Technically screwed

Home listings flood the market, here.

When I published ‘Greater Fool’ in April, and wrote it some weeks earlier, the MSM view was that housing in Canada was rock solid, and this country’s consumers and investors would avoid a US-style price correction. When national real estate sales volumes began to tumble in February, March and April, the industry blamed snow. When sales levels fell but average prices continued to creep higher, we were told this was proof the market was inherently healthy.

Of course, it’s all part of a pattern which was evident to me – and anyone else with a grasp of reality – months ago. Sales volumnes crash first, prices later. In fact, an analysis of the last Canadian housing dwclines in the Eighties and early Nineties shows the pattern clearly – the greatest of fools are those who are tricked by numbers, blinded by greed, and buy into a market where prices are high and sales thin.

The big news this September or so will be a decline in average home prices in all major markets – not just Alberta. It will be a bitter awakening for all those who dismissd the obvious, and bought in 2008.

The article below by technical analyst Bill Carrigan appears in the Toronto Star. He bears this out. — Garth

Not too long ago, not-in-my-backyard referred to nearby unpleasant projects that could degrade housing prices. Now the great not-in-my-backyard fear is an epidemic of For Sale signs.

So far, our local housing markets have remained isolated from the trouble in the United States, especially California, Florida, New York, Michigan and the suburbs of Chicago. These areas peaked in 2005 and then started deflating in 2006. This in turn greatly increased foreclosure rates and sparked the August 2007 sub-prime mortgage and credit crisis.

Should we worry about the U.S. housing problems?

According to the Toronto Real Estate Board (TREB), there were 9,411 GTA-wide single family dwellings sold in May. “While off last year’s pace, a 9,000-plus sales month is certainly indicative of a healthy market,” the board said.

TREB said prices have trended upward on a year-over-year basis, with the average rising to $398,148, up 4 per cent over the May 2007 figure of $382,787.

According to TREB, homeowners in the GTA are still insulated from the volatility of the U.S. housing market.

As a technical analyst, I couldn’t help noting the many technical arguments used by the author of the TREB report.

“Prices trended upward” is a technical study of trend. The reference to year-over-year price change is a technical study of price momentum. It appears the author is a closet technician who has skilfully used available data to support TREB’s bullish outlook.

Unfortunately, the bullish analysis loses credibility when a bearish glitch is disclosed. It appears the inventory (for-sale listings) has increased by 15 per cent over May 2007. This is brushed off as “good news” for potential homebuyers.

Our chart this week is of the average monthly resale price of single family dwellings in the GTA spanning about 14 years. The smooth line just below the price plot is the 30-month moving average.

If we were to end our technical analysis here, we would conclude the price trend is upward because the price is above a long-term moving average and the moving average is pointed upward.

The lower plot is what I refer to as the sales-volume-on-balance line.

This line represents the relationship between the number of monthly sales and the monthly average sale price. The principle is based on the on-balance volume study introduced by Joe Granville in 1963, which is a measurement of positive and negative volume flow.

The principle is simple. In an upward trending market, rising prices must be accompanied by rising volume; during a short corrective period, the lower prices are accompanied by lower volume. A negative trend change is signalled when prices advance on lower volume, or if prices decline on higher volume.

Unfortunately, over the past several months there has been a series of negative price and volume relationships, which have driven our sales-volume-on-balance line lower through 2007 and 2008.

The May sales number registered yet another decline from April on higher sales volume, which in turn drives the sales-volume-on-balance plot lower.

This, along with the higher inventory numbers, tells me sellers are getting more aggressive, which in turn could result in lower prices through the remainder of 2008.

A logical downside price target would be the rising 30-month moving average, currently at the $371,000 level – the “good news” for potential homebuyers.

Bill Carrigan is an independent stock-market analyst. He can be reached at


#1 Realtors Panicking on 06.13.08 at 9:51 am

Higher gas prices, higher natural gas prices, higher food prices, higher property taxes, higher land transfer tax

now big Canadian Banks have all raised their mortgage rates by .50 to .85 basis points.

The nail in the coffin?

#2 Popping-Bubbles on 06.13.08 at 10:42 am

Industry participants (aka The Real Estate and Indebtedness Mafia) willfully ignore and publically downplay what is going on. The mainstream media are their paid shills (grab a weekend paper and look at the percentages of advertising which is real estate or lender related!). Instead we should all worry just a little (but not too much) about…

a) the fact housing affordability is at its worst level since the last housing bubble burst [RBC. Housing Affordability. Mar-2009, p.1]

b) the fact that real housing prices have increased substantially more than during the last three housing cycles dating back 40-years (all of which ended badly) [Scotiabank. Real Estate Trends, 26-Feb-2008, p.2]

c) the fact that real housing prices in Canada have risen more from trough to peak than in the U.S., where prices and the general economy are now tanking [Scotiabank. Real Estate Trends, 26-Feb-2008, p.2]

d) the fact that Canada’s housing prices-to-rent ratio is higher than in any other OECD country save Spain and 90% higher than the long-run trend [OECD Economic Outlook No. 82, December 2007. Data table can be found in the housing price ratio tab of…/2483894.xls%5D

e) the fact that Canada’s housing prices-to-income ratio is 32% above historic trends and substantially above the ratio which prevailed when the last housing boom bubble popped in the late 80’s / early 90’s [same source as (d)]

f) the fact that the unprecedented run-up in prices have been fueled by a proliferation of risky lending practices such as (i) a decrease in the required down payment from 10% to 0%, (ii) an increase in the allowed amortization from 25-years to 40-years, (iiI) the proliferation of 7% cash back mortgages and other lending gimmicks (teaser rates, step mortgages, skip a payment, builder rate buy downs, etc.), (iv) the proliferation of home equity lines of credit, and (v) lenders not being on the hook for the vast majority of risky loans they write (CMHC guarantees low-down payment and/or extended amortizations)

g) the fact that studies show typical consumers do not fully understand the implications and risk of low down payment, long amortization and gimmicky (e.g. 7% cash back) mortgages. How many consumers do you think have run a scenario analysis which asks, “what would happen if interest rates went to 8%, 10% or even 12%? What would happen if my partner or I lost our job? What would happen if real estate prices dropped by 10%, 20% or 30%? What impact will extending myself for this house have on my retirement plans?”

h) the fact that housing bubbles around the world are beginning to deflate. By way of example, the UK (admittedly a worse market then ours) mortgage lending in the first quarter is down 40% to the lowest level in 33-years and things are only beginning to get rolling there. In New Zealand housing sales are down 53% year-over-year. And we all can see what is going on in the U.S.

i) the fact that housing construction is far in excess of household formation. CMHC data shows housing starts averaging 226,000 units per year from 2003 through 2007, 33% per year above the roughly 170,000 net new households formed each year [as estimated by TD Economics and others]. Based on housing permits and starts, this trend is expected to continue well into the future.

j) the fact that Canadian MLS housing inventory is at record highs while at the same time the number of sales is dropping dramatically [Canadian Real Estate Association (CREA)]

k) the fact consumer indebtedness is at record highs relative to disposable income [Vanier Institute. The Current State of Canadian Family Finances. 11-Feb-2008. p.28]

l) the fact that savings rates are close to nil even though the baby boomers should be saving for retirement [Vanier Institute. The Current State of Canadian Family Finances. 11-Feb-2008. p.9]

m) the fact that Canadian incomes have stagnated. Statistics Canada recently reported “that adjusted for inflation the earned income of the ‘average’ Canadian — the so-called median income – was the same in 2004 as in 1982”

n) the fact that the economy is bordering on a recession. The high Canadian dollar has pounded exports and the U.S., which absorbs some 70% of our exports, is likely in a recession. And what would happen if the rose comes off the construction and commodity bloom? Heresy I know, but both of these sectors are well above trend and are the only real source of strength in the Canadian economy.

o) the fact that inflationary pressures are building, raising the prospect of higher interest costs for borrowers. The Bank of Canada recently decided to hold the line on interest rate and mortgage rates recently jumped by amost 0.5%.

I guess it is easier to put on our rose colour glasses, look in the rearview mirror and admire how pleasant the trip has been. Never mind the cliff dead ahead.

#3 brazer on 06.13.08 at 1:06 pm

U.S. foreclosure filings surge

“One in every 483 U.S. households received a foreclosure filing in May, the highest number since RealtyTrac started the report in 2005 and the second-straight monthly record.”

#4 Midtown on 06.13.08 at 1:22 pm

@Popping-Bubbles, your itemized list seems to be sitting somewhere on your desktop, ready to paste whenever a bubble discussion starts somewhere online. I think I have seen it 4-5 times without any changes. I think we get the message, you need to write something new and fresh :-).

#5 Janet Shum on 06.13.08 at 1:58 pm


What do you think will happen in Winnipeg. I am at that fine line where I am priced out if not close to priced out. Houses in the highest crime rate in town are selling for over and listing bullishly high, 20-30 thousand more that 2 months ago, probably because of the spring market would be my guess. It is not a major market here, and certainly Winnipeg does not traditionally you know have the galmour appeal of say a city like Vancouver.

Unforutantly for someone in my situation, having a house will ripple into a domino effect and affect my chances of having a family so I am not completely sure what to do.

By the numbers, it would be insaine for me to purchase right now. Unfortuantely my downpayment is locked up in GICs.


#6 Concerned realtor on 06.13.08 at 2:11 pm

concerned realtor in confidence…apparently transparency and full disclosure..rules to live by..don’t apply to insiders at treb…3 weeks ago…the board revamped its format for publishing stats on the website..previously daily reports showed yr over yr % changes (sales and price)…weekly updates did the same…bi-monthly reports as well..they’ve pulled the aggregate daily report completely….too much work…and nothing to do with the changing internals of the market i was assured…a lack of hits on that part of the website was sited as a reason…the weekly report shows total aggregate sale number and average price with no yr over yr explanation except it has nothing to do with market conditions…conspicuosly missing again…at best a 3rd world damage control strategy to manage the less than positive stats…agents and public should have access to this if treb maintains the info(and not wait for monthly results)… for buy/sell decisions ..the bi-monthly report due next mon/tues…in doubt as well…so in summary…treb is delaying/parcelling/scripting the reportage of vital stats to the detriment of all..unconscionable p.s. bonus…was told agents can now phone in for yr over yr percentage stats or others that have been omitted from website!

#7 Sam on 06.13.08 at 3:10 pm

Yeeee ha! It’s coming.

Vultur : Where are you ?

#8 Rob M on 06.13.08 at 5:45 pm

The media slide towards bearish is happening faster than I thought. Add in a few decent RE agents to start advising their clients properly, mix and serve.

The winter will be LONG for some people.
Let’s see if this sweep all of the markets though.

#9 My_view on 06.13.08 at 6:13 pm

Can anyone say speculators…………

#10 poorguy on 06.13.08 at 6:27 pm

Iceberg is visible now.

#11 My_view on 06.13.08 at 6:28 pm

I just love how they constantly say US-style housing correction. Its a bubble, plan and simple.

#12 Popping-Bubbles on 06.13.08 at 9:05 pm

Midtown: It took me a while to pull together the statistics (all from rosey housing reports, I might add), so I wanted to get some mileage from them. Regardless, your point is well taken; however, given that I’m too lazy to write anything new and fresh I’ll just post a link to the latest story which shows that the dirty little secret about the real estate market is slowly spreading.

“Canadian real estate boom over, statistics indicate”

#13 David on 06.13.08 at 10:18 pm

Janet Shum, my own take is that the Winnipeg real estate bubble is just that, pure bubble, Until a few years ago the Peg offered families affordable and very decent housing in line with local incomes.The market was declared officially stagmant. The “bouyant” market now offers crap over priced houses that were unmarketable a few years ago. Home ownership on Magnus Avenue or Selkirk Avenue is priceless correct? Prices in the Peg have risen about 150% in the past 3 years and has your income risen 150%? during the same period?
Back in the not so distant past past Peggers had a decent home and cottage at the beach for a song. Try that now and go broke. Badly broke.
Aging 2 bedroom homes in St Vital and East Kildonan are almost fetching $200 K on listings. There is the cult of rampant over bidding on any available listing now. Massive over bids. Take your chances if you want. A nice solid well constructed 3 bedroom bungalow in Windsor Park will run you about $250-$300K.
Personally I would save my money for better times.
Get a copy of the Winnipeg Sun or Free Press. Right now Peg auto dealerships are virtually giving away off lease sport utes at 50% discounts or more. Housing is soon to follow.

#14 vultur on 06.13.08 at 11:43 pm

The tech analyst guy seems to feel there’s room for a <10% correction in GTA prices. I am inclined to agree with that prediction, particularly in the over-supplied condo market.

#15 Mini-Garth on 06.14.08 at 6:52 am

Who in the H-E double Hockey Sticks would pay $300,000 to live in Winnipeg?

Sweat Jesus….

#16 Erik on 06.14.08 at 2:47 pm

Mini-Garth – People who are born here have an excuse, but folks who move here are either immigrants from poor countires or idiots. I’ve lived in Winnipeg all my life. It’s cold in the winter, with hot mousquito-heavy summers, and a limited job market (unless you think $10/hour is a great wage to raise a family with).

How the Winnipeg market has been driven so high is a combination of people returning from Toronto, Calgary, and Vancouver who left Winnipeg in the 80s and 90s. They are back to have kids and raise families on the cheap. The result was like what happened in the 80s when HK immigrants flooded Vancouver – prices went nuts overnight.

Now, realtors are telling the simple that Winnipeg prices had to jump this high and that we are getting in line with the big-league cities like Calgary and the like. There is no oil here, there is no major manufacturing sector. What we have is Hydro, regular federal cash payments for a proportionally large Aboriginal population, and equalization payments.

The folks moving to Winnipeg will leave when the Federal money for current capital projects end and we return to being a backwater with relativeliy inexpensive homes and few jobs for educated professionals.

#17 David on 06.14.08 at 4:10 pm

Net migration to Winnipeg is fairly static and has been for decades. Local developers have seldom had any difficulty meeting demand at affordable prices in the past and resells were fairly level. The bubble is being driven totally by speculation and first time buyers with 0/40 mortgages fearful of being forever locked out of the market. Multiple over bids are standard practise in the Peg’ now and that is clearly a sign of speculative mania.

#18 Anonymous on 06.14.08 at 5:52 pm

The speculation is simply spreading east. It’s not rocket science. And has little to do with economies, resources, or migration. It started in BC, spread to Alberta, Saskatewan and now it’s in Manitoba.

Remember all the talk about California equity locusts? We have that here, too.

If you missed flipping that house in Saskatoon, maybe Winnipeg is your choice.

However, I doubt you have more than a year to buy and sell that property.

There are less risky ventures out there.

#19 brazer on 06.14.08 at 6:13 pm

Some personal news…

My girlfriend listed her Toronto condo last week…asking price $289K (she had bought 4 years ago at $220K).

Two offers came in today, and final price sold was $296K. I was a bit surprised it went over the asking, but not going to look a gift-horse in the mouth.

With what we’re seeing slowly happening in this market, I’m sure as heck she got out at or near the top.

She’ll move in with me….we’ll continue to rent for a year or two, and then see where the RE industry finds itself at that point before reconsidering entering the market.

Best to all.

#20 $fromaSia on 06.14.08 at 10:02 pm

Garth, how long do you think this RE correction will take to hit us here in Vancouver?

What impact will the Olympics have on slowing and dragging out a correction?

Already started. — Garth

#21 $fromaSia on 06.14.08 at 10:05 pm

Funny thing my wife and I are renting and waiting to buy in at a reasonable $.

We see all these current competitors locked in on 25-40 year mort’s. My theory is that most of these 10%-Zero downers will get cought in negative equity this comming correction…. We’re gonna have so much of a selection :)!!!

#22 peng on 06.14.08 at 11:24 pm

#23 David on 06.15.08 at 1:15 am

The enthusiasm seems to stop at the Manitoba border and does not pick until southern Ontario. No bubbles in Thunder Bay or Dryden.
The bubble is breaking in Western Canada. People who bought in the last two years are most likely upside down or will be even more upside down when interest rates start to climb.The party is officially over and may the lucky prize winners takes their winnings home from the greater fools party.

#24 Sam on 06.15.08 at 10:55 am

I watching this program ‘ hot property’ on City News Toronto. It is being run by a bunch of jokers and a tout for Tridel. Can anyone please tell these spin masters to come clean and not decieve the public ?

Garth – I am sure your voice will be heard more loudly if you call them on air and have a dialogue.

#25 Keith in Calgary on 06.15.08 at 12:48 pm


I am from Calgary. When we had the Winter Olympics here in 1988, it did absolutely nothing to RE values leading up to the event, or after if was over.

Next time someone in Vancouver mentions the Olympics, ask them directly how if will affect RE values and watch them flop around like a fish out of water when they don’t have a valid answer.

Our Olympic legacy is an almost never used winter park (ski jumping, bobsled, etc) and a bunch of crappy, really cheap and leaky condos built for the athletes that took almost a decade to sell to suckers.

#26 JC on 06.15.08 at 8:20 pm

“Garth, how long do you think this RE correction will take to hit us here in Vancouver?

What impact will the Olympics have on slowing and dragging out a correction?

Already started. — Garth”

Check out the Fishy Real Estate Blog out of Van — While the Greater Vancouver Area is clearly in the initial stages of correction, West Vancouver appears about to implode, with over a YEAR of inventory (not counting various private sale offerings) and realtors ready to take offers well under list to their vendor clients.

#27 vultur on 06.15.08 at 10:04 pm

Sam- ‘Hot Property’ is an infomercial for Tridel. It’s been well documented that the MSM are big housing industry cheerleaders and not coincidentally the housing industry are big advertisers.

Rule of thumb with anything media is look for inherent bias/conflict of interest unless otherwise proven.

Housing industry has enormous clout and vested interest in maintaining the boom- from CHMC to the big banks to the realtors, developers, contractors, appraisers, marketing and ad firms, insurance companies- name it! The country is essentially built on the orderly functioning of the housing market. That’s really the basis for my belief that the damage across the board will be minimized and nowhere near as destructive as America.

#28 patriotz on 06.15.08 at 10:26 pm

I am from Calgary. When we had the Winter Olympics here in 1988, it did absolutely nothing to RE values leading up to the event, or after if was over.

But Calgarians never had the delusion that everyone on earth wanted to live there. Nor was there a global RE bubble going on back then.

The Olympics were used in Vancouver as yet another rationalization for the ridiculously high prices of the last few years. As long as the greater fools keep buying, it works. Once the last fool has bought, it doesn’t.

#29 wealthy renter on 06.15.08 at 10:52 pm

Hi Sam,

I watch the Hot Property Show from time to time. I could deal with the show if it were just a bunch of shills pumping the industry, but some of the advice they give to people is beyond self-serving, it is destructive.

A good case in point would be this week. The dumbskull (dummy and numbskull) from Dumbworth Financial was pumping their 40 year mortgage, by saying that the savvy users of the product were using accelerated weekly repayment schedules, and thus would have their mortages paid off in 31 years. Instead of pumping their poison, they could actually use their time to educate and inform. For instance, they could give a balanced scenario like this….

Young lovers A & B have decided to buy and need a 300K mortgage at 5% interest.

Plan 1 (what Dumbworth was pumping)
40 yr, with accelerated weekly repayment schedule.
Weekly payment: $360
Years to pay off: 32
Total Payments $600K

Plan 2 (a reasonable (albeit a bit dear) path to both home ownership and financial security)
25 yr, with accelerated weekly repayment schedule.
Weekly payment: $436
Years to pay off: 21.5
Total Payments ~ $480K

Predatory lending is alive and well in Canada.

The best advice for this couple is to tell them to sit down with a calculator and force themselves to trim their budget enough to afford the second plan. For instance, they could take on a couple extra shifts a month, make a few less trips to Starbucks, or a perhaps take major holiday every other year etc.)

Mr. Turner will never be on Hot Property!

#30 Janet on 06.16.08 at 6:53 am

They released the figures for between january and march rfor winipeg. All prices have gone up. In the highest crime area they went up 38. :-(

#31 Mike.slob on 06.16.08 at 10:13 am

Hello Garth,. Do you think the Toronto real estate market could be decreased soon? Because statitistic shows decreased resales but still increased prices.
Especialy Mississauga,Brampton,Georgetown,Milton and Oakville, thouse comunites increased prices in the last 4 years over 120k.When you think will be correction
of the price about 10% or more?

#32 Internal Exile on 06.16.08 at 1:14 pm

The Olympics propping up real estate is one of the great urban myths of Vancouver, like “everybody wants to live here”, the elusive Sasquatch like “foregn investor”, the bizzare belief that there’s “no more land”, and that we’re a “world class city”.

You hear these things repeated ad nauseam around Vancouver on a daily basis. Trying to argue these points is absolutely ridiculous, because it assumes they were based on something in reality in the first place, and therefore somehow worth debating. Vancouver is a reality unto itself, where facts never need intrude on your fantasy.

#33 GenXer on 06.16.08 at 1:37 pm

Hi Mike,

My thoughts on your question.

If you read through Garth’s book (or Shiller’s or other bubble analysts), you’ll see that the first thing that happens at the end of a bubble is a disconnect between price and volume. Sales numbers go down significantly (which we are seeing now) while prices continue to rise (because people are unwilling to believe that the train ride has come to an end).

If you analyze the charts above, you’ll see that an approximate $40k average price correction needs to take place on a $400k home to bring the average back in line with market fundamentals – a gap of ~10%.

That however, does not take into account
– regional factors
– fluctuations in interest rates
– tightening credit markets
– change in oil prices
– impact of job losses
– inflation
– etc, etc.

Shiller comments in his book that the US housing run-up in prices should have righted itself in early 2002. I remember feeling that real estate in Toronto was starting to get overvalued around the same time. It wouldn’t surprise me to see a quick 10% correction (as per the charts posted in this article) and then a long term slow down of prices sliding below inflation bringing us back to 2002-2003 prices in real terms over the longer run.

Just my thoughts after analyzing a lot of information around the markets – no one can really predict the future on these things.

#34 speculator panic on 06.16.08 at 9:46 pm


Please call “hot Property” on City TV. i have never seen so much propaganda and lies. Set these fools straight!!!


#35 brazer on 06.17.08 at 12:25 pm

Air Canada to cut 2,000 jobs

More bleeding…

#36 brazer on 06.17.08 at 12:50 pm

U.S. housing starts lowest in 17 years as wholesale inflation rises

“We have very weak housing with no sign yet of a turnaround and, meanwhile, rising food and energy costs are boosting wholesale inflation,” said Gary Thayer, senior economist at Wachovia Securities in St. Louis.

#37 SMWhite on 06.17.08 at 1:25 pm

Name – ($) write downs so far (does not include loss reserve increases or remaining exposure).

Lehman Brothers – $7.2B/$6B

Goldman Sachs – $5.4B

Wells Fargo – $2.9B

National City – $200M

Royal Bank of Scotland – $3.6B/$24B

Barclays PLC – $6.4B?

Societe Generale SA- $13.7 /$8.5B

BNP Paribas SA-$2.5B/ $0 cash

Morgan Stanley – $16.1B

Merrill Lynch – $32.2B

Wachovia – $6.8B/$10.5B

Washington Mutual – $1.6B

Canadian Imperial Bank of Commerce(CIBC) – $5.7B

Royal Bank of Canada – $1.4B

Bank of Montreal (BMO) – $611M

Bank of America – $4.4B

JP Morgan Chase – $9.9B

Citigroup – $69.1B/$36B

Mizuho MFG – $5.4B

UBS – $45.0B/$41.5B

#38 Michelle on 06.17.08 at 4:51 pm

Sorry to get off topic but I’m confused about the CMHC fee that homeowner’s typically carry on their mortgage. Is it insurance that protects the home owner from loosing their home? Or does it protect the bank from loosing their money, putting all the risk in the homeowners hands?

#39 Sam on 06.17.08 at 6:09 pm

Yes Garth. You can set the ‘ hot property guys’ straight on air . Please go for it.

#40 patriotz on 06.17.08 at 10:48 pm

CMHC insurance protects the lender, i.e. the bank, from default on the loan.

It doesn’t protect the homeowner from anything. If a house is foreclosed and cannot be sold for the amount of the mortgage, CMHC will come after you for the deficiency.

#41 Crikey on 06.17.08 at 11:30 pm

Sorry to get off topic, but it’s “losing”, not “loosing”. Please look in a dictionary.

To get back on your topic, CMHC limits the risk to lenders by providing mortgage insurance against principal and interest losses arising from mortgage defaults.

You pay the premium, your bank gets covered by CMHC. How much CMHC can cover if losses get huge, however, remains to be seen.

#42 Mike.slob on 06.18.08 at 3:00 am

Hmmm,when will be decrease of price in Toronto area?
I think that now avg. price is $ 400 000, and will going up at least $ 420 000 than will be healthy decrease to
$ 400 000 and hurraaaa…. Again will see the market boom. Those trickies are still good for simple people.
So they will keep good high price to next September…
After that will be moderate and after Olimpic Games in Vancouver 2010 will be the biggest crash in Canadian History of Real Estate.

#43 Bruce on 06.18.08 at 8:27 am

#44 Bruce on 06.18.08 at 8:27 am

Read this!

#45 SMWhite on 06.18.08 at 2:09 pm

Yeah CMHC is there for you, the consumer…

We’re so different in Canada, if there is/was a large popping bubbly sound and foreclosures climbed, the taxpayer bails out the bank via CMHC.

Quite possible seeing as a large amount of these 40 year mortgages taken out over the last couple of years will be up for renegotiation come 4 – 5 years times at probably 3 – 6% higher. It takes 8 years on a 40 year mortgage to actually build equity, so how many people will say [email protected] it, when they can’t get rid of their speculation “investment”, seeing as most of these mortgages will be upside down and still another 3 – 5 years from having equity in them.

The bank is protected two-fold, they receive money for the mortgage over the first five years (between 50% – 100% more then what rent would cost the borrower) and if you have to walk away they get paid the balance via CMHC for what they sell the property for.

History continues to repeat itself, how quickly we forget, or ignore it in the quest for quick money…

Anyone that thinks the debacle is down south of the border, or that here in Canada we’re in for a fluffy landing is kidding themselves.

The sky will fall for the greedy and ignorant…

#46 SMWhite on 06.18.08 at 2:12 pm

PS It was a beautiful plan by the banks, your 40 year mortgage was actually double rent paid for the “illusion” of home ownership and when the properties go up for foreclosure auction, they sell the property at a reduced price, the actual REAL value of the home…

#47 nonplused on 06.18.08 at 3:30 pm

The 5 stages of grief are:


The US is almost 3 years into thier housing “correction” (colla;se???) and they are just getting maybe to the anger – bargining stage. This can be seen by looking at the various lawsuits and proposals by congress to “save the housing market”.

When the various proposals are finally proven ineffective (2 years from now) they can move to depression and then finally acceptance. That will be the low in the market but it could be 4 years away!

Therefore, if Canada follows suit, it could be 7 years before you actually want to buy a house if you are waiting for a bottom. It’s going to be extremely hard to make any money on this thing.

#48 poorguy on 06.18.08 at 4:16 pm

Gee! They are still blaming land transfer tax for the slide.Can’t believe this.

BTW this is the best time to buy property .

“With employment and interest rates holding steady and a 17 per cent increase in available listings compared to a year ago, it is an ideal time to take advantage of all that the market has to offer,” said Ms. O’Neill.

#49 brazer on 06.18.08 at 5:20 pm

TD’s economic advice: ‘Buckle up for the ride’

“Nevertheless, the next move by both central banks will be to hike rates, but only after a long pause.”

#50 kabloona on 06.18.08 at 6:16 pm

In the most recent articles I’ve read in the paper re. plunging house sales (Vancouver Sun, Victoria Times-Columnist) the shills blamed rising gas prices and fuel costs for the slowdown!! ha-ha!! As if a 25 cent rise in the price of a loaf of bread makes people reconsider putting themselves in hock for the next 25 years…..

P.S. Nonplussed: I call market bottom in 2011 or 2012….

#51 kabloona on 06.18.08 at 6:17 pm

Oops…..meant to say Times-Colonist ;-)

#52 My_view on 06.18.08 at 10:15 pm

Hey Garth,

You were on the Money Line Show (via phone) this evening. I wish you were part of the panel for debate and not just the opening statement. The bulls were still feeding the bs. But at least they did admit to something “soft landing will happen”.

#53 Peter on 06.19.08 at 12:32 am

Just heard on the news, Vancouver has loads of foreclosures coming from Banks, Utility companies & your municipal government because these people dont have money to pay their bills, get ready for the plunge and be prepared !!! Pay Your Home Line Back ASAP or else it would endure NEGATIVE equity and your home will be taken away !!! Here is fresh from article from RBS, they have been saying any G8 countries are not immune to this credit crisis plus RECESSION, so if you know what you are doing, do something good to yourself rather riding on debts and when it comes, it will CREEP up on you and you wont be able to get a grasp of how it looks like and you already dead –>