————-

Sorry Garth, I never started it and I thought that I replied to Dingyboat politely enough in post #139 when I didn’t have to, but he felt that he somehow compelled to call me a grouch (for which I never fired back), sarcastically repeated what I should sell my house for an how FOS I was, based on my post that was directed to the group that reads your blog.

At any rate consider it done on my end. You have my apologies.

#196 GeorgeSoonToBeRetired on 04.01.13 at 9:27 pm

Old Man and Tom Vu

Tom keep it up you are fun to read and needed here most of time as relief from boring posts by posters with no life.

Old Man/Smoking Man go away you are an idiot who brings nothing here.

#197 Old Man on 04.01.13 at 9:37 pm

#196 George – retire soon and wish you luck _|_.

#198 EdmontonAgent 123 on 04.01.13 at 10:44 pm

Garth,

You seem to have slowed on your mantra “that all RE is national, Not Local”
It seems that Don Campbell of REIN says its Local. Alberta is proof of that.
Thoughts?

It’s different everywhere, until it isn’t. — Garth

#199 Gunboat Denier on 04.02.13 at 1:22 am

195 – nice ‘tude. I’m not being sarcastic, as you seem to
miss the obvious. You must be rich, because you own
multiple homes in sunnier climes. Also, did you enjoy
those low rates for your mortgage? (I did. Paid mine off
in 7 as well.) You also called this country 2nd rate, yet
you seem (claim?) to have done well. Still not obvious?
Sell. Everything. Leave.

#200 Berniebee on 04.02.13 at 11:03 am

#88 VAnPerfecto

” Right now Vancouver is having a pause…”

When the “pause” reaches 3 or 4 years with no sign of the downward spiral stopping, let us know how “rich” your underwater house buyers are.

It’s no longer a question of IF all Canadian real estate is overpriced. It’s only a question of how long the price bust will last. Vancouver has a long, long way to fall.

#201 Dorf on 04.02.13 at 1:41 pm

Tell us when to buy, Garth!

Do all my thinking for me, run my life for me !

#202 all_we_need_is_mortgage on 04.02.13 at 5:03 pm

Living standard is determined by consumer spending. Nowadays consumers spend by 25% – 30% more then they earn. That difference is financed with credit money. Government stimulates households spending with the credits to sustain
the standard of living. Should they stop doing this and the middle class (their supportive base) would vanish. The official will never go for this by their own will. Under existing economic condition it is impossible to support consumption without household debt increase. But time will inevitably come when debt increase objectively won’t be possible anymore…

#203 House for Sale in the GTA goes up in smoke on 04.02.13 at 5:27 pm

Looks like the housing crash in the GTA is getting real bad as unsold homes go up in smoke. The housing ponzi in crashing down hard!

#204 Maxed out! on 04.02.13 at 5:32 pm

Bill Gable on 04.01.13 at 4:46 pm
Think this quote from Victor V. says it all, Mr. Turner:

“Some seniors have been using credit for income replacement, which is particularly worrisome.”

I can say with alacrity, this is very common among my Boomer buddies. I have a friend with a TON of debt, a job in media (ask Mr. Turner about job security in Media), 2 kids and is so broke he uses his HELOC to pay his Mortgage and feed the family.

His wages from the Radio Station are gone by every payday, so he has to dip further into the condo equity. His West End Condo is in a building with 11 units for sale, and so you have to know that the value of his 2 bedroom piece of life, is dropping in price. The Bank will call. The game will be up.

We were having dinner and as he was telling me this, I started to get really concerned.

I asked him if he realized that HELOCS are ‘demand’ loans’. He had no idea what I meant.

This scares the pants off me, and as those lovely cheerful ads on National TV say “The Last ten years of most people’s lives are spent in ill health”; well, we might as well add – and BROKE.

This, and Victor said it – “will not end well”.
—————————————————————–

Canada is in such a ponzi bubble that it defies logic and reason. people are so maxed out on debt that they borrow to pay off borrowed money? Most Canadians will just go bankrupt since this was their plan from day 1. The corporate CONservatives have bankrupt Canada and Canadians. Well done CONs

#205 Daisy Mae on 04.02.13 at 8:56 pm

#182 Vancouverite: “Julie, when you went to school in Canada, did you complain that Easter Monday was a day off?”

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

Stupid argument….