Just say it

grandma

“We do not have a bubble,” F said one night this week. “I think if we had failed to take some action we would have had a bubble.”

Well, that’s a relief.

In Vancouver the average household income is $83,330. The average bungalow costs $1,013,750. To buy it and not pay high-ratio mortgage insurance requires $223,025 in cash, and a mortgage of $811,000. At 3% that eats $3,850 a month. With insurance, property tax and a little maintenance, the nut climbs to about $4,500.

So, to buy the average Van bung with conventional financing you need a quarter million in cash, and then $54,000 a year. After-tax, an income of $83,330 in BC yields $64,568. This means the average family buying the average bungalow is left with $830 a month for food, clothing, transportation, utilities, medical expenses and as much alcohol as possible. There’s no money left for investing, retirement or saving. Which probably means the average family could never save $223,025 for a down payment.

But, says F, no bubble.

I wonder if he’s read the latest RBC housing affordability report. The bank figures it takes 82% of a family’s gross income to pay for all aspects of owning that Van bungalow. In Toronto, where people earn more and houses cost less, families need to devote 54% of gross income to real estate. Across the country, says economist Craig Wright, owning a standard two-storey house will absorb an average of 48% of a household’s gross income.

Now this is meaningful, since banks (and CMHC, which F oversees) have a rule that all home-related expenses should not exceed 32% of a family’s gross income. It’s called the GDS ratio – gross debt service. Plus, total debts of all kinds are not to exceed 40%.

Here are the actual CMHC guidelines:

Affordability Rule 1
The first rule is that your monthly housing costs shouldn’t be more than 32% of your gross monthly income. Housing costs include your monthly mortgage payments (principal and interest), property taxes and heating expenses. This is known as PITH for short — Principal, Interest, Taxes and Heating. If you are thinking of buying a condominium or leasehold tenure, PITH also includes half of the monthly condominium fees. For leasehold tenure, PITH also includes the entire annual site lease.

Lenders add up your housing costs and figure out what percentage they are of your gross monthly income. This figure is called your Gross Debt Service (GDS) ratio. To be considered for a mortgage, your GDS must be 32% or less of your gross household monthly income.

Affordability Rule 2
The second rule is that your entire monthly debt load should not be more than 40% of your gross monthly income. Your entire monthly debt load includes your housing costs (PITH) plus all your other debt payments (car loans or leases, credit card payments, lines of credit payments, etc.). You have calculated these on the Monthly Debt Payments form. This figure is called your Total Debt Service (TDS) ratio.

This raises a few questions. Like, if banks (and the government) have strict ratios to determine who qualifies for a mortgage, how is anyone in Vancouver (or Toronto) buying houses? If the average Canadian family can’t meet the criteria to afford the average home, how can we not have a bubble? How can anyone be surprised the saving rate’s collapsed, that a quarter of families have never saved anything or a third say they have ‘no wealth’?

And how could Craig Wright therefore state (as he just did):  “A significant nationwide price correction isn’t imminent as long as affordability stays within the current range”?

The only reasonable conclusion is the longer this artifice endures, the more that F and the bankers fib on, the slimmer the odds of a happy landing for the hemorrhaging housing gasbag.

This week mortgage brokers warned 150,000 jobs will be lost as housing and construction crater. “Some people thought the market would come back (this spring),” says head broker Jim Murphy.  “Well it hasn’t come back. It is a definite trend.”  New housing starts will be 25% lower within a year or two, he adds, and in Toronto a drop of 50% will erase 35,000 jobs.

Don’t you just hate being treated like morons? I thought that’s what the Senate was for.

160 comments ↓

#1 T.O. and GTA bidding wars debunked -May 23 on 05.23.13 at 8:31 pm

http://recharts.blogspot.ca/2013/05/to-sfh-bidding-wars-debunked-may-23.html
http://recharts.blogspot.ca/2013/05/gta-sfh-bidding-wars-debunked-may-23.html

#2 guelphstudent on 05.23.13 at 8:37 pm

Looks like Toronto is indeed heading towards 50% drop in housing starts given that new home sales for April are over -40% compared to a year ago. No sales, less starts, less joBs.

#3 Ann on 05.23.13 at 8:38 pm

Rules we don’t need no stinking Rules

#4 Derek on 05.23.13 at 8:43 pm

Garth, I wonder if you could make some comments on the Saskatchewan market sometime? Is the same effect happening, or are the prices supported by real market factors out here?

#5 Chester on 05.23.13 at 8:43 pm

The bank can’t lose on housing. They either collect mortgage interest on money they loaned that they never had in the first place or they foreclose on a house and collect the real money when it sells. The homeowner is the sucker either way.

#6 AK on 05.23.13 at 8:47 pm

Gartman ‘Aggressively Bearish’ on Bonds….

Dennis Gartman

#7 Mean Gene on 05.23.13 at 8:47 pm

The average household income in Vancouver is based on what people tell the government, not their other income.

#8 Property Accountant on 05.23.13 at 8:49 pm

A friend of mine making 40K got a mortgage for 300K from mortgage broker 2 years ago for a house in Vaughan, ON costing 450K at that time. Mortgage was underwritten by one of big 5 banks, I have seen the document myself. He was putting down 100K from his parents.

Wondered: How he could have gotten it? He smiled.

Trick was mortgage broker, for a small fee, wrote a letter stating he is currently making 75K and told him “don’t worry, nobody checks these things… some banks do, some don’t. I know which ones don’t, that’s my job”.

No bubble. Yep. Bank Standards.Yep. Sarcastic. Yep.

#9 Victoria on 05.23.13 at 8:50 pm

What I do not understand is why would you all presume that an average family should be entitled to own a house. There are many countries and cities where real estate has always been so expensive only the rich could buy SFDs. Like Moscow, Russia. London, England. Paris, France. Big Etcetera. Millions in Europe and Asia happily occupy one, two or three bedroom flats and apartments (entire families, sometimes extended), and never whine that they cannot afford a townhouse, let along a detached house, and since they can’t, that country or city must be in a bubble.

#10 timmy on 05.23.13 at 8:52 pm

It can be explained by rich immigrants, at least in Vancouver. I can’t tell you how many trades people keep telling me how many of them are buying these houses. Because it is politically-sensitive you keep sweeping this under the carpet saying that there is no hard data on this, but anyone in Vancouver can see how obvious an effect this has had on the market. Why are 25% of the condos in Coal Harbor vacant? What else can explain this?

#11 Apocalypse When? on 05.23.13 at 8:54 pm

Not much new construction in York region anymore; at least not like it was these past ten years. Back in ’97 I qualified for a 255K mortgage which was an astronomical sum in those days. And no way should the bank have given us that big a mortgage. Now they would gladly give me 4 times that amount if I could be suckered into it. However no matter how much the sizes of the mortgages increase or how low the rates go, there are only so many fools out there to keep on buying those boxes in the sky or those executive townhouses. It was only a matter of time before the limit was reached, and it would appear that that day has arrived. New construction will recede like the tide on Kits beach. Only problem is that it won’t be coming back. So I’d say that the projected 150K jobs lost number is on the low side, the real number will be much higher when all the jobs that have been supported by relentless residential construction are taken into account, like yoga studios for instance, paid for by all them HELOCs. Well like they say ‘All good things…’

#12 Musty Basement Dweller on 05.23.13 at 8:57 pm

It’s very maddening to see the misleading information out there by all levels of government and real estate agents.

I can usually take solace in the adage of “buyer beware” since so many of the buyers will end up paying the heaviest price as the gas continues to let out of the bag.

The really maddening part though is the price I will pay as a tax payer with what CMHC ends up chipping in on eventually to make sure the banks don’t suffer.

#13 Ronaldo on 05.23.13 at 8:59 pm

”This raises a few questions. Like, if banks (and the government) have strict ratios to determine who qualifies for a mortgage, how is anyone in Vancouver (or Toronto) buying houses?”

You can only conclude that the gov’t must be telling the banks, “pith on it, forget the rules, just let them have a mortgage”

#14 Gladiator on 05.23.13 at 9:02 pm

- Johnny, last night I flew in my dreams again.
– Grandma, how many times should I remind you? Your pills are brown, and mine are white!!!

#15 Drill Baby Drill on 05.23.13 at 9:13 pm

#13 Ronaldo
Actually This is a very good point Garth. Where are these mortgage applicants getting the money or the wages to qualify for these obviously huge mortgages in the lower mainland ? Are we talking “Liar Loans” for shame here in Canada ?!

#16 Sparky55 on 05.23.13 at 9:13 pm

If those are CMHC rules, then wouldn’t CMHC have an easy way out of paying claims on such mortgages, that were given to individuals who have failed to meet that criteria, and thus ultimately failed to meet their mortgage obligations?

Seems like many of them don’t.
A little investigation on each of the failed mortgages, on behalf of CMHC could void many (vast majority?) of the insurance claims if this is the case…

#17 Sebee on 05.23.13 at 9:14 pm

Seriously. How is anyone qualifying for the CMHC loans with these crystal clear rules in place?

#18 Boombust on 05.23.13 at 9:18 pm

#9 Victoria

Because Vancouver isn’t in the same league as those cities? Duh.

#19 bill on 05.23.13 at 9:18 pm

#10 timmy on 05.23.13 at 8:52 pm
‘What else can explain this?’
Rich Canadians?

#20 Mocha on 05.23.13 at 9:20 pm

Van is ridiculous. I’ll probably never buy here.

#21 will on 05.23.13 at 9:23 pm

“I thought that’s what the Senate was for.”

Good line Garth. Thanks for the reminder about the purpose of the Senate.

#22 Dean Mason on 05.23.13 at 9:24 pm

In 1995 after when interest rates were dropping like a stone from 10% 5 year mortgages to 8% in 12 months and then slowly after the 2000 tech wreck mortgages rates dropped to 7% by 2002 and then 6% by 2006 and now today 2013 2.75% to 3.00%.

Now all these debt ridden followers that were laughing and making fun of low interest being paid to savers is going to get a good financial shock.It’s been 18 years and it is about time that they pay the piper.

#23 Shawn on 05.23.13 at 9:24 pm

PROOF WE NEED FINANCIAL LITERACY TEACHING

Chester at Number 5 said:

The bank can’t lose on housing. They either collect mortgage interest on money they loaned that they never had in the first place or they foreclose on a house and collect the real money when it sells. The homeowner is the sucker either way.

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

Please people, you must stay away from retard doomer sites that teach you that kind of nonsense. (Sorry to be redundant, and no disrespect to those with actual mental difficulties instead of being willfully stupid like Fractional banking alarmists are.)

#24 Axxman on 05.23.13 at 9:25 pm

Regarding F’s comments, someone should ask whether what he said breaches the Bank Act. The Act is quite prescriptive about not disclosing supervisory information publicly yet he was openly talking about the stress testing work that OSFI was doing and his comfort level based on that. Sounds dangerously close to illegal based on the Act. Just sayin’

#25 Dan on 05.23.13 at 9:28 pm

Trying to sell house for last 4 weeks, 3 visits since going online and no visit/no call at all during Victoria Day weekend, talked to other agents and they’ve never seen it so dead in Montreal even if prices are so much lower than TO or BC. Me thinks im stuck with this one for a while.
http://passerelle.centris.ca/Redirect2.aspx?CodeDest=PROPRIO&NoMls=MT10801719&Source=WWW.REALTOR.CA&Langue=E

#26 kenken on 05.23.13 at 9:30 pm

the same thing has been said, re-said and re-re-said on here for the past few years now
yet we have only seen house price increases! and no sign of decreases to reach that ‘affordability’
nothing gonna happen here, albeit slight moderation in prices…no big crash…

#27 Larf on 05.23.13 at 9:33 pm

#9 Victoria

You are deluded if you think Vancouver falls in the same tier as Moscow, London, Hong Kong or Paris. Not only is it far more expensive to buy here, there is greater ‘lebensraum’ (no more land my arse) and the city is pleasant but completely devoid of soul, history and tourism. Further, in cities like Madrid where everyone rents, everyone also has a McMansion back home in the pueblo.

Sincerely, someone who has actually traveled.

#28 Scamcouver on 05.23.13 at 9:36 pm

Vancouver is the most vulnerable to collapse on it’s face. Vancouver is where you send real estate money to die. There are no drivers of fundamentals to help people afford bulldoze jobs worth millions in Oakridge and Metrotown. The whole city has been witness to speculative fodder over the past 15 years. It’s been bullshit market ever since where people make zero income, but have to purchase million dollar crack shacks in order to have a roof over their head. That whole entire city is headed straight to failure in terms of real estate values. There are no drivers to keep this horseshit make believe market going.

#29 Scamcouver on 05.23.13 at 9:41 pm

There is no way in hell you can have complete gut jobs sell for millions over the next decade. Maybe the past decade was different. Not the next decade. Shit shacks are shit shacks. Doesn’t matter how much staging and lipstick you put on a pig. A pig is a pig. Scamcouver real estate is poised to collapse big time. All of it.

#30 Pam on 05.23.13 at 9:44 pm

#9 Victoria

…Because we are not living in Moscow, Paris, London.

Are you that stupid?

#31 Burnt Norton on 05.23.13 at 9:45 pm

Kind of reminiscent of Alan Greenspan circa 2005

http://www.nytimes.com/2005/05/21/business/21fed.html?_r=2&oref=slogin&

Guys like these think that they can’t ‘just say it’ for fear of triggering the mad rush to the exits, but really they won’t ‘just say it’ because their egos couldn’t take it.

#32 Just say it — Greater Fool – Authored by Garth Turner – The Troubled Future of Real Estate – The Affluent Boomer on 05.23.13 at 9:47 pm

[…] via Just say it — Greater Fool – Authored by Garth Turner – The Troubled Future of Real Estate. […]

#33 Yellow Rox Rock! on 05.23.13 at 9:50 pm

Today’s post makes me angry. I’m assuming that’s what you were shooting for. Things have gotten completely out of wack in many areas of our country. Ever look at prices in the territories? Looking at them, you’d think that the arctic was actually a desirable place to live.

#34 Dean Mason on 05.23.13 at 9:50 pm

OMERS has a 10 billion pension funding deficit.The main reason is sustained period of low interest rates and rising costs from it’s older members.It’s at http://www.financialpost.com front page right now.

The low mortgage rates,line of credit rates,low car loans and car financing rates is not free and it’s being paid in the future.The future is almost now.

#35 goodquestion on 05.23.13 at 10:05 pm

Mr. Minister. perhaps we should take a minute to clarify the difference between housing affordability and the concept of an asset price bubble. The latter concept reflects not only the level of prices, but the acceleration in the rate of price growth that may not reflect key fundamentals, but rather is driven by exogenous factors, including speculation. In a steady state, however, housing can go through periods where the average price to income ratio is high. The key difference is that historical data strongly supports concerns about rapid price decline from the peak of a bubble, but the same CANNOT be said out sustained periods of high prices that are not combined with excessive price acceleration. Mr Minster we would be happy to meet with you or your staff at a later time to discuss this specific issue in more detail. We would agree with your colleague that there is no evidence of a house price bubble in most markets in Canada. Sometimes, Mr. Minster it is better to be lucky than good.

#36 David W on 05.23.13 at 10:29 pm

#35 Dean Mason

You are spot on. Pension funds are being killed by these low rates and are in major red. This government thrives on hurting the little ppl.

#37 al on 05.23.13 at 10:32 pm

fractional reserve banking is how the banks are making money

http://topdocumentaryfilms.com/the-ascent-of-money/

#38 blokexistentialist on 05.23.13 at 10:33 pm

Grandma in the fridge, eh? And grandpa in the freezer (estranged older couple).
Not boomers, evidently … we’re likelier to end up fertilizing our kids’ vegetable gardens (which they’ll certainly be living on if they have big mortgages). Still a better fate than being mistaken for Shake N’ Bake(TM).
A Filipino co-worker here (rigid Roman Catholic) went on her dream trip of a lifetime to see Vatican City. Her most prized souvenir was a bottle of Lourdes holy water blessed by the Pope.
She’d stashed it with care in her carry-on bag, but found on her return to North America that it was inexplicably empty. Her travelling companion finally ‘fessed up. She’d grown thirsty on the flight home, mistook it for ordinary bottled water, and drank it.
The moral of the story is that water is water. And ashes have their uses, too. For goodness sake, at least sprinkle grandma on that rose bed she used to slave over.

#39 Vanman on 05.23.13 at 10:40 pm

Garth, it’s called a “mortgage helper”. Most detached homes in Vancouver have one or two basement suites rented out, at a hefty price.

#40 M_Evans on 05.23.13 at 10:42 pm

Could anyone answer this hypothetical question ?

You purchase a home for $500,000 with a $400,000 mortgage
The value of the home falls to $300,000 and you lose your job.
You sell the home leaving you with an unsecured loan of $100,000.
If you then declare bankruptcy do you wipe out the $100,000 debt ?

#41 Kevin on 05.23.13 at 10:55 pm

Garth, that article from CMHC’s site is severely outdated. Staff are too busy fooling around with that $600 billion ceiling on insured mortgages.

From the last round of mortgage rule changes.

•Fix the maximum gross debt service ratio at 39 per cent and the maximum total debt service ratio at 44 per cent.
http://www.fin.gc.ca/n12/12-070-eng.asp

I have compiled a list of GDS ratios over the years.

In 1946, GDS is set at 23% of income.

In 1957, the GDS ratio is increased to 27%.

In 1972, the GDS ratio is increased to 30%.

Also 1972, the GDS ratio started to use all of the spouses income. Before, 1972, half of spouses income was used.

In 1981, GDS ratio is increased to 32%.

In 1992, the FHLIP program allowed first time buyers to have a GDS ratio of 35%, everyone else it was still 32%.

In 2007, some lenders scrap GDS ratio altogether, bumping their acceptable TDS ( Total Debt Service) ratios up to 44%. On an exception basis, borrowers are sometimes approved with TDS ratios of 46% or more.

In 2008, CMHC applies more stringent maximums for riskier borrowers (35% GDS and 42% for credit scores below 680) No GDS requirements for low risk borrowers, TDS at set 45%.

In 2012, new caps on GDS (39%) and TDS (44%) Riskier borrowers (35% GDS and 42% for credit scores below 680 stays the same)

#42 Canuckistan on 05.23.13 at 10:56 pm

Garth,

The average income in Vancouver is in the $60M range as per the Canadian government statistics office as of FY 2010. Not sure where you got your figures, but I would find it hard to believe that the average income has shot up a 1/3 in the last 3 years. Just saying…

#43 Alex K on 05.23.13 at 11:03 pm

OMG Garth just one question if I may< are these 20 and 30 something, were they born stupid or they became stupid later on in their lives?
Personally I hope this continues for a while,
we'll be able to benefit even more when the shit hits the fan.
Almost 2 years since we sold and happily renting.
I know because I've been told that this time it's different and I'm a fool, yeah okay. This will be catastrophic but a hell of a lesson. I'm very patient and time will tell who's right

#44 Fort Mac Flatlander on 05.23.13 at 11:04 pm

#16 Sparky55

Worst case scenario, the banks would still not be on the hook. As a government backed body, (I know its really financed with debt instruments) CMHC would require the government to step in some way with a new “program” that still forces the costs onto either the house owner or the taxpayers.

The Canadian financial sector is such a large portion of this country’s GDP, especially if housing and commodities take a tumble, that there is an inherant responsibility for the government to keep it alive and thriving.

#45 Victoria the original on 05.23.13 at 11:13 pm

Lived in London and Paris. You cannot compare them to Vancouver.

London is a leading global city, with strengths in the arts, commerce, education, entertainment, fashion, finance, healthcare, media, professional services, research and development, tourism and transport all contributing to its prominence.[9] It is one of the world’s leading financial centres [10][11][12] and has the fifth- or sixth-largest metropolitan area GDP in the world depending on measurement.London has been described as a world cultural capital. It is the world’s most-visited city as measured by international arrivals and has the world’s largest city airport system measured by passenger traffic. London’s 43 universities form the largest concentration of higher education in Europe.Paris and the Paris region account for more than 30% of the gross domestic product of France and have one of the largest city GDPs in the world, with €607 billion (US$845 billion) in 2011.[5] Considered[by whom?] as green and highly liveable[citation needed], the city and its region are the world’s leading tourism destination, hosting four UNESCO World Heritage Sites and many international organizations, including UNESCO and the European Space Agency.

Vancouver WOW –
Vancouver (i/væŋˈkuːvər/) is a coastal seaport city on the mainland of British Columbia, Canada. The 2011 census recorded 603,502 people in the city, making it the eighth largest Canadian municipality, and 2nd largest in Pacific Northwest of North America, second only to Seattle. [1] The metropolitan area, with more than 2.3 million residents, is the third most populous metropolitan area in the country[1] and the most populous in Western Canada. With 5,249 people per square kilometre (13,590 per square mile), the City of Vancouver is the most densely populated Canadian municipality among those with 5,000 residents or more.[3] Vancouver is one of the most ethnically and linguistically diverse cities in Canada; 52% of its residents do not speak English as their first language.

I could go on with Madrid and Moscow but I won’t.

#46 Jane54 on 05.23.13 at 11:17 pm

I actually was in London, the real one not the Ontario fake one, last weekend and looked in some RE windows. London is actually cheaper than many parts of TO or Vancouver so no way can you compare these cities. I have travelled a lot and nowhere else has the buzz or London or NYC. These two cities are in a totally different category.

I will never understand why Canada, the biggest country in the world has such expensive RE.

#47 Devore on 05.23.13 at 11:18 pm

#9 Victoria

How can one possibly discuss Vancouver real estate without comparing this regional outpost to global world class cities.

#48 Lily Joe on 05.23.13 at 11:21 pm

Thanks again for the clear information

#49 Steven on 05.23.13 at 11:28 pm

If the Federal government was as smart and wise as they would have you all believe there would be no national debt. http://www.debtclock.ca/
I would say that debt and the currency based on it is the biggest, baddest and most dangerous bubble of them all followed closely by real estate. Time to pull the plug!

#50 Brew on 05.23.13 at 11:32 pm

#35 Dean Mason
“OMERS has a 10 billion pension funding deficit.The main reason is sustained period of low interest rates and rising costs from it’s older members.”

_____________________________________________
The main reason for the deficit is the Global Financial Crisis in 2008. Since then the fund has been generating annual returns of 8.9%.
It’s not because of the low interest rates as you say.

#51 Shawn on 05.23.13 at 11:40 pm

OMERS has a 10 billion pension funding deficit?

Only if they invest 100% in corporate bonds. That deficit is trumped up. It does not exist.

#52 Elmer on 05.23.13 at 11:55 pm

Most people in Toronto (and probably Vancouver) bought their houses decades ago when they were selling for a fifth of what they sell for now. Take a stroll through any neighborhood in Toronto, you’ll see mostly old geezers with white hair sitting on their porch or tending to their lawn. People like to blame immigrants for driving up prices but what about all the retired people who refuse to leave Toronto to create space for those of us who actually need to live here to work?

#53 what bubble? on 05.24.13 at 12:05 am

F is very well aware that there IS a RE bubble, but he will never admit it publicly. Since admitting this would require him to take adequate measures and (what is absolutely unfashionable among politicians nowadays) be responsible for them.

F is simply powerless, he can’t do anything on his own.
All his efforts are spent to convince the crowd that everything is under his control: inflation, unemployment rate, RE market… that’s what he is for up there, at the foreground.

It is not a denial on his part… it is clear indication that there is simply no solution… they don’t know what to do up there in Ottawa…

Hopefully there will come some hints from Washington… but for the time being F with friends will continue doing what they are good at: lower interest rate, get people to borrow, lower rate again and get them borrow more…

More first time home owners – wider electorate base = both sides are happy, social nirvana… dancing days (bidding wars) are here again as the summer evening grows…

#54 Cici on 05.24.13 at 12:05 am

#10 timmy

Actually, the percentage of vacant condos in Montreal and Toronto is probably somewhere in that vicinity, and it’s definitely not rich immigrant speculators that are the problem. Speculators in general are the problem, but I’d be less worried about the rich ones than the overextended ones, regardless of their residency status.

#55 Ronaldo on 05.24.13 at 12:09 am

George Bush on home ownership challenge May 17, 2002. This is where it all began. The American Dream turned into the American Nightmare.

http://www.youtube.com/watch?v=kNqQx7sjoS8

#56 Cici on 05.24.13 at 12:10 am

#14 Gladiator

Umm, wishful thinking mate. I think that jar was supposed to contain Granny’s ashes :-(

#57 Shot Ski on 05.24.13 at 12:10 am

This raises a few questions. Like, if banks (and the government) have strict ratios to determine who qualifies for a mortgage, how is anyone in Vancouver (or Toronto) buying houses? If the average Canadian family can’t meet the criteria to afford the average home, how can we not have a bubble? How can anyone be surprised the saving rate’s collapsed, that a quarter of families have never saved anything or a third say they have ‘no wealth’?

Are these rhetorical questions?

#58 Cici on 05.24.13 at 12:13 am

#18 Boombust
#9 Victoria

I’m sure that size (geographical and population) also figure into the equation.

#59 crash calaway on 05.24.13 at 12:15 am

Mortgages should come with graphic warning pictures similar to cigarette packaging.

Pic #1 on the contract would show a couple hiding out in parents basement.

Pic #2 shows parents making children return their Xmas gifts in order to make bank payment.

Pic #3 shows children taking the family swear jar money to the nice bank in hopes of staving off mommy & daddy’s pending divorce brought on by debt overload.
The nice green bank even has a nice machine to sort and collect the coinage!

Pic #4 shows a dwarfy lepercon traveling coast to coast tossing slippery banana peels under peoples feet and chuckling with delight as they trip and are carted off to debtors prisons.
But the Elf has a kinder gentler side…
all sentences are to be served at home on days that end in Y

Ever wondered what eternity in limbo is?
Many dreamers and fools are about to find out

#60 John Prine on 05.24.13 at 12:16 am

The longer F and H allow themselves to be bullied by lobbyists the worse the results will be, it is so obvious that they are just ‘kicking the can down the road”. This will make Herr Harpler’s senate problems seem like a walk in the park.

#61 VanPerfecto on 05.24.13 at 12:30 am

What makes you so sure “average” Canadians are buying in Vancouver? What evidence exists to show the Vancouver home owner is under such tremendous debt? Vancouver has been sold to the highest bidder from overseas including Europe and our neighbours down south. Harper and F couldn’t care less about the “average” Canadian. These clowns want to keep the housing industry going and if “average” Canadians can’t afford it then that’s just too bad. Nice legacy these clowns have left for our children

#62 Nemesis on 05.24.13 at 12:30 am

You’d be tempted to think they were all smoking crack.

Oh wait…

#63 Peter on 05.24.13 at 12:30 am

Just so everyone knows , the feds are talking about nation wide, everyone keep referring to Vancouver, which is probably not for ” average” income people at all , prices there are affected by foreign money , retired persons, pot money , and beautiful nature and temperate climate, IF people do not like the prices and want to buy , make like a nomad and move. Even if the prices were cut in half for a one week sale, none of you whiners would buy, you have all been brainwashed the other way believing you are ENTITLED to own at a price you can afford or it is a bad deal. Lots of immigrants have done it making minimum wage , but they worked hard and couldn’ t complain and were happy to live in a country where you are free to try, sometimes renting flats in their home , or babysitting , limiting spending , and eating at home . I could not afford the home I purchased , interest was much higher and the bank (not my friend , nor my enemy) made way more money than me in the deal, but I knowingly agreed to those terms and happily paid the bank (best banking system in the world, again not my friends, I had to pay way higher interest then norm because I couldn t qualify for the best rates , and penalties (IRD) more than once), I am selling now because I have other things to do with my life (not because I think the market will tank , it won’t ) I think renting is great , always did , but why an owner or renter would worry about the other is beyond me , the two things are not that much different. Buying a house was the really rewarding for me , but it is not for everyone . No one knows where house prices are heading , or interest or rules , too many unknowns , but whining is for babies , hope some of you grow up one day

#64 Carpe Diem on 05.24.13 at 1:02 am

We were window shopping this weekend. That is visiting open houses for sale. This one place was very nice. On the Ottawa river, 30 minutes to downtown, nice place and features. Price 700K.

I’d never by it for more than 500K. I’d consider it then otherwise I can rent this place not far from it and keep investing elsewhere.

During our visit, this one older gent wanted it. But was stuck in some mansion + acreage. Until he could sell that one, he couldn’t buy this place. His place had been on the market for a while.

I did not offer a solution that was drop your prices people!

This is the start.

People want to buy but can not sell.
People want to buy but can’t because prices are too high.
People are stupid and you can’t cure that.

Patience is a virtue.

I told a few realtors … I’m in no rush. I want to see price reductions before I buy.

Personally, I like renting. No mortgage is very nice. Making ROI on a multi-year bull market is awesome.

I’ve given up on helping people.

I’d love to have my own land but at current prices, I might keep renting and enjoy my 3rd floor, attic office in my Tudor home overseeing 2 acres of grass.

If it were my land, I’d have 30 apples trees now. Grass is such a waste of land.

#65 Mr Happy!! on 05.24.13 at 1:11 am

People get the results from their own decisions.

I USED to try to help friends with financial advice, but they would never listen….

I mean, what would I know, I am 50, retired and rich and I came to Canada the son of a poor immigrant. Nobody “gave” me anything. Well…they do now… dividends, interest, rent! ect ect…

I feel sorry for 99% of the people that post here. You haven’t got a clue….

#66 Gunboat denier on 05.24.13 at 1:20 am

9 Victoria – you make a good point but use poor examples. Here is some ammo for you

http://www.numbeo.com/property-investment/rankings.jsp

you’re welcome

Question for 5 Chester – why is the money “real” when the bank sells the house?

#67 what bubble? on 05.24.13 at 1:26 am

F is very well aware that there is a RE bubble, but he will never admit it publicly. Since admitting this would require him to take adequate measures and (what is absolutely unfashionable among politicians nowadays) be responsible for them.

F is simply powerless, he can’t do anything on his own.
All his efforts are spent to convince the crowd that everything is under his control: inflation, unemployment rate, RE market… that’s what he is for up there, at the foreground.

It is not a denial on his part… it is clear indication that there is simply no solution… they don’t know what to do up there in Ottawa…

Hopefully there will come some hints from Washington… but for the time being F with friends will continue doing what they are good at: lower interest rate, get people to borrow, lower rate again and get them borrow more… more first time home owners – wider electorate base = both sides are happy…

#68 souvereigninternational on 05.24.13 at 1:34 am

at #23 Shawn please read the link

http://en.wikipedia.org/wiki/Fractional-reserve_banking#Example_of_deposit_multiplication

I hope Buffett aproved Wikipedia as a “non-retard doomer” source of information for you. Happy Grazing!

#69 A Nightmare on Bay Street on 05.24.13 at 1:52 am

#7

“The average household income in Vancouver is based on what people tell the government, not their other income”

..?

What exactly you have in mind ? Prostitution ?
Thats what people have to do now to buy a house ?

#70 Tom Vu on 05.24.13 at 2:00 am

As was thinking 24/7/365 ….+/- leap year

Not like NHL standard issue hockey sticks =integrity of offshore pro-phylatics.

Tend to explode…as opposed to good old “woodie” version….whereby a player like Gordie Howdie -Doody or Wayne Granola-sky could play entire carear with one shaft and a spare.

Wuz thinkink Olde Man and I cud J.V…with IPO on cast iron version of ALL Gores classic Glowballz Warming graph …off -herr Lifetime Guarantee…and bone-us round = Smoking Kong man not lose shirt (Ugghhhh!!!) at casino betting on Rob Fjord.

Peee Ezz :….buy IPO now or be priced out 4 ever

#71 Notta Sheeple on 05.24.13 at 2:21 am

“…….And how could Craig Wright therefore state (as he just did): “A significant nationwide price correction isn’t imminent as long as affordability stays within the current range”?………”
=======================

TRANSLATION: We’ve found the fine line between killing the golden goose vs. choking its neck for every last golden egg.

#72 angela on 05.24.13 at 2:25 am

house ownership sucks just get into the S&P500 or be priced out forever ,this stock market thing is so exciting it looks like it will go up forever my stock broker said that to me .sounds like a real estate agent a few years ago lol

#73 Notta Sheeple on 05.24.13 at 2:29 am

#8 Property Accountant on 05.23.13 at 8:49 pm
“…….Trick was mortgage broker, for a small fee, wrote a letter stating he is currently making 75K and told him “don’t worry, nobody checks these things… some banks do, some don’t. I know which ones don’t, that’s my job”…….”
=======================

Perhaps if the Canadian Association of Accredited Mortgage Professionals capitalized their trade like the REALTURDS®, they might gain more credibility.

Then again, probably not.

#74 observer on 05.24.13 at 3:52 am

A banking buddy of mine said (over 2 years ago) they calculate the appreciation of the property as additional income.

Basically, they fudged up the numbers to make it appear that you actually make more.

#75 Ralph Cramdown on 05.24.13 at 4:10 am

It’s horrible, HORRIBLE, I tell you! Day after day, I sit here watching the houses on the other side of my pretty little ravine, and they’re not selling. The one who was running a Dutch auction (dropping the price by $1k/day) has now gotten serious and cut by $150k the other day. The teardown changed agents, only cutting the price by $20k but the new agent put out a sign at the busy end of the street. The other two are standing pat. And every month I make out the rent cheque, collect my dividends and wait for the big tax refund, and/or the audit.

#76 Joe on 05.24.13 at 4:30 am

Almost everything that involves large amounts of cash is manipulated. I think of the libor rigging as an example. I’m not a doomer i’m a realist it’s a fact proven over and over again.

#77 David on 05.24.13 at 4:36 am

I spoke with a friend who just closed a sale of his circa 1964 south Edmonton bungalow. It is a well maintained place etc etc. He got his asking price of $500K. It left me scratching my head about matters housing related.

#78 Coho on 05.24.13 at 4:54 am

Garth, great post. It pokes gaping holes into the anti-bubble, good time to buy, houses are affordable movement. The numbers tell a very different story than what they claim. If these clowns are the cream that rises to the top, I’d hate to see the bottom.

#79 daystar on 05.24.13 at 5:45 am

#31 Burnt Norton on 05.23.13 at 9:45 pm

I think it runs deeper than this. We are talking about politicians (F, H, followers and cheerleaders) who knew exactly what they were doing and what the outcome would be but they did it regardless and they did it because of lobby interests in regards to insurance south of the line and they did it to please the guys on Bay Street (Canada’s financials) to create a wealth effect to support greedy CEO share options and a run for a majority government… all with our own borrowed money.

In others words, our politicians and financial leaders exploited Canada for greed and power and to me, its blatant and they should all be replaced for it.

Readers, take note. These CEO’s:

Gordon Nixon of RBC:
http://en.wikipedia.org/wiki/Gordon_Nixon

Gordon made $12 million last year thanks to outsourcing IT jobs and running up housing valuations to asinine levels. What a B.A. in commerce will do for a guy these days.

Ed Clark of TD:
http://en.wikipedia.org/wiki/W._Edmund_Clark

Ed’s on his way out. Not before making an easy 9 figures before his career is over. Ed took in 11 million last year.

Richard Waugh of B of NS:
http://en.wikipedia.org/wiki/Richard_E._Waugh

Richard made 11 million last year.

William Downe of BMO:
http://en.wikipedia.org/wiki/Bill_Downe

http://business.financialpost.com/2013/03/15/bmo-cuts-ceo-downes-pay-6-8-to-c9-22-million-on-missed-targets/

The bank missed targets leading to a 6.8% pay cut for Bill. Bill only made 9.2 million last year. How will our banksters survive it?

Gerald T. McCuaghey of CIBC:
http://en.wikipedia.org/wiki/Gerald_T._McCaughey

Gerald took a 7.6% hit in pay. He only made 9.2 million last year for his outsourcing, mortgage vacation, skip a payment and whatever other form of “moral suasion” to make a buck. Didn’t seem to help Gerald though. Maybe its because when a bank, any bank screws over its employee’s, its customers and its nation by ignoring income to debt ratios, the ugly truth to rising interest rates and debt service and the even uglier truth to unemployment caused by real estate and commodity bubble and bust cycles some of which are politically orchestrated, one has to wonder why any of these men are running the show.

And then there’s Louis Vachon of National Bank:

http://business.financialpost.com/2012/04/05/ceo-of-canadas-smallest-bank-makes-the-most-money/

Louis makes the most out of the least with his 7.5 mil last year.

To summarize, they may be Canadians (pick a Conservative MP, or senator, Banker CEO or whatever), but the choices of our leaders isn’t about serving the electorate or the general public. its about greed and power and if people can’t see it for what it is, if they can’t follow the money trail and ask “who really benefits”, if they can’t see the causal effects to CMHC policy or banking policies or lobby interests on our insurance sector (think mortgage insurance like Genworth Canada, Canadian by name only, its American):

http://business.financialpost.com/2012/12/21/feds-ok-another-50-billion-of-mortgage-guarantees-for-private-sector-players/

Or our banks and our media and commodities like oil with so called former lobbyists pushing for pipelines into the U.S. experiencing an energy renaissance for close to 4 years now and poised to be an energy exporter next year:

http://online.wsj.com/article/SB10001424127887323582904578487242641612834.html

Its not hard to see what the effects of selling Western Canadian Select oil into U.S. markets awash with the stuff will do to Canadian oil prices:

https://www.energyandincomeadvisor.com/midwest-refinery-turnarounds-widen-wti-wcs-spread/

… one has to wonder just how easily bought Harper was when he was president of Canada’s largest international lobby organization (National Citizens Coalition) for 5.5 years before becoming leader. One can bet there won’t be brown paper bags to find with one so organized.

Meanwhile, under Harper, our energy revenues continue to shrink. Eastern Canada pay’s Brent crude prices, the U.S. pays Western Canadian Select prices, Alberta oil and gas producers get screwed and everyone is happy as long as our government and media says so. Why not screw Canada with a housing bubble while we are all at it?

Our leaders are either outright corrupt… or they are woefully dumb. Either way, they aren’t acting our best interests. If I had my way I’d run off the whole lot.

#80 The real Kip on 05.24.13 at 6:58 am

“This week mortgage brokers warned 150,000 jobs will be lost as housing and construction crater.”

Somehow I find it hard to believe the mortgage brokers are concerned about construction workers, now that’s funny!

#81 Led on 05.24.13 at 7:23 am

I remembered getting an idea of how much we could afford from the bank. It was far higher than the ratios given here – it’s probably news worthy as the banks have knowingly been giving people mortgages that they can’t afford. Apparently we qualify for a 700k mortgage. I know that would leave us with nothing at the end of the month.

#82 Ralph Cramdown on 05.24.13 at 7:26 am

#53 Elmer — “Take a stroll through any neighborhood in Toronto, you’ll see mostly old geezers with white hair sitting on their porch or tending to their lawn. “

Maybe where you live. My neighbours would never deign to do their own gardening. A few weeks ago, I saw three trucks and trailers from the same gardening company parked around the same property.

A propos: Smoking Man is always talking about running against the herd. Here’s a business idea free to all the blog dogs. Get the homeowners together to bid on gardening services. Lower prices for the homeowners, and THIS renter will only have to listen to those wee gas engines one or two days a week instead of six or seven.

#83 Berniebee on 05.24.13 at 7:49 am

#25 Dan, Dan, Dan.

Some one wanted to own the biggest house on the street, right? This house is exactly the kind of suburban barn that boomers will be selling in droves over the next few years. Classic commute too: A job anywhere downtown requires crossing a frustrating, overcrowded bridge twice a day.
So good on you to be selling now. Whoever buys it will be seeing a depreciating asset.

But it suffers from the “biggest house on the street” syndrome. The smart buyer looks for the lowest priced house on a nice street. What you’ve got here is the almost the opposite situation. (Well, except for the fire hydrant, smack in the middle of the property.) The house asking price is probably say, 50%-%100 higher than the neighbourhood average.
Tough sell even in a good market.

#84 economictsunami on 05.24.13 at 8:26 am

Both my friends and family are looking to unload their
“investment” properties; they have their fingers crossed, that RE engineered/ tight inventory will work in their favour this selling season.

Interesting article on US Housing: Home Supply Limited by Americans Lacking Equity to Sell…

http://www.bloomberg.com/news/2013-05-23/home-supply-limited-by-americans-lacking-equity-to-sell.html

Lack of inventory from those unfortunately underwater (credit also tight) and a deliberate slow up in the foreclosure process by banks, is helping the big hedge funds drive many markets. (They buy for rentals; meaning weak economic multiplier spinoffs. Checkout lumber future’s.)

We won’t have a US style crash but owners in BC can testify, it is certainly “homegrown”…

#85 fancy_pants on 05.24.13 at 8:28 am

RE expensive here b/c it comes with free health care, relatively safe (less guns than people) and a gov’t that bends you and your neighbour over the table to make immigrants welcome.

#86 jess on 05.24.13 at 8:43 am

misleading information /spin

Read more: http://www.thenation.com/blog/174515/primal-scream-reform-las-77-percent-vote-overturn-citizens-united#ixzz2UDCMqvCi

Proposition C asks: “Shall the voters adopt a resolution that there should be limits on political campaign spending and that corporations should not have the constitutional rights of human beings and instruct Los Angeles elected officials and area legislative representatives to promote that policy through amendments to the United States Constitution?” (Handout / April 26, 2013)

Proposition C: Support limit on corporate rights, political spendingPrecincts reporting: 100.0% (1,311/1,311) Name Votes Pct.
Yes 235,517 76.6%
No 72,070 23.4%

John Nichols is the author (with Robert W. McChesney) of the upcoming book Dollarocracy: How the Money and Media Election Complex Is Destroying America. Hailed by Publisher’s Weekly as “a fervent call to action for reformers,” it details how the collapse of journalism and the rise of big-money politics threatens to turn our democracy into a dollarocracy

#87 maxx on 05.24.13 at 8:43 am

“Don’t you just hate being treated like morons? ”

Look at the behavior at ground level, as MSM and cartel reports are evidently bogus. Time on market, angry red dots increasing daily, agents imploring us to “make an offer” and being available at the drop of a hat- service levels not seen since the late ’90s. I have never witnessed so many agents answer the ‘phone on the first few rings. Oh, and let’s not forget the red dot peek-a-boo, here today gone tomorrow and back the following week or month. Silly wabbits.

No bubble? Soft landing? Not on your life, and my money’s patience increases with reports of that ilk.

Buy now and pad someone’s wallet and/or subsidize their retirement.

#88 sciencemonkey on 05.24.13 at 8:52 am

While of course Vancouver doesn’t compare to a world-class city, I still like #9 Victoria’s point about average people owning SFD. Perhaps last century’s anomaly of middle-class home ownership is over. Whether it becomes completely unattainable depends on whether corporations still value the compliance and immobility of workers trapped under mortgages.

Hey Smoking Man, do you enjoy reading fiction? I would recommend a novel called The Diamond Age; it’s a science fiction story that touches on how to raise a track 5er.

#89 Rainclouds on 05.24.13 at 8:58 am

Here in van the bank had NO problem including rent from a bsmt suite for my first bungalow.didnt matter that i had to build one first

#90 Grantmi on 05.24.13 at 9:03 am

#6 AK on 05.23.13 at 8:47 pm
Gartman ‘Aggressively Bearish’ on Bonds….

Just like Gartman was über bullish on gold. How’s that working who followed him now?

#91 Shawn on 05.24.13 at 9:13 am

BANK DEPOSITS EXCEED BANK LOANS

Number 69 souvereigninternational.

Thank you for the link to Wikipedia which has a prominent table that shows the total deposits (savings)exceed the total loans after the multiplication you speak of.

Just as I have said.

Fractional reserve banking exists. But doomers are completely wrong to think that is a bad thing.

The loans only grow in the fractional reserve example because the proceeds of the loan are spent and come back to the banking system as deposits.

#92 Canadian Watchdog on 05.24.13 at 9:17 am

In case anyone was wondering why over the past few weeks we've seen an uptick in fake MSM stories along with aggressive real estate marketing, the following PDF should explain.

Using Social Media as a Business Tool

The Right Mix

Here's a rule of thumb to help guide you on how much to post on which topics:

A) 75% on your content should be about the home/real estate

B) 25% should be about you and your interests

And let's not forget rule C: 100% of your content should be biased and positive. If there is no positive news, make it up.

#93 ss on 05.24.13 at 9:17 am

Houses in Oakville still moving fast, some even above asking. Seems easy credit and low monthly make people’s decision easy. The total amount of debt is just a number, be it 400K, half mil or 800K. All comes down to monthly payments…

Oakville sales -14% year/year, average price +2.09% year/year. Not healthy. — Garth

#94 Pr on 05.24.13 at 9:34 am

At the same time, F say it a healthy market and Carney say its not a normal market(the last decade).

#95 CATerinaskdmetopost on 05.24.13 at 9:34 am

F says to G…

No Bubble
I cant see the bubble that you see
My bubble is different than your bubble
My bubble which is not really a bubble may burst, but when I want
My bubble that does not exist, will burst, but slowly and nicely and orderly fashion and would look pretty
My bubble…. POP… POP POP…..mummyyyyyy

#96 bee on 05.24.13 at 9:36 am

#5

> The bank can’t lose on housing. They either collect mortgage interest on money they loaned that they never had in the first place or they foreclose on a house and collect the real money when it sells. The homeowner is the sucker either way.

Please do your own research before investing your hard earned money in Canadian banks.

I think home owner is just half of the story. Tax payers are on hook due to CMHC. Bank will not be too happy too because less people will be taking a mortgage. They will earn less interest and fees.

#97 Smoking Man on 05.24.13 at 9:40 am

As the spend free Toronto tree hugging clan zero in on Ford linking their cops at prospect of getting the video,

I say it ain’t going to show up. It’s already been purchased, just in case another copy around Ford ain’t saying sqot…..

Smart Man. Flipping the finger to Em all.

FORD will always have my vote…

He’s a Smoking Man

#98 someone on 05.24.13 at 9:42 am

@Canuckistan 43

“The average income in Vancouver is in the $60M range.”

Yes, the average income in Vancouver is $60 million!!! THAT explains the high real estate prices! Someone would have to be making $60 million a year to afford a bungalow on the West Side and still have money left over for taxes, tolls, user fees, MSP premiums, and the high cost of groceries and gas.

The average income of Vancouver may well be $60 million if you include offshore earnings, laundered money from China made off the backs of sweatshop workers, and drug money from marijuana grow-ops. Of course, none of that money gets counted in the statistics!

#99 GregW, Oakville on 05.24.13 at 9:44 am

“China Incinerates 3 US Shipments of Genetically Modified Corn”
(It seems even the officials in China care about their family’s health!)
http://naturalsociety.com/china-incinerates-3-us-shipments-of-genetically-modified-corn/#ixzz2UDQYfHe2

You could help yourself too, there is a march Sat. May 25th starting at 2pm in a city near you. See link for more info. And to find a city march and details near you, click ‘Events’ at link below.
http://www.march-against-monsanto.com/

#100 TEMPLE on 05.24.13 at 9:47 am

#86 fancy_pants

RE expensive here b/c it comes with free health care, relatively safe (less guns than people) and a gov’t that bends you and your neighbour over the table to make immigrants welcome.

Actually, Canadians own lots of guns, health care was free here long before the current real estate bubble, and every human on this continent is, or came from, an immigrant.

TEMPLE

#101 RenterinCalg on 05.24.13 at 9:59 am

First time poster! love the site

Garth you say RCB is using gross income, when the article I read says they are using pre-tax income which makes this all even scarier! Better hope people in vancouver are taxed at less than 18%.

http://www.calgaryherald.com/business/Calgary+listed+more+affordable+housing+markets+Canada/8423835/story.html

#102 Victoria on 05.24.13 at 10:21 am

To everyone who responded – I was actually referring to Toronto, but all the same, my point was that in countries where life (financial, cultural, economic etc.) is centered around few big cities, RE in those cities is VERY unaffordable. It doesn’t matter that Van and TO are not in the same league with London and Paris. For Canada they are JUST AS IMPORTANT as London and Paris for their respective countries. Yes you can live anywhere in Canada as there is plenty of space, but would you? Compare population statistics of Canada’s few big cities with the rest of the country – the difference is huge. It’s like the entire population of Canada aspires to live in just a few places, living everything else very sparsely populated.

#103 Silver on 05.24.13 at 10:30 am

I sold in Swincouver recently. Close to mill. Pocket 8+ thou. Moved out from the entitled hoards strategic stronghold…

Moved to Mission… yah I know its small… but the price was $130,000 below ASSessment of $400 thou, and as such to good to turn down. ($270. and a Court ordered sale),
…CMHC took a loss on it,
… and the bank took 90 K loss.
Dozens and Dozens of them here
… 300+ according to the agent, … that he knows…of

neighborhood is mostly older…
… and 50% of them are in the process of talking about selling in the summer market,
… or working on subdividing the land they have.
… for retirement…

The other half live in the huge number of big box pressboard builds.
lined with young couples and the kids is stunning… where do they get the credit to buy this junk, and the expensive to maintain lifestyle, and stuff???? . How do new parents own $40,000+ dollar trucks at 25-30 ?, a $500 thou house????
Signs of mold developing on most the buildings already…

Oh I forgot… a bunch of them are custom developers and specialty contractors… or hired by Plan Canada construction jobs…

Oh right and have increasing “Equity” (“Debt”) in their house….
Yup… all is well…

Silver

#104 sciencemonkey on 05.24.13 at 10:53 am

Victoria, I think that within the big cities you will find lots of people who value living there because of family, entertainment, etc, but at the same time many would love to live in a smaller town or semi-rural area. The challenge is many fields cannot find decent employment outside the cities.

#105 SS on 05.24.13 at 10:53 am

Oakville sales are down is because listings are much slimmer. There are not a lot on the market to choose from, if there is a half decent/well priced onto the market, it will be gone in a week. Couple days if it is very decent/market priced. People are just not selling, is it because most were bought in last five years and can not afford to move/sell?

#106 Herb on 05.24.13 at 10:57 am

#98 SM,

of course Ford is a Smoking Man, and he’s just as effective, i.e., irrelevant.

#107 Toronto_CA on 05.24.13 at 10:57 am

#103 Victoria on 05.24.13 at 10:21 am

You’re delusional. RE in Canada has become expensive is because of the MASSIVE increase in cheap and easy credit (like the 40 year zero down mortgages), NOT because Toronto or Vancouver have suddenly in the last 10 years become super more important to Canada.

Toronto is no more important to Canada today than it was back when RE price was back at its historical mean ratio to incomes/rents. If anything less so, because Alberta has moved WAY up in importance over the last 10 years relative to Canada’s economy due to the oil sands.

And Vancouver is not the London of Canada. It’s more like Canada’s Edinburgh. Canada does not have a city that is as important to it as London is to the UK or Paris is to France, in my opinion.

#108 steev on 05.24.13 at 10:59 am

Victoria,

In Toronto we manage a 76% ownership rate. So it’s pretty safe to say the average person owns the average house. At the same time the average person can’t afford the average house. It’s pretty easy to see the problem when you put it in that context, world class city or not.

#109 Old Man on 05.24.13 at 11:00 am

#98 Smoking Man – I heard a rumour that Ford needs a break in life to kickback and relax tonight, so might be heading south to a place called Southside something, as forget the name. He just wants to sit at a corner table for the entertainment to ponder his next move while Bad To The Bone performs on stage.

#110 screwed on 05.24.13 at 11:04 am

#9 You are spot on. Vancouver is ONE of those global cities where people pay a premium to have an address and live in a very safe location. Other global cities have other reasons as to why they’re expensive. Vancouver is simply beautiful and it’s a stable community with close ties to the entire Pacific Rim. House values are high but when I drive through Kerrisdale, Point Grey or Shaughnessy I understand why the money is there. The money is earned outside of this jurisdiction and the people earning it are using Vancouver as their safe haven.

#46 re London.
London is a city where soldiers get hacked up by terrorists. London has terrorist attacks all the time. London is also the playground for the oligarchs, same as Moscow and Monaco.
I would not trade a 2-bedroom in Coal Harbor for a house near Hyde Park. Thanks but no thanks.
Great place to visit if you’re so inclined but to live there? Ask any British expat in Vancouver and they will agree.

Housing slowdown or standstill in Canada will cost us closer to 500,000 jobs. But it will not effect the value of real estate in Vancouver. Just deal with it. There won’t be any cheap deals in that city. If you hoped to catch a cheap house or condo there, the waiting list is about a mile long.
The rest of the Lower Mainland will not get away that easy though. Much of that market is already depressed given current valuations and only massive rate increases would drive prices into the gutter.

Rate increases … yeah right. Like that’s going to happen. Ottawa might as well close shop and go home.

TD reported 1.7 billion in profits for 3 months. That money comes directly from our pockets, from the economy in the banker’s pockets. They’re doing just fine and if memory serves right, the bankers call the shots in Canada.

#111 Canadian Watchdog on 05.24.13 at 11:05 am

RealNet's George Carras: A taller, smaller and more expensive housing market

While it’s true that there are a record number of condominium buildings currently under construction in the region — 242 buildings containing 63,237 units — we must remember that condominiums take longer to deliver and are only a part (albeit an increasingly dominant part) of the GTA’s total housing equation.

From the guy who called his company RealNet, "the Bloomberg of Canada." Well George, since when does Michael Bloomberg post articles on the Wall Street Journal favoring stocks? Is there no conflict of interest in the data when a statistical agency's owner has an interest in rising home prices? How about telling buyers the real reason why only 50% of 2012 condos were completed on schedule. Could it be because developers suddenly realized after they sold the bulk of units to investors and realtors — that the faster they complete units, the faster flippers will be competing with developers' inventory? Chart New home tur

I only have two questions for you George. 1) What happens when investors discover their delayed units are now worth less then there futures contract? 2) What happens to those who were pre-approved a mortgage rate (and CMHC) when a project is delayed beyond the lender's expiration date?

With that said, here's the latest from RealNet and as an added bonus, a chart of what GTA's condo market looks like right now.

Low-rise sales continue to slide

#112 Daisy Mae on 05.24.13 at 11:06 am

#80 Daystar: “Our leaders are either outright corrupt… or they are woefully dumb. Either way, they aren’t acting our best interests. If I had my way I’d run off the whole lot.”

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

Well, they aren’t ‘leaders’ — they can’t think for themselves. Blind leading the blind?

#113 DM in C on 05.24.13 at 11:08 am

We bought in March after our landlord hemmed and hawed about renewing the lease, then decided to sell.

There were literally no houses available for rent at the time in our Calgary community — not a townhouse, not an apartment, nothing. And we were not having the kids change schools again, so we looked and chanced upon the perfect place.

3.5x income, PITH – 22% TDS – 30%. 1/4 acre west facing with a unobstructed view of the mountains, 20mins to downtown.

We still put away 18% of salary into TFSA/RESP/RRSP.

And the landlord sold the day we moved out, after two weeks on the market, for >500k. Way too big for us, with too small a yard.

We don’t regret it at all. When rates rise, we can afford it.

‘THEY’ say Calgary is the most affordable market in Canada http://www.calgaryherald.com/business/Calgary+listed+more+affordable+housing+markets+Canada/8423835/story.html

#114 Sotiri on 05.24.13 at 11:17 am

#103 Victoria
“For Canada they (Toronto and Vancouver) are JUST AS IMPORTANT as London and Paris for their respective countries. ”

They used to be the same important 8, 10, 15 years ago as well when the estate price wasn’t crazy as it is now. So what happen that we have these prices only in the last 7 – 9 years?
What created this bubble is plain an simple : the government intervention (30, 35. 40 years amortization) loose mortgage rules plus extremely low interest rates. All these to make Canadian feel “richer than they think “. If we want to find the real market value of the real estate we should take out of equation the government intervention through CMHC.
We have seen this before south of the border and we know how it ended.
Oh yea its different here…NOT

#115 Post Haste on 05.24.13 at 11:19 am

IMHO – when a flood of non-performing mortgages hit CMHC’s desk and the banks stand there saying payup – CMHC may just ask – yes Mr.Banker, I will but first let’s make sure that you did the required checks that would have satisfied the loan approval – What, this homeowner never made $75K but $25K – and you didn’t do the requried check – bye bye!!

Gottcha Banker Boy – 1/2 of all your claims were not properly checked – that means you’ll be eating the loss.

One more bit that I wanted to add – those who write telling us how homeowners come to work and tell everyone how much they are struggling – stop with the BS – I have worked for many firms, and have NEVER heard of anyone lowball their lifestyle – it’s all high flying life is grand remarks – Denial is a popular theme out there!

And if some care to check – that prediction of 50% price drops have been a theme with some here for the past 5 years – geez, move on people.

Great job Garth!

#116 frank le skank on 05.24.13 at 11:22 am

Can anyone confirm how accurate the number are from the CAAMP’s Spring Mortgage Report 2013?

#117 Canadian Watchdog on 05.24.13 at 11:38 am

For those who missed it, read post #139 and follow up with these charts.

What is happening can be termed best as an invisible crash.

#118 Ronaldo on 05.24.13 at 11:47 am

#99 Someone – M = 1000

http://wiki.answers.com/Q/What_two_letters_are_both_symbols_for_1000

#119 Adam on 05.24.13 at 12:13 pm

#102 RenterinCalg

Do you know that “gross income” means?

#120 Kilby on 05.24.13 at 12:17 pm

#86 fancy_pants on 05.24.13 at 8:28 am
RE expensive here b/c it comes with free health care, relatively safe (less guns than people) and a gov’t that bends you and your neighbour over the table to make immigrants welcome.
*********************************************
My wife and I pay $115 a month for free health care..It is free in the Yukon and Alberta. “families First” Ha!

#121 MrSuzi on 05.24.13 at 12:25 pm

Thank You again Garth,
Check this story out: http://www.leaderpost.com/business/Housing+Saskatchewan+slightly+more+affordable+first+quarter/8427326/story.html
“Specifically, the affordability measure for the benchmark detached bungalow eased by one percentage points to 38.1 per cent…”

Bungalows in Saskatchewan are now OFFICIALLY unaffordable. I even put the link to CMHC guidelines in my facebook post to the house pumpers I know: (http://www.cmhc-schl.gc.ca/en/co/buho/hostst/hostst_002.cfm)

Thanks Garth.

#122 Happy renter on 05.24.13 at 12:25 pm

I’m sorry but prices reflect what people can afford. Vancouver,Toronto,Victoria and where ever in Canada.If you think prices are to high,don’t buy ,rent.But people always have priorities and if you want something in life,you’ll need to make sacrifices to achieve it.End of story.

#123 Bottoms_Up on 05.24.13 at 12:46 pm

#103 Victoria on 05.24.13 at 10:21 am
——————————————
I completely agree with you. The average family in densely populated, economic centre, might be able to afford the average ‘home’, but that ‘home’ may not be an SFH. In Toronto, the average ‘home’ is more like a beat-up townhouse or 2 BR condo.

#124 Kalamazoo on 05.24.13 at 12:46 pm

Go to New Jersey and order Scotch on the rocks at a restaurant and they give you rubbing alcohol mixed with caramel colouring!

http://www.cbc.ca/news/business/story/2013/05/24/business-new-jersey-alcohol.html

#125 souvereigninternational on 05.24.13 at 12:54 pm

@ 92 Shawn on 05.24.13 at 9:13 am

“Fractional reserve banking exists. But doomers are completely wrong to think that is a bad thing.”

For banks it is definitely a good thing.

Being skeptical and rational/realistic is classified as doomer thinking or conspiracy theory, which became negative labels used to ridicule an often opposite view in order to avoid discussing it’s merits. It’s like everything Buffett says is pure golden truth in reverse. According to Wiki Doomer has nothing to do with fractional banking, but rather with peak oil.

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

Doug Casey said
“If someone can’t define a word precisely, then they actually don’t know what they’re talking about. Imprecise language leads to sloppy thinking. Which inevitably leads to pointless and unresolvable arguments.”

#126 Bottoms_Up on 05.24.13 at 1:04 pm

#50 Steven on 05.23.13 at 11:28 pm
—————————————
Don’t forget, as Garth has stated here a few times, that national debt is not meant to be paid back. What’s important are deficits, debt-to-GDP, and how fast GDP is growing.

A nation can carry debt for an infinite amount of time; but, they can’t carry infinite debt. Thus, it’s the size of the debt (relative to other things such as GDP) that’s important.

#127 Bottoms_Up on 05.24.13 at 1:08 pm

#47 Jane54 on 05.23.13 at 11:17 pm
—————————————
Don’t forget that in London, England, there are many areas that locals wouldn’t touch with a 10-ft pole. So, it’s pretty difficult to use what you saw in London as a comparison to Toronto unless you’re an expert on both markets.

#128 Smoking Man on 05.24.13 at 1:15 pm

#107 Herb on 05.24.13 at 10:57 am#98

SM,of course Ford is a Smoking Man, and he’s just as effective, i.e., irrelevant.
…………….

Don’t no herb, Ford’s done very well in life.. Came up against tree hugging Nazi’s. At city hall. Put an end to all the back room deals, naturally they are out hang him.
And remember, Ford had many wealthy and powerful buddies, don’t be surprised if the video just vanishes

I hope he hangs on to to the job, keep pissing them off.

#129 Bottoms_Up on 05.24.13 at 1:17 pm

#36 goodquestion on 05.23.13 at 10:05 pm
——————————————-
Garth has never said there would be a precipitous drop in prices.

He has often alluded to a ‘slow melt’, in other words, picture the price of your home as an ice cream cone on a summer day. Everything looks good for a few minutes, until you notice the first few drips on your hand. Over the next few minutes the dripping intensifies until you’re left holding a shrunken, soggy cone that nobody wants.

#130 broadway skytrain on 05.24.13 at 1:20 pm

people who refuse to leave Toronto to create space for those of us who actually need to live here to work?

———————————————-
entitled much?

the space is in their basement, which they OWN, and will sell when they damn well feel like it.

and from someone who has lived some of the worlds largest cities, vancouver is MUCH MUCH MUCH nicer place to live if you can afford it. (and if you can have more fun with the ocean and mountains than in a stuffy art gallery) average ppl don’t buy bungs in van, they buy city condos or sfh in maple ridge. In 1980 I was stunned to see asking prices in van at about 3-4x those of my east coast town , just like today.

#131 Shawn on 05.24.13 at 1:23 pm

THE MEANING OF WORDS

126 Souvereign said:

Doug Casey said
“If someone can’t define a word precisely, then they actually don’t know what they’re talking about.

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

Well let’s refer the mattter to Humpty Dumpty in Alice in Wonderland who said:

“When I use a word,” Humpty Dumpty said, in rather a scornful tone, “it means just what I choose it to mean—neither more nor less.”

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

As to Fractional Reserve Banking it has been around for at least 800 years and the world has progressed pretty nicely in that time. To be against it is to be against banking. To be against banking is implicitly to favor subsistence hunting and gathering for humanity which is about all that is possible without some form of banking.

#132 broadway skytrain on 05.24.13 at 1:25 pm

old people who refuse to leave Toronto to create space for those of us who actually need to live here to work?

—————————————–
or maybe like this….

old people who refuse to sell their harleys to create supply for those of us who actually can drive them ?

(cmon’ garth give me your bike!)

Don’t provoke me, metrosexual Vanboy. — Garth

#133 Bottoms_Up on 05.24.13 at 1:29 pm

#157 Smoking Man
=====================================
….So if a slave says to teacher, I don’t want to do math or English today, I don’t want to take the test today, I will hand the assignment in when I feel it’s just right, not when you demand it. Who the hell do you think you are grading me. What, you want me to use up my free time doing home work… You going to pay me…

Today I want to surf the Web and find out what really happened on 911. Then I want to research how to start a business so I can take advantage of all my stupid fellow students you believe your malarkey…..
=====================================
You see Smoking Man, that is where YOU need an education. There are schools that allow students to design their own learning plans, and the learning is conducted independently (they’re called Montessori schools). If they want to research 911, they are allowed. If they want to learn how to start their own business, they are allowed. And yes, graduate school is all about teaching critical thinking.

You’re not fooling anyone. You have to follow rules set out by The Man too. You pay your bills. You stop at red traffic lights. You don’t break into closed liquor stores. You, in fact, ARE accountable to your employees, and they to you.

#134 Bottoms_Up on 05.24.13 at 1:37 pm

#175 retired WI Boomer on 05.24.13 at 10:05 am
—————————————————
Careful when you discuss our property ‘bubble’. Canada is a pretty small market, and the largest centres influence prices very substantially. I know of many people, that live in smaller towns, whose houses didn’t appreciate in the past 5 years, and actually someone who lost a little bit of money over that time (I think they bought for $270,000 in 2007 and sold for $260,000 in 2012). Canada as a whole is not in a property bubble — certain locations, in certain cities, perhaps. And, contrary to what you read on this website, our banks have been fairly prudent in their lending. I was turned down twice for a modest mortgage by 2 of the big 5, great credit score, great credentials, down payment, great job prospects, but I JUST DIDN’T HAVE A JOB THAT PROVED THAT I COULD FINANCE THE MORTGAGE. Yes, I was turned down. Twice. (this is not to say there aren’t certain sketchy lenders out there, but in terms of our big banks, they, in my experience, have been pretty conservative lenders)

#135 Toronto_CA on 05.24.13 at 1:48 pm

At least the April GTA new home sales numbers released, late on a Friday so as not to get any media attention.

http://www.bildgta.ca/media_releases_2013_detail.asp?id=918

“Consumer confidence in the GTA’s new homes market is still low as sales amounted to the third-worst April on record, the Building Industry and Land Development Association (BILD) announced today.”

Only the 3rd lowest April on record?

GTA
Total New Home Sales last April 2012 5,066
Total new Home Sales THIS April 2013 2,843

Decline of 44%.

“Year-to-date sales painted a similar picture with the total number of homes sold combining for the second-lowest on record and 30 per cent below the long-term average.”

30% below a normal year for new home sales.

#136 Craig on 05.24.13 at 1:48 pm

So a million dollar home puts your housing costs at $4500/month to “own”. WTF

I’ve never owned a house. I make over 6 figures and rent a 3300sqft home that is “worth” $1m for only $1800/month. I have no idea what would motivate me to buy at this point.

Simple math

$10k per month income
$200K in capital

Owning a million dollar home

Down payment ($200K)
Monthly housing cost ($4500)
Food and other exp: ($5000)
Total monthly expenses ($9500)
Remainder $500

Renting a million dollar home

No down payment
Monthly housing cost ($1800)
Food and other exp: ($5000)
Total monthly expenses ($6800)
Investment income($200K @ 5%) $1000/month
Remainder $4200

Renting saves me $4200/month. That’s $50K per year.

Can a realtor explain to me why I would buy?

#137 Consumer #52489 on 05.24.13 at 2:05 pm

Back in 2010 I spoke with my broker in Vancouver about getting financing. I told him: I have $10,000 cash, bring in a massive $38,000/an net., and have about $350/mnth in Student loan payments for at least the next 5years (at which time it will go down to $190/mnth for the next 25 years!) and was single in the most expensive city on the continent.
He says: ‘Great! Stable income, low debt, some cash, good credit. I can easily get you $375,000 over 35 years.’
I say: ‘You know my SL payments are taking more then 10% of my gross and that $375,000 gets me an old condo/apartment where I have strata of at least another $250, surely to go up from there. How do I pay for such a big mortgage?’
He: ‘No problem, if you get into trouble, I can get you a personal loan at prime +2% to get through a rough patch! Its perfect. If you don’t get in now, you never will! Just sign here.’
Obviously I declined, rented, saved, and got a better job then talked to a responsible professional, who, after I nearly doubled the saving and wages and halved the debt told me, ‘Well, maybe I get you $275,000. But, be careful cuz things might get tight if interest rates go up.’
There are some good guys out there but, you gotta shop around cause the idiots are ruining the entire industry. (the second broker was with Alliance, props to him. I’ll be back for another when it is time.)

#138 daystar on 05.24.13 at 2:10 pm

#113 Daisy Mae on 05.24.13 at 11:06 am

They are out for themselves. It was obvious 7 years ago and no less obvious today. Canada is in for some hard times because of this lot.

Household debt was 115% of GDP 7 years ago (when GDP was a lot smaller, I might add). Today its at 165%. CMHC mortgages in force more than doubled from $275 billion to near $600 billion (not counting what is 90% covered) and F is now shovelling insurance guarantee’s to foreign corporations like Genworth Canada, Canadian by name only. Why would F & H do that? Why are they talking privatization when there isn’t a financial insurance corp in Canada big enough to buy it? Why are they dumping the entire mortgage insurance sector into U.S. hands? Corruption? I think so and it goes back to the foreign oil and insurance corps Harper lobbied for when he was president of the largest lobby foreign lobby organization (the national citizen’s coalition) for 5.5 years before becoming leader of the Conservatives.

Take for example, David Emerson. Some readers may remember him, he’s the BC MLA that orchestrated the sellout of BC gas to Terasen gas while he was minister of trade. Just under 2 months later, David steps down as minister and within 8 months, he becomes a director of Terasen for share options worth more than a million. Anyone with a brain knows that a person doesn’t become a director of a large nat gas service corp just because they like you. David shaved off some zero’s in the sale of BC gas and got juiced handsomely for it. Its legal (in BC only could a politician step down from office and within 6 months be a corporate board member) but, its corrupt, a clear abuse of authority with a paper trail to match.

Where is one of Harper’s right hands, David Emerson now?

http://thecanadian.org/item/1916-oil-china-why-david-emerson-wants-alberta-to-start-paying-taxes-alison-redford

…. acting as an oil lobbyist to get royalties reduced to zero in Alberta. I’m not sure why Canadian corps pay him. He’s got his pockets stuff so full of international corps who want to pump oil out of Canada for free (think China, U.S., all legal theft), why triple pay him? What, pay Emerson again and again and he’ll come back to everyone with three bags full? I’ve got a message for Canadian corps. “Keep your bribery money. You’re going to need it with what’s coming for WCS thanks to bigger bribes”.

The only worse thing than a corrupt politician turned oil lobbyist is a lobbyist turned politician. People need to wake up to the reality that this is all Harper is. A lobbyist turned politician and its the worst kind. A traitor kind. Nothing dumb about it but it can never fly straight.

#139 AK on 05.24.13 at 2:33 pm

#136 Craig on 05.24.13 at 1:48 pm
“Food and other exp: ($5000)”
——————————————————————-
You spend $5,000.00 a month on food?

#140 Jordon on 05.24.13 at 2:41 pm

Not doubting this is all true, but what’s your source on those Vancouver numbers?

GVREB. — Garth

#141 My thoughts on 05.24.13 at 2:42 pm

This house in Vaughn just sold for asking in 24 hors and five showings. 1800 square feet for $623k yup things are out of control. I can’t speak for new home sales but not of the resales seem to be moving in certain neighborhoods. Amazing really! Everyone views a million dollars as if its nothing. I don’t think you can change the mentality of the herd just yet. Everyone is vacationing this summer… Spending money. Buying investment homes. I’m amazed everyday.

#142 AK on 05.24.13 at 2:46 pm

#73 angela on 05.24.13 at 2:25 am
“house ownership sucks just get into the S&P500 or be priced out forever ,this stock market thing is so exciting it looks like it will go up forever my stock broker said that to me.”
——————————————————————–
Do Stock Brokers still exist?

The beauty of the Stock Market is that you do not need a Stock Broker to buy and sell equities.

#143 Raginnn on 05.24.13 at 2:51 pm

Garry Marr from the FP (this guy is not bad for reporting the facts)

New bottom for Toronto low-rise home sales

It was the worst April ever for low-rise home sales in the greater Toronto area.

RealNet Canada Inc. said there were 987 new single, semi-detached and townhouses sold in the GTA last month. Year-to-date sales are the second worse ever and 30% below the long-term average.

“Affordability is still a major challenge for the industry and new home buyers, particularly in the low-rise sector,” said Bryan Tuckey, president of the Building Industry and Land Development Association, in a release.

http://business.financialpost.com/2013/05/24/new-bottom-for-toronto-low-rise-home-sales/?__lsa=bac3-8b28

#144 Canuck Abroad on 05.24.13 at 2:58 pm

41 M Evans – I don’t think it works like that. You can’t convert your mortgage to an unsecured line of credit. You will need to bring a cheque for $100,000 to the closing in order to sell the house. If you don’t the bank won’t release your mortgage.

I think you need to get yourself foreclosed and hand your house over to the bank. Then in order to get out of the remaining debt you would then have to declare bankruptcy because your debt to the bank doesn’t go away when you hand the house over to the bank.

So bottom line you can use bankruptcy to wipe out the balance, but the process is different…

#145 :):( Ying Yang on 05.24.13 at 4:15 pm

And everyone says there is no bargains in the big smoke. This one is in Long Branch, cheapo man! I might just go have a peek this weekend. Could be seeing Smoking Man on the streetcar playing his guitar!

http://www.realtor.ca/propertyDetails.aspx?propertyId=13226597&PidKey=-474040444

#146 Victor V on 05.24.13 at 4:21 pm

A strong U.S. dollar, low inflation and weak consumer demand will continue to put downward pressure on gold prices, with the precious metal expected to hit $1,300 US an ounce by next year, then sink even lower, according to TD. http://bit.ly/10RLibh

#147 Pr on 05.24.13 at 4:30 pm

66 Mr Happy!!….- I mean, what would I know …..interest, rent!

You may now be that way collecting interest, rent, plus values of real estate, but one part of your richness is LUCK! Go try to duplicate, TODAY, what you have done before. It will take you 2-3 lives at the realestate prices of today, to have, maybe, if your lucky , the same result.

#148 erebus on 05.24.13 at 4:37 pm

@#123 Happy Renter

You mean prices in Canada reflect what people can borrow?

#149 VT on 05.24.13 at 5:17 pm

#137 Craig

Isn’t ‘pride of ownership’ worth an extra $50K per year?

#150 Bob the Imp. on 05.24.13 at 5:31 pm

How absurd! Your math is really poor Garth! That is only the average income of one person! If I include my income, wifes, 2 uncles, 3 aunties, 2 year old child, and 4 month old baby … forgot my Grandma, we sure DO have enough “for food, clothing, transportation, utilities, medical expenses and as much alcohol as possible.”

The FED has is right! YOU HAVE IT WRONG!

#151 Dr. Hoof - Hearted on 05.24.13 at 5:40 pm

#134 Bottoms_Up on 05.24.13 at 1:29 pm

#157 Smoking Man
=====================================
….So if a slave says to teacher, I don’t want to do math or English today, I don’t want to take the test today, I will hand the assignment in when I feel it’s just right, not when you demand it. Who the hell do you think you are grading me. What, you want me to use up my free time doing home work… You going to pay me…

Today I want to surf the Web and find out what really happened on 911. Then I want to research how to start a business so I can take advantage of all m

==================================
Actually Smoking Man despite his many deficiencies, like bad hair and red knuckles, Quasimodo doppleganger…is quite the savant re: education.

Ye Olde school system created far brighter minds and independent thinkers.

The warning sign in history is when Gov’t makes something “public” and makes you think it is for your own good. No, you are swallowing the kool aid ..RUNNNN.

One’s mind is programmed to regurgitate things like Who ?Wh? When? Where?…and not Why….without much ACTUAL critical thinking.

People that instinctively avoid the BS often succeed and leave others in the dust.

#152 jess on 05.24.13 at 6:01 pm

Judge Gleeson …will he sign off on that DPA deferred prosecution agreement?

the humbled and horrified change message – scandal opportunity for reform. lol

=

Banks’ Lobbyists Help in Drafting Financial Bills
May 23 2013 – 12:51pm

=
Washington Consensus
http://www.youtube.com/watch?v=PSRJZi4XmIs&feature=player_embedded&list=SPPszygYHA9K1yU3SXHOoC7JhT2O7No-3D

#153 Lizanne on 05.24.13 at 6:18 pm

What I find truly remarkable in cities like Vancouver is that people assume that complete gut jobs will keep selling for the same asking prices today in over 10 years? And therein lies a huge problem. If incomes have not kept up to the rate of housing inflation in Vancouver over the last quarter century. How is it exactly that anyone, be it bulls or bears will witness triple digit asset inflation on houses? When housing begins to take on the characteristics of commodities…. Eventually stakeholders get burned. Margin Call. If I was in Vancouver I would short immediately. It’s grossly overpriced when compared to fundamentals. Moreover the fundamentals all point to a collapse in that market, moreover what statisticians and economists are even predicting after F jumped in and ruined the hubris for house horny agents and wack jobs wanting to own gut jobs for well over $900,000 dollars. Think about that for one second. Old houses, no real industry of incomes to support that market and housing inflation continues ad nauseum until the stars burn out? Vancouver is screwed!!

#154 Mr. Monday Night on 05.24.13 at 6:19 pm

#150VT on 05.24.13 at 5:17 pm

A loser with $50K extra in his pocket every year. Even without the downpayment you’re still $30K / year to the good! I’d like to see my friends and in-laws drinking the Kool-Aid sell me on ‘pride of ownership’ now.

#155 CalgaryRocks on 05.24.13 at 6:21 pm

#137 Craig on 05.24.13 at 1:48 pm
So a million dollar home puts your housing costs at $4500/month to “own”. WTF

I’ve never owned a house. I make over 6 figures and rent a 3300sqft home that is “worth” $1m for only $1800/month. I have no idea what would motivate me to buy at this point.

Yes of course but since you’ve never owned a house you’ve missed out on hundreds of thousands of appreciation in the biggest boom in history. That million dollar home you could have had for 500K 10 years go, if that.

So now, you’re priced out unless there’s a 50% correction but the guy that bought 10 years ago can cash out aytime, sit on an extra 500K and be in the same position as you. Except with 500K more money of course. That’s an extra 2K/month in dividends if you will.

#156 espressobob on 05.24.13 at 6:55 pm

#66 Mr. Happy!!

Seems you have the upper hand on the rest of us 99%. Got to admit real estate is the way to go? Not that us self employed folk along with our cash flowing investments can shine your shoes. Trust me I know how Al Bundy feels, excuse Us.

#157 Lookoutbelow on 05.24.13 at 8:52 pm

Given that facts that you provided about average household income vs average price of a bungalow, I found the following quote from the CMHC website, in their 2012 Annual Report:

“The majority of borrowers of homeowner loans have high credit scores, and the average borrower equity in CMHC’s insurance portfolio is 45 per cent, up slightly from last year. Other key figures show mortgage loan insurance losses on claims decreased by $85 million to $532 million in 2012. In addition, the arrears rate of 0.35 per cent is low and the trend is declining. This is in line with the industry rate as reported by the Canadian Bankers Association.”

Something doesn’t add up here. The majority of borrowers have high credit ratings, yet mortgage losses were over $530 Million in 2012 and they are running the business prudently.

Has someone out there done a forensic analysis of CMHC’s financial statements ?

#158 dogman01 on 05.25.13 at 12:33 am

- The best refuge is liquidity.- Yep, got it Garth!
– fixed income such as corporates – some
– preferreds – XPF
– growth assets (like ETFs) – yep
– plus diversification across asset classes, sectors, capitalizations and economies. – hard but doing it
– Don’t overdo exposure to Canada. – Tax Treaty with U.S in RRSP
– Learn what rebalancing is, and do it. – Hard to do
– Match risk with portfolio weightings. – got DB pension so a bit risky
– Buy at the right prices – typically along 200-day MAs. – hard requires attention.
– Shelter fixed income. – yep, got it
– Collect dividends and cap gains in a non-registered account. – yep got it
– Maybe get some help. – probably need it but I still have a trust issue.

Thanks Garth – 4 year reading. It is sinking in.

#159 Dean Mason on 05.25.13 at 2:02 am

#51 BREW Topic OMERS $10 Billion pension funding deficit
# 52Shawn

Since 2003,their rate of return is 7.76%. The problem is that they do not have 7 or 8 workers paying for 1 retiree.They have 3 to 4 and pretty soon it’s going to be 2 workers for 1 retiree. This is a major financial drain which a7.76% or 8.90% will not cut it.

Low interest rates do affect pension plans.Omers is now taking more risk then they normally would if bond yields were 5%,6%,7% instead of 3.00% to 4.50%. Also,those retirees are increasing in age and numbers.They also have disability benefits and many other benefits that has nothing to do with pensions.

This is going to hurt them even more because of alot of aging workers claiming more of these benefits.You will see more changes coming soon.

They will cut the spouse amount to 60% to match C.P.P.,they will cut the service percentage to lower than 1.85%,we could see 1.60% in next 5-7 years, much higher contributions by at least 50% over the next 5-7 years.Inflation indexation calculation could be changed like U.S. wants a lower C.P.I. payout.

Also,a declining younger union workforce that means less contributions than OMERS would of got 10,15,20 years ago.It’s going to get bad.

#160 Ret on 05.26.13 at 10:22 am

OMERS, no problemo! The workers can just pay back the money with interest that should have gone into their pension fund during their 4 year pension holiday from 1998-2002.

A first year Economics 101 student could have told them that what they were doing was lunacy. See Bill Tufts link below.

http://www.ipolitics.ca/2012/01/27/bill-tufts-the-myths-of-pension-reform/

McMaster U thought this was also a brilliant idea. SIL was cut a check for $8500 for her surplus share, 7-10 years ago.

Guess who is whining to the government about pension shortfalls now? The universities can’t grow their way out of their pension deficits no matter how many foreign students they cram in.

Check out the 3-4 year shortfall increases. I wonder who will be covering those deficits in the years to come?

http://www.bryce.ca/uploads/3/0/5/7/3057756/pension_shortfalls.pdf

We let Canadian universities teach business and economics? What a farce. They couldn’t manage a three flavour pop stand.