The Must See

CLEAN AIR modified

“Talk about a good laugh!” Chad wrote, as he sent along a listing from a Vancouver realtor (below). As you may know, the average SFH in Van is changing hands these days for $1,198,828, which is down from close to $1.4 million a few months ago. This drop has been driven substantially by declines in the tonier areas, like the Westside and West Vancouver. In fact, since the Immigrant Investor program was punted by the feds, traditional in-demand hoods have seen an 11% price reduction.

Of course, the city is still nuts. The realtors are mental. The natives are post-horny. And I think we all know what lies ahead when a $2,170,000 house is advertised as first-time buyer special.

Here’s the pitch:

Description
EXCELLENT PRICE FOR FIRST TIME BUYER OR INVESTOR. Prestigious Shaughnessy Location. Charming character home. Over 3,300 sqft.Tastefully updates spacious 6 bedroom family home 4.5 baths. Newer hardwood floor thru out. Gourmet Kitchen. Close to well-known school. Potential 2 bedroom suite in lower level. Park-like garden with secured fenced back yard with southern exposure. A MUST SEE!
.

And here’s the house. Granted, it smokes. And it’s in an area thick with pretension, old money, and wrinklies with new hips – Shaughnessy. Maybe it’s worth $2.17 million, even though you might have to park somebody in the basement. But, get a grip people, if this is a starter home, we’re beyond screwed.

EXCELLENT modified

Now the Vancouver real estate board, despite falling SFH prices, is pumping its current stats as evidence the boom is back on. Sales in April were 15% higher than in March and have improved from last Spring (which was weak). But all is not well here. Listings are swelling in the Lower Mainland, as they are in most places – up 7.2% last month from the month before.

In fact, there are currently 15,515 properties on the market in Vancouver, compared with 19,118 in the GTA – which has three times more people. And of all these listings which are rapidly piling up, 5,000 are on the market at more than $1,000,000 (twice the number as in Toronto).

In fact, here’s a snapshot of prices in the area. Note how prices of detached homes went ballistic in the early years of the new century, just as Ottawa brought in 0/40 financing and emergency interest rates.

VREB modified

Finally, here’s a depiction of the US real estate experience showing a similar experience – relatively stable prices for a long time, followed by a speculative frenzy fueled by cheap money and lax lending standards. See any parallels??

SHILLER modified

Whether the fools living in Vancouver (or Toronto, or Calgary) believe it or not, prices almost always revert to the mean. There is no place that’s special. No people who are entitled to a home. No way average house prices can stay above $1 million while the average family earns $83,130.

If you think otherwise, I’ve got a bitchin’ starter house for you.

202 comments ↓

#1 OttawaMike on 05.08.14 at 5:16 pm

Is this the Crackpipe or Niceprice column from Jalopnik.com
Because I once owned a’49 Hupmobile and let me tell you..

#2 JOE on 05.08.14 at 5:16 pm

http://www.edmontonjournal.com/business/Canadian+dollar+amid+strong+housing+sector+data+traders+look/9585945/story.html

I am really confused now…..after reading this one..
Canadian dollar up amid stronger housing sector….

It is only economic propaganda???

#3 Daily reader on 05.08.14 at 5:17 pm

I don’t understand why this is such a thrill, but I can’t help myself! “First”.

Thank you Garth for keeping it real. Looks like most people are delusional.

#4 Bill on 05.08.14 at 5:20 pm

Starting to look for investment property. Offering 2/3 of the asking price, upsetting some realtors, but I’ve got the time and money. By July I should be able to take another 10% off. Staying ahead of the slide.

#5 Dual Citizen In Canada on 05.08.14 at 5:22 pm

Where is the equivalent to your FICO score in Canada. What criteria does the banks up here use to give you a loan? The FICO score is one of the first things the bank pulls on you when you want to borrow money. Plus, they give you access to your credit history in the US. I’ve lived here 30 years, then spent 10 in the US, back for 3 now and I’m seeing why people over extend themselves up here. They can’t help it. Watchdogs are nowhere to be found. Let’s paint all homes a color code to show how much debt is owed in each. Wow, what a heat map that would be…

#6 View on 05.08.14 at 5:27 pm

It is all so amazing… Price to income is out of reach and we live beyond our means.

#7 Spiltbongwater on 05.08.14 at 5:27 pm

I think this blog was saying “no way Van prices can stay above $800K when avg family earns $??,???.

Garth, what do you predict Van prices will revert to? 7X avg income?

#8 Calgary Owner (2nd. Round) on 05.08.14 at 5:29 pm

Hey Garth, I think I know where you stand on this but since I’m first I might as well ask: When do you think would be a good time to lock into a fixed mortgage rate? I got 2.6% last winter and I’m keeping an eye on the rates but is proving to be rather annoying to do so.

Thanks and hope your leg is just dandy.

Now. — Garth

#9 takla on 05.08.14 at 5:31 pm

The top bouncing is faultering big time in the fraser valley.Latest price declines from highs are between 20-35%,went out yesterday to look at a depressed property @ 30% below munuciple appraisal.Needs lots of work…I think I got one more rebuild left in me.Wife says im living there on my own if I buy till its up to snuff….promises,promises

#10 JOE on 05.08.14 at 5:33 pm

you can read that IMF warning on Canadian housing market or other agencies…
and now….just statement : Canadian dollar up amid stronger housing data ?!!!!
an
So why they were bragging so far of danger of housing collapse and now everything OK market strong , Canadian dollar strong!!!
So what a heck going on…..
We should start to join the buying waive and make Canadian dollar stronger and economy…..
Can anyone explain this sudden change of propaganda on the Canadian real estate market…..looks like we are doing fine buying those shacks…….
Can anyone explain that one….

#11 Josef on 05.08.14 at 5:34 pm

Wow! Early today.
First!!! Oh YEAH BABY!!! YEAH!!!
Josef is awesome!!!

#12 Billy on 05.08.14 at 5:34 pm

I like to show charts like these to my colleagues who continue to believe prices will stay at current levels or go higher, and who refuse to believe interest rates will go up.

#13 DocInWaitingRoom on 05.08.14 at 5:42 pm

Garth don’t you know its different here? It’s like Maui here just frozen. Also health care is free you know just make sure you take a ticket.
All the immigrants come to Canada, nowhere else you know.
Don’t forget education is free too as long as you go to the right school with the right teachers the kids will turn out ok – even though both pqrents work for nothing and expect teachers to teach and bring up 35 kids in a class.
Energy is clean from Niagara just make sure your money is free flowing like a bladder cath on a boomers benign prostate after 10 beers.

It’s different here as people here are really special. Homes will only go upand politicians will help us when the boomers and new sucker home owners hit the streets begging for cash like the new streetlight beggars

#14 Nomad on 05.08.14 at 5:56 pm

The Financial Post talks about April’s massive increase in homebuilding:
http://business.financialpost.com/2014/05/08/homebuilding-rebounds-quicker-than-expected-with-35-jump-in-condos-and-apartments/

Housing price index excludes condos? I see.

“The new housing price index excludes condominiums, which the government has said have been a particular cause for concern.”

#15 Josef on 05.08.14 at 6:11 pm

#11 Josef on 05.08.14 at 5:34 pm
Wow! Early today.
First!!! Oh YEAH BABY!!! YEAH!!!
Josef is awesome!!!
-———————————
Looks like Josef was DOUBLE FIRST today!!!

#16 Londoner on 05.08.14 at 6:21 pm

“…a speculative frenzy fueled by cheap money and lax lending standards”

For better or worse cheap money is going to be around for a quite a while longer. Coordinated central bank action has been trying to stoke real income growth along with inflation. Unfortunately they’ve only achieved asset price inflation so far. They would rather risk overshooting the inflation target then risk losing what little growth they have. BOC, Fed, BOE, ECB, BOJ have all used expansionary monetary policy to varying degrees… let’s see who gets it right first.

#17 Smoking Man on 05.08.14 at 6:24 pm

With plants leaving Ontario, frightened to death of that Wynne nose, sniffing for more taxes.
High power prices, and reckless spending… High CAD dollar…

Brampton employer of about 300
going back South…

What’s this mean for housing..

Prozac is getting boxed in… He either drops the over night rate, to kill the dollar, or watches the exodus of jobs.

This house horny orgy is about to erect to higher levels once the low rate pill is poped…

Now if Wynne gets booted, Prozac can relax a bit more..

#18 Smartalox on 05.08.14 at 6:27 pm

Something interesting happens when you overlay the two charts… for the first two booms and busts in the Vancouver market, the lag is about 2 years. In the last, major run-up, the lag is at 6 years(!) This would suggest that high prices are being sustained by inputs that were did not act to prolong the previous highs in the Vancouver market.

Other thoughts:
– in hindsight, I don’t recall hearing much hew and cry about what appears to be an almost 20% drop in value of detached homes in the early part of 2012.
– ‘Reversion to the mean’ means what exactly? I wish I had the data used to make the chart, to determine the actual historical means. What’s the target number?
– Do the normal rules of technical analysis apply? Because I would not have expected a breakout after a triple top (or Batman), as is depicted in the chart.

#19 Millennial-Falcon on 05.08.14 at 6:34 pm

Break out your cramp ons and oxygen tanks, Vancouver is at deprivation levels. I think this time next year we will all still be in disbelief pissing and moaning about the prices in van, just like the last five! Don’t even try to call a top! This place is f*ckn possesed in fact I think I saw satan himself chilling in a condo lobby in gastown last nite!

#20 r on 05.08.14 at 6:40 pm

$2m wow This is absolutely crazy

However don’t we expect listing to grow in spring comparing to this year brutal winter

#21 Joseph R. on 05.08.14 at 6:43 pm

#12 Billy on 05.08.14 at 5:34 pm

“I like to show charts like these to my colleagues who continue to believe prices will stay at current levels or go higher, and who refuse to believe interest rates will go up”

If they based their opinions on Janet Yellen, chairwoman of the FED and Stephen Poloz, then they would be correct. Both have the legal responsibility of keeping inflation below 2 % in their respective jurisdiction. Inflation is measured through the Consumer Price Index and asset price inflation aren’t calculated in CPI.

Another argument that can be raised that the FED will not raise the prime interest rate is that the US is facing another debt crisis; this time fuelled by student loans, which as now surged above $1 Trillion and has surpassed Credit Card And Auto-Loan Debt. Student loans are already set to rise due to the 10-year Treasury Note:

http://www.forbes.com/sites/maggiemcgrath/2014/05/07/federal-student-loan-interest-rates-set-to-rise-for-2014-2015-school-year/

Based on the recent positions of two highest raking bankers: “don’t worry, be happy!”

Sub-2% inflation is not the BoC’s mandate. — Garth

#22 Happy Renting on 05.08.14 at 6:43 pm

Maybe they meant “starter home for spoiled kids of rich people”. In that case, yeah, totally.

#23 Frustrated on 05.08.14 at 6:45 pm

Hi Garth, When the US took a down turn in house prices. Did big cities like New York take a hit ? Im sure it wasn’t the same hit that Florida or Arizona took.

#24 Aggregator on 05.08.14 at 6:48 pm

#14 Nomad “The new housing price index excludes condominiums, which the government has said have been a particular cause for concern.”

I already posted about this and linked to a report titled Developing a Residential Property Price Index (RPPI) for Canada, which is a new property price benchmark being proposed by StatsCan (as if we need another rigged index), and what's even more interesting about that report is that it says up to 30% of residential property prices in Canada may not be transacted through MLS, and to top it off — it also states that if StatsCan were to use private data (CREA) to compose their new index, they would be open to data manipulation.

The big problem is that the current New House Price Index is used for certain CPI models, so all this time they've been excluding detached, townhomes and condo resale prices and have only based prices on new SFH in metro areas.

Alas, StatsCan will need to make sure the new index is not too accurate, because the last thing the BoC and government want is a truthful and honest home price index included in the CPI, and if history is any guide to the future, the next thing to eventually happen is a complete overhaul of the current CPI to reflect Canadian's new poor standard of living — as they've always done to baffle the public and investors with more bullshit statistics. The New Index

Everything is controlled.

"When it becomes serious, you have to lie" —Jean Claude Juncker

#25 Vangrrl on 05.08.14 at 6:52 pm

Here on the east side of Van (not tony but apparently a ‘desirable’ hood), this dump is still listed for 898k about a month in. So it appears the east side is a bit more delusional at this point:
http://www.rew.ca/properties/V1055886/3896-glen-drive-vancouver

#26 Victoria Real Estate Update on 05.08.14 at 6:58 pm

Victoria’s RE board released their April 2014 stats.

* Prices are down: Victoria single family home prices in April 2014 were lower than in April 2013. SFH prices have declined in 40 out of the last 41 months in Victoria (year-over-year). From what I can gather, the vast majority of houses are selling at below asking price, which is indicative of a down market. 2508 Florence, a move-in ready house in Oak Bay (priced well below assessed value), has been on the market for some time with no buyer.

* Sales remain low: SFH sales in April 2014 were, once again, well below Victoria’s long-term average. This has been the case since 2010. Basically, SFH sales are in the tank and have been in the tank for the last 4 years.

It is always important to consider the source of the information you are using to help you make important financial decisions. People who sell houses for a living are unlikely to give you unbiased information about the local housing market because they want you to think that it’s a good time to buy so they can take home that hefty commission. It’s how they get paid.

Victoria’s housing bubble is huge. Prices remain well above the level where incomes and rents could provide price support. This was the case in many US cities in 2006. Naturally, house prices in the US (inevitably) corrected and went back to the level where incomes and rents provided price support. Right now house prices in the US are basically where they should be in relation to incomes and rents. In the same way (and for the same reason) house prices in Canada will fall back down to the level where economic fundamentals (incomes and rents) support prices as well. It’s just the way housing markets work. House prices always revert to the long-term mean.

Why did house prices in the US begin to correct in the first place? It’s simple – house prices had increased dramatically (due to lax lending standards) to the point where the average family could no longer buy the average home (think Canada). Naturally, house prices began to correct. In the US, house prices had already been falling for about 2 years before bank failures became a major problem. It wasn’t the bank failures that caused the US housing correction, it was sky-high house prices.

House prices will (naturally) correct in Canada as well. Note that by 2011, Canada’s housing market was more overvalued than the US at its peak and Canada’s housing bubble has inflated even more since 2011.

Let’s look at some of the bubbliest markets in the US in 2006. Of the bubbliest markets, it’s clear that the cities that began to correct first (Phoenix, Las Vegas, Los Angeles and San Diego) also experienced the biggest overall price drops from peak to bottom. Victoria’s price correction began in 2010, a lot earlier than most Canadian cities. Victoria will likely experience one of the biggest price corrections.

As I mentioned, house prices in the US are currently (approximately) where they should be in relation to incomes and rents.

Let’s take a look at house prices in Cape Coral, Florida:

House criteria:
* min. 3 bed, 2 bath
* min. 1800 sq. ft. of above ground primary (main) living space
* 2004 or newer
* attached double garage

In Victoria, a house like this would probably cost $700 K or more.

In Cape Coral, the combined value of these 6 houses (that fit the above criteria) is about 791 K.

$ 117 K ( 3 beds, 2 baths, 1,978 sq. ft.)
$ 129 K ( 3 beds, 2 baths, 1,955 sq. ft.)
$ 131 K ( 3 beds, 3 baths, 1,222 sq. ft.)
$ 136 K ( 3 beds, 2 baths, 1,976 sq. ft.)
$ 138 K ( 3 beds, 2 baths, 1,810 sq. ft.)
$ 140 K ( 3 beds, 2 baths, 1,969 sq. ft.)

Girls and guys, it would be financially irresponsible of you to buy a house in Victoria right now. Prices will continue to fall. Renting for now is a no-brainer. Be responsible with your money and avoid future financial hardship by keeping out of the housing market for now. It’s really the only choice you have.

Until next time – Cheers!

#27 Joseph R. on 05.08.14 at 7:00 pm

“The inflation-control target was adopted by the Bank and the Government of Canada in 1991 and has been renewed five times since then, most recently in November 2011 for the five years to the end of 2016. The target aims to keep total CPI inflation at the 2 per cent midpoint of a target range of 1 to 3 per cent over the medium term.”

Source: http://www.bankofcanada.ca/rates/indicators/key-variables/inflation-control-target/

I stand corrected then. 2% is the target!

No it is not. The target range is 1% to 3%. — Garth

#28 sciencemonkey on 05.08.14 at 7:04 pm

Starter home… Heh, what a difference a factor of ten makes.

#29 gladiator on 05.08.14 at 7:13 pm

Not to play devil’s advocate here, but the hockey stick is evident on the US graph and not really on the Canadian one. This market still got juices to go.
Post-election is when I expect the bubble to pop. Till then – rainbows, rivers of milk and Skittles-shitting unicorns.
Yeah baby!

#30 Smoking Man on 05.08.14 at 7:29 pm

Tired of waiting for Summer.

Forcast for Vegas next weekend.
Friday 100 Sunny
SAT, SUN, MON… The same…….
WooHoo..

Just booked…

#31 DaleFromCalgary on 05.08.14 at 7:34 pm

“prices almost always revert to the mean”

Setting aside that weasel word “almost”, it must be noted that mathematically speaking, nothing reverts to the mean in a dynamic system with low transparency of inputs. That is, the system overshoots downward, bumbles along the bottom, and then rises back up above the mean.

The stock and commodity markets have always relied on hiding the true data on trading, and the real estate industry is now working toward that goal with their fudged indexes. This increases volatility and allows brokers to make more money on commissions.

The other important factor is inertia. Trends go on longer than you think they will, and fundamentals don’t matter in a rigged market.

#32 Prediction anyone ? on 05.08.14 at 7:37 pm

Toronto SFH at 1.6 million by the end of 2015.
2 million by end of 2018.

#33 Daisy Mae on 05.08.14 at 7:42 pm

What is a ‘fixed variable’?

#34 OffshoreObserver on 05.08.14 at 7:46 pm

Garth,

Could you post a link to that first graph, please.

I cannot read…maybe my wrinklie eyes.

#35 omg on 05.08.14 at 7:46 pm

Reversion to The Mean

Yes GT is right. Markets like housing always revert to the mean. But you just may not be able to see it clearly since it could take a long time.

For YVR and TO this means going back to “real dollar” prices somewhere in the multiples range of 3 to 5 versus average income.

This implies real prices will drop 60% to 70%.

Won’t happen any time soon. It will be a generational thing. It could take 10 to 20 years. (Alternatively a black swan, like 12% prime rates could do it sooner, but that’s not likely – after all its a black swan.)

Can’t believe prices could ever decrease that much? Just check out southern Ontario (London, Windsor, Chatham). Prices there are not much higher than they were in the late 1980s.

Adjust to real terms (that is take out inflation of the dollar) and prices are only about 50% of what they were in the heady days of the late 1980s.

A friend of mine in Chatham recently sold a house he bought in 1990 for $120K for $145K. In real terms $145K is worth about $75K in 1990 dollars.

Don’t by this concept?

Fine then just load up of real estate at the market top so my kids can buy it from you for 1/2 price 15 years from now.

#36 Frustrated Kiwi on 05.08.14 at 7:48 pm

Vancouver does seem to put all other housing bubbles in perspective. Here we recently had a story complaining about close to a million is being advertised for “first-home buyers”:
http://www.nzherald.co.nz/residential-property/news/article.cfm?c_id=76&objectid=11249968
I guess that’s cheap relative to 2 million!

#37 MarcFromOttawa on 05.08.14 at 7:50 pm

#33 Daisy Mae

I don’t believe there’s any such thing as a fixed variable.

There are open variable mortgages or closed variable.

#38 omg on 05.08.14 at 7:52 pm

London Housing Bubble

Good summary on link below of the London Housing Bubble by Dan Blanchflower, economics professor and one time advisor to the Bank of England.

His bottom line is that BoE is a screwed – London housing is going crazy while the rest of England stews in slow growth. Can’t raise interest rates to cool London bubble as that will hurt other areas of the UK.

(Its a radio broadcast on Bloomberg)

http://media.bloomberg.com/bb/avfile/Economics/On_Economy/v_Hi7G4Y39a8.mp3

#39 Linda Mulligan on 05.08.14 at 7:52 pm

Potential 2 bedroom suite on lower level means undeveloped basement? Seriously, who wants or needs a 6 bedroom, 4.5 bath home except serious entertaining types who always have plenty of friends/family staying overnight? Plus if you are a well off ‘wrinkly’ with new hips I suppose 3 flights of stairs daily would help with walking but – if your hips/knees etc are not yet repaired I see big problems with hiking all those steps. Though I suppose the joint could have a chair lift on the stairs or even an elevator – for that price it should have both.

#40 Smoking Man on 05.08.14 at 8:08 pm

Look you miserable basement dwelling bastards. Real estate will go down in Toronto when I say it will.

No hockey stick, no correction…

Real estate is not like Forex, or stocks. Batman and Camel Toe don’t apply.

Concentrate on make more loot, not from trading time for wages, trading things for profit. Up side is limitless.

Special treat on my blog for those of you who know where it is…. Today’s mug shot is going down tomorrow.

Bloody pumped , I might buy a casino next week end..

Just got to get the old be-otch to come down a bit, then try and figure out how I can get Rob Ford on title for a small share, so I can hang a big ass sign….

Under new ownership…..I will triple sales, then sell it to a HAMster…..

#41 Bargains everywhere on 05.08.14 at 8:08 pm

#26 Victoria Real Estate Update on 05.08.14 at 6:58 pm

Not to rain on your parade, but there is a reason those houses in Cape Coral are so cheap. During the building boom, especially around 2005 and 2006, there was such a shortage of drywall in Florida they ended up having to buy inferior product from China. It emits a foul odor due to sulfur compounds in it which cause respiratory problems and actually corrode the wiring in the house. Just say “Chinese drywall” to anyone in Florida and they run from it. The Cape Coral area was one of the worst affected. If you buy one of these homes, it must be totally gutted and everything must be replaced. Most people won’t go near them, thus the low prices.

http://archive.news-press.com/article/20130428/NEWS0101/304280036/Lee-County-homes-suffering-from-Chinese-drywall-rise

#42 Freedom First on 05.08.14 at 8:18 pm

As a whole, Canadians are morbidly debt obese. Unfortunately, when a person is morbidly debt obese, as many Canadians are, and not only in mortgages and Helocs, but in many other ways too, well, and I hate to break it to the morbidly debt obese Canadians among us, but, if you are morbidly debt obese, you are also mentally and emotionally unbalanced. Much like little children who want what they want when they want it.

This is not an anti-RE blog that Garth writes for us. Garth covers all aspects of Financial Planning in every area of our lives, and in great detail with sound Financial Principles. These Financial Principles WILL lead to a Financial Freedom of always being: Balanced, Liquid, and Diversified, and keep one from a severe financial, mental, and emotional spanking.

#43 not 1st on 05.08.14 at 8:18 pm

Garth, how come no comments on the slow motion tech wreck on the Nasdaq? Its bubble 2.0 time there and I thought you would have taken notice.

#44 Mark on 05.08.14 at 8:27 pm

The housing industry obviously controls the finances, hearts, and minds of the media. All that advertising for Realtors, developers, suppliers, builders, decorators, etc., brings in money. The truth of the RE bears, bearish RE analysts, etc., actually is quite offensive to those who currently pay the bills.

Case in point, a relatively popular Canadian discussion and couponing forum recently got rid of (as in, banned) two of its most respected (on RE-topics) posters merely because they were bringing forth facts about Canada’s RE decline. The RE bull(**itters) accounts, despite breaking every forum rule in the book about libel, were left intact. Despite mountains of evidence pointing to a declining GTA RE market brought forward.

So as we saw, at least in that instance, the RE lobby can be very dangerous, and there are almost no limits to the depths of depravity they will engage in to push their point of view when clearly the numbers are starting to really fail them.

#45 LB on 05.08.14 at 8:29 pm

Unilever is laying off 280. Grand and Toy laid off 160 last week. Economy strong. Real Estate strong. Debt strong. Russia strong!

#46 retired Boomer - WI on 05.08.14 at 8:33 pm

RE RE RE doesn’t this madness ever end in Canada?

In the US the madness ended when Banks, suddenly, became “il-liquid” the music – stopped! Quite Abruptly!

Portfolios of mortgages, for sale, found no buyers. Their values plunged! Would be buyers (on borrowed bucks) found no loans available. Trouble on Wall St. ensued, then main st. then the Fed had to prop up banks, and counter parties to credit default swap’s ‘dumb-ass’ side of the not quite insurance-insured side of their bets. Would it have been better to let the house of cards go ker-plop?

More interesting, and a more thorough cleansing of idiocy, but a much nastier depression would have resulted. No one wished that, and nobody is really happy with the tepid present result. high equity values, fewer jobs, and a continuing drain on treasury. Sure, aging Boomers are here, and we will not go very quietly into the night. Is there effective national leadership in the United Snakes?
Dunno the answer. Conservatives have shown they do not know how to manage a thing, liberals not so much either.

Muddle on til the lights go out? Maybe so. We shall see…

Canada have an answer? Hee,Hee don’t think so, as you worship at the alter of the house. Good luck with that.

Enjoyed yesterday’s car column. The smart buy & drive the used til they drop, or just before the major money transplant is needed. Garth – always a joy to read the blog

#47 Smoking Man on 05.08.14 at 8:36 pm

From National Post

Kathleen Wynne takes more shots at Stephen Harper, says federal Tories hurting Ontario’s economy.
…………………………………………………

The audacity of this woman is spectacular. I’m starting to believe this clueless school teacher.

Her delivery is perfect for all those that have been programmed in our schools. It’s almost hypnotic..

Hodak and Harper are the disruptive students, and I’m the teacher, I will keep you safe…

She don’t get that if you keep taken water from the well with out replenishing it, we will all die…..

Global Market, Money, assets can freely flow to where it wants to go.

You want high paying jobs, flood the country with new business.

To do that, remove corporate tax, start burning coal for cheap power. don’t give business hand outs, make it easy for them to make a profit.

They will come……then the labour pool shrinks, and wages go up…. It’s simple.

But Wynne like many who never went prospecting , relied on, funding, hand outs for her existence she don’t know better.

And the scarcest thing of all…

She thinks she’s right…

#48 X on 05.08.14 at 8:39 pm

RE is overpriced…granted the mean has now changed….now we can raid our RRSP’s for house money, we no longer need to put 10% down, and can essentially buy with nothing down, and are enjoying some of the lowest rates we will see for a generation.

During a period of such low rates, it is too bad the gov’t didn’t increase the required minimum downpayment, especially when RE was already on steriods….when rates rise they can always decrease the minimum downpayment to boost RE again.

#49 Mark on 05.08.14 at 8:44 pm

“Canada have an answer? Hee,Hee don’t think so, as you worship at the alter of the house. Good luck with that.”

In Canada, the illiquidity problem doesn’t exist at the banks for 2 reasons:

a) Most of the mortgage portfolio, at least the lower quality subprime stuff, is CMHC-insured. The only loans that aren’t subprime CMHC-insured are generally those with extremely good metrics.

b) Canadian banks do not run meaningful duration gaps in their portfolios, and 40% of the Canadian portfolios are short-term resetting (in fact, overnight resetting) in nature. While US banks were caught with large books of illiquid mortgages.

I personally believe that BoC policy rates are not going to rise, but the risk premium demanded by lenders to lend to borrowers against a declining asset class (residential RE) is going to rise going forward. So when Garth says that interest rates are going to rise soon, he is correct. But when people attempt to generalize rising interest rates on housing loans, to a rising BoC policy rate, I believe the generalization is wrong.

I would even go one step further, and say that the very strong deflation and significant increase in the Canadian dollar that is in the pipeline due to housing prices falling will force the BoC to lower its policy rate, and engage in a form of Canadian QE. Of course this won’t help home borrowers as the value of their collateral is now in irreversible decline.

#50 killaboy on 05.08.14 at 8:44 pm

“#3 Daily reader on 05.08.14 at 5:17 pm
I don’t understand why this is such a thrill, but I can’t help myself! “First”.”

Why exactly is it a thrill for you to post “First” when your the third to post?

#51 Tony on 05.08.14 at 8:47 pm

Re: #10 JOE on 05.08.14 at 5:33 pm

That news is two months old. Here’s some up to date news.

http://www.biv.com/article/20140508/BIV0111/140509925/-1/BIV0100/vancouver-sees-the-country-8217-s-biggest-drop-in-new-home-prices

The price of new homes dipped in the twelve months to March, according to the New Housing Price index released by Statistics Canada May 8.

Year-over-year, prices were 1.1% lower than a year ago. This represents the biggest drop in the country compared with all other major cities. Ottawa-Gatineau came in second place with a decrease of 1.0%.

Victoria (down 0.9%), Edmonton (down 0.1%) and Charlottetown (down 0.4%) were the only other cities where prices dropped over the year.

Across the country, prices increased an average of 1.6% over the same period. The strongest gains by far was found in Calgary, which saw a jump of 7.5%. After Calgary, the biggest increases were seen in St. Catharines-Niagara (up 3.4%) and Saskatoon (up 2.9%).

Prices were down 0.1% compared with February. The average new home price across the country increased 0.2% over the same period, with Calgary once again posting the highest increase at 0.8%. This is the third consecutive month in which Calgary led the country in price increases.

#52 Mark on 05.08.14 at 8:53 pm

“Garth, how come no comments on the slow motion tech wreck on the Nasdaq? Its bubble 2.0 time there and I thought you would have taken notice.”

This is almost a RE play, in a way, as the owners of the RE associated with the tech sector, all the infrastructure, have, despite running solid businesses, barely seen their stocks go up. While the Facebooks, Googles’, and all the other low-barriers-to-entry and low-capex required businesses have seen their stocks shoot to the moon.

As we saw in Telus’ results today, the real money, over the long term, is in the firms that actually have made the investment. Not poor quality companies like Google that merely try and usurp all of the benefits and contribute little to nothing in return.

#53 45north on 05.08.14 at 9:02 pm

Maybe it’s worth $2.17 million

maybe. It’s over the $1 million CMHC cut-off so the buyer needs $400,000 plus $9,940 a month (RBC mortgage calculator, 20 years amortization). The buyer needs to be wealthy. Very wealthy.

Dual Citizen: Let’s paint all homes a color code to show how much debt is owed in each. Wow, what a heat map that would be

imagine such a map! Well the banks obviously have them. They could pool their data, write a GIS routine et voilà! I could do it before lunch. Personally I’d like to see the map before I bought. The bank (or CMHC) could say “you know your area doesn’t look so good so maybe we don’t want to give you a mortgage”. Not science fiction.

takla: I think I got one more rebuild left in me.Wife says I’m living there on my own ….promises,promises

pretty funny

Frustrated: When the US took a down turn in house prices. Did big cities like New York take a hit ? Im sure it wasn’t the same hit that Florida or Arizona took.

http://www.nytimes.com/interactive/2011/05/31/business/economy/case-shiller-index.html?ref=business&_r=0

New York lost 21% from the peak. Means that housing is very risky. I really think that in Canada we have just pasted the peak. Suppose by some miracle you buy the property that is the most likely to go up – I mean out of 1000 properties you buy the one most likely to go up. You might have to wait a long time before you see any increase in price.

And another thing. The collapse of the American housing market is not a secret. You can read about it finding more info. Mike Shedlock tracked the performance of one mortgage backed bundle – tranche until it became obvious it was worthless.

aggregator: Developing a Residential Property Price Index (RPPI) for Canada, which is a new property price benchmark being proposed by StatsCan

I think Garth said that there are 45,000 realtors in the GTA, 30,000 have not made a sale this year. Any solution is going to leave these guys real mad.

oh yeah, I noticed the court ruling where CMHC bought a property in default. What is going on?

Victoria Real Estate Update: In Cape Coral, the combined value of these 6 houses (that fit the above criteria) is about 791 K

Cape Coral where my brother-in-law bought!

you know I think we passed over the Quebec election too fast. I said that they would vote their houses – and they did. the result was the most solid support of prices. Look for the same in Ontario.

#54 Mark on 05.08.14 at 9:02 pm

“I am really confused now…..after reading this one..
Canadian dollar up amid stronger housing sector….”

The dollar should strengthen as housing continues to go down, due to debt deflation, and a reduction of credit.

Every time someone takes out a mortgage and buys an asset with it, they’re effectively shorting the Canadian dollar. After all, the process of buying a house on credit is to sell Canadian dollars, and buy the asset instead.

As debt is repaid or at least the expansion of debt stops, this “shorting” force disappears, and the currency, like a beach ball held underwater, shoots up.

#55 Nemesis on 05.08.14 at 9:11 pm

#ColumbieBrittaniqueDeclaredSafeForSmokingMan #CollateralDamage

Yikes!

No sooner does the PostMotorciclismo CoitalBliss fade and Reality BitchSlaps you back into the “now”.

Funny thing about $2M StarterHomes, SaltyDogz…

Unintended consequences abound…

[CBC] – 632 Coquitlam teachers getting layoff notices

http://www.cbc.ca/news/canada/british-columbia/632-coquitlam-teachers-getting-layoff-notices-1.2636861

Oh yes, what was that ‘OlCrusty said?…

Ah, now I remember… Something to do with, “Families First”.

Never mind Chalkies… After all, there’s always TESOL/TESL.

#56 Ulsterman on 05.08.14 at 9:26 pm

Looking at the US inflation-adjusted Shiller chart isn’t it amazing that prices in the US are STILL higher that the entire 1890-2003 period? Houses in the US are still expensive by historical norms. That’s after a financial meltdown, the hollowing out of the middle class, decimation of solid manufacturing jobs, crushing of unions, etc etc. What does it take to make housing fairly valued and just a place in which to live?

This doesn’t make me hopeful for the Canadian market.

#57 hohoho on 05.08.14 at 9:56 pm

> … Why exactly is it a thrill for you to post “First” when your the third to post? …

the poor chap got beat by two high frequency posting programs …

I think Garth should monetize this to pay for the bandwidth :-O

#58 Sam on 05.08.14 at 9:59 pm

Garth,

Can you please tell how come banks are able to approve mortgages for 1 mill houses at the 80K incomes ?
where are these people getting money from ?

#59 hohoho on 05.08.14 at 10:01 pm

> … this “shorting” force disappears, and the currency, like a beach ball held underwater, shoots up. …

real life examples please

#60 Mark on 05.08.14 at 10:02 pm

“Looking at the US inflation-adjusted Shiller chart isn’t it amazing that prices in the US are STILL higher that the entire 1890-2003 period? Houses in the US are still expensive by historical norms. That’s after a financial meltdown, the hollowing out of the middle class, decimation of solid manufacturing jobs, crushing of unions, etc etc. What does it take to make housing fairly valued and just a place in which to live? “

Long-term interest rates are still quite low. Revert to normal long-term rates, or even overshoot (mean reversion implies that for periods spent below the mean, there will be periods spent above the mean!), and it is likely that the Case-Shiller index will overshoot to the downside.

The tragic thing is, we have hoards of Realtors and other financial “experts” in Canada going around telling young borrowers that rates and risk premia will always remain low. The average BoC policy target rate in Canada is in the 7% range, with the average mortgage rate closer to 8-10%. The overpricing is so severe these days, and the expectations so out of line with reality for rates going forward that significant disruption is very likely to many lives.

#61 sheane wallace on 05.08.14 at 10:03 pm

Who the f.ck cares about Vancouver except the locals?
Give me a break, if I have 2.17 millions I would be living in Spain or Germany enjoying life and not having to work all my life.

we/North America have big problems as we are cheap and try to make paint from a fart.

GMO food
bad and expensive education
banks sucking the life out of everyone
horrible transportation
horrible waiting times for health care in Ca, horrible prices for health care in US.

It seems the tax farmers are not happy with their cows/couch potatoes that they would like to milk 5 times a day instead of 2.

Stop occupying my time with f.ing real estate in Canada – cardboard houses and shoe box condos with with community ownership, huge maintenance and property taxes.

I know one 70 years old who has to work part time so he can keep his house as the pension is not enough to pay property taxes.

#62 Smoking Man on 05.08.14 at 10:05 pm

Obviously I’m going senial, I can’t get Johnny Cash off the ear buds.

What are you doing to me God…

What’s next, watching America preachers on late night TV…

Standing in front of the TV screaming.

Hallelujah, praise the Lord.. Go from fits of crying, to fits of joy…

Ya I’m losing it..

#63 Inglorious Investor on 05.08.14 at 10:06 pm

#56 Ulsterman on 05.08.14 at 9:26 pm

Shiller probably uses the CPI as his inflation index. However, the method used to calculate CPI is being corrupted, and the way it is measured today is very different than how it was measured in the ’80s. By the ’80s methodology, CPI would be much higher today. Today CPI understates real inflation. Some analysts (e.g. John Williams at ShadowStats) estimate current real inflation in the US to be around 10%. Using true inflation stats would deflate the real value of housing further than the graph shows.

#64 Italians love real estate on 05.08.14 at 10:08 pm

Not many Italians in Shaughnessy so I do think prices for RE may be vulnerable.

Not a chance here in the GTA . Prices can only move higher as there are plenty of Italians willing to buy !!

#65 Victoria Real Estate Update on 05.08.14 at 10:19 pm

#41 Bargains everywhere

House prices in the US are, generally, where they should be in relation to incomes and rents. Cape Coral, Florida is only one example of a US city where similar houses are valued within the same price range (about one fifth of the value of a comparable Victoria house).

Victoria’s housing market is extremely overvalued based on incomes and rents. The 10-15% price decline so far is only the beginning of a major, multi-year price correction.

As I’ve said, house prices in the US are generally not overvalued. Let’s take a look at house values in other US markets.

House criteria:
* min. 3 bed, 2 bath
* min. 1800 sq. ft. of above ground primary (main) living space
* 2004 or newer
* attached double garage

In Victoria, a house like this would probably cost $700 K or more.

Phoenix, Arizona:

$146 K (4 beds, 3 baths, 2,168 sq. ft.)

Dallas, Texas:

$131 K (3 beds, 2.5 baths, 1,808 sq. ft.)

Tampa, Florida:

$170 K (4 beds, 2 baths, 1,816 sq. ft.)

San Antonio, Texas:

$139 K (3 beds, 2.5 baths, 2,259 sq. ft.)

Not to rain on your (excuse) parade, but I could post thousands of similar examples from many US cities. I have to laugh when I come across people like you who constantly come up with pathetic excuses in an attempt to justify Victoria’s bubbly house prices.

#66 Inglorious Investor on 05.08.14 at 10:21 pm

Maniacal asset prices always revert to the mean, usually after they overshoot to the downside.

That being said, barring a total economic collapse, there are basically two roads the economy can follow from here:

1) All the currency units in the banks’ reserve accounts begin to flow into the real economy via loans. If that happens in a big way, watch out! We will see price inflation like few have ever witnessed in their lives. This would flow through to everything, including wages and salaries. This would be supportive of high housing prices because, as wages and salaries go up, higher prices for everything will become the new normal. It’s as old as the Fed itself.

2) The economy remains weak, and despite cost-push inflation and financial repression from underfunded governments with bloated civil services and unrealistic pension obligations (do you really think Wynne’s proposed Ontario Pension Plan is for tomorrow’s pensioners or for today’s retired civil servants?) people’s wages and salaries will not increase anywhere near fast enough to keep up with the cost of living and the next recession will cause a collapse in debt-dependent asset prices. This is when housing prices in Canada could collapse. (Notice all the businesses that are failing/moving lately?)

I’ve been saying for a long time that (barring a hard recession) I think the likelier outcome is a slow-burn, whereby houses don’t appreciate much in real terms but prices remain nominally high, giving the illusion of stability. Condos are an exception because it’s too easy to create an imbalance between supply and demand) In reality, if the powers that be can’t kick inflation into high gear (as they really, really want to do ala Larry Summers) and wipe out the debts, we could see a global real estate crash what would last for a century or more before houses recovered.

#67 saskatoon on 05.08.14 at 10:23 pm

#49 Mark

QE and rates of inflation/deflation are not associated.

since bank loans create bank deposits…the only thing that keeps the bubble popping is the issuance of new debt…from banks to you–as well as the slow repayment of existent loans.

in other words, inflation = people pay back loans slowly; people take out more loans; deflation = people pay back loans quickly; people take out fewer loans.

whenever debt is repaid, money is destroyed.

#68 Inglorious Investor on 05.08.14 at 10:30 pm

What’s in your ETF?

First, let me state that I am not against ETFs. However, I’ve commented before on how there are good ETFs and bad ones. As with any product or investment you have to know what you are buying. Especially in today’s market where finding ways to fleece ignorant investors is a full-time job for some. The old rule is true: if it looks to good to be true…

http://www.zerohedge.com/news/2014-05-08/what-pe-ishares-biotech-etf-it-depends-whether-you-read-fine-print

#69 Nemesis on 05.08.14 at 10:33 pm

#TESOL/TESL. #NemesisStyle

http://youtu.be/Pj8e770Qq10

#70 T.O. Bubble Boy on 05.08.14 at 10:40 pm

$900k House of the Day for Thursday, May 8th:

Finalists
1) “Perfect for Builders” $925k tear-down bungalow that was just increased from $899k
2) $939k 3-bdrm bungalow in Etobicoke
3) $939k townhouse in The Beaches

WINNER
I’m going with #3, because it clearly is being sold for the house itself, and not the lot.

#71 Inglorious Investor on 05.08.14 at 10:46 pm

…of course if there is war, all bets are off for housing and, well, everything.

After Russia annexed Crimea I said on this blog that civil war in Ukraine could be next. Are we already there? The US would love to throw a very costly wrench into Putin’s plans by tying him up in a messy proxy war in Ukraine. To what end? To weaken the Russian Bear enough to make real, all out war feasible? Some, like Paul Craig Roberts think so. Martin Armstrong sees a severe economic downturn beginning in late 2015. What happens when over-indebted nations, starved for cash, fighting for the world’s precious resources, during a time of major geopolitical inflections, can’t get their depressed economies going?

#72 sheane wallace on 05.08.14 at 10:49 pm

#66 Inglorious Investo
………………………………………..
Of course they will inflate. It is ‘legalized’ form of stealing. If hyperinflation is to happen in case they overshoot with the inflation which is somehow likely the fun will be huge.

Significant inflation will also be fun. Specially for people with fixed income, This is not Europe where government would take care of you.

I am sure Steve would be happy, he would be able to privatize health care finally.

So enjoy the million dollar homes baby boomers.

#73 young & foolish on 05.08.14 at 10:49 pm

So, house prices are over-priced. The equity markets seem expensive as well. Where lay true value?

#74 Shawn on 05.08.14 at 11:00 pm

Useful Article on Zerohedge?

I know, I know, impossible, right?

But indeed the article Inglorious Investor gave us just above about the inaccurate P/E ratios that ishares reports is indeed useful. I was aware of this and it applies to all ishares P/E ratios. They exclude extraordinary items, negative earnings companies and round high P/Es down to 60.

What they should be doing is adding all prices and dividing by the sum of GAAP earnings in the past four quarters.

Basically all sources of P/E ratios should be treated as suspect and especially for funds, indexes and groups of companies. They are often “corrected” in some way.

And forward P/Es which in theory are good are also suspect as they the Es are usually optimistic forecasts.

#75 TurnerNation on 05.08.14 at 11:01 pm

Where is Frugal Chad? Basementitis?

#76 chris on 05.08.14 at 11:02 pm

The last time prices were at the mean was 1945 according to your chart.

#77 A Yank in BC on 05.08.14 at 11:05 pm

Something is sure going on. I live in wrinkleyville on Vancouver Island, and I’ve never seen so many for-sale signs this time of year. It’s really quite noticeable.

#78 Aggregator on 05.08.14 at 11:07 pm

Here's a long term chart (Shiller extended) for Canadian home price returns. Chart

Believe it or not, the long-term real annual rate of return is about 2.08%, making it a lousy investment in percentage terms. However, what's made real estate profitable over the last century is nothing more then easy credit and leverage, a lot of it. And what encourages and backs leverage? Government insurance and deregulating underwriting standards.

Put it this way (I noticed this last week): Right now you'd need to post more money on margin (down payment) to trade some commodity futures on an exchange then you'd need to purchase a home, and especially presales. That's how leveraged housing is.

#79 Inglorious Investor on 05.08.14 at 11:07 pm

#60 Mark on 05.08.14 at 10:02 pm

“The average BoC policy target rate in Canada is in the 7% range, with the average mortgage rate closer to 8-10%. The overpricing is so severe these days, and the expectations so out of line with reality for rates going forward that significant disruption is very likely to many lives.”

Maybe. However, I think that as long as the US can keep “persuading” the rest of the world to use Federal Reserve Notes, and the economy remains in slow-mo, rates will remain low until governments can get a handle on debts. From everything I’ve read, the US gov cannot afford higher rates right now. Since the US Treasury is the benchmark, as long as the US dollar remains the key currency, the rest of the world will not want a collapse because then the US would go nuts. With noting to lose they may just lose it. Also, the US economy is just too big to throw away. Lots of inertia left yet.

If the rest of the world can peacefully pull away from the dollar and the US military proves a paper tiger with no money, then they may gleefully pull the plug, and woe unto the Americans as hyperinflation and all out collapse (why did they buy all those bullets again?) could happen. But that could be a long way off––if ever. I’m sure most of the world (except maybe Putin who seems to be getting pretty cocky lately) would prefer a peaceful transition that could take many years yet.

Of course the big banks play into all this, but I won’t go there right now.

#80 tf on 05.08.14 at 11:08 pm

Have you seen this Vancouver condo sales pitch?
“Infinitely Privileged”
http://melissafong.wordpress.com/2014/05/06/infinitely-privileged-vancouver-condo-ads-just-got-that-much-worse/
Can’t say much more than that.

#81 Capt. Obvious on 05.08.14 at 11:15 pm

@#68: Whoa whoa whoa whoa. A biotech sector ETF isn’t part of any sane indexing strategy, so whether its PE is accurate is a do not care condition.

#82 bdy sktrn on 05.08.14 at 11:19 pm

#25 Vangrrl on 05.08.14 at 6:52 pm
Here on the east side of Van (not tony but apparently a ‘desirable’ hood), this dump is still listed for 898k about a month in.
————————————-
better part of east van – ask 1.1 , sold 1.2

took 3 days to sell.

no suite, no second floor, but really nice all round.

http://beta.realtor.ca/propertyDetails.aspx?PropertyId=14361391

#83 Who knows on 05.08.14 at 11:21 pm

#61, the thing is many of the buyers don’t care about Vancouver as they never set foot here. As been previously discussed, just a place to put your money. I’ve given up on Van real-estate and happy to rent, in this world it would make sense for us to buy as we make more than 3 x the average family income but won’t saddle the family with that kind of debt. We live on the west side of Van, owner lives in China, have an excellent property manager who fixes things as cheap as possible, but usually the same day. Was speaking to the handy man yesterday who does all the work for my property manager, one of his clients has never been to Canada but has 40 homes in the Van, Richmond area. Most are empty, doesn’t even want to rent them. Many of the homes in our neighbourhood have never been lived in, pretty much the most soul less, beautiful, place to live. If you like quiet and don’t want kids at halloween, move to the west side of Van. Garth seems to think it’s not HAM money and agree low rates have put most in over there heads but real-estate is like all systems. You take away 40 homes from a market to some guy who has more money than he knows what to do with, and who knows how many more, it changes the system. Which is why things will never change here.

#84 more jobs leave Canada on 05.08.14 at 11:31 pm

Conservatives continue to destroy the Canadian economy as jobs continue to leave Canada. The US crashed their housing bubble thus able to lower wages and be competitive. Crazy Harper created the biggest housing bubble in the world which demands high wages. Everyday more Canadian jobs flow to the US. The point will hit when Canada housing bubble falls apart. Even realtors are using words like stratosphere to describe Canadian RE prices. The bubble has gotten better than realtors even dreamed of. Good job crazy Harper.

#85 wtf! on 05.08.14 at 11:35 pm

“This is almost a RE play, in a way, as the owners of the RE associated with the tech sector, all the infrastructure, have, despite running solid businesses, barely seen their stocks go up. While the Facebooks, Googles’, and all the other low-barriers-to-entry and low-capex required businesses have seen their stocks shoot to the moon.

As we saw in Telus’ results today, the real money, over the long term, is in the firms that actually have made the investment. Not poor quality companies like Google that merely try and usurp all of the benefits and contribute little to nothing in return.”

Google spends more in 6 months on infrastructure (datacentres, servers, fibre between the datacentres) then Telus is planning to spend over the next two years across canada.

Also Telus is about the worst example, they socialized the billions of dollars needed to build the fibre optic backbones, because much of it built before the various provincial telcos were privatized and now privately reap the rewards while delivering mediocre service.

Amusing none of those dollars spent on server farms are going to canada because despite having comparable electricity costs to the popular DC locations in the US (e.g. oregon, TVA area) the internet pipes (commercial) in this country are tiny and very expensive.

#86 more jobs leave Canada on 05.08.14 at 11:35 pm

Btw you realtors here who are Starving for a sale better look for another job. Sales as you know are falling pretty hard. When you compare inflated sales to revised sales you know RE is in trouble. Keep lying realtors you are digging a big hole for yourselves.

#87 Ultraman on 05.08.14 at 11:39 pm

“Fixe” refers to the term, typically 1 to 5 years, and “variable” refers to the rate, typically based on prime rate plus or minus. So, yes you can have a fixe term at a variable rate, like 5 years at prime minus 0.9%. Or, you could have an open term with a fixed rate. Fixe term/fixe rate and open term/variable rate are also alternative options.

An open term gives you the flexibility to pay off your mtg without a penalty but usually comes with a premium on the rate. It’s a good option if you anticipate to sell your house or expect a money windfall and pay off your mtg.

#88 God Here on 05.08.14 at 11:43 pm

#62 Smoking Man on 05.08.14 at 10:05 pm
Obviously I’m going senial, I can’t get Johnny Cash off the ear buds.

What are you doing to me God…

What’s next, watching America preachers on late night TV…

Standing in front of the TV screaming.

Hallelujah, praise the Lord.. Go from fits of crying, to fits of joy…

Ya I’m losing it…

Now listen Smoky, knock it off or I’ll pay you a visit at the Flamingo next week, oh shit nope already done that one to Bugsy. Well just knock it off your pissing me off!

#89 DAN on 05.08.14 at 11:43 pm

#68 Inglorious Investor

WOW

http://www.zerohedge.com/news/2014-05-08/what-pe-ishares-biotech-etf-it-depends-whether-you-read-fine-print

#90 Tony on 05.08.14 at 11:55 pm

Re: #61 sheane wallace on 05.08.14 at 10:03 pm

Here’s what happens when you don’t get that second or third job in America. Being an American crybaby won’t pay off the mortgage.

http://america-underwater.tumblr.com/

#91 Opinated on 05.09.14 at 12:06 am

Smoking man # 47 said

….”don’t give business hand outs, make it easy for them to make a profit.

They will come……then the labour pool shrinks, and wages go up…. It’s simple.”

I wish too. Unfortunatelly, it is not that simple. Have you heard of slave-like TFW,s in Canada?

#92 Son of Ponzi on 05.09.14 at 12:06 am

Mainland Chinese can be First Time Buyers, too.
After that, they buy their 2nd and third.

#93 Andrew Woburn on 05.09.14 at 12:17 am

#54 Mark on 05.08.14 at 9:02 pm
After all, the process of buying a house on credit is to sell Canadian dollars, and buy the asset instead.
==================

I get that taking out a mortgage increases the supply of $CDN by increasing bank debt and paying it off reverses the process, but if these transactions are all within Canada,how does it affect the exchange rate on the Canadian dollar?

#94 Nomad on 05.09.14 at 12:18 am

Barclays will cut 14,000 jobs.
It’ll take something like that to impact our housing.

#Mark
Nasdaq is only a part of the SP500 and the SP500 is only 5 points from its peak. But yeah, valuations for many Nasdaq companies are high. Note that Apple, which has the fatest weighting, has a PE smaller than the one of the TSX composite. I don’t buy the Nasdaq, but stick to $ZUE, $VFH, $PFF.

#95 Tom Jones it's not unusual on 05.09.14 at 12:29 am

Dear ‘RA in Toronto’ and ‘Spock’: thank you for your responses to my question about max CPP Survivor Benefit on the passing of a spouse the other night, much appreciated. TJ

#96 Sinful Man on 05.09.14 at 12:36 am

Smoking Man “What’s next, watching America preachers on late night TV… Standing in front of the TV screaming.
Hallelujah, praise the Lord.. Go from fits of crying, to fits of joy…”
Never mind those guys on TV. Just quietly open the bible by yourself and start reading right at the beginning. ‘Be still and know that I am God.’

#97 Larry on 05.09.14 at 12:39 am

According to CBC, price just shot up 10% in Toronto in April.

http://www.cbc.ca/news/business/toronto-house-price-jumps-10-in-april-1.2633552

#98 lol on 05.09.14 at 12:41 am

@#58 “where are these people getting money from ?”

Sam, meet Ham.

#99 lol on 05.09.14 at 12:47 am

@Smoking Man

Cow stories! I want mort cow stories! Pleeeeeease

#100 P-gizzlee on 05.09.14 at 12:50 am

Since the immigrant investor program was stopped, prices down 11%?!?!

I thought foreign money had no effect on housing prices? Have you finally seen the light?

#101 P-gizzlee on 05.09.14 at 12:52 am

BTW…. about the “starter house” you have featured… it has been on the market for over 1 year. I’m pretty sure it started at more than $2, 500, 000

#102 Kool Aid on 05.09.14 at 12:58 am

The Houses that don’t sell…. ( is there such a thing in Toronto???)
http://www.thestar.com/business/real_estate/2014/05/08/the_houses_that_dont_sell.html

#103 Andrew Woburn on 05.09.14 at 1:28 am

House price heatmap: it’s still winter in the regions (UK)

This map compares house prices today with those in 2007, and shows that in many areas properties are worth 20pc less than seven years ago

http://www.telegraph.co.uk/finance/personalfinance/houseprices/10812771/House-price-heatmap-its-still-winter-in-the-regions.html

#104 Mark on 05.09.14 at 1:36 am

“Not a chance here in the GTA . Prices can only move higher as there are plenty of Italians willing to buy !!”

Sorry to break it to you, but prices have been moving lower, and continue to move lower in the GTA.

#105 tony bologny on 05.09.14 at 1:39 am

Nigeria’s central bank plans to shift more of its $43 billion of reserves into yuan from dollars
http://www.bloomberg.com/news/2014-01-28/nigeria-central-bank-to-shift-reserves-into-yuan-from-dollars.html
Zimbabewe adopts the yuan as legal tender
http://www.timeslive.co.za/africa/2014/01/30/zimbabwe-adopts-chinese-yuan-as-currency
So when do we attack these nations and why not the US dollar? is it because china produces everything and might aswell skip the debt laden dollar and just use the yuan OH OH inflation coming soon

#106 Hmmm on 05.09.14 at 2:01 am

#65 Victoria Real Estate Update

The United States and Canada are two completely different countries. Its like comparing apples to oranges. Yes the Canadian housing market is overvalued. Absolutely. But to say that when housing prices correct that you’ll be able to buy a 4 bedroom 2 bath house in Victoria for under $150000, because that’s what they cost in similar US cities, well, I think your logic is faulty. I think there is a lot to learn from the US housing crash, but I don’t think you can draw literal conclusions. Prices will continue to fall, but I wouldn’t hold my breath for the kind of bargains you are hoping for.

#107 stage1dave on 05.09.14 at 3:08 am

Wow, can’t believe I missed yesterday’s column & a chance to ruminate about my almost favourite pastime & sometimes occupation…cars n trucks repair and/or restoration.

(the real estate thingie only seems to grab my attention a couple times a week, when I’m catching up on this blog or reading the newest hilarity from the local real estate junta)

I’m confronted daily with several cases of vehicle idiocy, but the one thing that continually stands out is what a waste of time, money, & effort the entire industry & it’s associated appendages seems to have turned into.

How did an invention meant to transport people from one geographical locale to another wind up dictating the daily flow of half of our lives? And a large part of our finances?

I can’t drive 10 blocks in any major North American city without encountering a new car dealership…and I haven’t been able to tell the difference between a Honda, Ford, Kia, GM, or whatever bloody else is cruising down the road; for two decades…and I’m a car guy!

The only thing that seems to rival the sameness in design is sameness in pricing…or financing…or leasing…or God help us, parts & service pricing!

Garth is spot on with the “new car” rant; it’s the worst investment you’ll ever make. Don’t confuse “recent” or “new” with “reliability”…stuff wears out & must be repaired/replaced. (I’ve bracketed that last statement because many of the vehicles built since the mid 90’s contain lots of parts that can’t be repaired, only replaced-mostly electrical-if you can find them)

I hate making payments much more than I hate fixing cars, so I choose the latter option. My current ride is a 1994 Pontiac Sunbird & cost me $250 4 years ago, & is still pulling 30-34 mpg on the highway. (I actually have 2, one auto, one stick) When something breaks, I hit the wrecking yard. If I’m looking for body parts, we have to look harder…for one the correct colour…

(this also functions like a date for the wife & I, as we don’t get out much)

It’s sometimes struck my customers as somewhat incongruous that I show up to work on their 100K show cars driving what they consider to be a POS, but I just tell them the Lambo is in the shop…end of discussion. In the rare event one of them comments on how I should repair the rust, or that noisy lifter (cripes, it might be a main bearing for all I know) I tell them nobody will pay me to repair my own vehicle…including THEM…& that’s usually the end of THAT discussion.

Frankly, I’ve got better things to spend my money on! The wife & I also have a couple half tons, & a couple older musclecars we’ve restored as time money & patience allowed…we don’t borrow money to fix them, restore them, or drive them. They’re just TOYS, & they’re treated as such. We may love a couple of ’em, but we also know their place.

Another one of my pet peeves about automobiles is how we lavish money on their acquisition & maintenance, & yet complain about the funds spent on the infrastructure to keep them moving…like roads, bridges, streetlights, snow removal, insurance, traffic cops, ambulances, hospitals, etc.

Not to mention the infobabes at the local news station, who get on the TV to inform mental delinquents every morning that there are other people using that same road to travel to work, & explain all the delays enroute; & then stick around for the evening recital of the numerous accidents & the resulting body count. All the time while looking pretty damned good, I must admit…

(just out of curiousity, does anyone else know that the advertising campaigns designed to sell “new” cars to newly affluent citizens in the post WW2 era was modeled DIRECTLY on the technique used to “sell” womens’ fashion?)

Moving right along, has anyone seen a car wash go broke lately? This has got to be the biggest waste of H20 since some bloody Scotsman invented the golf course…I keep my inner wheelwells & lips brushed out, power polish the paint once a year & let mother nature look after the rest. The glass gets windexed once a month & they get vacuumed out at that time…cigarette boxes & Starbucks cups get garbaged at the end of every day.

As you can tell, I don’t own vehicles to impress the neighbours…I probably don’t even impress the homeless people around here. This building is full of people with car payments that rival their monthly rent.

Most of the 150 or so cars I’ve owned over the years I’ve restored myself, & sold…I’ve enjoyed all of them for a time. They’re kind of like kids; the older they get the more you just wish they’d go somewhere else…hahaha.

It seems the new vehicle has just become a modern appendage to a visibly successful life with not too many people giving it a second thought. Most of the vehicles I see in wrecking yards shouldn’t even be there…but if the trans flakes out, “it’s not worth putting another 3K into that 10 year old car”…but they’ll sign up for another 5 years of payments & watch 20% of that evaporate as they drive off the lot.

Well, that was fun…I feel much better having trashed most of the industry responsible for about half my present income. However, like every other thoughtful person, I’ve wondered for years where all this is leading & have concluded that it’s pretty much nowhere…like a lot of other large manufacturing industries (& the resulting support structure) it’s existing for it’s own short term benefit while the general population has to deal with the long-term effects & ramifications.

(well, I didn’t trash the resto & custom end of things, which is where I make a chunk of my living. I will say, however, unless you’ve literally got money to burn; an incredible emotional attachment to the car, OR it’s a 1971 HemiCuda, 68 Shelby GT-500, 1970 W-30 442 4 spd convertible WITH paperwork & matching numbers, or similiar; it’s hardly worth doing a “nut & bolt” resto. At $100/hr or better, plus parts, it’s not hard to spend 200K +)

Might make things a bit more interesting if they built new vehicles only once every 5 years, for instance…then a good chunk of us would have something else to worry about.

Like why a society that could put a man on the moon STILL can’t design a public transportation system that works?

#108 Londoner on 05.09.14 at 3:10 am

BOC will not raise rates purely to tackle asset price inflation. Canada’s growth rate (real income and inflation) was pretty good compared to it’s peers following the GFC. Rates increased accordingly. Now Canadian growth has a significant risk of going the wrong way. If this proves to be correct then the only direction rates will go is down. Too early to tell right now. Conversely, both the US and UK have seen some growth, albeit subdued. However they are hesitant to raise rates in fear of stemming growth and so will use accommodative monetary policy until they feel the economy can grow without stimulus.

Canada’s only options to curb house price inflation is to play with the rules…. small changes to CMHC, tighter lending rules, etc. They don’t want house prices to come down, they want house prices to remain where they are until real income growth catches up.

#109 Pooh on 05.09.14 at 3:33 am

#29 gladiator

The hockey stick is definitely there for Canada, it’s just the different time range that is giving the illusion it’s softer. Back up the Canada timeline to 1890 like the US graph, and you have a nice looking Canadian Sher-Wood. Yikes.

Often it seems like both the bears and bulls overanalyze, overlooking the obvious. That bigger picture graph offers a sobering dose of reality.

Selling my tulips tomorrow.

#110 Flawed - the Nosty Vlad on 05.09.14 at 3:56 am

Looks like that balanced portfolio is going to have to get re-balanced:

http://www.usatoday.com/story/money/business/2014/05/07/fast-food-worker-strike/8803193/

And the same McGreasies are going to have to put the letters GMO on everyone of their processed wears. Thumbs down for YUM brands and McPukes?

Apparently only the Govt is allowed to point guns?

http://www.usatoday.com/story/news/nation/2014/05/08/cliven-bundy-ranch/8879837/

Forget the bird flu, POLIO is on the move.

http://www.usatoday.com/story/news/world/2014/05/05/polio-emergency-who/8716927/

#111 Dr. Common Sense on 05.09.14 at 4:09 am

“Looks like Josef was DOUBLE FIRST today!!!”

Have you considered Electroconvulsive Shock therapy? You and a number of others that post here may find it very beneficial, Smoking Man you should go first and bring all of your fan with you. No mistake, no s, I did not mean it to be plural only more accurrate.

#112 Londoner on 05.09.14 at 4:37 am

If and when the BOC increases interest rates it will be accompanied by real income growth. When that happens Toronto house prices will continue a steady upward trend as they are supported by increased wages. Other locations in Canada in which income growth does not increase proportionately may see a negative impact of higher interest rates on house prices.

Toronto house prices will not decline as a result of an increase in the Bank Rate.

Toronto will only have a real estate price decline if it first experiences runaway price increases or if the economy contracts and the city faces significant unemployment. Toronto real estate has not experienced runaway price inflation… yet.

#113 Buy? Curious? on 05.09.14 at 4:52 am

You know what a great idea would be? If you can go back to all the homes you’ve featured in the past blog entries and do a “Where are they now?” or “What are they worth now?” I still remember that house off of Queen St West, that was near a sex club that closed down a few months after you featured it. I wonder what that house is worth now. Or what about the “crack shacks” in Vancouver? A lick of paint and a women’s touch (or a stylish man who read ELLE magazines instead of Sports Illustrated and became a pretty tough fighter as a result of attempted bullying) can certainly improve the property and fetch a pretty sheckle in today’s market.

Garth, no one can accuse you of not providing a decent plan B, giving losers hope while saving for a downpayment, and making us laugh along the way, but if given a choice between a house as an investment and a residence verses renting and investing in a diversified portfolio, my money is on buying the house. I’m all in!

One other quick point/question; why do publish all the “first” comments but if I make a scarcastic post that is relevant to the topic, me get no publish? Why ees dat, Meester Garth?

https://www.youtube.com/watch?v=7m4-lSllrXk

#114 Mark on 05.09.14 at 5:12 am

“We will see price inflation like few have ever witnessed in their lives. This would flow through to everything, including wages and salaries. This would be supportive of high housing prices because, as wages and salaries go up, higher prices for everything will become the new normal. It’s as old as the Fed itself.”

I disagree. If the prices of consumer items inflate, income is not likely to inflate at the same time at anywhere near the same rate. Additionally, credit usually ends up contracting during a significant period of inflation in real terms, which leads to real price losses on assets such as housing which are primarily purchased with credit.

In an extreme case, hyperinflation, the value of real estate effectively plunges to almost nothing because there’s no credit available for it, and nobody has money of any value to pay for it. In Weimar Germany, for instance, an entire apartment block could have been procured for a mere ounce of gold.

I’ve been saying for a long time that (barring a hard recession) I think the likelier outcome is a slow-burn, whereby houses don’t appreciate much in real terms but prices remain nominally high, giving the illusion of stability.

The recent price falls really call this scenario into question, as did the collapse in the United States. Both Canada and the US housing markets are characterized by large amounts of government-sponsored subprime credit being available (CMHC in Canada).

Most likely, what will happen in Canada is a continuation of the decreases of the past year, in conjunction with a cyclical rotation into another asset class. Perhaps the stock market, particularly the very narrowly held gold sector. Which will only be of assistance to a very small proportion of the Canadian investing population, as most mutual funds and pension funds do not invest in gold equities.

#115 maxx on 05.09.14 at 6:44 am

#4 Bill on 05.08.14 at 5:20 pm

“Starting to look for investment property. Offering 2/3 of the asking price, upsetting some realtors…”

I love challenging realtards when they’re flogging a real piece of garbage and doing the “price support mumbo jumbo”. Especially whilst trying to justify a multiple of the municipal evaluation. A common reaction is one bordering on indignant shock and fury. So cute! After all, they’ve got a patent on values, don’t they?

A great way to do this is to do a drive-by at various times, talk to neighbours, ask lots of questions and don’t forget a check on crime stats in the area. You wouldn’t believe what you sometimes find out.

We have passed on many properties due to radon risk (a bigger problem than many realize, but ask the flogger and watch the shoulders hunch), multiple break-ins and obnoxious neighbours who don’t control their barking dogs.

So go ahead. Challenge a realtard for sport. And fun.

#116 Schadenfreude on 05.09.14 at 6:58 am

“starter home” Wow!! Whatever happened to working your way up to your “dream home”. We are so screwed.

#117 Mark on 05.09.14 at 7:02 am

“I get that taking out a mortgage increases the supply of $CDN by increasing bank debt and paying it off reverses the process, but if these transactions are all within Canada,how does it affect the exchange rate on the Canadian dollar?”

You sort of answered your own question. More Canadian dollars in existence = a weaker Canadian currency on the international markets. And vice versa.

As Canadian dollars are destroyed (or merely not created) through the process of the RE decline and a destruction of consumer consumption, the CAD$ is likely to strengthen. Due to a weakening of both domestic and foreign consumption by Canadians. Leaving more domestic goods available for export and severely attenuating imports.

Intuitively this makes sense. As homeowners see declining equity, they feel poorer, they spend less, fewer jaunts to hot spots in the winter, etc. Not as much is spent on mostly imported home furnishings. All this contributes to a strengthening of the CAD$.

#118 Mark on 05.09.14 at 7:05 am

“Canada’s only options to curb house price inflation is to play with the rules…. small changes to CMHC, tighter lending rules, etc. They don’t want house prices to come down, they want house prices to remain where they are until real income growth catches up.”

Prices are coming down as there’s simply overcapacity in the industry. As the US experience shows, there’s exceedingly little that politicians and central bankers can do to prop housing prices up once they’ve hit the apex and have started falling. In Canada, a few high-end enclaves in Toronto excepted, prices have been falling for the past year.

#119 Mark on 05.09.14 at 7:07 am

” But to say that when housing prices correct that you’ll be able to buy a 4 bedroom 2 bath house in Victoria for under $150000, because that’s what they cost in similar US cities, well, I think your logic is faulty”

I expect to be able to buy them even cheaper because Canada’s RE market, compared to the US, is built on an even shakier foundation of subprime credit, adjustable rate mortgages, and poor lending standards.

It may seem shocking, but Canada is not immune to the same laws of economics that eventually asserted themselves in the USA and many other places around the world.

#120 Financial Freedom at 40 on 05.09.14 at 7:34 am

Agent called parent with super exciting news – “You’re up 5% ALREADY !!! House identical to one you bought this winter just sold – with multiple offers!”

Dug deeper, it had been sitting for almost 4 mos and FINALLY found someone in rutting season to take it (at list). Reminded my parent factoring in closing costs – just RE commissions and HST on commissions – their purchase (which was by an off-season relisted motivated seller) is still out of the money if they mirrored the neighbour’s sale.

But it’s all in how you spin it…

My phone call would sound like “It’s the only investment you’ve made waiting to break even after 6 mos… even those GICs and CSBs I give you a hard time about are kicking ass comparatively”

Adjusting time horizon and crossing more fingers…

#121 };-) aka Devil's Advocate on 05.09.14 at 7:46 am

There will be a rain dance Friday night, weather permitting

#122 Steven on 05.09.14 at 7:48 am

When are non home owners going to run away from Canada? Surely they must all understand that there is no place for them here.

#123 Ralph Cramdown on 05.09.14 at 7:50 am

#5 Dual Citizen In Canada — “Let’s paint all homes a color code to show how much debt is owed in each. Wow, what a heat map that would be”

Actual data:
http://houseofdebt.org/2014/05/08/chicago-and-the-causes-of-the-great-recession.html

Given the pattern, you can probably get the household income data by postal code that you need, and figure out by educated guess roughly what it would look like in your neck of the woods.

#124 };-) aka Devil's Advocate on 05.09.14 at 7:54 am

Life isn’t about waiting for the storm to pass.It’s ab out learning to dance in the rain.

#125 Mark on 05.09.14 at 7:54 am

“When that happens Toronto house prices will continue a steady upward trend as they are supported by increased wages.”

Why do you automatically assume that people will dump the entirety of their incremental income into more housing? As Garth constantly reminds us, the cupboards are pretty bare as far as retirement savings are concerned, and the population isn’t getting any younger!

And even if they did, is this really enough to reverse the recent declines in the GTA? Remember that it took over a decade of wage gains and a decline in mortgage rates to push RE back up enough to meet 1989 pricing.

#126 pbrasseur on 05.09.14 at 7:56 am

@Mark

Good and interesting posts in general.

But I disagree with your call on Google, it is truly a wonderful company.

#127 Just the facts Ma'am on 05.09.14 at 8:50 am

#4 Bill on 05.08.14 at 5:20 pm
Starting to look for investment property. Offering 2/3 of the asking price, upsetting some realtors, but I’ve got the time and money. By July I should be able to take another 10% off. Staying ahead of the slide.
———————————————-

U R an ediot!

#128 maxx on 05.09.14 at 8:53 am

#44 Mark on 05.08.14 at 8:27 pm

“The housing industry obviously controls the finances, hearts, and minds of the media. All that advertising for Realtors, developers, suppliers, builders, decorators, etc., brings in money……

……and there are almost no limits to the depths of depravity they will engage in to push their point of view when clearly the numbers are starting to really fail them.”

And numbers, REAL numbers don’t lie.
Even the house-horny know this.

Pay attention, folks and beware your stat sources.

#129 T.O. Bubble Boy on 05.09.14 at 9:02 am

As Rob Ford would say…. BOOMING:
http://www.cbc.ca/news/business/canada-loses-29-000-jobs-in-april-1.2637227

#130 Londoner on 05.09.14 at 9:08 am

#124 Mark

Why do you automatically assume that people will dump the entirety of their incremental income into more housing?
_____________________________________________

That’s not what I said. I said that, during an inflationary cycle with real income growth, house price increases would be supported by income growth. I.e. they would be spending more proportional to wage growth as opposed to spending an incremental percentage of their income.

#131 :):(Ying Yang on 05.09.14 at 9:09 am

#30 Smoking Man on 05.08.14 at 7:29 pm
Tired of waiting for Summer.
Forcast for Vegas next weekend.
Friday 100 Sunny
SAT, SUN, MON… The same…….
WooHoo..
Just booked…

……………………………………………………………………….

Smoking Man just came back from business in Los Angeles and decided to make a short holiday out of it. Rented corvette convertible at LAX and Drove to Vegas, weather was absolutely fantastic high 20’s and low 30’s for four days. If you get a chance go rent a E350 Mercedes convertible they are nice too. Have fun next weekend, nice weather coming to Vegas I hear for long weekend. Stayed at Aria again, will have to try another place soon starting to get to familiar. I need a change often!

#132 Peter on 05.09.14 at 9:13 am

1. Revert to the mean

Not going to happen. Clearly, CAN RE price has been rising steadily unlike our neighbours south of the border. The rate of increase is much smaller (ie no hockey stick in canada).

2. #58 Sam on 05.08.14 at 9:59 pm

It’s simple. Because people make enough money and put enough downpayment. Believe it or not, people can afford homes!

3. #64 Italians love real estate on 05.08.14 at 10:08 pm

Not just Italians. GTA is rich in general. Have you seen the new builds on Markham and 16th? Price shot up 60K on average for the new builds since last year.

I can go on and on to disprove all of the facts that this blog is laying out.

#133 Just the facts Ma'am on 05.09.14 at 9:27 am

#47 Smoking Man on 05.08.14 at 8:36 pm
———————————————–
Wynne is trying to take down GTA house prices single handed, get rid of jobs, raise taxes and then people won’t be able to afford a house and prices go down.
Easy, peasy,
.
Not left, not right but forward. I think she stole this line from Tory.

#134 TnT on 05.09.14 at 9:28 am

The houses that don’t sell

http://www.thestar.com/business/real_estate/2014/05/08/the_houses_that_dont_sell.html

#135 Daisy Mae on 05.09.14 at 9:36 am

#33 Daisy Mae: “What is a ‘fixed variable’?”

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

Okay, I have it figured out. The word ‘fixed’ had me confused. As in, how can it be ‘fixed’ and still ‘variable’? It’s variable until one chooses to lock in.

I think I’ll go now….

#136 Just the facts Ma'am on 05.09.14 at 9:38 am

#65 Victoria Real Estate Update on 05.08.14 at 10:19 pm
Victoria’s housing market is extremely overvalued based on incomes and rents. The 10-15% price decline so far is only the beginning of a major, multi-year price correction.
—————————————————-

The way I see it is keep enjoying the subsidized rent or MOVE!!!!
But stop your moaning.

#137 Old Man on 05.09.14 at 9:40 am

#120 Devil’s Advocate – I see you will be dancing to the goddess Coyolxauhqui on Friday night, and be careful of Ehecatl that he doesn’t blow you away.

#138 Bargains everywhere on 05.09.14 at 9:45 am

#65 Victoria Real Estate Update on 05.08.14 at 10:19 pm

Not to rain on your (excuse) parade, but I could post thousands of similar examples from many US cities. I have to laugh when I come across people like you who constantly come up with pathetic excuses in an attempt to justify Victoria’s bubbly house prices.

‘People like you’?? Uh, you don’t even know me…

That was a bit rough. I don’t know a thing about Victoria house prices and never said I did. Only ever been there once in my life and that was about 40 years ago. With everything you’ve posted about them, I totally agree with you.

My point was to provide some information about Cape Coral specifically because I had some first-hand knowledge about it after looking for some real estate in that area last year. I thought it would be useful to explain why it perhaps wasn’t a good comparison.

#139 Toronto_CA on 05.09.14 at 9:53 am

Way to go Canada, with your 29,000 job losses in April. No job growth since last August. Good thing we can all rejoice that houses are selling so much since our economy is in the shitter.

#140 Randis on 05.09.14 at 9:56 am

#4 Bill:

Great job that’s the way to go my friend.

I have a similar experience with a friend … She placed an offer of 900k for a 930k house, seller rejected. No better offer came forth the seller called her back and wanted her to buy it at 900k … I told her to lower it to 870k and seller got pissed and rejected once again … months passed by seller wants her to buy at 870k, and I told her to lower it to 830 now …

Anyways my point is, sellers and their realtards are greedy and retarded and deserve a high 5 at the face for twice with a metal chair by hulk on adrenaline rush … And my friend too, for wanting to buy that expensive place to begin with but owell I can only do so much for her

#141 The Original Dave on 05.09.14 at 9:56 am

here’s an experiment for all of you living in Toronto if you want to know how weird Italians are.

Stand close to a home that has a for sale sign. In minutes you will see a car slowly pull up. Inside will be an older couple. Ears perked up, saliva coming from the mouth. Like a rabid, starved dog.

if you get them to utter the words, you”ll get a sense of how passionate they are about ‘rell eshtate’. Willing to fight you over their opinion.

they then pass this belief onto their offspring…..who are clearly dumb enough not to investigate further (assuming every trend remains the same permanently). Their offspring will typically approach houses that are for sale with arrogance and nose in the air …because they’re smarter than everyone of course

#142 straight six on 05.09.14 at 10:06 am

I bought a dog-eared version of this house stuffed full of student housekeeping units back in the halcyon days of upper Kits for 90K, an area realtors later coined Lower Shaughnessy.. Something about pumping the market.

as to no way average house prices can stay above $1 million while the average family earns $83,130..

That was true when things made sense, before Vancouver entered the Twilight Zone back around 1986.
Maybe the ‘average’ family is no longer the average family. I think they’re probably aliens from Ontario.
Check the back of the necks for unusual marks.. a dead giveaway, as Vancouverites always had nice smooth necks.

Then there was the old CBC TV show “To Tell the Truth.” They always got to the bottom of things.
If the panel was stumped by the mystery guest(s) it would end with the host saying, and now..
Will the ‘real’ average family! please stand up.

and they did.

#143 Sheane Wallace on 05.09.14 at 10:07 am

https://ca.finance.yahoo.com/news/newsalert-economy-loses-28-900-jobs-unemployment-rate-123159630.html

Economy loses 28,900 jobs
The report also showed that 30,900 full-time jobs were lost in April

Ca dollar dives

#144 Nomad on 05.09.14 at 10:15 am

Higher up I was saying that only job losses would impact housing in Toronto (even from the perspective of a renter).

Well, here’s 29k job losses in April:
http://business.financialpost.com/2014/05/09/statistics-canada-reports-canada-lost-28900-jobs-in-april/

#145 The Original Dave on 05.09.14 at 10:16 am

“I get that taking out a mortgage increases the supply of $CDN by increasing bank debt and paying it off reverses the process, but if these transactions are all within Canada,how does it affect the exchange rate on the Canadian dollar?”

You sort of answered your own question. More Canadian dollars in existence = a weaker Canadian currency on the international markets. And vice versa.

As Canadian dollars are destroyed (or merely not created) through the process of the RE decline and a destruction of consumer consumption, the CAD$ is likely to strengthen. Due to a weakening of both domestic and foreign consumption by Canadians. Leaving more domestic goods available for export and severely attenuating imports.

Intuitively this makes sense. As homeowners see declining equity, they feel poorer, they spend less, fewer jaunts to hot spots in the winter, etc. Not as much is spent on mostly imported home furnishings. All this contributes to a strengthening of the CAD$.

———————

i agree with a lot of what you’re saying, however, the currency exchange on the other end is also a big factor. The U.S and Canada are polar opposites. As the U.S recovers, that strengthens their currency via contracting credit consumption. In Canada, debt levels are still expanding. The contracting of personal debt is still a long ways away. I believe that’s when you start see a stronger currency.

#146 Daisy Mae on 05.09.14 at 10:17 am

#86 Ultraman: “Fixed” refers to the term, typically 1 to 5 years, and “variable” refers to the rate, typically based on prime rate plus or minus.

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

Got it! Thanks!

#147 chet sanders on 05.09.14 at 10:23 am

I see they really like white paint.

#148 Dupcheck on 05.09.14 at 10:25 am

Never mind Toronto and Vancouver, I wonder how people all around Canada with and average family gross income of 100K with at least little 2 kids can afford a 600K home and 2 good cars? Are they all growing weed in their basements? What gives?

#149 Mark on 05.09.14 at 10:26 am

“As the U.S recovers,…”

There’s no U.S. “recovery”, especially into a rising long-term rate, no-QE environment. Once you’re disabused of that notion, you’ll understand perfectly.

CAD$ has only gone down recently because some big hedge funds have placed outsized bets against it. Look at the CoT reports for corroboration. But those bets peaked about a month ago and we’re seeing the early phases of the unwind.

#150 Nomad on 05.09.14 at 10:28 am

HomeCapital (canadian residential lender) stock (TSE:HCG) is getting slapped around even after good earnings. Job losses maybe.
Lots of shorts on it.

#151 Doug in London on 05.09.14 at 10:39 am

@sheane wallace, post #61:
This 70 year old person you commented on, is his or her house in a pricey area like the GTA? If so, I think you can see where my comment is going. They could sell the house while prices are still out of touch with reality and live somewhere cheaper.

#152 Sheane Wallace on 05.09.14 at 10:42 am

#143 The Original Dave
Wrong,

More loans means more money flowing into the economy hence inflation (you see it everywhere).
Paying down the debt in ideal case would be deflationary, however you need functioning and growing economy for that.

Distortions in the economy result of cheap credit and monetary interventions/expansion are not contributing to a stronger economy, on the contrary they lead to capital miss-allocation.

As a result we are building stuff that is not needed and we are becoming less and less competitive.
Central Bank interventions lead to distortion of markets.

It is very possible that:
1. We would need to run deficits in addition to the zero interest rates policies just to be able to service the debt
2. Faced with the danger of deflation and default on debt (hence bank failures) we would need to keep increasing monetary supply
3. Once the velocity of money picks up… we won’t be able to increase interest rates unless some very serious inflations shows up and it will show up.

The economy is not healthy, it is like drug addict who needs to get more and more simply to get going.

In a healthy economy the interest rates don’t stay at zero for extended period of time, on the contrary, money paid as interest would flow into the economy and would get spent for real stuff that is desired by people, true market discovery.

Creating demand while supply deteriorates is inflationary.

Becoming wealthy by taking on more debt is an illusion, smoke and mirrors.

#153 frank le skank on 05.09.14 at 10:48 am

#105 Hmmm on 05.09.14 at 2:01 am
I think there is a lot to learn from the US housing crash, but I don’t think you can draw literal conclusions. Prices will continue to fall, but I wouldn’t hold my breath for the kind of bargains you are hoping for.
=================================

I tend to agree with you. As a renter in GTA who is looking to eventually buy, I enjoy speculating on how low the price of a house can go. I’ve crunched the numbers for multiple scenarios (10, 20, 30, 40% decrease) and would love to see 40%, but it seems too good to be true, especially in GTA. Its like buying a lottery ticket….its fun to dream about.

#154 Rainclouds on 05.09.14 at 11:05 am

#100 PGIZZLY

You are partially correct, the Van Prop Garth showed has in fact been on the Mkt for 2.7 yrs ……Once asked 2.99M. Classic behind the market pricing.

http://vancouverpricedrop.wordpress.com/2014/05/05/weekly-drop-metro-vancouver-detached-may-5-2014/

#155 shawn on 05.09.14 at 11:06 am

Money Talk

There is a notion that a higher money supply always leads to a lower value for the dollar.

This may be based on the mistaken notion that the value of a dollar is:

value of dollar = total quantity of dollar money divided by value of total wealth.

In this equation if value of wealth is constant, higher dollar money supply quantity means a lower value of a dollar.

But is not true, no such equation exists.

Wealth exists somewhat independently of currency. That’s why we could adopt the U.S. dollar tomorrow and ban the Canadian and wealth would be little affected.

The total money supply is FAR lower than total wealth.

Money supply is increased to facilitate trade and commerce.

Many people worry far to much about the money supply.

Again, just accumulate your own wealth and you will be okay.

#156 G DAWG on 05.09.14 at 11:07 am

Nice charts G..but things are different on this end of the curve than when Greenspan invented the ZIRP gravy train for governments around the world to jump aboard.

Yellen pointed out that 7 trillion dollar deficits will be the norm out to 2025 and beyond. The debt accumulated under the ZIRP is unprecedented…..and can’t be paid back now….never mind if rates were allowed to normalize. The government can never raise rates unless they become suicidal. Thats what the sudden issuance of 50 year bonds is all about…they know they’re never going to raise rates. The new paradigm will be an era of 100% TAXATION TO BOLSTER THE STATUS QUO.

http://www.cnsnews.com/news/article/terence-p-jeffrey/fed-chair-deficits-will-rise-unsustainable-levels

And btw….you attacked anyone who suggested that HAM even existed…. I remember being branded a racist for the mere suggestion that you might look at the facts.

“In fact, since the Immigrant Investor program was punted by the feds, traditional in-demand hoods have seen an 11% price reduction.”

So why the about face and no apology?

#157 Smoking Man on 05.09.14 at 11:15 am

Ying Yang.

I could stay anywhere I want, free fully comped, but the Flamingo rocks…

Cheapest beer buckets by the pool… 5bs for 20 bucks.

But nowhere in Vegas do you get such a large selection of hot white trash girls that love to get hammered in the pool.

Aria, or Cosmo… Boaring rich, old ugly Zoids..

Plus, I only by or rent Fords…. Only auto company that didn’t take a bail out.

Getting a ragtop Mustang…..

#158 pinstripe on 05.09.14 at 11:43 am

The demand for a single lot is growing in Edmonton

http://www.edmontonjournal.com/news/edmonton/Land+rush+hits+Edmonton+hopefuls+camp+overnight/9820878/story.html

#159 WhiteKat on 05.09.14 at 11:55 am

The best retirement planning advice ever:

If you had purchased $1,000.00 of Nortel stock one year ago, it would now be worth $49.00.

With Enron, you would have had $16.50 left of the original $1,000.00.

With WorldCom, you would have had less than $5.00 left.

If you had purchased $1,000 of Delta Air Lines stock, you would have $49.00 left.

But, if you had purchased $1,000.00 worth of wine one year ago, drunk all the wine, then turned in the bottles for the recycling REFUND, you would have had $214.00.

Based on the above, the best current investment advice is to drink heavily and recycle.

#160 Nemesis on 05.09.14 at 11:55 am

#TheMustBeSeens #ABriefWordFromOurSponsors

…offered with further comment…

[TheStar] – Conservative government outsources a day of military honour: Tim Harper – National Day of Honour for Afghan veterans and families who lost loved ones comes courtesy largely of corporate Canada.

“OTTAWA—This national day of honour is brought to you by Air Canada and VIA Rail…

…The highlight for families arriving in Ottawa will be a private breakfast with Prime Minister Stephen Harper and other VIPs, with corporate donations of $10,000 or more guaranteeing your company prime signage and related advertising for the event…

…According to Harper’s chief spokesperson, the government was answering a corporate call.

Jason MacDonald said there was a “tremendous appetite” from corporate Canada to participate in this day…

…One can’t help but be left with the impression that next week is all about marketing.

In background material released by Harper’s office this week, there is a link to more information on the day.

It is labelled “Related Product.”…

http://www.thestar.com/news/canada/2014/04/29/conservative_government_outsources_a_day_of_military_honour_tim_harper.html

#’LastPost’

[CBC] – Silver Cross mother still stung by ‘disrespect’ on eve of Day of Honour

…”Pte. Andrew Miller of Sudbury, Ont. was killed at age 21 by an improvised explosive device outside Kandahar on June 21, 2010. His family was subsequently sent a bill for $2,300 after the costs of his funeral went “over-budget.”…

http://www.cbc.ca/news/politics/silver-cross-mother-still-stung-by-disrespect-on-eve-of-day-of-honour-1.2636944

#161 Bottoms_Up on 05.09.14 at 12:00 pm

#144 Daisy Mae on 05.09.14 at 10:17 am
——————————————-
This may be more clear for others.

With a mortgage, there is a term (the period of time until your next mortgage renewal–when you have to choose/negotiate your next term and interest rate), and there is an interest rate (as well as an amortization period).

The term is typically fixed (many people opt for 5 years), but some do take open mortgages if there’s a chance they can pay off the entire balance more quickly (for example, if you know you’re getting inheritance money in the near future).

The interest rate can be fixed or variable; fixed does not fluctuate over the length of the term, but variable moves according to the Bank of Canada’s overnight lending rate (the ‘prime’ rate).

And according to our Great Host, fixed rate offerings move according to prices (yields) in the bond market.

#162 Bottoms_Up on 05.09.14 at 12:04 pm

#158 WhiteKat on 05.09.14 at 11:55 am
—————————————–
Based on your calculations, a bottle of wine costs $1.

The return on $1000 worth of wine (at $10 per bottle) is $20.

#163 Toronto_CA on 05.09.14 at 12:05 pm

“#147 Dupcheck on 05.09.14 at 10:25 am Never mind Toronto and Vancouver, I wonder how people all around Canada with and average family gross income of 100K with at least little 2 kids can afford a 600K home and 2 good cars? Are they all growing weed in their basements? What gives?”

You realize that Canadians have never been more indebted than they are now right? That’s “what gives”. Debt.

#164 Bottoms_Up on 05.09.14 at 12:13 pm

#152 frank le skank on 05.09.14 at 10:48 am
———————————————–
Immigration to Canada is around 1% of our population yearly, and the majority settle in the GTA. As Garth has cited previously, 20% will buy a home (20% per year over 5 years equals 100% of any given year).

So if immigration is at 360,000 per year, and the GTA receives half, that’s 180,000 people *involved* in a purchase over 5 years. Let’s say average family size is 5, so 36,000 total sales over 5 years equates to over 7000 per year. Not drastic, but there will likely always be an underlying population growth helping to buffer prices in the GTA.

#165 Old Man on 05.09.14 at 12:13 pm

This is not a National Day of Honour, but rather a National Day of Shame. This war was sponsored by USA based upon a hidden agenda of three items which was never to capture Bin Laden. This cost Canada 158 lives, and approximately $12 billion and nothing was accomplished; just name them. This war was a financial and political disaster.

#166 Bottoms_Up on 05.09.14 at 12:17 pm

#65 Victoria Real Estate Update on 05.08.14 at 10:19 pm
——————————————————
You can also cherry-pick data from many, many Canadian cities to show prices are affordable: Windsor, Sarnia, Chatham, Hamilton, Belleville, Kingston etc. etc.

It’s the major markets that may have overstepped a little. I didn’t see you posting links to 600 sqft boxes in New York that sell for an average of $900,000? There are many, many, expensive real estate markets in the US, Washington and San Francisco are two that come to mind.

#167 saskatoon on 05.09.14 at 12:18 pm

Like most politicians, Wynne is a total maniac:

From today’s paper:

Campaigning at Transformix Engineering, a local robotics manufacturer that received $178,000 in 2011 from the province’s Eastern Ontario Development Fund to help create 20 full-time positions, Wynne stressed government has a role to play in helping business.

“That’s the kind of strategic investment that I believe is necessary and must continue if we are going to allow businesses like Transformix to expand,” she said Friday.

“It’s a wonderful thing that we have, as a province, been able to foster and create that many . . . full-time jobs. So I’m thrilled about that.”

Things to note:

1. Government “allows” business to expand.

2. Government has a “role to play” in helping CERTAIN businesses.

3. It’s easy to create jobs with other people’s money.

4. Ontario employment declined by 2,900 jobs in the first quarter of 2014.

5. As of September 30, 2013 the Ontario government’s total debt stood at $288.10 billion.

6. The interest on the debt was $10.3 billion for 2012-2013 budget at an effective interest rate of 4%.

7. It represented 8.4% of the total budgetary expenses and is the fastest-rising cost for the Ontario government.

8. The Debt-to-GDP ratio in 2013 was 37.4%, the highest in Ontario’s history.

#168 Gregor Samsa on 05.09.14 at 12:19 pm

Canada’s economy seems to be defying gravity. Job growth is anemic, daily essentials like food just get more and more expensive, most industry seems to just be limping along.

And in the face of this, house prices only continue to rise. Surely something has to give at some point, but when will that be? 1 year, 5 years, 10 years?

You can see from the chart that we are approaching 10 years of bubble in Canada, and about 10 years of people saying there is a bubble in Canada.

#169 Oceanside on 05.09.14 at 12:36 pm

Yesterday in our popular seaside towns on Vancouver Island there were 9 sales single family homes, all were under $330,000. Anything over $500,000 with very few exceptions just languishes on the market, a lot of retired people moving here from other parts of Canada and they want small, one level homes…Lot of people from the lower mainland, Victoria and Alberta.

#170 straight six on 05.09.14 at 12:41 pm

Blame the feds! Blame 40 yr mortgages! Blame low interest rates! Blame xenophobia!
Blame the habs for losing last night..

that average family earning 83K..
They’re now renting in the basement of the global family who bought the property..
but not to despair, they can lease the image.

Delusion rules! Pride rocks!

#171 saskatoon on 05.09.14 at 12:51 pm

hey dogs,

looking for an answer:

can canadian banks BUY/OWN canadian treasury bills?

any help on this would be appreciated.

#172 straight six on 05.09.14 at 12:53 pm

re WhiteKat #158.. You nailed it.

that’s what I’ve been doing.. drinking heavily and recycling!
at least I still have my shirt, well.. actually I’m leasing it.

#173 RichHill - RichVale girl on 05.09.14 at 1:15 pm

#103 Mark on 05.09.14 at 1:36 am

“… prices have been moving lower, and continue to move lower in the GTA.”

You keep saying prices are going down in the GTA. Where exactly? Prices for SFH are definitely UP-UP-UP in Richmond Hill / Vaughan.

#174 fixie guy on 05.09.14 at 1:27 pm

If it hasn’t already been mentioned, the top graph is nominal price and the bottom real. Nominal hides, for example, that Vancouver lost almost 30% of its inflation-adjusted value after the mid Nineties.
Those two graphs form an unrealistically optimistic perspective of Vancouver price stability. It will crater hard. The US probably still has 20% to drop.

#175 WhiteKat on 05.09.14 at 1:40 pm

@Bottoms_up #161,

Darn, I knew one of you clever math types, would catch that! If the realtors can’t fool you, I don’t stand a chance.

I still think it’s a better investment though – at least you get to drink $1000 worth of wine.

#176 Nemesis on 05.09.14 at 1:49 pm

#GardensOfStone

http://youtu.be/sSVnTmj0-VU

#177 frank le skank on 05.09.14 at 1:50 pm

#163 Bottoms_Up on 05.09.14 at 12:13 pm
Not drastic, but there will likely always be an underlying population growth helping to buffer prices in the GTA.
====================================

I wouldn’t discount a large decrease in Toronto Real Estate prices because they are significantly higher than most metros, unemployment is increasing and the average income in Toronto is more or less the same as any other city in Canada. As far as immigration goes, the higher volumes could be a double edged sword for real estate if employment keeps going up. I do find it hard to believe that there will be any decrease in prices, simply because I’m 34 and have never experienced it. When you look at the wages, employment, ownership rates and prices it seems pretty obvious that things are out of whack. Could be wishful thinking on my part so I will mitigate as much as possible.

#178 DAN on 05.09.14 at 2:10 pm

#171 RichHill – RichVale girl

Keep an eye on MLS, track a few of the homes in Richmond Hill and Vaughan. You’d be surprised how many of them aren’t selling, when they do, it takes a few months.

I’ve seen quite a few listings drop their prices over the last couple of months.

Anyone else notice that the ‘Listed Since’ feature on MLS doesn’t work? lol

#179 learningfromyou on 05.09.14 at 2:22 pm

Hello Garth
This comment is mainly related to your yesterday’s post.
7 years ago I bought a used car in order to save money; I put efforts, money and time keeping it in shape during all these years, finally I got sick and tired of losing some of time fixing it while sometimes I wanted to get out with my family during the weekends.
A little baby changed my formula because I want to get out with them and make sure I do not get stuck in my way with the baby with us, for this reason price, reliability and A/C were my priorities y my analysis.
Before yesterday I passed 2 weeks checking all options, testing cars and listening to every sale pitch, I tried to keep my emotions away from my head.
I got sick and tired of people lying on Kijiji, the owner where businesses selling car in their own name and the previous owner where (mostly) women of more than 70 years old or a father that just died and they were in rush to sell the car (motivation). I lost trust in people while searching for a car from the owner.
I did not have time to read that post the day before, I was able to do it yesterday in the middle of the day, at that point I had the decision to leave my work and buy a brand new car from a cheap brand, the smallest one I was able to get to satisfy my needs, the budget at that point was 18k.
After reading your post I searched a bit more and I finished buying a used car 3 years from a good brand, 1.8 l engine to save gas with the expectation to keep it for many years.
Your post saved me 6000 dollars and made me the possibility to meet an accountant that did not know who the interest rate works, he told me to forget about the interest rate I pay for the car because the interest paid will be less after each payment, he did not know why, I explained it to him.

Garth, leasing a vehicle costs me more long term, buying a new one is suicidal. Maybe I’m wrong.

I avoided some mistake made while buying the previous car, now is 3 years old, low kms,

I did not use the RRSP or TFSA to buy it.

#180 Bottoms_Up on 05.09.14 at 2:30 pm

#164 Old Man on 05.09.14 at 12:13 pm
—————————————-
Here’s what was accomplished:

With Canada’s help, access to health care has improved, hundreds of kilometres of roads have been built or repaired, irrigation systems have been developed, dozens of schools have been restored, teachers have been trained, and more and more Afghan children now attend school.

http://www.clerk.gc.ca/eng/feature.asp?pageId=381

#181 Victoria Real Estate Update on 05.09.14 at 2:31 pm

#105 Hmmm

“Yes the Canadian housing market is overvalued. Absolutely. But to say that when housing prices correct that you’ll be able to buy a 4 bedroom 2 bath house in Victoria for under $150000, because that’s what they cost in similar US cities, well, I think your logic is faulty.”

I didn’t make that conclusion, you did. That’s your faulty logic.

#182 Victoria Real Estate Update on 05.09.14 at 2:36 pm

# 137 Bargains everywhere

“My point was to provide some information about Cape Coral specifically because I had some first-hand knowledge about it after looking for some real estate in that area last year. I thought it would be useful to explain why it perhaps wasn’t a good comparison.”

The more information, the better. However, if what you claim is true, not every house would be affected. In the big picture, houses in Cape Coral are available for a fraction of the cost of a similar house in Victoria or any other major Canadian market.

#183 :):(Ying Yang on 05.09.14 at 2:40 pm

#156 Smoking Man on 05.09.14 at 11:15 am
Ying Yang.
I could stay anywhere I want, free fully comped, but the Flamingo rocks…
Cheapest beer buckets by the pool… 5bs for 20 bucks.
But nowhere in Vegas do you get such a large selection of hot white trash girls that love to get hammered in the pool.
Aria, or Cosmo… Boaring rich, old ugly Zoids..
Plus, I only by or rent Fords…. Only auto company that didn’t take a bail out.
Getting a ragtop Mustang…..
……………………………………………………………………….

Bahahaaaaaaa…….You R right about boring rich at Aria but its mostly younger Kardasian wannabees. Really dislike those carpetbag chicks that want a good time on your dime. Wanted to rent a Ferrari but none would rent from LAX with drop at Vegas, so I took the Corvette. Yes Mustangs are great did rent a hardtop Boss last year in Florida, holy crap was it fast, faster than the Corvette. I may have to make another business trip out to the west soon, Flamingo hey! White trash with an rich Asian dude…….hmmmmm…………

#184 Victoria Real Estate Update on 05.09.14 at 2:47 pm

#135 just the facts Ma’am

“The way I see it is keep enjoying the subsidized rent or MOVE!!!!”

I’ve stated nothing about my personal situation on this blog for over a year. Please keep your (unsubstantiated) conclusions about me to yourself.

“But stop your moaning.”

Stating facts isn’t moaning. It isn’t mandatory to read any of the (once a week) comments I post on Garth’s blog.

#185 Hey Steve! on 05.09.14 at 2:48 pm

Howz da Ecocomic Acting Plan working fur ya?

#186 Shawn on 05.09.14 at 3:08 pm

Can banks own Canadian treasury bills?

Yes they can and do and Canadain treasury bonds as well.

#187 Sheane Wallace on 05.09.14 at 3:19 pm

#152 frank le skank on 05.09.14 at 10:48 am
Dream? for 40 % decrease hence 600 k shack in Toronto?

Thank you very much. I can have the same shack in Houston or San Antonio for 120k.

600 k for Toronto is cuckoo price. In reality it should be 350-400 max.

You will live to work as a debt slave all your live my friend, not work to live.

Sigh. This is how brainwashed we are.

#188 Stumpy on 05.09.14 at 3:28 pm

Richvale Girl, you are indeed correct. In fact Richmond Hill has the highest average detached home price in the entire GTA at $989k.

Lots of basements to rent for those that got priced out.

#189 Sheane Wallace on 05.09.14 at 3:31 pm

all your life, damn it.

#190 sciencemonkey on 05.09.14 at 3:42 pm

@171
You mean upa, upa, upa! Or 向上, 向上, 向上!

Speaking about Ontario’s problems, and how Caesar wants to privatize healthcare. If the Canadian healthcare system becomes the ‘Murican system, I have zero reason to stay in this country.

#191 Al on 05.09.14 at 4:26 pm

In the Toronto Star today; couple has been unable to sell their home for a couple of months now and have already bought firm elsewhere! Agents talk of “buyer fatigue”. You don’t say ! And its supposed to be peak season for RE !

#192 Old Man on 05.09.14 at 4:35 pm

#179 Bottoms_Up – that is the official story, but this will never square with reality. ” In a time of universal deceit, telling the truth is a revolutionary act. ”

– George Orwell

#193 Sheane Wallace on 05.09.14 at 4:42 pm

#187 Stumpy

Living in basement in Canada speaks volume about one’s intelligence.
It is actually a mental diagnose.
Considering that a bedroom in above ground apartment will cost you less. (3 bedroom apartment goes for 1.3 k a month).
Another mental diagnose is living in condo shoe box with glass walls, bedroom 8 x 9 ft. and huge maintenance.
Looking at Toronto one realizes it is actually a big mental institution. Where the personnel is also crazy.

#194 Old Man on 05.09.14 at 4:53 pm

#182 Ying Yang – I can see you guys will never get any real action in Vegas, so suggest you check out Hooters Hotel and Casino. The last time I was there had a great time with the gals, both day and night. *wink*

#195 Brown on 05.09.14 at 5:03 pm

Re 187 Stumpy

The reason there are so many basements to rent is because the new owners need the money to pay the mortgage. Also a lot of people taking on foreign students to help ends meet,

#196 shawn on 05.09.14 at 5:08 pm

Why Stay in Canada?

Science Monkey says

I have zero reason to stay in this country.

****************************************
One good reason is that our Canadian citizenship only guarantees us to be allowed to live here. Anywhere else on the planet is only by permission of the host country.

In 1949 United Nations said people need the human right to move freely within their own country.

At what point will humans have the right to move to any place on earth? Why are immigration barriers (to law abiding people able to support themselves) not considered an affront to basic human rights?

#197 };-) aka Devil's Advocate on 05.09.14 at 5:42 pm

Looks to me like we are headed into that “irrational exuberance” zone once again. Yes we will overshoot that which we should and yes we will experience an economic pull back as we should in consequence but that pull back will not be so commensurate as the overshoot that catapults us forward.

SHIFT happens, always has, always will. Still, despite the to and fro, we keep climbing higher and higher.

#198 jack on 05.09.14 at 5:45 pm

That mean was 50years ago. Might happen in 3-4 generations time. So who cares.

#199 doctor who on 05.09.14 at 6:13 pm

Garth, you’re a pussy !!

#200 Daisy Mae on 05.09.14 at 8:02 pm

#160 Bottoms_Up: #144 Daisy Mae This may be more clear for others….”

***************
Want to be condescending?

Go for it.

#201 jack on 05.09.14 at 8:43 pm

#198 doctor who on 05.09.14 at 6:13 pm

That was uncalled for. He is maybe wrong or unrealistic.

#202 Doug in London on 05.09.14 at 11:25 pm

@Peter, post #131:
Wow, after reading your post I was shot at mach 3 into the time tunnel and back to 1988-89. In the spring of 1988 I relived the experience of hearing for the first time INXS singing: “The devil inside, the devil inside, every single one of us the devil inside”, and Cher singing “Sooner or later we all sleep alone” in 1988, then seeing the hydro Quebec power grid collapse and the Exxon Valdez oil spill, and talk of cold nuclear fusion in 1989 as well as Steve Earl singing “Goin’ out to Knoxville with the weekly load, you can smell the whiskey brewing down Copperhead Road”, and many, many other fond memories of 1988-89. Why this time period? Because I heard and read all the same arguments back then about why house prices in the GTA would go up and up forever and ever. I’m still disoriented after flying out of the time tunnel and back into the present. Tell me, what happened to GTA house prices in the early 1990s?