‘On solid ground’

Troubles in Toronto, here.    toronto.jpg


Once again, self-dealing industry obfuscates the housing market facts

My contention is that within a few months, maybe a handful of weeks, Canadians will be caring far more about the value of their homes than they will about antics in the House of Commons, immigration legislation, boycotting the Olympics or the revenue-sucking GST cut.

Today families in this country have more than 80% of their entire net worth in one asset, their homes. This is even more undiversified than the Americans, where a real estate collapse has swept through the middle class like a fatal contagion, and brought the world’s greatest economy into recession. And do you hear about this in Parliament? I didn’t think so.

Meanwhile our compliant and institutional media, combined with self-dealing industry spokesguys are papering over the symptoms of a disease we’d best all talk about treating. A good example is this week’s assertion by Royal LePage, given prominence in unblinking publications such as the Globe and Mail, that the Canadian housing market is strong and vibrant, as witnessed by continual price increases.

“Canada’s housing market remains on solid footing. With the notable exception of a handful of small western cities, the country has returned to an environment characterized by moderate price increases,” says Phil Soper, LePage CEO, in a single-voice media article.

Sadly, this is not the case. Let me give you some reasons.

Let’s take the country’s most expensive real estate market, Vancouver, where the average house price has been sitting north of $700,00 now for more than a year. That means the average Vancouver family cannot afford the average home there. It also means that to buy a piece of property takes, on average, more than 70% of the entire income of a family – which is ludicrous and unsustainable.

This is, needless to say, the highest home price in history, suggesting we are at the top of a cycle. After all, US home values collapsed because of asset inflation (and not subprime mortgages), and the inability of new buyers to get in, even with a lowering of the financial bar.

But here’s the rub. LePage tells people we are into a “more agreeable” era for homebuying, where we are really in red needle territory.

Fact: Sales of resale properties in Greater Vancouver tumbled by 6.4%, year-over-year, in February, and were down 9% from the same month two years earlier.

Fact: Vancouver real estate sales crashed 16% in March from the same month in 2007.

Fact: Homeowners are rushing to get their properties on the market while there is still time. Listings in Vancouver last month increased by 4%, to 5,674 properties, while inventories of unsold homes in the Fraser Valley hit a 10-year high, with active listings up close to 30%.

Fact: In Calgary, listings have been soaring for the same reason – the writing is on the wall and current home values are unsustainable after a decade of excessive gains. The city has become a buyer’s market.

Fact: The average home price in Edmonton has actually started to fall, with single family homes off 5% and condos down 7% from a year ago.

Fact: In Metro Toronto, resales tumbled by 11% in the latest reporting period. Realtors blamed snow.

Fact: Across Canada, house sales have been collapsing at an annualized rate of 70% since 2008 began.

Today Canadians have more invested in real estate that anything else. RRSP contributions have not increased. Family incomes have stagnated. Most Canadians do not have company pensions. Energy costs have increased dramatically. Utility bills, insurance charges and property taxes are all higher, driving up the carrying costs of residential real estate, which itself is more expensive by 70% than it was after Nine Eleven. Worse, we have hundreds of thousands of recent buyers with giant mortgages, virtually no equity, and the distinct possibility of soon having home loans worth more than their homes.

Is this a recipe for financial disaster? Well, it was in the United States, and the blowback from the real estate excess would have come sooner, and less painfully, if they had not relaxed mortgage lending practices, to keep the party going.

But in Canada, we’re smarter, right? That’s why we have prudently allowed 40-year mortgages with lower monthly payments and ballooning debt. It’s why we routinely sell young couples houses with virtually no money down. It’s why our cautious banks approve loans based on postal codes, not appraisals. It’s the reason we let Royal LePage’s CEO got unchallenged when he repeats the industry mantra: “Buy.”

And it’s why this is all unsaid, on Parliament Hill.


#1 Gerard Stafleu on 04.04.08 at 10:44 am

Hi Garth, here is something else about these 40-year mortgages. Since they will “never” be payed off, the banks are now in effect the owners of the houses while the inhabitants are renting it, the rent being the mortgage payments. And as banks are often happy as long as you pay only the interest, this “never” is not as hyperbolic as it sounds, and the mortgage payments are a lot more like rent than like down-payments for future ownership.

But here’s the thing. It used to be that landlords put part of the rent money aside for maintenance. Do you think the banks are doing that (and remember that the banks don’t really hold the mortgage, they have sold it down various rivers as CODs and what have you). Will the people who live in the house have an incentive to maintain it, given they don’t really own it? And even if they want to, will they have the money, given that their payments are probably pretty well maxed out?

I guess the only good news is that this will, in a few years, put an end to these gray-haired crooks with a wolfish smile who try to get old people to do away with the last of their savings: nobody will have any equity left to chip away, and the difference between a house and a pile of wood chips will get smaller by the year.

#2 Miss N on 04.04.08 at 10:54 am

Dear Mr. Turner, I know everyone is saying this to you but thank you so much for bringing light to this situation. We have a large family and have been looking for a house for a few years. Our RE agent was bragging about all the rich people who are buying million dollar plus properties with cash – without blinking an eye and these people are not going to be worried about a downside or high interest rates. Guess which city – Victoria!!!! of course. Everyone in the whole world wants to live here – people from Calgary are/were the new rock stars. The million plus homes are just sitting sitting sitting.

When we were in Toronto and my husband was on Bay Street we knew plenty of “rich” people with million plus properties – and big honking mortgages to boot. Our banker in Toronto says that after 30 years of banking she has never seen baby boomers so close to retirement taking out huge mortgages and buying big properties or second properties. Of course the banks are lending.

Anyway, I am ranting but I appreciate your comments.

#3 Paulb on 04.04.08 at 11:19 am

Let’s not forget total inventory in Greater Vancouver is up 20% over last year.

#4 EM on 04.04.08 at 12:20 pm

I’m not an expert in Canadian law, but my question is: Could someone like Phil Soper be sued for his irresponsible and clearly biased position about the market?

As a public figure, his comments affect life-changing decisions of many people. People like Phil are free to deceive the public on purpose and not paying the consequences.

This sounds to me as outrageous as a doctor encouraging pregnant patients to drink and smoke and getting away with it.

#5 Keith in Calgary on 04.04.08 at 3:43 pm

In Calgary, housing sales have fallen dramatically in each of the last 3 months (between 25-40% each month).

In March they were down 35% (single family homes) and 40% (condos).

We now also have 12,000 listings……..versus 3,500 year. People are running for the exit from the RE market…….the only direction is down…..and I wouldn’t buy here unless things fell 50%.

#6 Another Albertan on 04.04.08 at 4:41 pm


I also expect a bunch of newer trucks, SUVs, German sports cars and pricey trinkets to hit the markets as well. The leading indictor came in early January when somewhere between $70M to $100M of 1 to 2 year old industrial vehicles and heavy-duty trucks and haulers could be found in various storage depots around the province (data extracted manually from the Auto Trader website). That signified attempts at asset liquidation from conventional oil and gas service industries.

My accounting and consulting colleagues already report brisk business in the insolvency and restructuring practices with waiting lists forming.

One interesting piece of commentary came after one client’s business was re-structured and the accountant indicated that downsizing the house and vehicle was required to be the final fix for the cash flow problems. The client was extremely hesitant to make any changes to his personal situation – “If I can’t live in the big house and drive the nice car, everyone will know that I’m a fraud.”

All the trappings that make you look like a king on the way up are wrapped around your neck like a noose on the way down.

#7 SMWhite on 04.04.08 at 5:57 pm

EM,its the consumer’s responsibility for their own due diligence and people should get their information from multiple sources. Find one study that says cholesterol is bad, I’ll find one that says its good…

Another Albertan, thats a great line “All the trappings that make you look like a king on the way up are wrapped around your neck like a noose on the way down”, mind if I borrow it?

You bring up a very interesting point, car dealerships have been having a party bringing in repos and ex-leases from the USA. In fact I called a local dealership recently that was advertising year old Chevy Trail Blazers for 18K to 25K, basically 40% – 50% off the sticker price. I called the dealership and they were only to happy(or too stupid) to tell me that they were coming in from the USA and then sent to Oshawa for the speedometer-cluster change.

The Bank of Canada (Mark Carney) recently lowered rates as far as I’m concerned to help the hurting auto industry in Ontario as well as help those people that have had gotten mortgages when rates hit the bottom in 2003 .

The dealerships bring these vehicles into the Canada which in turn is hurting the auto industry, yet they have the audacity to complain about Canadians going south of the border to save themselves 20% on a vehicle.


Credit is drying up and the best time to have credit/money, is when nobody else does…

I’m 34 and have been watching the party south of the border for the past five years, I will not get pressured in to buying at this point because as Gerard said, I would really only be renting from the bank… and I like eating things other then peanut butter and kraft dinner.

Mr. Turner keeps using those “icky” fact things to state his claim, whats up with that Garth?

Think we should have a real estate “excuse” pool on this site, bet that sales will be down this spring because its “too rainy” and in the summer, “too sunny”!

#8 Kevin on 04.04.08 at 6:42 pm

Great article, Garth. You are doing a public service, drawing attention to the misleading story by Phil Soper. In the US, the National Association of Realtors (NAR) made the same self-dealing statements as Phil while the housing market there declined. When I read that article, I was astonished at how one-sided it is. Keep up the great work!

#9 Newguy Vancouver on 04.04.08 at 6:49 pm

Many feel that the inevitable Vancouver house price decline will be gradual. Here’s why I disagree: The nature of speculative bubbles is that people are paying irrationally inflated prices on the expectation of future gains. Once people get the sense that the market has leveled off, the speculative nature bursts, and you no longer have the speculators buying up multiple listings and flipping. Once those guys decide to get out, the whole thing goes down in flames quite quickly.
For a case in point, see the NASDAQ crash.

#10 vultur on 04.04.08 at 8:37 pm

Garth, you are an extremist. I agree with the spirit of your comments, but not with the degree. Canada IS different because our lenders are more conservative and the subprime mortgage industry here is a fraction the size of what it was in America. Mortgages in Canada for the most part remain on the bank’s balance sheets and are not securitized. High-ratio mortgages are insured so, assuming that CHMC remains solvent, widespread defaults are unlikely. This has necessitated better underwriting standards than you’d see in instances where the mortgages get sold. While there are clearly pockets of speculative excess (Vancouver is really just an offshore safe haven now, no longer a place of owner-occupied residences) for the most part the country’s market are stable. The Toronto condo market looks to be fueled by offshore buying syndicates which can’t be good for stable pricing in the short/medium term. Longer term the positive migration to the GTA will absorb any excess supply.

Again, I agree with you- I think that we are vulnerable to a correction, but probably no more than 10% from the highs.

You are wrong in some key observations. The subprime industry (lending to ‘B’ customers, as it is called here) is not the issue, but rather the growing lax standards of the major lenders and their ‘A’ products. For example, home appraisals being replaced by postal code approvals. For example, giving loans to self-employed and others who have no tangible proof of income. For example, the 40-year amortization being used to determine borrowing ratios. For example, zero-down loans.

Your assertion that mortgages loans are insured is meaningless, since this just insures the lenders, not the borrowers. This is still a confidence game, and when consumers come to see the assets they are buying are over-valued and unsustainable, then demand will dry, listings will overwhelm sales and prices will drop. You do not need ‘widespread defaults’ for a market to collapse. In fact, the US does not have ‘widespread defaults,’ since this is still a small percentage of the market, and yet virtually the entire national real estate scene has been affected. Your comments are clearly informed, but you are looking at the car’s safe and durable tires, when the vehicle is utterly out of gas. — Garth

#11 Jeff Riverdale on 04.04.08 at 8:58 pm

Just to add to Newguy Vancouver’s comments. I think the reason these bubbles pop in a disorderly manner is because of the operating cash flows. To own a property once you take into account mortgage interest, insurance, property taxes, opportunity cost of down payment (if you have one) etc. every month you lose money compared to renting. The only reason why people own investment realestate is because the capital gains on the house. But once the gains on the house stops, no one wants to hold onto a money losing venture, then it becomes a rush for the exits at once as people want to cash out.

#12 JC on 04.04.08 at 11:01 pm


It might bolster your case – already a strong one — if you could do a case study on a market’s claims…say: Vancouver.
The arguments most often heard there are a) rising incomes; b) Asian investment; c) rising inmigration, foreign and Canadian; and d) The Olympics; as to why RE prices in Van will continue upwards.
Can you cite data detailing actual Vancouver population, income, and foreign investment rates that outstrip the rate of inflation and trends elsewhere in the country?

#13 Newguy Vancouver on 04.04.08 at 11:18 pm

Garth, I wanted to add that I really enjoyed your book, and recommend it to anyone thinking of making a home purchase, especially in BC.

It seems that Vancouver is starting to crash fairly quickly. According to the data from Vancouver real estate agent Paul Boenisch, who meticulously records daily sales statistics from MLXchange, listings in Vancouver are rapidly spiking.

At the close of April 1, 2008, listings in the REBGV, stood at 12853. As of the close of April 4, listings have skyrocketed to 13408. That’s a 4.3% bump in 3 days!

The listings are posted at: http://www.nvcondos.realpagemaker.com/

Things are starting to unfold just as the book has predicted. I’m sure the mainstream media will try hard to avoid reporting these type of figures, but its getting harder for them to put a positive spin on it!

#14 Drachen on 04.05.08 at 10:24 am


“The arguments most often heard there are a) rising incomes; b) Asian investment; c) rising inmigration, foreign and Canadian; and d) The Olympics; as to why RE prices in Van will continue upwards.”

I’ve never seen him respond to a comment posted on his blog yet, I can have a stab at it if you like.

a) Rising incomes in BC are only due to the construction and real estate sectors. If you factor those two out our income is sitting very close to inflation. Also, incomes rise 10% or so for each 50% rise in prices.

b) I have heard no evidence of Asian investment. Around the turnover of HK there was a big spike in Asian investment but after things settled down there they mostly went home.

c) Immigration is actually very low right now and it hasn’t been anywhere near the highs of the ’90s since the boom started.

d) EXPO 86 didn’t prop up prices in the ’80s. The Olympics didn’t prop up prices in any other Olympic city (and I hear they’ve been holding them for a few years now!). This is just garbage thrown out by realtors and snapped up by a greedy populace.

#15 Statistical on 04.05.08 at 12:08 pm

Dear Garth,

Thank you for offering some clear thinking facts to counter the Globe and Mail article in question:


The main obfuscation you elude to, of course, is the use of year-over-year (YOY) price comparisons to comment on the present state of the real estate market. It is probably true, for instance, that the average price of a detached bungalow in Canada is indeed 8.3% more today than it was a year ago. What we are not told by this statistic, however, is how did the price get there and where is it going now. It is quite likely that since April 2007 there were several months of steady price increases – until December, say – followed by just a few months of flat or decreasing prices. This scenario leads to the rosy sounding YOY increases trumpeted in the article. But YOY values alone say nothing about where prices are going.

Perhaps you can comment further on this somewhere on your blog. It would be a great public service. By the time the first YOY decreases show up and are reported in the press, prices will have been falling for very many months.

#16 Nappo on 04.05.08 at 1:47 pm


Garth is not an extremist. He is just informed.
Canada is not on Mars, is still on Planet Earth. Right now, there is a credit crunch happening on Planet Earth.
And as such, there will be more than 10%. It will be more like 25-30%.

#17 vultur on 04.05.08 at 4:19 pm


real estate is a local phenomenon. There is abundant mortgage debt available for residential loans in Canada. Nothing suggests a widespread drop in prices. I don’t know where prices are heading and neither does Garth. One can only speculate. I agree that there’s a lot of excessive buying in the many part of the Toronto condo market but overall the pace of growth in Toronto has been pretty moderate and the net positive migration is a strong underpinning of prices at a certain point.

There is no credit crunch for the bulk of canadian home buyers with decent credit. It’s the 2% who don’t finance their homes conventionally that are shut out of the market. They never should have been there in the first place.

I hope you are not a real estate investor. — Garth

#18 vultur on 04.05.08 at 6:38 pm

Actually I am Garth, and I have more unleverged property that you could even dream of accumulating. Bought most of it in bad times, some of it in good times and all of it has appreciated much faster than the initial debt that I used to acquire it.

Your self-serving scare tactics are at best humorous and at most misleading to your few followers. Lesson to the crowd from a veteran- well located property appreciates faster than any other kind.

I see a big reversal in the GTA condo market as a result of enormous speculative demand. That cord should unravel soon but overall the investment market in the GTA in pretty stable.

You sound like someone I hope I never meet. Or buy something from. — Garth

#19 Newguy Vancouver on 04.05.08 at 7:02 pm

Hey Garth, just to add to my last post. As of 3:50 p.m. PT today (April 5 2008) there were 260 new listings in the Fraser Valley and 0 sales. I wish I were making this up. Plus, this is already in addition to an approx 45% increase in listings since the start of January for the REBGV.

The data is from MLXchange as compiled by Paul G (I provided his link above).

Why has no one in the media picked up on this? This is big news, we are flying off the cliff at warp speed. Could just be a blip, but that would be a difficult case to make. Garth, can you verify this data from an alternate source?

#20 Newguy Vancouver on 04.05.08 at 7:41 pm

Hey Garth, in case you are having trouble finding it, the website where Paul reports this is:


Paul’s daily, weekly, and monthly summary of MLXchange data can be found at:


I have no idea how this dude has time to post this info every day, but I appreciate him doing it!

#21 Drachen on 04.06.08 at 12:41 am


“There is no credit crunch for the bulk of canadian home buyers with decent credit. It’s the 2% who don’t finance their homes conventionally that are shut out of the market. They never should have been there in the first place.”

The credit crunch and the housing crash are independent of each other, they do interact but the housing crash really has very little to do with the credit crunch. The housing price crash is due to overpriced housing. PERIOD. The timing was effected slightly by the credit crunch but it would have happened anyhow.

The boom/bust cycle goes on in all commodities and has since the beginnings of organized trade. It happened many places in North America in the ’80s and it has happened around the world for the 400 years that accurate records have been kept. Give one good reason why things should be different this time.

And remember, the first rule of ANY bubble is;

The majority of the investing population MUST believe that it is different, “this time”, or the bubble wouldn’t form.

#22 JC on 04.06.08 at 1:52 am


Thanks for your reply. I am a bit astounded at the income part of your response…if Vancouver RE prices have more than doubled the last 5 – 6 years, have incomes REALLY gone up 20 or more per cent?? I have empiric reports and personal observations that incomes are not as high in Vancouver as they are in Calgary, where RE is far more affordable, but only recently gently emerging from the RE bubble. I am not sure Calgary incomes have moved up that much since 2001 or ’02-ish…do you have any more detailed data on this question?
And if you scroll back, Garth did in respond, as he does from time to time, to questions posted here…
Garth — if its in the book, at least hint at it!

#23 greg on 04.06.08 at 2:55 am

When I hear arguments that there is no subprime in Canada, I just shake my head. What is a 40 year amortization or a zero down mortgage? It may not be the same as a liar loan, but these different financial products are allowing people to “buy” houses they could only rent in earlier times. These buyers are all in the game and counting on a financial pay-off. And being in the game, they are in denial or disdain towards those who say it is not going to turn out the way the buyers have planned.

When things go wrong, these people will be looking for someone to blame, other than themselves.

I don’t know if I agree with everything you are saying, Garth, but I commend the fact that someone has finally caught the attention of the media with this contrarian message.

Media shills were trying to shout down Peter Schiff on the “talking heads” shows on Fox and CNN, just a short while ago, now those bullish commentators just look like fools.

Keep raising awareness on this issue.

#24 SMWhite on 04.06.08 at 9:06 am

To add to greg’s point, I bought Peter Schiff’s book and started watching his appearances on Fox News(via youtube) and listening to the other “pro” wall street shills (Mike Norman) as well as the anchors themselves scoff Schiff about gold, inflation and housing; well they have since changed their tunes since the decline in Wall Street and housing mess, they have “almost” admitted Schiff was right.

In hindsight his predictions weren’t really that crazy when you consider the lack of economic fundamentals and media hysteria pumping speculative housing(You can’t turn on the HGTV or TLC without seeing a “flip” show.

Those in denial of Mr. Turner’s points will be eating a healthy dose of crow.

#25 Rob on 04.06.08 at 9:49 am


“The credit crunch and the housing crash are independent of each other, they do interact but the housing crash really has very little to do with the credit crunch. The housing price crash is due to overpriced housing. PERIOD. The timing was effected slightly by the credit crunch but it would have happened anyhow.”

I believe the credit and housing bubble are not independent. I think the sheeple will borrow ever larger amounts for a house as long as they believe (against any rational analysis) that the prices will continue to increase. The housing bubble is fueled by credit, most people don’t purchase houses outright using their cash reserves.

Today with the appearance of the no down, 40 year, cashback mortgages we have reached the limits of how much people can leverage themselves to get into housing. This is not the choice of the sheeple, but the choice of the banks. Now that we are finally reaching the limits of how much can be borrowed that sets a limit on how high prices can go – until incomes increase to catch up.

#26 Keith in Calgary on 04.06.08 at 11:04 am


Vultur is a “cast off” from the ALBERTA BUBBLE blog where he was found often to use outright lies and fabrication as support of his arguments. This is the site….he hasn’t posted for a while however.


He was publicly humiliated and embarrassed when he said that he owned over $100 MILLION of local property. He wouldn’t divulge himself to substantiate his wild claims when challenged, since there are people posting on the board that either know everyone, or can find someone who does.

Thought you should know.

#27 Drachen on 04.06.08 at 11:31 am

What I mean to say is that they’re separate issues Rob, they clearly interact with each other but to confuse the two or to call the housing crash a “part” of the credit crunch is inaccurate. They most certainly influence each other to a great degree but if it hadn’t been for the risky mortgage types housing would still crash, it just wouldn’t have risen as much so it wouldn’t have as far to fall. The ONLY reason housing is crashing in the states is because it was too high. Risky lending was only one factor in the housing market just as the collapse of housing is only one factor in the failure of the global credit market.

#28 Lou Campo on 04.06.08 at 11:59 am

Hi, I sold my overvalued house a year ago and am renting a huge house for a fraction of the cost of owning. The interest on the $ is paying for the rent and I don’t pay a lot of other costs (property tax etc). It’s a no-brainer. When the market crashes I am going to take advantage of an inevitable over-leveraged investor who bought into the hype, for 50 cents on the dollar and get a downtown condominium and perhaps a place in Costa Rica (the secondary home market is really crashing). The consumer is constantly sucked into the “Life of the Rich and Famous” and wants to emulate that lifestyle and is sucked into way too easily. No wonder the rich are getting richer. The middle class are suckers.

#29 Jeff on 04.06.08 at 1:56 pm

Well it’s happening Garth,

March MOM sales decreased 16.3% in Greater Vancouver, 25% in the Fraser Valley, and 22% in Toronto.

Listings are up 17.3% over 2007 in Greater Vancouver, and 27% in the Fraser Valley.

#30 Adam on 04.06.08 at 2:35 pm

Anyone have listing info for the GTA? And any recommendations for good TO real estate blogs? I have done some google searches but haven’t been able to turn up anything all that useful.


#31 vultur on 04.06.08 at 4:39 pm

I wouldn’t worry too much about dealing with my Garth. You deal in fantasy whereas I deal in reality. You are like the boy who cried wolf with your scare tactics designed to promote your stupid book. Best seller- that’s only 5,000 copies in Canada! I bet you bought them all yourself! You know nothing about real estate investing. Stick to your day job of being a professional liar on Parliament Hill.
Publicly humiliated Keith? That’s a bit of a stretch pal. Do you honestly expect me to post my personal data on a blog? You must be even less intelligent than I gave you credit for!

You actually sound like a prick. We can all visualize that. — Garth

#32 wealthyrenter on 04.06.08 at 4:40 pm

Hi Lou,

I wholeheartedly hope your plans come to fruition. While my wife and I have never owned a home, we are very happy with our cheap condo rental in Toronto. We live in a huge (albeit older) unit that costs about 10% of our net income. At the same time, 60s vintage sidesplits in “B-” neighbourhoods very close us to are selling for over 700K. Something has to give.

With a little effort, there are plenty of great rentals around the Toronto to wait out this bubble. The key is to get an experienced, professional landlord with cash flow positive properties to rent.

#33 0.01% on 04.06.08 at 5:34 pm

What kind of info are you looking for Adam? mls.ca lists most residential properties available for sale. TREB posts Monthly stats (typically geared towards their agenda of portraying a healthy market.

What further data are you seeking?

#34 0.01% on 04.06.08 at 6:52 pm

Hey everybody, your hero/zero Garth the Fiberal censors posts that don’t conform to his wacky opinions.

FYI, better to know what kind of moron you are dealing with here.

No posts have been censored on this blog. And why don’t you use your Vultur handle? — Garth

#35 SMWhite on 04.07.08 at 9:04 am

…and now you know why they use the term “greater fool” a la “0.01%”.

Garth, your going to be making lots more “real estate” friends in the upcoming months, sounds like the herd is getting restless.


#36 Dom-GTA on 04.07.08 at 11:30 am

Wow, it must be tough for all those people who bought in th elast 3-6 months. Paying 700K plus for 3-4 bedroom houses.

All I know is that my household income is well over 150K a year and all I can do is laugh well my boss tells me I am in the top 5% of income earners in this country. If that is the case why can’t I afford to buy a reasonably sized house with an in-law suite that is even remotely affordable. I am sorry, I do not consider a 580K mortgage on a 700K house reasonable. The costs are well over 4.5K a month to maintain (including everything) and that is supposed to be a good deal? I just wonder how teachers, accountants, and other professionals that I know making 70K a year (tops) can afford these houses. And yes, my credit isn’t great (failed business so I pay a premium on the interest rate) but I have over 70K for a down payment and 0 debt yet am unwilling and/or unable to purchase one of the 700K houses….

#37 Eric on 04.07.08 at 12:25 pm

Hi Garth,

Do you have any insights on problems the Towns/Municipalities will have when the housing markets goes down? I was just thinking if the house values went down then the property taxes collected will also go down significantly. With the recent work on infrastructure some towns are doing to cope up with the high population growth, this would also put burden to towns specially if they rely a lot on the property taxes they collect.


#38 Sphinx on 04.07.08 at 12:52 pm

Torontonians are way overstretched!


click the first link “That Sinking Feeling”

#39 Resident on 04.07.08 at 1:32 pm


The correction will be nothing short of 35%. 50% is the likely amount. It is NOT going to correct at 10%.

#40 Another Albertan on 04.07.08 at 2:36 pm

Dom-GTA: Those people can’t without access to a 3rd party piggybank.

Eric: You are correct. There are already budgetary shortfalls in many US states and counties. Property taxes, income taxes, business taxes… a government’s income is ultimately its tax base. When property values drop and/or people lose their jobs and/or companies earn less, the government’s portion drops. The issue is exacerbated in places where income taxes are already low and the difference is made up with higher property taxes. Many places in the US will run deficit budgets this year because they will be forced to.

Google for Larry Ellison’s recent property tax re-assessment and the implications.

#41 vultur on 04.07.08 at 3:49 pm


The answer is simple. They’ll just raise your taxes to compensate for the loss of revenue. I wouldn’t worry too much about that event though- across the board real estate markets in Canada are quite stable.

#42 Drachen on 04.07.08 at 6:21 pm

I think the vitriol from Vultur is yet another indication of the impending collapse. There are several of his sort on the Vancouver specific blog I visit and they are all getting very ANGRY all of a sudden. Three months ago they were mocking us and having a grand old time, now the stats are in OUR favour they’re starting to get nervous and it shows.

#43 Outlaw on 04.07.08 at 9:02 pm

In the GTA, especially Brampton/Mississauga builders are offering discounts of 20-30k, plus upgrades on unsold inventories of detached homes. I guess its getting pretty bad if the builders have to sit on their ready to move in properties and keep on slashing prices

#44 SMWhite on 04.07.08 at 11:10 pm

Eric, its something I’ve been pondering, mainly what will happen in the municipal bond market?


#45 Sphinx on 04.07.08 at 11:23 pm

agree, builders in these two cities started discounting prices in the last 6 months….although mississauga is close to run out of land, here’s one builder unloading big on MLS


#46 Dom-GTA on 04.08.08 at 5:59 am

Question–How is it possible that when I spent 3 hours calling the builders of new homes they all insisted this past weekend was incredible and that this is still a Seller’s market. Not 1 builder I contacted said they were prepared to deal at this time.

Guess it’s a question of circling the wagons..and not admitting defeat!

Good News, I finally sold my property in Montreal, 6 months and 15% later…

#47 Outlaw on 04.09.08 at 11:30 am

But then again Mississauga and Brampton receive a huge percentage of new immigrants that need housing. With rental vacancy rates fairly low and lack of new rental constructions, prices should not fall drastically. I think we are in for a fairly gradual decrease over a period of 5 years or so. As for Toronto real estate is definitely overpriced, a similar property can be picked up in mississauga for 60% of toronto’s prices.

Dream on, Outlaw. — Garth

#48 Thomas on 04.22.08 at 9:17 pm

Hi Garth,

I currently live in a 2-year old 1740 sqft corner townhome. I’m potentially looking to purchase a 4 bedroom 3000 sft detached in a development that won’t be ready till summer 2010 but that I would have to put a deposit down this summer. The real risk is that I would be locked into a 2008 purchase price but wouldn’t be selling me home till 2 years from now.

After reading this I’m seriously reconsidering this decision. Is it your recommendation that I instead invest the money I was going to put towards the home and then buy and sell in the same time period so that even though I might be selling at a lower price I will be buying at a lower price?