And now, the news.
July 15th, 2008 | Book Updates | E-mail this blog post to a friend
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Greater Fool – Authored by Garth Turner – The Troubled Future of Real Estate
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The views expressed are those of the author, Garth Turner, a Raymond James Financial Advisor, and not necessarily those of Raymond James Ltd. It is provided as a general source of information only and should not be considered to be personal investment advice or a solicitation to buy or sell securities. Investors considering any investment should consult with their Investment Advisor to ensure that it is suitable for the investor's circumstances and risk tolerance before making any investment decision. The information contained in this blog was obtained from sources believed to be reliable, however, we cannot represent that it is accurate or complete. Raymond James Ltd. is a member of the Canadian Investor Protection Fund. |
38 comments ↓
Not to mention the job layoffs in GM… once considered a bell weather and blue chip stock. Plus the interest rate thing holding pat for now will certainly send a chill into the market. Still from my own personal experience some buyers are basically willing to wait out any storm that might come up. Very small concessions . Only in a couple cases where the property was way overpriced have a seen price drops but generally they went down to what they are truly worth or what they are supposed to be worth based on previous sales. Gotta throw that COMP SALES crap out the window now… Whole new ballgame I am afraid.
Lots of positive comments coming out of the media surrounding a US housing recovery in 2009. Doesn’t this point to Canada turning the corner soon as well?
http://money.cnn.com/2008/04/24/news/economy/builders_forecast/index.htm
http://www.therealestatebloggers.com/2008/06/30/schwarzenegger-sees-california-real-estate-recovery-in-2009/
They’ll have been in the soup for 4 years by then, and us for less than 12 months? You are dreaming. — Garth
The Mole,
These US housing recovery in 2009 news are coming from Homebuilders and experts. Do you still trust these guys?
I think 2009/10 will be good time to buy in US and 2010/11 will be in Canada. That will be bottom price around those timings. This is just my calculation.
God Bless you Garth for exposing and predicting all this to the folks who fell prey to the RE industry.
No one with an iota of intelligence would believe those so called experts in the US with a vested interest in RE. Financial experts were called for a second half recovery in the US which is now been laughed at by investors as they have been selling. Look at the TSX which fell another 400 points. People are losing their jobs by the thousand almost everyday. The current recession in the US looks to get worse as many peple talk of a depression. Many people will lose their homes just like the last time Canada had a housing bust.
Moley, Moley, Moley – Austin Powers
Lets see…. I wonder what the folks were saying back in 1907 and 1929 about their saves being secure… and OH NO!!! It’s going to recover soon!
This generation has NEVER seen tough times! For the post war Baby Boomers… this is our 1930 Depression and War Time pill!!!
Get use to it! Save, save, save!!
Dear Mr. Turner – I watched your interview last night.Your comments about not buying real estate at this time I found very careless for a Politian.Influencing consumers in such a negative way are not helpful for the economy.
Purchasing a home depends on the circumstances of the individuals and even in a soft market buyers can and will get the best possible deal for them at that time.Who says how long people should wait – who knows what the market is doing in 12 month – what are the markets in different areas doing over the what period of time??
Si tacuisses,philosophus mansisses!
Kind regards,
PS, real estate agent,Vernon,B.C.
check this out…
http://www.financialpost.com/story.html?id=656838
can you believe it?…
chmc should become private or follow the fed’s rules
no bailout….
have no problem with private companies doing whatever they please with the investors money, as long as i, joe taxpayer, am not liable…
hmmmmm….
Long term – this type of short term correction in the market is exactly what we need to shake out the bubble created by amateur house speculators and let the real flippers provide a necessary function of fixing up neglected properties for resale / profit. The golden rule is to buy when everyone is selling – and everyone else selling makes me happy. Keep up the panic-engine team!
Perhaps keep bashing on NEGATIVE comments and keep talking UP how healthy the real estate market or what NOT buy now and not later is the REALTOR’s last CRY or RESORT or their last word to say before the DROP !!! MAY THE PRAYERS BE WITH YOU !!!
Dear Mr. Turner – I watched your interview last night.Your comments about not buying real estate at this time I found very careless for a Politian.Influencing consumers in such a negative way are not helpful for the economy.
Purchasing a home depends on the circumstances of the individuals and even in a soft market buyers can and will get the best possible deal for them at that time.Who says how long people should wait – who knows what the market is doing in 12 month – what are the markets in different areas doing over the what period of time??
Si tacuisses,philosophus mansisses!
Kind regards,
PS, real estate agent,Vernon,B.C.
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You shouldn’t expect a RE agent to tell the truth….It’s always a good time to buy…right??? If you were to buy now you would be buying at the top of the market. But what do you care…..you just want your comission. Garth may be a jackass but he is correct about this.
PS, it’s not Garth’s job to prop up the economy. We need politicians who are willing to tell the truth. Party on, Garth.
But Sam, I gotta ask: Has a realtor ever put a gun to your head and forced you to buy a house? Nobody “fell prey” to the RE industry. People bought houses of their own free will. Full stop.
#7 PS
most all pigs get slaugtered in due course…keep your eyes open….the next year will give you an education you are not likely to forget in the whole of your life.
tick tock tick tock…
Markets with the greatest year-over-year decrease in unit sales in June
#1 – Greater Vancouver – down 42.9 per cent
#2 – Regina – down 33.8 per cent
#3 – Saskatoon – down 32.7 per cent
#4 – Victoria – down 24.4 per cent
= RE owners and speculators in British Columbia will be the first to bleed on these types of blogs.
After reading the story “Crude suffers biggest drop in 17 years” I never really fathomed the banks having to liquidate their holdings in oil and other commodities (Although I do know that they have sold off a lot of their gold through the 90’s), when the bank needs their $ to cover their own ass, the margin calls will come, just like Grant pointed out in 1907 and 1929.
It was the banks that initiated the panic then, and they will initiate it again.
The mole, if you look back over the past two or three years in the USA those with a vested interest (NAR, realtors, builders, banks, mortgage brokers, government) have been spewing that a “turn around” is “next year” even since things started to turn.
Your having trouble comprehending its a cash/credit problem and that there isn’t money to buy these properties really and won’t be for the next 5 years.
Homebuilders, banks and other publicly traded companies tied to this mess don’t have to project anything other then the current years earnings. People like yourself wouldn’t be in this mess if you hadn’t been listening to people that don’t know WTF they are talking about in the first place.
Look at history, these booms and busts in RE have been happening every ten or so years since WWII.
Running out of suckers/fools in Canada… Luckily a few keep showing up on Garth’s blog every couple of days.
http://www.thestar.com/Business/article/460178
“RBC Capital Markets, meanwhile, estimated that 300 U.S. banks might fail over the next three years because of credit losses and tense capital markets.”
not good.
PS –
I disagree. Garth is telling the truth – something many of you RE agents just don’t get, especially in your inherently self serving industry.
Can’t you see what’s happened? People don’t have money to inject into the economy because its all tied up in the artificially inflated value of their real estate! If prices come down and the dust settles, perhaps us middle class folks will be able to afford a decent home AND have cash left over at the end of the month to inject into other things…like the manufacturing sector for example.
LMAO
PS, your scolding Garth on being irresponsible yet it hasn’t stopped your industry from pumping and pushing people into bad financial positions to pad your own pockets.
Didn’t I read an entry on here where Mr. Gregory Klump was lobbying parliament on raising the amount a person could contribute from their RRSP. Not to mention we all damn well know it was a CREA that lobbied CMHC for the rule changes to implement the 40 nightmare.
People in glass houses PS, people in glass houses.
The Canadian RE industry is losing credibility in a fast and furious fashion.
You are either ignorant to the current economic climate and affordibility issues or your part of the snow job.
We’re all going to find out how “local” RE is in Canada…
PS:
Your comments are unethical. How will a person who qualifies for an inflated priced house and will have trouble soon making the payments and then default help the economy? Short term gain for long term loss? That doesnt make sense.
I invite you to try come buy a home in Calgary. The working class is being screwed. This is of course thanks to fraudulent expert advice from Ed Jensen head of the real estate board and delusion clowns like the editor of the Calgary Herald, Mario T.
It is better for the economy to wait and buy when prices are reasonable. The prices may be reasonable in Vernon. They are NOT in Calgary.
this time it’s different! it can’t happen here!
’nuff said :)
NOT!
looks like interest rates might go up in September. 0%/40yr isn’t looking too good if you’re variable rate or you gotta renew in the fall.
http://www.thestar.com/Business/article/460419
and here
http://www.reportonbusiness.com/servlet/story/RTGAM.20080715.wboc_live0715/BNStory/Business/home
Fliprbaby – you are not so smart.
Can you please point out to me who is a “real” renovator / flipper and who is fake? So all of these families that have been turning over properties and cashing out of the real estate market before the bubble were all fakes, but you’re going to show us how it’s done by buying at the top?
Good luck with that strategy. If all else fails, you can always come and do some work around my house for $8 an hour. Or you could get a real job.
GenXer,
Smart = selling to home buyers desperate to get into the market last month at the peak and then buying it back from them next month when they panic, then reselling it back to them in June of next year when the market recovers. It’s classic buy low / sell high. I don’t think I’d want a real job right now… I hear the economy isn’t doing too well right now. If a depression hits and the country hits the skids like all you doomer’s are predicting then you can buy the potatoes that I’ll grow on my cottage property.
I have little respect and tolerance for housing speculators and flippers who add no value. If you’re one of the rare ones who actually takes a house that is run down, ramshackle, and won’t sell, then fixes it up and sells it for a fair profit, fine. You’ve added value and you’ve worked for your money.
However, most of your ilk do nothing but buy a place and attempt to sell it at a higher price. The end result? Unaffordable housing for people who actually want a place to LIVE in. You want to speculate? Go invest in gold or stocks. At least this way the only people who are hurt as a result of your greed are other speculators.
EJ,
Doesn’t everyone who sells their house attempt to sell it at a higher price?
By the way – we tried speculating on oil and everyone got mad at us. Now if we stop speculating on oil the stock market crashes. Can’t win. :(
#7 PS on 07.15.08 at 7:36 pm Dear Mr. Turner – I watched your interview last night.Your comments about not buying real estate at this time I found very careless for a Politian.Influencing consumers in such a negative way are not helpful for the economy.
Purchasing a home depends on the circumstances of the individuals and even in a soft market buyers can and will get the best possible deal for them at that time.Who says how long people should wait – who knows what the market is doing in 12 month – what are the markets in different areas doing over the what period of time??
Si tacuisses,philosophus mansisses!
Kind regards,
PS, real estate agent,Vernon,B.C.
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You’re kidding, right? I suppose it would be irresponsible for someone in the know to advise a consumer against purchasing a gas guzzling 4X4 over a compact car? I’d hardly call a politician stating the obvious “irresponsible.” Convoluted logic dude, just keep preying on the baby boomers moving to Vernon but please don’t deny reality. This just lowers the credibility of your industry one more notch.
26 Fliprbaby on 07.15.08 at 11:38 pm EJ,
Doesn’t everyone who sells their house attempt to sell it at a higher price?
By the way – we tried speculating on oil and everyone got mad at us. Now if we stop speculating on oil the stock market crashes. Can’t win.
——————————————————-
Get a real job and join the “winners.” I can’t say it any better than EJ.
Flipper baby=another unethical bull.
Too much bullshit in Calgary already. This attitude is killing common families and those who want to buy. Look at the crazy prices!!!
Time for you and PS to enroll in the Ed Stelmach plan.
“Higher price” is a somewhat vague term when you are looking long-run (which is your typical seller). A numerically higher value is usually a given due to inflation. However, once inflation, maintenance, taxes, insurance, upkeep, etc is taken into account, it’s probably still sold at a loss, like most other tangible assets. Unless it was purchased during typical times and sold during a bubble…
I think the current high oil prices will cause short term pain. Over the long run, I think it will turn out to be a good thing. Peak oil may not be in the immediate future, but it will happen eventually. Today’s situation is resulting in accelerated development of alternative energy sources to help ween us off of oil. Electric cars are becoming more and more available with prices dropping and more offerings at hand. Unfortunately, there’s still the issue of petroleum-based products like plastics, which hasn’t been solved yet. Hopefully this situation kick-starts that as well.
“The prices may be reasonable in Vernon.”
Are you kidding? The prices in the Okanagan are completely insane. At least Calgary has good jobs.
The Okanagan is Canada’s Florida.
Ouch!
Real Estate in Canada is not Market .
When you have decline on demand 40% in Vancouver and 18% in Toronto and still prices going up than it is not Market at all. Only sellers’ price is proteced in last 12 years.I still can’t understend what is real estate value in Canada. Is it buyers offer or sellers’ asking price?
Flipprbaby most of us here wish you well in your flipping business. Flipping might not work so well in an era of hard equity requirements, rising interest rates and declining home prices. Go ahead and try and tell us how well it works out.
Has the Key turned entirely at the Parliament building? Or just a notch?
Expect 10/25 later this year?
The likes of Fliprbaby come onto this site to rattle some cages but when bigger thinkers than the flipper market guys tell you there are problems then you should pay attention. Flippers are like day traders, they provide no solid long term investment advice, they are in it for the quick dough. If you are a family just scraping by and have seen some gains in your homes you may want to sell . Maybe sell to Fliprbaby.. sounds like he has lots of cash to throw around. I have heard the Czech republic and Poland have strong economies … maybe do some flipping there.
Mike, well said, and I’m going to borrow that, “day-traders”.
Its bang on…
How pissed off were all the brokerage house in the late 1990’s when these idiots started messing around in the markets, looks like the same today, only difference is they went and played around with a family’s most prized possession, their home… And it its not with a few thousand dollars either, its the 300K average.
As a general rule, everyone else in the world is not a moron.
Similarly, those who are in positions of great influence and power are not morons.
Flaherty is not a moron.
The various financial commentators and analysts are not morons.
People who expect a 5% increase in realty prices are not morons.
People who expect a 10% drop are not morons.
I check into this site because I welcome the input of people with different opinions, and I learn from them. However it weakens your credibilty when you scorn the posts of people who disagree with you and suggest that they are somehow an idiot, or corrupt, or malevelent, or part of some huge malicious conspiracy.
I guess in a sense that is what I myself just did. I scorn the posts of those who thing others are idiots. But I do so not because I think they are an idiot (or evil, or part of a conspiracy) but because they have such little faith in their own opinion that they need to ridicule the other guy.
What is my opinion you ask?
I think all markets are cyclical, and nationwide Canada is in for 12 months of zero nominal change in RE values(ie a decrease in proportion to the rate of inflation), followed by a period of inflation+2% increases. Some local markets will differ.
Regards
There are STILL a lot of disbelievers in how worst the economy would be next year when they still enjoying their red wine in their deck everyday..I think you all disbelivers are all dreaming in la-la-land…to think real estate will go UP UP UP and will last forever..What a bunch of jokers…!!!I guess you all thought your house is like a GIC..its interest is guaranteed and the principle is also GUARANTEED…Perhaps its time for you all disbelivers to WAKE UP and FACE THE TRUTH !!!