The news

How the real estate went from boom to buyer’s market in a blink of … – Don Mills,Ontario,Canada

GTA home prices up, but spring sales melt

Toronto Star – Ontario, Canada

Canadian Home Sales to Dip in 2008 and 2009, Real Estate Agency Says

CEP News – Montreal,Quebec,Canada

Moody’s Sees Prices 10-25% Lower in 2009

Seeking Alpha – New York,NY,USA

Forest Hill mansion sells for $2M over asking price

By Barry Hertz


#1 m. on 05.07.08 at 9:20 am

I have been following Dunning’s monthly GTA housing market digest for years and I generally found it well thought out and balanced. In the past year or so I find it increasingly disconnected from reality though.

Regarding jobs, the same old rosy picture. No analysis of what jobs go away and what jobs get created. Is the quality of the new jobs better compared to the jobs that get destroyed (a lot of them well paid manufacturing jobs)? No mention we may be on the brink of recession in Ontario (if not already in one). Also no mention what could happen *after* the inflexion point, when the well paying jobs in financial industry and construction will start shrinking. This reminds me a little of some analysts in US a few years back that were basically saying “as long as we are fine, we will be fine”.

No analysis regarding why the 40 year amortization is so prevalent among the first time buyers, or what the financial institutions can do next to keep the party running for a little longer.

Not much regarding the speculation in condos and how a possible crash their will ripple through the market upwards. My guess is that when the party is over everybody will be amazed at the level of speculation in GTA housing market. Just a guess.

Also no parallels to what happened in similar US markets, etc.

I can’t blame Will Dunning for not sticking his head out and risking his reputation. Making rear view mirror forecasts is always safer for your career. Nobody blames you if you are wrong with the crowd.

That being said, I commend Garth for sticking *his* head out and having the courage to stake his reputation on this as he doesn’t have much to gain if he’s right and a lot to lose if he’s wrong. A sane voice in an insane world. Thanks Garth!
(and yes, I bought your book, first week when it came out :-) )

#2 vultur on 05.07.08 at 9:39 am

>>>Prices are still appreciating because sales still remain at historically lofty levels, even though they may be sliding.

The average Toronto-area price in April almost hit the watershed $400,000 mark at $398,687, up 5 per cent from the same period a year ago.

The housing market is coasting on strong job numbers and the wealth generated on the Toronto Stock Exchange over the last few years, said Dunning.

“You would need a pretty big shock to consumer confidence to totally derail the market,” said Dunning.

“Most Canadians so far have reason to feel good about their earnings and employment.”<<<

Read that Darth Mortgage and maybe you’ll learn something.

#3 Ilargi on 05.07.08 at 12:05 pm

In an interesting aside to an article about oil going to $200, , UK Telegraph global finance writer Ambrose Evans-Pritchard takes the Canadian bust for granted:

“The market has shrugged off the effects of a housing slump in the United States, Canada, Britain and Spain. The oil boom has revealed just how much the world has changed from the days when the OECD club of rich countries invariably dictated the oil price.”


#4 Rob M on 05.07.08 at 12:21 pm

M makes very good points that are balanced [I don’t use that in RE speak of course

“You would need a pretty big shock to consumer confidence to totally derail the market,” said Dunning.

the operative word being “TOTALLY” and of course Dunning will only work with the data he has at the moment and will spin it positively.

right after all this is:
“This could change in the future.”

this is pretty weak stuff from you Vultur but good for a laugh regardless.

US weakness has yet to come ashore in S. Ontario…employment numbers coming Friday will be interesting.

#5 Cam on 05.07.08 at 2:52 pm

“You would need a pretty big shock to consumer confidence to totally derail the market,” said Dunning.

On the contrary, a big shock is not needed. Show me the big shock that happened in the states to start the decline in housing prices. It is only now that the shock has set in to consumer confidence, well into the housing market’s decline. The problem is much simpler, prices have appreciated beyond what incomes can sustain. Show me the cold, hard statistics and data that indicate otherwise.

#6 SMWhite on 05.07.08 at 3:26 pm

“Most” Canadians?

How do we measure those? Amazing how all these talking heads, economics, and business geniuses who are reporting all these good times don’t need to bother with silly things like numbers and statistics. We loose 1000 jobs @ 60K a year but replace them with 1500 jobs @ 30K a year, times are good, right?

Numbers shumbers!

I did find some numbers though, Dunning’s latest graph on rentals(October 2007) and they are showing a steady rise(3% in 2005, 4% in 2006, 4.5 in 2007) in vacancies in rentals. Can’t wait to see that number for spring/summer 2008.

This goes along with the “over speculation theory” of the condo market in TO. First those “investment” properties sit idol and the “investor” can’t sell to make his profit or even rent to get some of the investment back into his pocket. They try to unload and it still sits there with no takers. Then panic ensues and the sellers compete with one another slashing the price, which buy the time their ego realizes their mistake, its too late. (Look for my post on the “five stages” of the real estate market mania)

Lots of competition for the rental market in TO, still some bidding wars for detached homes, so what, its not the norm and makes for a great story to go beside the 2 page glossy put out by the bank or RE company.

The sales numbers down which are skewing the “average” price numbers, means you can probably negotiate a deal on your rent at this point as that market gets more and more competitive.

#7 Andrew on 05.07.08 at 3:52 pm

Consumer borrowing unexpectedly surges in March
Wednesday May 7, 3:18 pm ET
By Martin Crutsinger, AP Economics Writer
Consumers increase their borrowing in March at the fastest pace in 4 months

WASHINGTON (AP) — Consumer borrowing rose in March at the fastest pace in four months, more than double the increase of the previous month.
The Federal Reserve reported Wednesday that consumers increased their borrowing at an annual rate of 7.2 percent, compared with a 3.1 percent rate of increase in February.

The gain was much larger than economists had been expecting and reflected strong borrowing on credit cards and also in the category that includes auto loans.

The increase in consumer debt totaled $15.3 billion at an annual rate in March, much bigger than the $6 billion increase that economists had been expecting. The bigger gain was seen as a sign that the weaker economy was forcing consumers to increase their borrowing to support spending.

Borrowing on credit cards was up at an annual rate of 7.9 percent, compared to a 5 percent gain in February, while borrowing in the category that includes auto loans jumped by 6.8 percent, compared to a 2 percent increase in February.

The overall growth in debt of 7.2 percent at an annual rate was the biggest gain since an increase of 8.25 percent last November.

Consumers have been moving to put more of their purchases on their credit cards as banks have tightened lending standards for home equity loans in response to the deepening credit crisis.

The Fed’s measure of consumer borrowing, which does not include any debt secured by real estate such as mortgages or home equity loans, stood at a record $2.558 trillion in March.

********This can’t be good using credit cards as ATM machines ************

#8 Crikey on 05.07.08 at 4:27 pm

Nope, I don’t think Vultur isn’t really Richard Florida, I think he’s David Lereah, the former chief forecaster for the National Association of Realtors in the U.S., whose “irrational exuberance” for real estate has led to some measure of ridicule. Now he says the bust isn’t near over, and home prices still have a long way to fall.

I think he senses people will still listen to his RE pap here. Well, some people. Clearly, not financially astute people.

#9 Brent on 05.07.08 at 5:50 pm

When do you think renters will start getting kicked out of their townhomes by the bank because joe spec landlord is in the red and has just been pocketing the rent money to try and get some of his down payment back. Watch, cause that’s next.

#10 MR on 05.07.08 at 8:37 pm

Hi Garth,

I’d like to point out why it is I think you’ve made a mistake with your
advice to pay in weekly amounts.

I think you’re looking at it in terms of a monthly budget, and in this
scenario, it makes perfect sense. You make mortgage payments on May 7,
14, 21 and 28, each time driving down the Outstanding Amount that you’re
paying interest on. That’s clearly a saving over paying 4x as much on
May 28.

However, if you shift your view slightly to look at it paycheque to
paycheque, it doesn’t make sense. If your only income is your biweekly
paycheque (on May 14), then you put in half as much as you can afford
to on May 14, then put in the other half on May 21. You’re paying more
interest than you need to for the week of May 14-21!

Of course, if you have income other than your biweekly paycheque, it’s
a different story, but I suspect that isn’t the case for the majority
of Canadians.

I’m also a little surprised by your assertion that the interest is
compounded daily with a traditional mortgage. I can’t find the T&Cs for
my mortgage right now, but for my HELOC, interest is calculated daily
but compounded monthly.

#11 wealthyrenter on 05.07.08 at 9:11 pm

“While Toronto experienced a 10 per cent drop in sales, the 905 market experienced only a 5 per cent fall by comparison. ”

Is it me, or is the Toronto Star getting to be really sloppy? I re-read the article, and the sub-heading has a fall of 7%. I guess the 10% was thrown in to make sure we were paying attention. Does it include new housing?

Are sales down YOY 7%? Are they comparing April 07/08? Inventory is up 18%, when compared to what period? YOY? Have GTA sales fallen 5% YOY?

I assume numbers reflect a year, but it is all unclear.

Just wondering if Wong’s editor is obfuscating very bad news?

#12 Lawrence on 05.07.08 at 9:54 pm

Canadians sitting on $45-billion of cash

Globe and Mail Update

May 7, 2008 at 8:00 AM EDT

Canadian investors, wary of continued market turmoil, are sitting on a record $45-billion in cash and CIBC World Markets thinks they should be pumping it into the market.

Benjamin Tal, a senior economist at the firm, argues in a Consumer Watch report that by staying on the sidelines instead of pumping the cash into the stock markets, punters are forfeiting billions of dollars in potential gains, just as they did in previous periods of volatility.

“Despite the recent recovery in the stock market, Canadians are still sitting on cash positions which in real terms are 15 per cent higher than the already elevated level seen in 2001,” Mr. Tal said in the report Wednesday. “The October, 1987, stock market correction lasted two months, but investors sat on their newly created mountain of cash for a lengthy 16 months, during which time the stock market gained more than 20 per cent. Ditto for the 2001 flight to safety.”

#13 vultur on 05.07.08 at 10:51 pm

Numbers shumbers!

I did find some numbers though, Dunning’s latest graph on rentals(October 2007) and they are showing a steady rise(3% in 2005, 4% in 2006, 4.5 in 2007) in vacancies in rentals. Can’t wait to see that number for spring/summer 2008.
Huh? Vacancy rates have been DROPPING for several years in the GTA.

Get your facts straight.

As far as labelling me an industry who*e, dream on! I’m as unbias as they come! I think the housing market will probably pull back a bit in places like Toronto, but I don’t see any need for the kind of panic that Darth Mortgage is trying to incite.

Most of you people are just sheep following along with whatever that idiot tells you. Have an independent thought once in a while- it will do you much good.

#14 vultur on 05.07.08 at 10:52 pm

Brent! Talk about Greater Fool! The guy is living out of trailer in some Florida swamp yet he’s dolling out housing advice to Canadians!


#15 Ultraman on 05.08.08 at 12:58 am

Term loan mortgages are always compounded twice yearly. It’s the law.

HELOC and variable rate mortgages are compounded monthly.

Interest is always calculated daily.

#16 SMWhite on 05.08.08 at 9:05 am

Wake up Vulture.

From Dunning Fall 2007(Thats 6 months ago and the numbers won’t be any better today):
CMHC also reports on “availability” of rental housing
– this includes units that are vacant as well as
units for which notice has been given and the unit
has not yet been leased. The availability rate for
October 2007 was 5.0%, also unchanged from the
October 2006 rate. The availability of more than
15,000 rental apartments confirms that a great
amount of rental housing is available in the
Toronto CMA rental market.

High vacancy rates continue to result in sluggish
rents in the Toronto area. The average rent fell by
$5 (-0.5%) to $984 versus $989 a year ago. With
overall inflation at 2.5%, the average rent fell by
2.9% in “real” (inflation-adjusted) terms. There is a
concept of “natural vacancy rate” – the vacancy
rate at which rent increases match overall inflation.
For Toronto CMA, I estimate that the natural
vacancy rate is 2% or less. This is the sixth
consecutive year that the vacancy rate has
exceeded 2% (and the fifth that it has exceeded
3%). The consequence of these high vacancies is
that rents have lagged behind the inflation rate –
during the past six years the average rent has
increased by just 3.7%. With total inflation of
12.6% over the same period, the average rent has
fallen by 7.9% over the same period in real terms.
The amount of units are going up and the price to rent is going down, choke on that you prat. Rented shelter is getting cheaper and will put downward pressure on homes, its supply and demand, or it least that what all you pumpers were saying when RE was shooting to the moon, well the rocket is coming back to earth in a negative way.

Read and and weep vulture baby!

Vulture continues to cry on this blog, the fact is he/she is one of the herd that believes manias go on forever and TRYING HIS/HER HARDEST to continue to pump and defend the RE market on this blog.

Vulture continues to weeble wobble on his/her opinions and as more and more negative data comes out, vulture’s position has moved from one of “your missing the party suckers” to “now things will be steady and level off”.

Vulture has hit stage one of the 5 stages of the market,


Begone with you ridiculous, none sensible, non factual arguments and slanders.

If Garth is Darth Mortgage, your the “Queen of Denial”.

#17 vultur on 05.08.08 at 1:31 pm

I am getting the sense that the negative voices in the crowd are those that presumably don’t believe that housing prices should be where they are today for the simple reason that no one in the crowd can afford them.


Availability is a measure of what’s coming on the market in the next 60 days. You could have an availability of 10% and a vacancy of 0% in a building with high turnover. I don’t think you understand the difference.

Tell you what friend- ask me a direct question and I’ll give you a direct answer. I really don’t believe that you understand my opinions if you think that I’m a market pumper. My alias alone should be a giveaway- I am a VULTURE- looking to pick up properties on the cheap after the wreckage. I never suggested there wouldn’t be weakness in the housing market. I just don’t think that the average homeowner should panic sell because Darth Mortgage tells her to in his silly book.

#18 Crikey on 05.08.08 at 2:17 pm

A Vulture who wants to “protect” us… how very sweet and paternalistic of you.

How are you under the impression we need your protection from mean old Garth?

I don’t beleive houding prices should be where they currently are, not because I can’t afford them (I can, thank you), but because the price of the average house is WELL beyond the reach of the average income. I do not think people should have to bankrupt themselves in order for the “pride of ownership” of a box that sits out in the rain and rots when I can rent one for one-third of the cost and invest the rest (and have someone else be responsible for the maintainance and repairs).

Thanks again for the thought, Vultur, but I don’t think I’m in need of your “help”.

#19 SMWhite on 05.08.08 at 4:32 pm

A vulture that cares… I like that!

So here comes the “bitter” renter theory from a self proclaimed “unleveraged” real estate star, suprise.

The fact that I or others refuse to sink a 20% down payment into real estate at this stage of the game doesn’t have to do with what I can or can not afford, its about cash flow isn’t it; and being about to have cash without it leveraged to a HELOC. The 40 year mortgage blah blah blah… …kiss goodbye to that 20% down.

You read CMHC and “availability” and went of on a tangent. From CMHCs site the greater TO area vacancies have risen from your 3.2% to 3.5%. You are correct in the fact the downtown core rates have dropped .5% to just under 2% at 1.8%. I read Dunning’s vacancy rate chart wrong and added an extra .5%, my humblest apologies to your cultural elitist self.

Dunning still projects the vacancy rate in Toronto will rise to at least 4% by April 2008 and be at a similar level in the fall. For 2009, he expect a further rise of the vacancy rate, to at LEAST 4.5% and expects rent$ to increase at 1% – 1.5%, less then the rate of inflation.

Now vulture, being somebody that is already a landlord as you have stated in previous posts, is this good or bad news? You don’t need to answer, its bad news and the % will continue to rise.

I concur that a person that expects to live in a property for any length of time should ignore the news, good and bad, use a 25 year mortgage, eat your Wheaties and etc. We already know those facts so take yourself off repeat.

But this isn’t the case in this market run up. We are building a lot of shelter at this late stage of the game for a market that is dissapearing and paying way to much for it.

Is Garth an alarmist? But of course! Its not the RE industry’s pumping the market to the point of extinction or banks throwing money at everyone and everything, or people over leveraging their life away, its Garth’s fault and his self fulfilling prophecy of turning the crowd/herd away from the RE cheer leaders. Don’t pay attention to Garth, ignore the fact Canada is doing its best to mimic the USA and have nothing left, not even a pot to piss in… Spend all the recently created money!

Oh yes, the #1 auto manufacturer in the world had its first quarterly earnings drop in 9 year, yes they weathered the dot com bust quiet nicely, one of the few companies that did. Garth strikes again!

#20 wealthyrenter on 05.08.08 at 10:55 pm

“I am a VULTURE- looking to pick up properties on the cheap after the wreckage. I never suggested there wouldn’t be weakness in the housing market. I just don’t think that the average homeowner should panic sell because Darth Mortgage tells her to in his silly book.”

Calling yourself a vulture is little bit childish and overdramatic, when what you are is an investor trying to scratch out a living in real estate world.

However, you appear to have your pulse on the market and unless you are bi-polar, you appear to agree with just about everything that Garth Turner says in his book. You just have the hate on for Mr. Turner because you dole out your “wisdom” for free, and he is excellent at marketing himself, and will probably make more with his book than we will make in a decade.

#21 anxious renter on 05.08.08 at 11:00 pm

Bravo, nicely said SMWhite.