‘There is no market’

A follow-up to the last post on the future of suburbia: Last summer, on my political blog, I said the big story, then on nobody’s radar, would be real estate. My bleatings continued with little effect, so I decided to write a book about it. “Greater Fool” was published three months ago and is now into its second printing. My premise was simply that the US real estate correction would come to Canada, and it took me 200 pages to explain why. Trust me, subprime mortgages have little to do with it.

But, it’s academic now. Because it’s arrived. At least the start of the beginning has arrived. And I will say it again: This is the biggest story to impact the middle class, especially combined with our current, and mounting, energy crisis. In fact, the political party which comes up with an agenda of action for that beleaguered middle class will have a potent advantage in the next federal election.

Remember, after all, that it was the housing collapse in the US which brought that economy to its knees, devalued the greenback, goosed oil prices, created a global financial crisis, and cost Canadian banks about $10 billion. This, of course, is not over yet. American real estate prices have declined every month for 16 months; year-over-year values are down 15% nation-wide with some markets off 40%; and it’s estimated the bottom is at least a year away. Over 3,000,000 families have negative equity and there are over a thousand foreclosures a day. This is the worst housing crisis since the Depression, and it has spurred similar retreats from Europe to Australia.

Canada is not immune from this contagion. For a year I’ve been warning the policies of the federal government would exacerbate this situation, and it’s happened. Ottawa has continued to milk stressed-out middle-class families, refusing to cut income taxes. Government spending’s been out of control, and we’re perilously close once again to deficit. Over 400,000 manufacturing jobs have been erased, some because of the hollowing-out of national industry, others because Ottawa helped talk up the dollar and smash our competitiveness. The income trust decision wiped out much-needed private savings and nuked too much investment in oil and gas. And, of course, the government paved the way for 40-year mortgages which have coaxed so many young couples into buying too much house with too much debt.

But don’t just take my word for it. The pattern is always the same. First, sales volumes drop for resales homes, and months later prices start to tumble. Right now, as has been pointed out on this blog, Calgary and Edmonton are in the price-decline stage, with the average home in the Albertan capital down 11% over the past year, or a whopping $44,000.

In Toronto and Vancouver, sales are falling off a cliff, which likely means prices will deteriorate by the end of the year. Home sales in the GTA are down 18% over this time last year, and crashed 9% last month alone. In Vancouver, despite the hype of the 2010 Olympics, the situation is even more dire. Sales have crumbed by 43% in a year, and the number of people trying to bail has grown steadily, with listings up 18%.

Again, don’t take my word for it. Talk to a neighbour or a friend about home sales in their communities. You will find selling a home right now is a nightmare in most places, an impossibility in some. Too many young couples who bought at the limit of their financial ability, and thought they could always sell for a profit in a weekend, are devastated. I spoke with a realtor friend two days ago – a guy I’d warned about this last December – and he was in shock. “It’s like a light switch was flicked off,” he said. “Suddenly people who need to sell are asking me how cheap they have to go, and people who wanted to buy two months ago are too afraid to make an offer.There is no market.” He specializes in cottage properties, and swears the value of an average $400,000 property dropped by a hundred grand last month.

Don’t be fooled. This is not just an economic story. It’s not about a natural cycle in the housing market. This is a societal tidal wave, since over 80% of entire family net worth is in residential real estate.

We’ve all had three years to watch this unfold in slow-motion south of the border. Now it’s here.


#1 Zebedee on 07.06.08 at 11:53 pm

Almost the entire world is seeing the bursting of the real estate bubble. I cannot think of any reason why Canada would be immune. Every place thinks it is special until they suddenly discover that nobody is special.

#2 EJ on 07.07.08 at 12:00 am

I’ve never understood the claims that Vancouver housing prices will go up, up, up, because of the Olympics.

Can someone explain to me why housing would increase in price for a short-term event where people all go back to where they came from when it’s over?

#3 calgary on 07.07.08 at 12:01 am

Taken from the Calgary Real Estate Boards web site CREB http://www.creb.ca
“As we move into the summer
months, it’s an excellent time for buyers to
capitalize on the wide selection of homes,
rather than waiting for the fall when things
start to pick up again”, remarked CREB®
President, Ed Jensen.

I appreciate the optimism , but worthless at the bank.

The big story in Calgary during the height of the boom was house prices were going up $500 a day. The June 2008 average SFH was $473,774 (last 30 days) now 6 days in July 06, 2008 the average is $468,903. That’s a $800 a day decline! shshshsh

#4 Rick on 07.07.08 at 12:23 am

Oh, I’m glad I’m in BC ’cause the Olympics will save us!!


#5 The Other David on 07.07.08 at 12:50 am

Two weeks ago, Statistics Canada reported that Alberta’s population topped 3.5 million for the first time in the province’s history.

That’s a nice, big, impressive-sounding number — one that seems to underline Alberta’s growing importance within Canada, not only as an economic powerhouse, but as a desirable place to live and build a career.

In the first quarter alone, StatsCan said Alberta’s population jumped by nearly 14,500 people. That’s a gain of 0.41 per cent, versus a national growth rate of just 0.24 per cent. At first blush, that sounds like great news.

But as ATB Financial senior economist Todd Hirsch has noted, the rosy numbers are misleading. If one excludes the big jump in temporary foreign workers — who accounted for 28 per cent of all first-quarter gains — Alberta’s population growth rate is now barely above the national average.


#6 vultur on 07.07.08 at 12:58 am


Same line from the broken record named Darth Mortgage. Declines will be moderate in Canada. Nothing to get alarmed about. If you want to get excited consider Darth Mortgage’s embarassing predictions during the last boom (tech). Any credibility that he earned by becoming a MP was thrown out the window after those outlandish and ridiculously inaccurate predictions.

#7 womp on 07.07.08 at 2:14 am

Although not as bad as Vancouver, Victoria sales were down 27% last month. According to some calculations, Vancouver is already in negative YOY price territory….

#8 arit on 07.07.08 at 2:17 am


Thank you for saying it as it is! Again!
We are patiently waiting in Vancouver. Priced out even though the family income is decent. Saving and keeping the finger on that trigger. 2016 looks like a good year to buy. Cash.

Best regards,


#9 Blacksheep on 07.07.08 at 3:25 am

Just sold my family home in langley, had to adjust the price from 460k to 410k and do 8k in renovations to get it sold, i honestly feel we got lucky to get out. paid 216k 12 yrs ago so we are fine.
I am telling any close friends and family to get out, if possible.
I feel house prices will not be this high agian for many years , if again in my life time due to aging baby boomers and the rising cost of commuting. While selling many people asked were we moving to? when i told them we were renting for a bit to watch the market, the common response was the market cant drop!

People are in denial,

they think it can’t happen here.The farther your home is from the core of Van. the more it will drop. My realtor is a family friend, once he new of our plans he confided in us, that getting out was great idea, as a correction was long over due. Made money on the increase, and going to save money on the decrease.The sheeple are to busy watching tv to see whats comming and it will cost many dearly.

#10 socratesway on 07.07.08 at 3:33 am

I live in vancouver west.
in vancouver west, many koreans desperately try to sell investment house,but nobody want to buy.
one friend selled his house(west vancouver) at cad$1,140,000 after 6month listing ,first price was $ 1,600,000.
Oneother friend failed to sell his house,so rented it.
I know many friends who try to sell his house but fail to sell.
I know one korean who has 6 houses tryed to sell all,but he couldn’t sell any one house.

Many korean students return to home country recently because high canada currency exange rate,and some korean students moved to USA.
every korean who I know want to try to sell house ,but I don’t know anyone korean who try to buy house.
Korean domestic house price also begin to down .

#11 Central Banker on 07.07.08 at 3:35 am

Hey Garth, you are bang on!!! There are thousands of Canadians who are getting hurt right now, the middle and lower class is being wiped out, retired folks, people on a fixed income, anyone with any savings, etc, etc….
We are just at the begining of this mess and anyone who thinks “it can’t happen here” think again.
Garth, thank you for telling it like it is!!!

#12 paul on 07.07.08 at 5:51 am

And so it begins…

#13 Peter on 07.07.08 at 6:59 am

Its funny how while all this is happening ,the Globe & Mail realestate section reports recent sales (last week) of properties still selling in Toronto for $100,000 and $200,000 over asking. Why? I guess they are just “fools” caught up in the proverbial hype,huh. Is the answer really that simple ? I hope there is a correction but will it really impact the desireable downtown core houses?

#14 JB on 07.07.08 at 7:07 am

What was the purpose of zero percent down, and amortization of 40 years? Are we not just moving forward consumption? As with all credit contractions, the next decade will be to correct those imbalances. Over the past 50 years, we went from mortgage burning parties to this massive delusional debt Kool-Aid.

#15 Dom-GTA on 07.07.08 at 7:20 am

Like with all stories this is one where most people simply won’t believe it until it happens to them.

I am still hearing extremely bullish comments for a lot of my neighbours (this is a street with 25% of the houses on it for sale avg asking price $1.2 million)

I made a comment to a neighbour/flipper/RE Agent about the $2.2 million dollar McMansion he is building and he almost ran me over in his Escalade and insisted the house for $3.3 million down the street had 3 offers on it.

Some of us have seen the writing on the wall yet we are still being villified as chicken little

BTW, off topic, Garth as a Anglo/Quebecer who recently left Montreal for the second time in 10 years, your comments about the seperatists was bang on!! Good for you! All this political correctness BS is what is causing many of our problems. Time to call it like you see it!!!

#16 vultur on 07.07.08 at 8:35 am

Peter on 07.07.08 at 6:59 am

Its funny how while all this is happening ,the Globe & Mail realestate section reports recent sales (last week) of properties still selling in Toronto for $100,000 and $200,000 over asking. Why? I guess they are just “fools” caught up in the proverbial hype,huh. Is the answer really that simple ? I hope there is a correction but will it really impact the desireable downtown core houses?

It is worth noting that probably 80+% of home buyers are people simply looking for a nice home to inhabit. For them the issue is:

1. Do I want to buy this house for myself and my famiy?
2. Can I (reasonably) afford this house?

The combination of these two factors lead such a buyer to increase 1’s offering price to the limits of 2.

It is not for Darth Mortgage, you, me or anyone else to determine the utility of this purchase. It’s up to the buyer. That’s the overwhelming majority of the housing market. Those are those who appear to resent others who can afford expensive homes that they cannot, those who resent speculators who have profited, and those who simply understand that often home prices can grossly escape the fundamental pricing metrics of rent to value. I completely agree that it makes little sense to own a home or condo that rents for a fraction of the cost but there are other intangible factors such at play.

The best way for end user home owners to look at the housing market is by consciously deciding that intend to occupy their homes for 5+ years and then reasonably calculating the upper limits of 1 + 2 above. Whether their principal residence appreciates 5%, 10% or depreciates 5%, 10%, or 20% in the next few years shouldn’t make much difference as the purchase should not be seen as a money maker.

The only parties who really care about the minute-to-minute fluctuations in prices are the speculators and those with an agenda- the real estate agents + of course your anti-hero, Darth Nostradamus Mortgage.

#17 Peter on 07.07.08 at 9:12 am

Garth, Its true, price is already going down with people worry about GAS price, cost of HOME OWNERSHIP & all those EXPENSES…Recently, a 2800 sq.ft double garage, excellent location (mccowan and finch area) home just sold in Scarborough with appox. 10 – 15 % DOWN from their ASKING PRICE.. Asking $ 500,000, sold $ 450,000…Homes in My Area also being down suddenly 1 month ago with LOADS of listings were up for sale…All of those homes were 10 – 15 – 20 % lower from the price since last winter..Homes went up to $ 450,000 were priced for $ 395,000 NOW…Some went up to $ 400,000 (1600 sq ft home) now being sold for $ 300,000 – 320,000 range.

#18 Mylene on 07.07.08 at 9:14 am

Here is a free and very interesting online documentary to explain what some feel will be the social and economic woes on our planet.


#19 smwhite on 07.07.08 at 9:43 am


“There are so many numbers, I won’t bore you with them”.

That’s because the numbers don’t lean in the RE industries favor… Listen to the RE rhetoric, we’re different up here in Canada, but it sounds the same…


#20 Mike on 07.07.08 at 9:47 am

Once again Vultur does prove his “thickness”… Garth’s concerns are founded in people putting all their eggs in one basket. Is that so hard to understand Vultur? There is nothing Nostradamus in his concerns and suggestions that people look before they leap. There is nothing sinister in his concern that people be cautious and don’t get caught into a trap that is very hard to get out of. There are countless numbers of people who bought in the late 80’s who , only 20 years later, got “their money out of it”. In fact they lost money over 20 years given the taxes, upkeep and/or renovations they had to do. Simply do the math . Especially conerning is the push for people to accept a 40 year mortgage is acceptable. THERE IS NOTHING SINISTER ABOUT GARTH’S POSITION.
Yes Vultur there are many examples of people overspending even today.. but the vast majority of people will be in financial ruin if they believe that no matter what happens their property will be worth more than what they paid for it. That is simply not the case.
Subprime illustrates an underlying problem in society… too much debt and cheap money brought on by Greenspan-economics… The other shoe will drop when consumer debt in the form of credit cards comes up and bites us in the ass. If you can’t grasp this vultur then you are truly thick

#21 John on 07.07.08 at 10:26 am

Learn why Oil and Gas Prices are so high. Don’t blame the Oil Companies or Saudi’s. It’s the falling USD and inflation.

#22 MissedTheBoat on 07.07.08 at 11:02 am

The Toronto Star ran these articles briefly. I wonder why!? Not trying to muzzle the truth I hope.

Anyway, Garth was right…..:

And how will we buy these over-priced houses:

#23 pjwlk on 07.07.08 at 11:06 am

VULTUR: Can’t say I agree with you when you say “purchase should not be seen as a money maker”, I think an overwhelming majority of people invest in a home hoping that it will appreciate so that they will have a nest egg to live off of at a later date, so therefore it is a money maker. Having said that, for most people to buy now doesn’t make sense if you’re expecting a 5%-20% drop.

Also can you provide a link to the article you are referring to about houses selling these days for 100- 200 grand over asking? Everything I see happening around me indicates those days are pretty much gone…

#24 The Other David on 07.07.08 at 11:30 am

Purchasing a property for 300k(1988) then having to sell a few years later for 183K(1996) is a reality, and that is what happens when you buy just before a crash.

This is what happened to the people that I bought my last property from.

It is human nature to feel like an idiot when your new neighbours move in to a similar or better property than yours, for 2/3 of the price you paid.

For condos it’s worse because you lose even more with that maintenance fees that you just cannot control.

It is the same loser like feeling people get when they take their nice brand new Jeep Liberty to visit relatives in the US, only to find out that their US relatives just bought a brand new Grand Cherokee for just a little more than what they paid for their Liberty.

#25 GenXer on 07.07.08 at 11:38 am


Do you not sympathize with individuals who save minimum 25% downpayments, work with proven 25 year ammortization schedules and yet are bid up or outbid by individuals willing to take on massive debt load and overleverage themselves to get in on the real estate game? Does it not bother you that responsible middle class citizens are being taken advantage of by the financial system?

The reason individuals are upset is not that others can afford larger homes and bigger cars. The problem is that too many people CAN’T afford these things, but are using loose credit to answer your questions the wrong way:

1. Do I want to buy this house for myself and my family?
– Yes, because I need it now, and I want to get in on an appreciating market before it’s too late

2. Can I (reasonably) afford this house?
– With a small amount down and a large mortgage at a low interest rate

The result: We all pay more for housing, even though we are being bid up by people who can’t afford (at traditional mortgage terms) the homes they are bidding on.

In the end, we are actually being bid up by the banks themselves, as they benefit from either side winning the transaction. In fact, they win more by supporting the no-money-down scenario while everyone else looses.

#26 Rob M on 07.07.08 at 11:59 am

Yes this is very likely the tipping point, but c’mon the ‘everyone going to resort to cannibalism in ’09’ [buy the t-shirt!] tone is wearing. The market will end not with a bang but with a very long, very slow whimpering hiss.

[Of course, we all know that only those in negative equity situations will be resorting to cannibalism.]

Have a sense of humour about this people – it’s only money – and go easy on the charlatanism.

#27 Future Expatriate on 07.07.08 at 12:03 pm

“vultur”, the world will TRULY cheer when you lose everything.

And make no mistake about it; you will. You know it yourself; that’s why your denial is so virulent. Obviously you are stuck in a position from which you cannot extricate yourself, so you believe you are mitigating the coming damage by pooh-poohing what now is more than obvious to everyone else.

“vultur”, you preach only to yourself; no one else is listening. And you yourself don’t even believe what you say.

The sound of one hand clapping a falling tree in a forest with no one to hear the sound.

#28 Internal Exile on 07.07.08 at 1:33 pm

Vancouver being protected by the Olympics is just one more of the cherished BC myths (like “everybody wants to come here” & “we decoupled from the US and our trade with China will protect us”…I’d go on, but what’s the point?).

The beauty of all those statements is no one who says them has to PROVE them, it’s up to everyone else to try to DIS-prove them, and since it’s impossible to prove a negative proposition (ie “Santa Clause doesn’t exist), they just refuse to die.

And they won’t die until reality hits home in BC – that even if we are “The Best Place on Earth” (barf) – we’re still not immune from the troubles everywhere else. Vancouver ESPECIALLY will get hammered just like everybody else, if not more so.

But hey, some people still believe in Santa Claus too…

#29 Roger on 07.07.08 at 1:56 pm


Many folks in Victoria and almost all local real estate agents have steadfastly stated that this is a special place and immune to a housing downturn. The mild weather and the “boomers are coming” mantra are the most common justifications for this belief.

Well… average and median prices have been dropping for several months. You can see the downturn in this graph: http://tinyurl.com/5lj2yz

Sales have also dropped considerably in recent months and inventory keeps climbing to levels not seen since 2000. Those interested in the whole sad story can watch a stats slideshow here: http://tinyurl.com/5o67z6

#30 Mike on 07.07.08 at 2:06 pm

I certainly agree Vultur that real estate is somewhat “local” . SO Rosedale or Forest Hill will certainly have different numbers than Scarborough or Finch and Jane.
But IN GENERAL prices are still insane in the GTA and people are far to in debt with ONE SINGLE ASSET ..
That is Garth’s point. Get it??

#31 Internal Exile on 07.07.08 at 2:16 pm

GenXer has it right – the banks win either way. I think on the Sopranos they call it “juicing” – making sure you never pay off the original debt, just the ridiculous interest on the money you borrowed.

In fact, I think you could make an argument that the LAST thing they want is people coming in with down payments and reasonable payment schedules, just like they love people who only pay the minimum on their VISA bills.

But not even Tony Soprano was smart enough to create a 40 year mortgage!

#32 Mountain Girl on 07.07.08 at 3:16 pm

Gen-Xer –
I fully agree.
And that might be a source of the resentment that vultur perceives amongst renters?
I know it’s the nature of the market and all that, but during the boom in Calgary, it sort of felt like someone was changing the rules mid-game.
The worst of it is that those of us who chose not to play, may, in the end, have to watch our tax dollars bail out those very banks that allowed such risky lending. If it’s being considered in the States, I don’t think it’s unlikely that we’ll be facing something similar.
Talk about squeezing lemon juice in the paper cut…

#33 patriotz on 07.07.08 at 3:44 pm

I think an overwhelming majority of people invest in a home hoping that it will appreciate so that they will have a nest egg to live off of at a later date, so therefore it is a money maker.

A house, like any other investment, is a money maker if the income it generates (rental value minus expenses) is greater than financing costs.

Selling an investment to a greater fool is not making money. It’s zero sum. The gain of one party is equaled by the loss of the other, just like gambling.

#34 TrueGritCalgary on 07.07.08 at 4:02 pm

I have a question for you folks here. I have 18 months left on my mortgage term at a rate 0f 5.88%. I am concerened about where rates will be in 18 months. I can break my mortgage and refinance at 5.7% for 10 years. Doing this will cost be a penalty of $2000. What would you guys do?

#35 Islander on 07.07.08 at 4:12 pm

List prices are meaningless. They are a best guess based on recent sales of comparable properties. A sale $100K over list could mean a bidding war or it could mean the house was priced too low to begin with. Look to sales price trends for a true read on the market.

Mountain Girl, you’re right on. It will be difficult for vote-happy politicians to avoid bailing out homeowners. For those of you not old enough to remember, in 1981 St. Peter Of Lougheed (*cough*) subsidized homeowners when interest rates hit 21%. So my parents, for instance, who had scraped every last dollar out of their paycheques for the previous 16 years to get their house paid off were, in effect, subsidizing debt-laden homeowners with their tax remittances.

To expect a provincial government with a $12 BILLION surplus to avoid the inevitable whining from homeowners is to expect a miracle akin to Saul’s conversion on the road to Damascus. To expect a minority federal government to avoid the temptation to “save” homeowners is similar folly.

And no, it’s got nothing to do with political parties. They’re all crooks. Except for Garth. He keeps getting kicked out of them so he must be doing something right.

#36 Mike.slob on 07.07.08 at 4:46 pm

NEW YORK (CNNMoney.com) — A good credit score doesn’t mean you can’t end up in foreclosure.

Many now troubled borrowers had excellent credit when they got their mortgages. But they took out loans that they couldn’t afford to buy homes that WERE TOO EXPENSIVE. Credit scores alone are no guarantee that borrowers will be able to keep up with their payments.
In September 2007, the most recent month for which data is available, more than 20% of mortgage borrowers with nearly perfect scores of between 840 and 850 were 60 days or more delinquent, according to First American LoanPerformance. That default rate was roughly equal to that of borrowers with much lower scores, in the 540 to 599 range”.

COB of Canada can’t forewer hold low interest rates,because of high inflation will see next year at least 1% increase….
Also many cities in Central Ontario will increased property taxes between 6% to 10%.
Fuel price,retail prices,food,etc, can going only up…
So the problem is that too many people CAN’T afford these things and you can see that real problem in US is that HOMES WERE TOO EXPENSIVE (OR OVERVALUED)….

#37 Crashing Yuppy on 07.07.08 at 4:54 pm

Its only a matter of time now.

There were 42 houses for sale in my area E18 Pickering (GTA) on MLS over the past 4-5 months. I have been tracking MLS and a grand total of 2 have sold in this time. This after multiple price reductions.

Garth Nailed it:

Sellers are nervous and buyers are frozen waiting for the other shoe to drop.

July-Aug Numbers will be interesting

#38 Mike.slob on 07.07.08 at 5:03 pm

I Agree with post #24-The Other David
“Purchasing a property for 300k(1988) then having to sell a few years later for 183K(1996) is a reality, and that is what happens when you buy just before a crash.
This is what happened to the people that I bought my last property from.But, also you lose $ 1500 interest for every monthly payment with 40 years mortgage and you’ll see after 8 years lost of 117K on property, plus 120K lost on interest and if you sell this property you should expect 5% RE Agents commision and lawer costs and bla,bla,bla,and your 60K Down payment is gone in garbage……

#39 3rdman on 07.07.08 at 5:25 pm

So where do we park it?

Not RE and the stock markets are bearish…

Sleep Country? — Garth

#40 wealthy renter on 07.07.08 at 6:17 pm

Vultur says,

1) Do I want to buy this house for myself and my family?
2)Can I (reasonably) afford this house?

I have disagreed vehemently with many things Vultur has said in this blog, but I think his arguments are correct for non-speculative buyers. Those questions were probably the absolute norm before the current run-up in prices. We are generally a country of homeowners, and they are fundamental questions. However, given the price increases, I think that thoughtful, non-speculative buyers are asking two more questions.

3) If I buy this house now, do I have reasonable chance of the house increasing in value, or will this home decrease in value (10K? 30K? 50K?) Will I be under water for years like the people who bought at the peak of the late 80s? Would I be better off buying a year or two from now?

4) Does the ownership premium justify the extra costs and giving up much cheaper rental housing?

On a simple level, I really think that what is Mr. Turner is arguing is that many people are fudging the answer for question #2. They are buying homes they cannot reasonably afford, and when market answers a firm “No” to questions 3 & 4, the market will correct significantly.

Finally, there are other people beyond Mr. Turner and speculators worried about incremental changes in the market. People close to drowning in 40-year mortgages crave the safety of an appreciating market to sell into. Said people would be significantly stressed and close to financial ruin if the market even tanks 3%, and they are underwater and have to sell. There are lots of homes in my hood that come on to the market a year after they were last sold. I can only surmise a lot of those are “40-year” women & men are the sellers. Right now, the are managing to unload the homes.

To prove my point, the homes come with scuba masks and snorkels. Lots of bad water metephors in that last paragraph! :)

#41 My_view on 07.07.08 at 7:36 pm

People should be outraged.

How the hell is this R/E industry not regulated? Garth thanks for the web site and wisdom, however what are the politicians doing? How the hell are 40 yr/0 down even available? People are buying these shiny homes/condos and being ripped off. More and more I’m hearing about these pre-built buys and the square footage/materials are changed when the buyer moves in. Walk in closet gone and by the way that underground pking spot is now an outside spot. I can line up to buy that great new car (line ups for cars never happen) and everything I ordered is delivered and the price is not changed while I’m sitting at the dealer ship. Vehicles are regulated to the nines. People that 1 something street downtown T.O. condo project; the developer changed/increased the prices while people were inline to purchase. How is that legal on the biggest purchase most people will ever make?

Behind the scenes there is an uncontrollable greedy machine, pockets are being lined.

#42 wolfey on 07.07.08 at 7:52 pm

as for money i put some investments in gold…even oil is dropping now

#43 jrochest on 07.07.08 at 8:44 pm


You’ve been able to find a 10 year mtg at 5.7%?

This is possible how? :)

#44 pjwlk on 07.07.08 at 8:44 pm

patriotz: I’m not sure what you’re on about, but simply put perception in reality for most people and like it or not most people think of the purchase of thier home as an investment as well as a place to live.

#45 Republic of Western Canada on 07.07.08 at 8:58 pm

If general inflation (on energy & consumables) continues to rise, you will need to squeeze the last penny out of your bonds or GICs. Life cheaply, get out of debt, and make inflation work for you as much as you can. More aggressively, ‘put’ options on various indexes & Fannie & Freddie might be good.

If substantial deflation kicks in, as it is with housing, you’ll want to be in cash as much as possible.

It’ll be interesting to see how imminent high inflation (due to decouplying of USD with oil payments), and imminently high deflation (due to reduction in new mortgage debt) will play off against each other.

#46 Calgary rip off on 07.07.08 at 9:06 pm

Ha ha ha all the idiots in Calgary who bought over the last couple years!!! You all are screwed!!!! You should have waited!!! As a renter I can sit and wait while everyone sweats. Once the market crashes, maybe I’ll buy, that’s if there is still even an economy to speak of…And to all the greedy Calgarians who own and think their crappy houses are so wonderful..the finger to you, Im sick of paying what you think your houses are worth!!! Get ready for that overpriced $400K house to go down to $150K, that’s if you are lucky!! By the way, the oilsands are too costly to support your houseprices, either way its screwed!! To any realtors reading this, up yours you are screwed too!!!

#47 David on 07.07.08 at 9:15 pm

There is not always a big margin in talking sense and being right. I spent over two hours at the coffee shop yesterday trying to talk sense into my good friends about real estate. I told them to buy Garth’s book and start renting. Honestly, I could not have been more thorough. I reviewed mortgage versus rent differentials, cap rates, interest rate risks, energy costs, the Case-Shiller Index and on and on it went. To make matters worse one of my buddy’s tells me his newly married daughter who lives in an overheated market in Western Canada is going with a 0/40 mortgage and he is cosigning. These are normal otherwise intelligent people, but when it comes to real estate the only thing that seems to work is people losing thousands of dollars in equity.
Same would be true of the McMansion crowd that Dom described, in reality that home is completely worthless and at some point will be written down to zero dollars, but the guy building it still believes. Quite sad actually.

#48 3rdman on 07.07.08 at 9:38 pm

So where do we park it?

Not RE and the stock markets are bearish…

Sleep Country? — Garth

Yeah probably a good bet with the bed bug pandemic…

#49 Calgary rip off on 07.07.08 at 10:09 pm

Email Ed Jensen at :[email protected]

He’s a POS!!

#50 patriotz on 07.07.08 at 10:38 pm

patriotz: I’m not sure what you’re on about, but simply put perception in reality for most people and like it or not most people think of the purchase of thier home as an investment as well as a place to live.

What “I’m on about” is that a real investment is something that actually generates income, not just something that the owner thinks they can sell to someone else (the greater fool) for a higher price.

If you buy a house and the rental value is less than financing costs, you are losing money. This can only be compensated for if a greater fool buys the property, who then will start losing even more money. The greater fools must eventually run out, which is why all bubbles burst.

#51 vultur on 07.07.08 at 10:46 pm

Wealthy Renter,

If they can afford the payments on their 40 year am mortgage then they have nothing to worry about. If they can’t afford the payments, then they do.

What other people choose to do with their financial affairs should have little to no impact on your life. Do what’s best for you and others will do the same. Rent, buy, Crash on parent’s sofa, sleep in the streets- whatever brings you the greatest amount of inner-satisfaction.

The anger and hostility on this site really is a real problem. People should try harder to not allow their negative emotions to dominate their thoughts, words and deeds. It is net harmful to society and beneficial to no one.

#52 The Other David on 07.07.08 at 11:27 pm

I am tracking M6K on mls.ca for the last 12 months, have seen some serious price drops on Joe Shuster, 2br towns used to be listed @ 340k+ there is one there for 297K for the last 2 months, plus alot(80+) of other stagnant listings.

Toy Factory on Hanna has had 12 listings for the last 2 months and they are still sitting there. ranging from 330k for a 1br to 1.2million for a 2br.

I mention this to one guy I know, his wife just became a RE agent about 4months ago. He said that agents just put these “fake” listings on mls, so people would call them and they can suggest another property to them, it sound kind of weird, I am not too clear on if this is possible on MLS, i am doubtful.

This guy and his wife are extremely PRO RE people, she mentioned the other day that the market is very good but it’s shifted from a sellers market to a buyers market, I don’t even think she knows what that meant, since she became an agent he claimed she “sold” a couple of preconstruction condos and got great deals for the people she represented, that if one walked in without an agent, these deals would not be available.

Is it sold or is it a finders fee sort of deal on preconstruction condos?

#53 Mountain Girl on 07.08.08 at 12:00 am

I agree that gnashing our teeth and despairing of the unfairness of it all isn’t very productive, but I don’t think that it is accurate to say that what others do with their financial affairs won’t make a difference to everyone else.
To steal a phrase from ecology, “all things are connected”. Poor decisions, particularly those made en masse, are going to affect everyone.
The sketchy lending practices in the US have already affected my investments and I think my experience on that is pretty typical. And our economy has been relatively insulated from the real carnage down south (so far, at least).
I think a lot of people on this site express concern as well as anger. Take the post from David about his friends, for example.
Your posts indicate that you don’t feel that the situation is as dire as Garth suggests, but a general economic downturn affects everyone, wouldn’t you say?
The 40-year mortgage dilemma is symptomatic of an economy that has used too much easy credit on everything, not just housing. When that house of cards comes down, all of us pay. Even those of us who are conservative with credit and have been absolutely scrupulous about debt.
We don’t exist in a vacuum.

#54 TrueGritCalgary on 07.08.08 at 12:17 am

jrochest, Not 5.7% but 5.8% at ING. 5.7% is the 7 year rate. This offer is only suppose to be good until July 31. I have crunched the numbers using 7.3% as the rate in 2010. However, I do not have a view into the future so I am not sure if 7.3% will be too high or too low.

#55 David on 07.08.08 at 1:12 am

Vultur, when you write that kind of pseudo Deepak Chopra nonsense, one has to wonder if you actually even read the most of the posts on here. Eliminating the Canadian middle class might in fact be very harmful to society. Housing that is no longer affordable to middle class families might also be harmful to society. Ditto for propping up a speculative housing bubble with toxic 0/40 mortgages that will either never be paid off or run the risk of going into default when interest rates start to reset. If people could afford a proper standard mortgage, there would be no need there for all these voodoo mortgages for otherwise unqualified buyers. No one can go out and trade commodities futures on the Nynex with zero margin, but people can go out and speculate nearly a million dollars on some crappy house with near zero equity requirement.
Bailing out the banking industry and underwater homeowners with our tax dollars over several decades might be harmful. No chump change either, try hundreds of billions of dollars that will not be spent on schools, hospitals and roads in Canada cleaning up the party aftermath from the real estate bubble. It seems unimaginable that Canadians will find some form of deep spiritual inner satisfaction doing years of tax penance paying for this mess.

#56 pitte on 07.08.08 at 1:39 am


I’ve just discovered this blog and have just finished reading the posts from top to bottom.

The “anger and hostility” that you so vehemently complain about on this blog stems mostly from you and your attacks on Garth.

While I agree with you that other people should be able to do what they choose, I believe that they are also better off making their decisions based on sound and reasoned thinking.

Would you want to spend 100k on a car that is really worth 10K? Only an idiot would want to do that, and even you will agree. Unless, of course, you are the car salesman.

That’s all Garth is pointing out in this blog – houses are grossly overpriced. If you want to defend overpriced houses then by all means go ahead, but attacking Garth with name calling will not make your case.

#57 wealthy renter on 07.08.08 at 2:34 am

“The anger and hostility on this site really is a real problem. People should try harder to not allow their negative emotions to dominate their thoughts, words and deeds. It is net harmful to society and beneficial to no one.”

I have said it before, but somebody who buys distressed properties has no business doling out pop psychology to anybody. I am sure you have profited off the backs of people who have had their lives completely ruined. As you have said in the past,

“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.”

Is your profession a net harmful or net benefit to society? Do you experience positive or negative emotions when you pick up properties on the cheap after the wreckage?

The people buying, “The Greater Fool” or those participating in this forum are not overwhelmingly negative. Contributors have seen an unprecedented run-up in prices over the last 5 or 6 years, and witnessed financial tools that have been introduced to further extend prices.

A few here have been priced out of the market, and many more are not willing to risk family financial security by purchasing what they perceive as a grossly overpriced box sitting on a foundation. This may be foolish thinking, but many here at least think about housing and other issues pertaining to the economy. You call it negative, but I call it interested and engaged.

If truth be told, most of the people are probably like you, “Looking to pick up properties [or a principle residence] on the cheap after the wreckage.”

Nothing wrong with that: however, stop trying to save people from themselves.

#58 Sam on 07.08.08 at 2:47 am


If you were a telemarketer you would have been way more successful!

#59 patriotz on 07.08.08 at 4:21 am

The anger and hostility on this site really is a real problem

No, it’s the housing bubble that’s the real problem. The anger and hostility are just the natural reaction of someone with any morality who understands what a huge scam it is. Jesus was pretty angry and hostile toward the moneychangers in the temple too.

Haven’t we seen enough evidence from south of the border already?

#60 GregK. on 07.08.08 at 6:59 am

Vultur said:

“What other people choose to do with their financial affairs should have little to no impact on your life.”

Try telling that to homeowners closing in on retirement in Stockton, California. Their little nest eggs have been completely decimated by what “other people chose to do with their financial affairs.”

If I had a 40 year/1.5% down mortgage on a $450K property, I’m not sure if I’d be too happy either paying $1,500 in interest per month on something that could be had for significantly less a year from now.

Now multiply that feeling by 3 or 4 investment properties (or more) some folks are certainly holding for “investment” purposes in Canadian cities. I can’t even begin to imagine what they must be going through right about now.

As for the anger and hostility: isn’t that one of the necessary phases folks inevitably go through with an over-valued real estate market on its way down?

Thanks for this blog Garth.

#61 Al on 07.08.08 at 8:48 am


“If they can afford the payments on their 40 year am mortgage then they have nothing to worry about. If they can’t afford the payments, then they do.”

The problem is that the term “afford” is getting mangled. While some people can pay their mortgage, they fail to save in other ways, and face losing their house if they face any kind of set back. And even if they really can afford the payment, is it in their best interest to take on the payment? Could they have their house payed off years earlier by delaying the purchase by renting for awhile first and saving for a larger downpayment.

This type of situation is not necessary with affordable housing. So the question becomes, why did housing become unaffordable? Among other factors is the mass amount of information pushing that RE is a good investment, even when it’s not. We need voices on the other side of the discussion cautioning against buying RE.

The main factor that lead to unaffordable housing is the new attitude towards debt. Debt costs. It cost alot. We’ve been encouraged to take on debt, more and more debt, so that as much of our income as possible becomes interest income for lenders and retailers. The lenders income is maximized when we are at the edge of bankruptcy without going over. As people spend more and more of their future income now, it pushes prices higher, which of course includes RE. If people quit being willing to spend so much of their future income now, prices will decline.

There is hostility on this site towards those that would get people to risk financial ruin so they can make their commission. There is hostility towards those that would encourage people to spend too much of their future income now so they can collect interest. Doesn’t that seem fair? Would you be angry at a telemarketer that ripped off your grandmother?

Lastly, anger can be helpful. It gets people to act against injustice. Convincing people to mortgage their future is an injustice. It may be negative to think that stepping on a nail will hurt you, but it keeps you from stepping on a nail.

The ‘nah, nah I told you so, and now you’re going to fail, and I can laugh at you’ type of anger (I’m looking at you Calgary rip off) is not helpful though.

#62 lgre on 07.08.08 at 9:05 am

David it’s nice that you are trying to get your friends to see the light, but one thing I learned is that they will never listen because you are not the media. I myself dont say anything to anyone about RE, I just let them drown cause most people will only get it when it’s to late, this has been proven time and time again. The media, realtors, bankers and economist have the most influence of the market and if you are not one of them then you are SOL unfortunately.

#63 smwhite on 07.08.08 at 9:58 am

– The anger and hostility on this site really is a real problem. People should try harder to not allow their negative emotions to dominate their thoughts, words and deeds. It is net harmful to society and beneficial to no one. –

So people should just accept the steaming pile of misinformation that has been disseminated over the past couple years on RE and the economic state of things? Let me guess, because I question the validity of the bull shit from CREA or the banks(and lets not forget two of Canada’s biggest banks, TD and BMO have gone on record this spring and summer saying there is a problem in RE) and media which all have vested interests in this fantasy continuing, I’m a Negative Nelly?

Vultur sounds like the FOX news talking heads again, calling anyone that questions the current state of the economy or “war on terror” unpatriotic and a traitor, or in this case, anyone that says RE at this stage is not a wise “investment” is negative.

Yes vulture, you’ve finally hit the nail on the head, there are a number of persons blogging on this site that are analyzing RE and economic statistics and data and coming to the conclusion that housing in Canada is in a big juicy bubble and the TSX(along with the rest of the worlds stock markets) is now in a bear market, I mean the TSX only lost 1500 points in 2 weeks… How are all those traders and fund managers going to overpay for those homes in the prestigious TO neighborhoods now that they ain’t getting any big fat bonus checks?

So I will go on record(if it couldn’t be figured out before) that my glass is half empty, I’m a realist and we’re REALLY in a BEAR market for housing and stocks, globally…

I can be positive too, the Leafs will win the cup, now being positive really doesn’t change anything does it?

Remember kids, the best time to have cash is when nobody has any!

#64 smwhite on 07.08.08 at 10:42 am

Calgary rip off, your dreaming(or over exaggerating) if you think a 400K home is going to drop to 150K, maybe 15% – 25% over the next 5 years…

Thing to consider is the principals on these mortgages from the last 3 – 4 years are so big that a reduction in 10% basically means goodbye to any equity you’ve established over the past 3 – 4 years…

$400K – 10% = $360K (That’s a quick way to spend 40K or wave your down payment goddbye.)

I will agree with you 100% though that the oil sands aren’t as wonderful as some think, with this bill/legislation in the USA to only accept “clean” oil, there is some scrambling from the Alberta premier…

Good thing the G8 leaders got together to establish a target date of 2050, Alberta better thank Harper for caring more about big oil then the environment(He’ll be dead in 2050 anyways).

Anyone notice yesterday that Fanny Mae and Freddie Mac took a huge beating on the stock price as did almost all financial yesterday… I’m hearing rumors that the write downs aren’t finished…

Markets as of July 8th 10:00am

DOW @ 11250 ( 10K here we come )
TSX @ 13600
Hang Seng @ 21200 (Lost 3% last night)
FTSE @ 5500
MDAX @ 8400

NAR predicts a 6% drop in home prices this year(it will be more like the 15% last year):

#65 Mike.slob on 07.08.08 at 11:04 am

“No tree grows to the sky”.
Past erosions in affordability are the main factor behind weaker sales in GTA.
Sales in GTA are significantly lower than in the banner year that was 2007, but they are also returning to before 2004-2006 levels between 78,000 to 81,000 sales in 2008.
Toronto Area is experience 13.8-per-cent lower sales for the first six months.”

About Residential ReSales in GTA in 2008:

Jan.2008 sales decreased 2.1%
Feb.2008 sales decreased 11.2%
Mar.2008 sales decreased 22.2%
Apr.2008 sales decreased 7.3%
May.2008 sales decreased 16%
Jun.2008 sales decreased 18%,avg.price up, and a 22 per cent increase in inventory.

Residential ReSales in GTA from Jan. to June:

2008. 43,685 sales decreased 13.8%
2007. 50,648 sales
2006. 45,797 sales
2005. 44,771 sales
2004. 46,398 sales

Residential ReSales in GTA -only in June:

2008. 8,600 sales decreased 18%,
2007. 10,451 sales
2006. 8,730 sales
2005. 9,153 sales
2004. 9,275 sales

My Real Estate prediction for July 2008:
Sales volume in GTA will be down between
18% and 23%.

#66 Calgary rip off on 07.08.08 at 11:56 am

Am I dreaming that the economy will collapse? I hope so for my sake AND homeowners. However, house prices will drop BECAUSE the common person cannot afford a $400K house and Calgary is not a technologically advanced city. It’s a cow town, remember? So I pray that all the bulls and other homeowners who have the mass delusion that their homes wont drop like crazy are correct. But unfortunately, I dont think so, its mass delusion. It shows the conservatism here that will ruin the province. What the government really needs is the NDP or some party that is for the people and not OIL.

It’s amazing that people in Calgary that bought at reasonable prices WANT their house prices to stay at unsustainable levels. This will in effect cause the economy to crash in time because only the super rich can afford to live here, and all the necessary day to day industries will be vacated. Why is it that if I make $90,000 a year it is still difficult to buy a decent house in a decent part of town? How crazy is this? Its not about entitlement to owning a house, its having earned it. Its amazing also the Stelmach and other fuckers in his government dont put rent caps on. What the hell is this? So either way the worker is screwed. Cant buy, too expensive, and pawns of house owners. Things are going to fall hard. God help the speculators, Ed Jensen and the realtor bitches(male and female alike) who count on this craziness continuing. Real estate sales are declining, and people just cant afford it. Perhaps as a renter I’ll wait for that $400,000 house to be appraised at $180,000 what it really is worth instead of this speculative crap. To those that say that will never happen, I hope you are right, but until it does, I will wait, I have nothing to lose.

#67 Chuck D on 07.08.08 at 12:31 pm

The problem with anonymous internet discussion boards is that for some reason the disgruntled nuts come out in droves and drive away reasonable debate and discussion. The sky isn’t falling and no one is out to get you.
Calgary Rip Off & Republic of Western Canada et al please take note.

#68 polecat on 07.08.08 at 1:21 pm

I agree, minus the Chef Ramsay explitives,heh heh.I make a bit less than you but should be able to afford something decent,not an oversize place but an affordable one.Funny thing is I make way more than my dad did and thank’s to inflation my money isn’t worth as much.I’m quite happy to rent a great place,walk to work and afford to take a trip almost every weekend with my family and not do it on credit.I see too much greed and keeping up with the Jones ideology.I don’t listen to real estate spin,I listen to people a lot older than I am that have seen this before.That and a little common sense will keep me out of a 40 year noose,much less and upside down asset I “own”.

#69 David on 07.08.08 at 1:28 pm

Canada might well have the rare distinction of having the most spectacular real estate bust of all the major industrialised countries. The Canadian bubble is the last to start bursting and the bubble is popping at the wrong time. There will be no props due to hyper inflation and rising energy costs. Combining rampant inflation with declining home values will result in some severe price declines. Factor in a legion of aging of baby boomers needing to sell and low levels of new household formation among Gen X’ers with minimal available cash for down payments and tightening credit standards.
What looked like a severe haircut will turn into a really nasty live scalping for those who overpaid on homes with 0/40 mortgages. Wages certainly will not increase to the levels to support the extended five year home price run up and inflation and interest rates are likely to rise. The army of eager buyers will be reduced to a corporal’s guard with mighty thin wallets.
Garth mentioned an 11% price drop in Edmonton. Think of it like a hockey match and someone just finished singing Oh Canada. The game is just starting.

#70 Kent D on 07.08.08 at 1:32 pm

Ontario is in trouble, BIG TIME!
layoffs in 2008 in just Ontario alone
– Magna
– Air Canada
– Campbell’s
– Siemens
– CUPE Schools, Hospitals, Universities, Municipalities
– CAW, GM, Ford, Chrysler… it keeps coming, permanent layoffs, closed plants, est. including smaller parts makers are some-where between, 20,000-25,000 jobs
– United Steel Workers
– Trucking
– forestry
there are many more but more concerning is/are manufacturing/export company bankrupts

We sold our home last year, now moved into our rental property and have that for sale, which has been on the market for over 6 months now, no buyers and we have the largest, most updated home in the area for sale 70k cheaper then the next home for sale….. anyone buying less then 100k off last years sales mediums is just throwing good money away.

The only buyer we had that was close, has to sell his house, which was 5 months ago…. Americans may not have much home equity but they do have lower inflation costs, keep more of their income, have cash, Canucks have no cash. My wife has an income of 130k per year, I am self employed that is why I use her as an example. She is taxed at 47% – 61k = 69000 left, a mortgage of 300k will run her roughly 2000 mth, 24,000$per yr, now our cost of living in Canada has increased to 27% which includes Hydro, heat, groceries, that to us in Toronto is 6500 year in property tax, food is crazy 1000 month, hydro/heat is 500 per month on avg, although I have had bills of 1200+++, now throw in gas prices, a car lease, insurance, gst pst gas tax, capital gains, child care or Montessori where my daughters go is 2400 per month, HOW CAN THE AVERAGE FAMILY IN CANADA AFFORD A HOUSE WHEN THE AVERAGE HOUSEHOLD INCOME IS ONLY 65K? IN Arizona, the income tax is 8%, Florida there is no income tax, average home prices are 200’s, for 3000 sq ft home…food is so cheap, clothes, cars are still 35-40% cheaper….. who is in the better position, Canada? USA ? no brainer eh!

#71 Kevin in Winnipeg on 07.08.08 at 1:35 pm


Winnipeg seems to be doing fine.

#72 vultur on 07.08.08 at 3:04 pm

I wish suffering on no one. I seek to profit from opportunity. I don’t create other people’s suffering. I am unapologetic for capitalizing on legal and ethical business opportunities.

Anger is never justified. Objection is justified, analysis is wonderful and respectful contrary opinions are always welcome.

Darth Mortgage is himself a cause of and a profiteer on people’s false sense of fear. There is nothing to fear. You make decisions that affect your life and you needn’t concern yourself positively or negativity with the actions of others. I have no hatred or negative feelings towards Darth Mortgage, but I do criticize his actions and words as specifically intended to provoke fear and suffering in others. He should consider the negative impact he is having on people through his dissemination of fear.

Mountain Girl:

>>The sketchy lending practices in the US have already affected my investments and I think my experience on that is pretty typical. And our economy has been relatively insulated from the real carnage down south (so far, at least).<<

Recognize that you entered into investments that were and are always subject to RISK. If you can’t tolerate risk then stay away from equities and buy government bonds. No one did anything to you- you did it to yourself by consciously choosing to assume risk. If you suffered at all I am sympathetic to your suffering but you need to appreciate that you caused your financial loss, not anyone else.

It’s quite interesting to witness the visceral attitudes here. Homeownership is a strong policy of this government. Why does it surprise you that it would encourage new ways for people to enter the housing market? Overall the housing industry has an enormous impact on the economy because of the wealth effect that it creates. To stifle that industry would be harmful to the country. I agree that in many areas housing prices have diverted geometrically from any fundamental analysis of value. That doesn’t mean that a person or a family shouldn’t choose to own a home. Let every adult person make their own financial decisions. Canada is not a nanny state and aside from fraud (PROVEN fraud, not the kind that many of you allege) why protect adults from making adult decisions?

#73 brazer on 07.08.08 at 3:22 pm

Building permits tumble 12.2%

“This will act to dampen home-price appreciation and create a pullback in prices in selected cities where markets went too far, too fast,” Toronto Dominion Bank deputy chief economist Craig Alexander said in a recent report. “However, the increase in supply in Canada will pale in comparison to the dramatic surge experienced in the U.S. that caused the worst American housing correction since the Great Depression.”

#74 brazer on 07.08.08 at 3:26 pm

Confidence plunges as stagflation fear grows

“A weaker dollar will translate into higher prices for fuel and food. Consequently, economists are also forecasting inflation to pop above 3 per cent in the coming months, topping the Bank of Canada’s target of 1 per cent to 3 per cent.”

tick tock tock tock…

#75 brazer on 07.08.08 at 3:40 pm

Stay liquid and be cautious – more market mayhem ahead

“How do you boil a frog? If you drop it into boiling water it will jump right out. But if you put it into tepid water and raise the heat slowly, it’ll stay put and get boiled. Just like many investors. ”


#76 patriotz on 07.08.08 at 3:41 pm

Anger is never justified.

Well you’re entitled to your opinion, but perhaps you might want to read the opposite opinion below, and you don’t have to belong to any particular religion to appreciate it. I think a lot of what says is relevant to the housing bubble and its attendant financial scams.


#77 brazer on 07.08.08 at 3:42 pm

JPMorgan CEO says credit crisis could get worse

“Mr. Dimon said the future of the U.S. economy is bright, but more short-term suffering is ahead. He said commercial banks, regional banks and jobs for the average American will be the next areas to experience significant stress.”

“suffering”, “significant stress”…hmmmm.

#78 Vancouveritis on 07.08.08 at 4:08 pm


You wrote:

“If they can afford the payments on their 40 year am mortgage then they have nothing to worry about. If they can’t afford the payments, then they do.”

I agree. To a point. Yes, people who bought a home with a 40-year mortgage at 4, 5 or 6% and can afford their payments have nothing to worry about.

However, what happens when they renew after 5 years? Can they afford their mortgage with the new interest rates? What if the interest rates climb up to 6, 7, and 8%? 10% is not inconceivable.

Consider a $325,000 mortgage. If a homeowner is getting by with a $1500 payment on a 40-year, 5% mortgage (not including taxes, maintenance, etc.), what happens when the interest rate is 8% after renewal? Can they afford the $2200 per month mortgage payment plus taxes/etc.? That’s an extra $700 per month after 5 years.

Many people will have a hard time making payments based on that scenario.

Now imagine a 10% mortgage rate scenario.

This is the problem with the 40-year mortgage. There is no fall back. The buyer will spend the next 40-years struggling to pay it off, if they don’t lose the house.

Now consider a scenario where home prices are not over-valued: a house at 225,000 on a 20-year mortgage at 5%. Payments are about 1500 per month. When the owner renews after 5 years at the new rate of 8%, the monthly payment increase to about 1800. That’s only 300 dollars extra per month. But if the owner cannot afford the extra amount, they have the option of choosing a 25- or 30-year mortgage, bringing the monthly payment back to about $1500.

40-year mortgages are deceptive. What looks like a good deal now with affordable monthly payments can easily become unaffordable when interest rates climb. Most people don’t think far enough ahead to realize this.

If interest rates go up over the next couple of years, most of the 40-year mortgage crowd will be in for a shock. Many will have to default and lose their home. Prices will crash.

#79 GenXer on 07.08.08 at 4:50 pm

“It’s quite interesting to witness the visceral attitudes here. Homeownership is a strong policy of this government. Why does it surprise you that it would encourage new ways for people to enter the housing market? Overall the housing industry has an enormous impact on the economy because of the wealth effect that it creates.”

Sorry Vultur – you’re way off the mark here. Here is a non-visceral economic retort – houses are non productive assets. They depreciate over time and require enormous inputs to keep them running. The jobs they create have no long-lasting intrinsic value to the global economy and do nothing to position a country for long-term competitiveness.

Why should the government back off on a policy that tries to put everyone in their own home? Because the only parties that benefit from the current policy are the banks, the real estate industry and government.

If you truly believe this is not a Nanny state, why would you want to bring home ownership within reach of every individual? Supporting home ownership that is as widespread as you suggest would require that individuals elevate their earning potential to a higher level across the board from a global point of view. Would it not make sense for the Government to focus on education and a leadership in green manufacturing instead, where we could deliver real net new productive assets to support our economy? Would this not lead to longer term real GDP growth that could support more people owning homes without being crippled by long-term debt?

Still – I have to agree some people are WAY too overzealous in wanting to see RE crumble. It’s one thing to look for a deal, quite another to wish for a stranger to lose everything due to a poor decision…

#80 EJ on 07.08.08 at 4:55 pm


“The association said new listings were up by 16 percent for the month, while the number of active listings — the total number of properties for sale — was up 28 percent.”

Watch these numbers. Unfortunately, they rarely report them. It’s difficult enough finding any hard numbers for Canada, let alone Winnipeg. We only get what “The Industry” spoon feeds us.

#81 jrochest on 07.08.08 at 5:26 pm

Apparently, pointing out that RE markets are a) overvalued b) at unsustainable levels and c) falling as a consequence is angry fear-mongering.

At least according to Vultur. This is odd, because to everyone else it seems like a statement of the obvious.

And TrueGritCalgary — if it were me, and the 5.7 was a fixed rate, not a variable one, and if the 2K penalty was something I could pay directly, I’d do it.

If they were going to fold the 2K into the mortgage, I wouldn’t.

But that’s just me: I think rates will more likely go up than down.

#82 TrueGritCalgary on 07.08.08 at 6:35 pm

JUst a thought, those who went into 0/40 mortgages are fortunate, in that, they will not have lost a downpayment. I really feel for those who saved up a decent downpayment and have now lost it due to the drop in prices. Both types of buyers may end up having to walk away from their home, but for those who put nothing down, they have not lost anything other than their credit rating for a few years. This is what really pisses me off about this whole thing. Those who saved up to buy their home will be hurt the most in this whole mess.

#83 Jon on 07.08.08 at 7:12 pm

Question for Garth or someone in the know. Any idea what rents are going to do in Vanocouver. Like housing charges they are unreasonably high – are they likely to decline as prices fall or continue as high as they are as landlords who bought during the bubble need that income to cover their large mortgage payments (although this assumes people will continue to pay high rents). My view is rents should also “correct” as renting becomes a less attractive option with falling house prices.

#84 One of the foolish on 07.08.08 at 7:25 pm

An interesting article from a small newspaper in Canada…


Move over Chicken Little! :)

#85 lgre on 07.08.08 at 7:54 pm

not subprime issue, just like Garth called it. check out video


#86 WaitingInToronto on 07.08.08 at 7:56 pm

Vultur – “Overall the housing industry has an enormous impact on the economy because of the wealth effect that it creates.”

I am no economist, but this doesn’t seem to make sense. How does housing create wealth for the general population, except for the select few (banks, RE agents, developers).

If you own a house and the value goes up, you do have more wealth on paper. However, assuming you bought an appropriate house for your needs, you’ll still need to live there. Are you any richer? No, since all your ‘wealth’ is tied up in your house.

Sell? Yes, this works, but you have to live somewhere. If renting is cheaper, you will have actually gained ‘wealth’ (at the expense of the next buyer). Too many people do this and the market will be flooded by new listings – and prices will drop. In other words, few can benefit from this before the market is affected.

At the end of the day, it doesn’t make sense for housing to broadly increase beyond the rate of inflation. Homes don’t generate income (except for rent, but that doesn’t cover ownership costs at today’s prices), and they cost money to maintain. It’s not like investing in a company stock – that company creates value by producing and selling things people want. Homes don’t produce anything of value.

#87 lgre on 07.08.08 at 8:06 pm

“Still – I have to agree some people are WAY too overzealous in wanting to see RE crumble. It’s one thing to look for a deal, quite another to wish for a stranger to lose everything due to a poor decision…”

Nobody is cheering on for someone to loose their property but if I can buy a house for $200k instead of $300k I’m all for it.

#88 give me a break on 07.08.08 at 8:25 pm

Hey Calgary rip off…only losers have nothing to lose. I am sure you didnt buy into the market in ’01,’02,’03,’04,’05 because when a house was $250,000 you were saying “this is crazy these prices are too high, its going to crash any day now”….haha

#89 mattbg on 07.08.08 at 8:43 pm

“Still – I have to agree some people are WAY too overzealous in wanting to see RE crumble. It’s one thing to look for a deal, quite another to wish for a stranger to lose everything due to a poor decision…”

I want to see life in general return toward modesty. Real estate is just a part of that problem.

#90 Popping-Bubbles on 07.08.08 at 8:48 pm

WaitingInToronto… you’re bang on. Most economist would agree that investing incremental dollars in housing relative to investing in productive assets (those which are used to produce goods and services) is a poor trade-off for the economy.

In addition, over-inflated housing basically forces a wealth transfer to the older, richer portion of society (those most likely to own a home) from the younger, less well established portion (those who don’t yet own a home but would like one or those with families who need to trade-up).

So even on the way up the housing bubble is bad for the economy. On the way down it’s just bad all around.

#91 Mike on 07.08.08 at 9:01 pm

Is Vultur still here to muddy the waters. Look.. plain simple… too many people want oil/gas price go up..
Too few people can afford house …inventory go up… price go down. Got it Vulture
Saw a house featured in Star on weekend. Riverdale home sold for 699K asking 699K Bought in 2005 for 633K. Take off the 5% commission and those guys pocketed basically nothing. Some investment.

I don’t think anyone on this blog is ghoulish and wants to see people suffer. We are all hoping for a correction to bring things back in line with reality… ie incomes and inflation or cost of living. I also don’t think anyone here thinks the sky is falling. When garth refers to 10-15% correction that’s hardly the sky falling.
The biggest concern is the Can Dollar hurting exports, witness the lumber industry in BC and manufacturing in Ontario . When experts don’t rule out GM going bankrupt, once a blue chip stock you kept for a lifetime, then you know there are fundamental shifts in the financial world which will impact each and every individual . At some point Canada will have to do something about the Carbon emmisions and that will for sure impact our wealty western neighbours. This is not doom and gloom but a framework of reality .
Get with the programme

#92 Poor Bear on 07.08.08 at 10:33 pm

I have little banking experience in a distant country of my home and I am wondering whether anybody could share the answer to my question.
What happens with bank-mortgagee relationship (in Canada) in a very simple case?

mortgage – 400k
interest – 5%
term – 5 years
amortization – 40 years
downpayment – 20k
house price – 420k

Assume in 5 years house price sinks mere 15% and the mortgagee does not pay any lump sum along the way. Assume also that for 5 years the mortgagee has not saved a penny as the person struggled to cough up mortgage payments.

At a time of mortgage renewal:
mortgage balance – ~382k
house price – ~357k
interest – does not matter

1. Would the bank ask the mortgagee for additional downpayment?
2. If the mortgagee cannot come up with a lump sum, what would the bank do?
3. Would the bank renew the mortgage that is larger than house price?

The answer is 3. — Garth

#93 Mountain Girl on 07.08.08 at 11:31 pm

While I thank you for your concern over my financial well-being, however condescendingly it may have been delivered, I think you missed the point. Of course I understand and accept risk. I wouldn’t put money into such investments if I didn’t accept the downside as well as the up.
My point, however, was that the financial decisions of others did affect my investments. As well as the investments of people around the world. I am not blaming anyone for that. I am saying that I do have an interest in responsible lending practices because at the end of the day, they affect my bottom line.
You keep repeating that homebuyers should be left to make their own decisions, that it’s none of our business what kind of mortgage they want.
Well, when it is a lending product that sets a market up to fall, then I think it is our collective business.
I act in the best interest of my investment by making moves to protect it, and if that includes calling in a “nanny” to also protect the average uneducated consumer (the ones you wish no harm, but still plan to “ethically” profit from when they hit foreclosure on their impossible 40 year mortgage), then that’ll be just what I do.
As for visceral attitudes on this site… keep up the obnoxious, sanctimonious tone and I’m sure you’ll see a self-fulfilling prophecy on that one.

#94 WetCoaster on 07.09.08 at 12:17 am

Sez Vultur…
I wish suffering on no one. I seek to profit from opportunity.

Yeah, you’re a real hero, alright. We need more sociopaths like you.

Apologies to Garth’s blog for feeding that troll.

#95 David_#3 on 07.09.08 at 12:54 am

vultur wrote “but I do criticize his actions and words as specifically intended to provoke fear and suffering in others. He should consider the negative impact he is having on people through his dissemination of fear.”

suffering, that’s far fetched…

what about the “negative impact” of being cheerfully led into signing a 40-year mortgage for an overvalued house and then realizing you’re the “greater fool” (if not the greatest…)

#96 David on 07.09.08 at 1:11 am

Market collapses really are no fun. I still vividly remember Alberta circa 1985-1987. The housing market crashed and burned, Alberta’s financial sector was in total ruins, the 1987 stock market meltdown resulted in some quite substantial losses and the Alberta government was well on the road to a structural deficit. Anyone old enough to have experienced what was going on at the time does not find any joy from what happened. The correction process destroyed a whole lot of equity.
Vultur, your comments are at least good for some comic relief, if nothing else. The 0/40 mortgage is a successful product in the sense that this marketing gimmick helped keep the real estate Ponzi scheme alive and sure helped hyper inflate prices to unsustainable levels disconnected from reality.

#97 just wondering on 07.09.08 at 1:18 am

Re: Poor Bear #90
Banks will take on the risk?
What would happen on these interest only mortgages? Rising interest rates? You still owe $400 or more and its worth $357.
Higher payments, food, energy ect…
What are people going to do?
What are the banks going to do?
How much will these “Cnd. Pseudo sub prime” effect the market?(less than 5% of these out there)

#98 patriotz on 07.09.08 at 5:26 am

“Any idea what rents are going to do in Vanocouver.”

Rents were basically flat during the early 1980’s RE bust/recession and I would expect the same this time around.

Nominal rents only fall when you get really serious overbuilding (like in Florida) or you get a Great Depression.

#99 Popping-Bubbles on 07.09.08 at 7:00 am

The following Globe article contains a few quotes worth noting:

“While Canadian home sales have weakened markedly in 2008, home building activity has yet to respond”

Traditional end of bubble behaviour. Projects in the pipeline continuing despite deteriorating fundamentals. In the end this new housing stock will help drive the declining market even lower.

“The ratio of new listings to sales – a key inventory metric – has risen above two-to-one for the first time since late 1998”

WOW, two homes are being listed for every sold?? If true and this trend continues (both reasonable assumptions), then in one year’s time a full year’s worth of housing stock sales will be added to inventory (in addition to the current record high housing inventory)! This will push inventory for sale to U.S. levels. Forget modest price declines, this is going to be a full on train wreck.


#100 Al on 07.09.08 at 7:50 am

vultur says,

“I agree that in many areas housing prices have diverted geometrically from any fundamental analysis of value. That doesn’t mean that a person or a family shouldn’t choose to own a home. ”

Al paraphrases,

“I understand the fundamendals of house pricing, but please ignore them and come buy my overpriced investment properties.”

vulure says,

“I have no hatred or negative feelings towards Darth Mortgage, but I do criticize his actions and words as specifically intended to provoke fear and suffering in others. ”

Al paraphrases,

“I hate garth because he’s trying to scare away my suckers and cause me suffering.”

vultur says,

“I seek to profit from opportunity. I don’t create other people’s suffering.”

Al paraphrases,

“I seek to profit from opportunity, and I try to create opportunity by encouraging stupidity (see my first quote.) I don’t create other people’s suffering, it’s their own fault for listening to me. Buyer beware.”

If someone kicks you in the shin, you should get angry. It lets that someone know that you won’t put up with their behaviour. If an industry is misleading the middle class into financial ruin, you should get angry for the same reason. You don’t want anger because it means a louder voice bringing attention the bad behaviour of you and yours.

#101 GenXer on 07.09.08 at 9:05 am

“Nobody is cheering on for someone to loose their property but if I can buy a house for $200k instead of $300k I’m all for it.”

lgre – have you considered the implications of the average family losing 1/3 of their net worth? Are you confident that your lifestyle would survive such an economic shock unscathed?

I can’t see suffering through a national economic crisis of that magnitude being worth saving $100k on a home given that it would most likely cost you many times that amount over a protracted period – whether it is future employment opportunity or return on invested capital.

You read it everywhere on this site – where do you put your money right now to project it? Real estate is falling, oil, gas and gold at an all time high, bonds getting hit due to expected hikes in interest rates. And keeping your money in cash during a stagflationary period? Forget it – there are no more safe bets. Is that worth $100k? Only time will tell.

#102 Calgary Rip Off on 07.09.08 at 11:40 am

“Give me a break”:

Please. I agree that losers have nothing to lose. I would like to buy a home. That is why house prices are of concern. It is unfortunate for home owners that have a lot to lose. Economics is a complex matter. In the years that you mentioned I didnt live in Calgary so I didnt have the opportunity to purchase in this vibrant city. However, I like living here now and I like my job which directly involves saving lives every day in the healthcare field. So, if I get flack for my opinions and desire to support my family so be it. I fault those individuals who through greed want their house to be worth less than its intrinsic value. Realistically the value of these overpriced houses may never drop below 20-30% hopefully, however it may be much worse or much better. Given the current market statistics, the highlight is the greed of many in Calgary who have essentially screwed many working folks like myself who have come here for a better life. Fortunately I make $100,000 a year so I stay afloat. I cant imagine what a person here does that makes much less. Many people are really hurting and the matter is very complex. I fault all those who manipulated to get ahead. It is unethical, as is the current government who refuse to put rent caps on like in British Columbia. Perhaps you should think before you judge people and try to censor. This is Canada. If you desire no freedom of speech, move to Russia please.

#103 smwhite on 07.09.08 at 11:53 am

Vultur, you must be tired of spinning the same record playing the same song over and over again… And you just got “owned” by Al…

Vultur said:

– “Homeownership is a strong policy of this government.” –

It was also a policy of the Bush administration, in fact he bragged about home ownership hitting record highs during the first year of his administration…

G.W. Bush said:

– Another priority for a new term is to build an ownership society, because ownership brings security and dignity and independence.

Thanks to our policies, home ownership in America is at an all- time high.

Tonight we set a new goal: 7 million more affordable homes in the next 10 years, so more American families will be able to open the door and say, “Welcome to my home.” –

So what does government “policy” have to do with whether or not real estate is affordable? Maybe when your central bank, banks and government officials get caught stealing set up because of bad policy, that benefits Joe Lunch-pail very short term and long term is just handing over more of what little ($) people have to the corporations and banks.

Well they’ll hit their 7 million target south of the border, easily! Thank you Mr. Bernake, Mr. Cheney and Mr. Bush! *HUGS*

: ) We just bared witness to the biggest bank heist ever…



#104 Crikey on 07.09.08 at 12:04 pm

Hmmm, more household spending due to be eaten up this winter. Ouch. Yet another nail in the coffin for the McMansion, folks.


Home energy bills may be highest ever: BMO

Globe and Mail Update

July 9, 2008 at 11:25 AM EDT

Total spending on energy by Canadian households likely hit an all-time high as a percentage of disposable income in the second quarter of this year – and those home-heating and electricity bills will head even higher this winter, says Bank of Montreal economist Douglas Porter.

Mr. Porter calculated that roughly 7 per cent of disposable household income went toward gasoline, natural gas, fuel oil and electricity in April, May and June.

“While raging gasoline prices have been hogging the headlines, natural gas has been quietly rising every bit as fast as crude oil in the past year (doubling in that period), and this will wallop household heating bills this winter,” Mr. Porter wrote in a research report issued Wednesday.

“With many of the energy input costs for hydro companies on the march, it is only a matter of time before electricity prices also lurch higher in many provinces,” Mr. Porter said.

The dramatic rise in energy costs has dampened consumer confidence and is expected to push the inflation rate higher.

The Consumer Price Index report for June, to be released July 23, “could hit the 3 per cent barrier, and threatens to push above the top end of the Bank of Canada’s comfort range in the next few months,” Mr. Porter said.

#105 Sam on 07.09.08 at 12:27 pm

Housing start up in GTA according to CMHC today… Where does that come from ..?

#106 David on 07.09.08 at 1:07 pm

Garth is being very conservative when he says a 15% price correction. Perhaps he erred on the side of caution.
Here is a great little clip on the subject of Bubblenonomics and housing. It is a good refresher, even if most of the people here are familiar with the subject.

#107 Alex on 07.09.08 at 1:08 pm


When we buy a cars or shoes, we do not care what others do, since investors normally do not buy cars or shoes for investment purposes. This is why cars and shoes prices are stable.
Houses are another league. 30% to 50% of condo buyers are investors. Their decision, not a “regular” house consumer’s affects the price the most.

#108 smwhite on 07.09.08 at 1:23 pm

Sam, housing starts were down across Canada last month, except for the one province with serious economic issues ahead, Ontario…

#109 Mike.slob on 07.09.08 at 1:37 pm

Residential ReSales in Canada
from Jan. to June 2008:

Vancouver Area. sales decreased 42.9%
Calgary Area sales decreased 21.8%
Edmonton Area sales decreased 15.9%

Toronto Area sales decreased 13.8%
Toronto sales decreased 17.7%

Montreal Area sales decreased 9%
Ottawa Area sales increased 2.6%

Please open the link bellow :


#110 lgre on 07.09.08 at 1:41 pm

GenXer – I have nothing to loose, I can pay cash for a $200k house and live in it till I die, I cant do that on $300 or more. the $200k house can be worth nothing in 5 years and it still wouldnt affect me, I have somewhere to live and owe nobody anything.

#111 lgre on 07.09.08 at 1:51 pm

I was watching the news the other day and they were talking about a 45% increase in NG prices this winter.

I dont see the point of why people need to live in a 3000+sqft house to begin with? unless you have 5 children. A friend of mine just bought a 2600sqft house for himself alone, makes ok money but alot of it will be eaten up by housing costs. I dont understand?

#112 Mike on 07.09.08 at 3:53 pm

Saw the CMHC guy being interviewed on BNN.ca . Talk about back peddling. Everything is rosy in his world.
Most starts are Condos… yippeee.. 500 sq ft of pure fun for $250 K and then forever pay monthly costs. Even this guy embraces the fact that most people cannot afford single family homes and moving to multis.
The June numbers actually declined 4.3% in housing starts in Canada. Softening across country… worst in Alberta 65% in multiple starts…..
Condo market strong in Ontario.. sold condos that have not been built yet…. a shift in recent years from single to multis. This is forcing people to move to cheaper housing… basically exactly what Garth has been saying. The singles will have a significant correction as all people can really afford is the condos…. maybe next year we will have 300 Sq ft condos maybe selling for a paltry 200K. Some future in real estate.
Dugan at CMHC says that there will be a more “balanced” approach to housing away from the “sellers market”. He asserts we are historically low mortgage arrears and doesn’t see the same problems that plague the US because “we don’t have sub prime here” You believe what you want. I for one have seen some modest house price corrections in GTA . I do believe that the summer and new credit issues world wide will eventually come home to roost .

#113 Doug in Calgary on 07.09.08 at 4:13 pm

CMHC rule changes!

No more CMHC 40 year, 0 down.
As of Oct 15, it’s 35 year, 5% down….


I wonder how that will change things!?

#114 Rick on 07.09.08 at 4:25 pm

Federal government rules out 40-year and zero-down mortgages


#115 Rob M on 07.09.08 at 4:33 pm

I would tend to go with the wisdom that housing starts are, counter to all things sane, up, because with the high Cdn $, they’re as cheap to produce as they’ve ever been and builders are doing what they do best – create a glut.

#116 Rob M on 07.09.08 at 4:45 pm

“A nearly eight per cent drop in the singles component is a better gauge of deteriorating housing market conditions than the milder drop in total starts,” said economists at Bank of Nova Scotia.”

thin edge of the wedge…they already know single condos are tanking, and are building were there is still [though dissipating] demand – multis and SFHs likely. they will go down soon too.

#117 My_View on 07.09.08 at 4:52 pm

Its happening, finally the government is raising the red flags on Canadas sup-prime madness. Next spring will be different. People will require a down payment (5%), oh oh, no more drunken sailors…………..

#118 Calgary rip off on 07.09.08 at 5:09 pm


You have many of the same views I do. Why do people want to live in 3000+ sq foot house? Greed. This is why it is so hard to survive in Calgary. People were smart and took advantage of a false value trend and unfortunately many persons are in a bad spot. I agree that it isnt too much too ask to get a reasonable cost on a house especially if you are making good money. But unfortunately the world doesnt work that way, especially in Calgary. Check out the prices on mls and nw calgary compared to a year ago. The prices have dropped because people dont want to pay insane prices for a 1500 sq foot nothing special house, just somewhere to live. Housing starts are down according to Mario T. of Calgary Herald, you are deluded, Rob M, get a reality check. Mario’s damn column is starting to reflect what is actually happening in Calgary, instead of crap like, “we are just turning the corner, prices are stabilizing, buy now before the market starts to increase,” which is utter nonsense. The fact is that the middle class cannot afford to pay $400 K for a house that in normal market conditions would be around $200 K, under most conditions. It may soon be like 1986 in Calgary, so just wait until prices drop, how much we’ll soon see.

#119 EJ on 07.09.08 at 5:47 pm

From the link in Doug’s post:

“According to the International Monetary Fund, the increase in house prices in Canada is based on sound economic factors such as low interest rates, rising incomes and a growing population.”

Is this a joke? We’re talking increases in the range of 100-200% in less than a decade. Increases of that magnitude are not based on “sound economic factors”.

#120 David on 07.09.08 at 8:27 pm

Calgary Rip Off, even if you got locked out of the bubble, things might be better than you think. Thousands of Calgarians now own over priced or obsolete homes with minimal equity supporting 0/40 year mortgages and are facing interest rate hikes and huge utility cost increases. It is hard to believe that a situation like that is the road to some blissful financial nirvana.
There is a hypothesis that real estate bubbles run in 18 year cycles. By all estimates the nadir will be 2015. In the interim families have to live and timing a bottom is not that simple.
A person can rent a house for far less than mortgage payments or build an owner occupied residence for far less in the mean time. If you can get a decent lot you can build a whole lot of energy efficient housing for less than 200 K. Hang in there.

#121 Snapshot on 07.09.08 at 10:44 pm


Nice idea to build your own house. The arbitrary and logistical obstacles though are huge.

First, property developers in big cities don’t want to sell just serviced, subdivided land. There’s much more money in selling overpriced houses. It’s the same principle that auto manufacturers use – sell a bunch of ‘options’ of questionable utility for thousands more rather than just a basic vehicle that the buyer can bolt stuff onto later. So you can’t get just a building lot anymore.

Then, you have four levels of restrictive design policy (provincial building code, and city ordinances, and neighborhood councils, and CMHC design requirements to get a builders’ mortgage) that all have to be satisfied. Satisfying any one of them does not imply that the others will be happy. Any good or interesting design will probably have be ‘dumbed-down’ to the point that it’s like all of the other crap out there.

Then, you have to have to have a construction engineer’s ability to visualize and design modifications, and maybe the ability to properly engineer a complete building to non-prescriptive code, and the ability to quickly get competent in many different trades like carpentry, maybe steel, electrical, plumbing, concrete, etc. Or you have to be an exceptionally capable EPC project manager and have a lot of pull to get all the right subcontractors wanting to work just on your little house.

Finally, you have to be able to swing your usual full-time day job to pay for all of it as well as your usual day-to-day expenses, at the same time as working on and managing a substantial project to finish in a reasonable period of time.

Good luck.

If you have the ability, and an intense interest, and the tenacity, and the strength, and some applicable experience, and can live really cheap or are well-funded, and have some other special angle to deal with it all, then go for it. Some people get great pleasure out of designing and building their own thing.

#122 David on 07.09.08 at 11:16 pm

I am well aware that the developers have held all the aces in the poker hand for awhile now. It is unfortunate but true. They really do not care about ordinary families developing simple plots with affordable housing nor do the people at city hall. Affordable middle class housing has been off the agenda for a while now.
Many municipalities makes it nearly impossible for families to build a decent affordable house. Shame on them. Jerks like that that deserve minor punishments like perhaps flaying in the public square or half hangings and drawing and quartering and maybe pitchcapping would provide guidance to these idiots.
A parasitic real estate industry with a large sense of entitlement is eating away at the guts of this nation.

#123 David_#3 on 07.10.08 at 1:08 pm

Snapshot wrote “First, property developers in big cities don’t want to sell just serviced, subdivided land. There’s much more money in selling overpriced houses. ”

Now that the party is over, you can bet property developers will start offloading their unbuilt subdivided lots! ;)

#124 Calgary rip off on 07.10.08 at 7:44 pm


Thanks for the feedback. Yes, renting dollar for dollar you can get much more house than owning, right now. Of course this is what I am doing. Unfortunately there are no rent caps to protect the worker. Fortunately my landlord is a great guy. I make every effort to protect his house while I am living in it. I have great respect for him and his property and know eventually I will own a house, somewhere. The real problem is that if I am struggling to support my family and I make $100,000 a year, I cannot even believe how many workers even scrape by day by day. I dont have excessive spending, no really expensive items. Just typical bills that type of thing. I do believe that having good food, a warm place, and clean water in addition to a family is the best thing there is. Unfortunately many in Calgary are forced to deal with basic necessities and cannot even begin to enjoy these basic things in life, which is really awful. It is my hope that the market reduces to the point where those who work hard day by day have the privilege to own a home. Right now, that wont happen. I qualify for around $360,00 on a 25-30 year amortization. In looking at the mls, would anyone want to spend that much on what the market currently says that is worth? I dont think so. Most of those priced homes really are only worth maybe $250,000, but market value, not intrinsic worth is what determines value. So myself and many others are playing a waiting game, there’s plenty of data supporting a dropping market, just dont ask Mario T of the Calgary Herald, Ed Jensen, or any of the bulls, they’ll give fictional lies.

#125 David on 07.10.08 at 10:57 pm

People paid $360K to live in Forest Lawn under a very busy airport in obsolete energy inefficient homes. Not much to envy there. There are some lots coming up for sale in Calgary that the developers could not sell and their numbers are increasing. You are in the catbird seat right now with a decent income and limited liabilities. There will be lots of idiots twisting in the wind from the 0/40 debt rope. Hang tight there bro’ your day of affordable family living is coming.

#126 Danny on 08.06.08 at 9:19 pm

I think everyone should give their head a shake if you are waiting for the “big crash” to happen, especially in the Toronto area. ITS NOT GOING TO HAPPEN Sit there for another few years and wait for your deal and get priced out of the market even more. I know several people waiting on the sidelines for the past 4 years waiting for ” things to come back to earth” Even if the price plateau for a year or two, they can’t afford to get in now. Dooms day is not coming where i am from – planet earth