Four years?

US home prices drop by steepest rate ever

Breaking real estate news, here

The following is CREA’s latest reporting on market conditions. As ‘devastating’ as the industry might find this, it’s just a pale shadow of the current situation. The information contained in this is up to seven months old. And let’s not forget that in the first few months of 2008 the pumpers at Re/Max and Royal LePage were calling for another great year. Since then, listings have soared and sales tanked, and the price correction so evident to every family trying to sell a home at this moment is just starting to show on current stats.

Of course, there are other factors to consider:

  • The soaring cost of energy as gas prices hit historic highs in recent weeks, sucking off investor cash flow and making everybody feel less wealthy.
  • The rising burden of mortgage payments as home loan rates rise.
  • The end of the 40-year mortgage, plus the demise of zero-down and liar loans.
  • And, above all, market psychology, since it is now apparent to everyone, even CREA, that this market has turned skanky.

What lies ahead? As I have said, a 15% decline in the national average selling price from the 2007 peak will be with us by this time next year, and possibly sooner. Some markets which have already sustained a 10% – 12% drop are on their way to 30%. Sales activity will slide further until we may see a stunning 30%-40% in deals from 2007 levels. This will lead to a sad but inevitable exodus from the real estate industry as agents look for other work. Worse hit will be the trades, as the pace of new home construction tumbles and homebuilders shift into survival mode.

At this point it’s tough to forecast duration, but let’s remember that in eight weeks we will mark the third anniversary of the American real estate collapse, which seems to have at least a year yet to run. Could Canadians be in for four years of this? It is entirely conceivable, in which case media stories like the one below will make realtors all mushy with remembrance.

OTTAWA — Canada’s red-hot housing market cooled considerably in the first half of this year, with sales recorded by the Canadian Real Estate Association slumping by 13.1 per cent from the same period last year. The real estate group said Monday that new listings of homes for sale on the Multiple Listing Service jumped 9.1 per cent to 518,270 units in the first six months – a record high – while sale prices rose a tepid 3.6 per cent following the double digit increases of the recent past.

Unit sales were down in all provinces except Newfoundland, with British Columbia, Alberta and Prince Edward Island experiencing a fall-off in sales topping 20 per cent. The numbers are indicative of a housing market that is trending downward after several strong years, particularly last year, said association president Calvin Lindberg.

“In essence, Canada’s housing market has pulled back from the record-setting pace set in 2007, but in most provinces it continues at or near sales levels set in the years before that,” said Mr. Lindberg. “The increase in housing prices is also pulling back from the record-setting pace of last year, but we have yet to see any of the price contractions that have impacted the housing market in the United States,” he added.

Mr. Lindberg noted that 251,550 units were sold through the multiple listing service in the January-June period, the fifth consecutive year sales have topped a quarter million. Most of the decline this year occurred in February, after which activity has held steady, said the association.

Chief economist Gregory Klump added that the market appears to be cooling evenly between rural, urban and suburban markets. “There is no statistical evidence to date that shows increases in energy prices are prompting Canadians to re-locate,” he said.

The association’s latest report confirms previous indicators, including from CREA, that point to a slowing but not collapsing housing market in Canada. In a survey of Canada’s 25 largest markets earlier this month, CREA reported that prices had retreated by 0.4 per cent in June from the previous year.


#1 Cashmoney on 07.28.08 at 6:30 pm

Check out the number of infills’ in Calgary listed for sale – for instance, look at MLS.CA in the Killarney inner city neighboorhood. All at 670,000s and up – most in the $750,000’s. Went to a number of open houses this weekend. Some realtors told us right away that seller motivated and willing to drop price by 20,000 or so. There is a lot of inventory. It will be very interesting to see what happens with the prices of these homes. $750,000 for an 1800 sq foot home on a skinny lot. We live in interesting times.

#2 pjwlk on 07.28.08 at 7:11 pm

“The information contained in this is up to seven months old.”

How convenient… and self serving…

#3 Mike on 07.28.08 at 7:19 pm

Honestly I have not seen any significant pricing changes from last year to this year here in Toronto. People still want a boat load of money for pretty crappy houses … and condos…forget about it

#4 Rasputin on 07.28.08 at 7:28 pm

4 years…if we are lucky. One of the few benefits of being older is that you have seen every movie before. Several times. The last 2 recessions started 1 year later in Canada than in the US. Our papers were filled with anti American bs about how “they are getting it because they deserve it”, and “our economy is more diverse, we have natural resouces, we have the maple leafs, blah, blah, blah. What ended up happening is Canada got it late, got it worse and got it for twice as long. Be careful what you wish for…

#5 My_view on 07.28.08 at 7:46 pm

Eventually the same printed crap will change (G&M). It’s inevitable. Someone out there tell me anything that has never gone down in value? I keep reading & hearing about how over a hundred American financial institutions are going belly up “potentially”. To date just 7 of these F/I have sank. America’s astronomical numbers are & will impact the universe….earthlings.

#6 70's show on 07.28.08 at 8:35 pm

sorry bears, cmhc/ central bank is in the process of preparing to monetize canadian debts. they know the canadian dollar is impervious to tanking right now due to worse problems in other countries. weakness in real estate is limited. all hard assets will be trending higher. sorry, that’s the way it is. it is not different this time, you should expect no better from our government.

#7 calgary rip off on 07.28.08 at 8:50 pm

So Garth,

What impact do you think the NAFTA supercorridor will have on real estate/jobs/life in Canada?

Also, do you think all three countries will be combined into one sovereign nation by 2010 or will this just be a trade deal with all three countries remaining separate?

What the impact be of all this?

The supercorridor is a myth. — Garth

#8 islander on 07.28.08 at 9:35 pm

70s Show, I think what you’re trying to say is that nominal prices will be propped up by money-creating central banks. That’s a valid argument.

However, the U.S. has monetized its debt and that has not stopped the decline in nominal house prices.

Also, the loonie is not impervious to tanking. Fiat currencies are headed to worthlessness at varying rates. TV tells us we’re doing OK because the loonie is bobbing on par to the USD. But take the measure of the loonie in gold (or some other commodity of choice) and it would tell a different story.

#9 jrochest on 07.28.08 at 9:45 pm

What is *with* the bug-eyed tinfoil hat nonsense of the Amero/ OneWorldGovernment/ Goldstandard type that’s cluttering up the place?

Honestly: housing prices are and were too high relative to wages. This is true here in Canada, it was true in the USA, it’s true in Europe. All these markets were out of wack, and all will adjust. Saying this is a bit like saying that the sun rises in the East and sets in the West: it’s not a crazy conspiracy theory.

I assume that the people who are posting this kind of nonsense are trying to imply that saying “Housing prices will fall” is equivalent to saying “Little green men control the world banking system”.

The two are NOT the same. Idiots.

#10 70's show on 07.28.08 at 10:03 pm

true enough islander, but suprisingly the u.s. does not have a system allowing broad based monetization to the same extent as canada (their working on it now). canada is time lagging the u.s. in the credit crunch but the authorities are preparing now. canada is very well situated in the currency debasement race.

#11 GrandePrairiegirl on 07.28.08 at 10:06 pm

#7 calgary rip off
You are asking the wrong person your questions as can be seen by the reply given. Pick an evening when you have a couple of hours to spare and do your own research. And not through mainstream media either. Go on the net and look for your answers there,while you can. Telus and Bell are currently working towards the demise of the net as we know it. Hopefully they won’t succeed.
For your NAFTA query try this one by the Sierra Club.
A couple of other good ones are:
And yes, Mr. Turner is absolutely correct. The corridor is a myth. After all he is a politician, representing the interests of his constituents.
As the coming NAU is not in the best interests of the common Canadian people (corporations are another matter)or Canadian Sovereignty, then the answer he gave is a logical choice.
I do give him kudos for calling the RE rodeo bang on though. Have to give him credit there. I’d prefer the truth anyday even when it’s not going to be what you’d like to hear or believe.

#12 Daigo on 07.28.08 at 11:41 pm

This is what I find interesting. Alberta has oil resources that has kept the economy and the construction industry active. Ontario has (had) manufacting. In BC, primarily the Lower Mainland has had the construction industry, feeding the construction industry. I may be missing something, but and economy feeding on itself can only have one inevitable outcome. As a Professor of Business at our University recently pointed out, it’s like the game of “Kerplunk”, all the balls are still in the game, but only one stick is holding them up. That stick is construction. What happens when that stick is pulled out? We have junior plumbers, painters, drywallers etc charging out a $100 per hour. It’s these folks that are buying new cars, furniture, eating out and buying rental property on spec. While I don’t have issue with that, it’s not extensible. You can have a housing slowdown in Alberta, but the economy is based on oil. Same goes for Ontatio, you have other economies albeit they’re in trouble too. But what happens in a place like BC where the construction industry is far and away the driver? Can you say Kerplunk?

#13 Future Expatriate on 07.29.08 at 2:53 am

NAU and all that; I think (perhaps hopefully; perhaps naively) that it’s not a myth now, but will end up to be one as far as Canada is concerned because Canadians are far too smart to ever unite with an economically collapsing country with little natural resources left, whose number one business is exporting death of innocents worldwide by supporting and creating satellite states in the Mideast in a desperate oil grab. And the fact that the gov, such as it is, has resisted “unification” thus far with no end of clandestine blackmail of all kinds going on, is also a tribute to the Canadian gov and the Canadian people in general. Canada is part of the British Empire, not the imploding American Empire.

This future expatriate would not be so if they didn’t believe the above. Which is not to say don’t keep talking about it; that’s what will keep it from happening. Knowledge is power.

As far as the freeway from Mexico to Canada? Never happen, they’d have to have troops on both sides from one end to the other preventing Americans from blowing it up hourly. You can make the plans for a superhighway in secret, but you can’t build one that way.

#14 David on 07.29.08 at 3:13 am

Saying four years to housing recovery is being conservative, simply because the bust is just starting. Oversupplied and look alike condos along with energy gulping far flung McMansions might represent a potential market segment that has no corner to turn, no potential buyers and reluctant lenders charging high interest rate risk premiums for those few willing to purchase. For the economists out there, what happens to businesses with a massive inventory of undesirable, inferior, obsolete and over priced goods?
The housing market correction coming upon Canada is not only large, but rather of a permanent nature that will not magically self correct or be buoyed by mortgage industry chicanery. There will not be enough new household formation to absorb the excess inventory of shabby houses and condos and certainly not at anywhere near the prices of the 2007-2008 era. The housing industry in Canada is about to be flattened, ploughed under and put to the sword like 12th century Jerusalem.

#15 JC on 07.29.08 at 4:35 am

The Donald about to face a big RE Hair Cut:

#16 HMP on 07.29.08 at 9:08 am


#17 openmind on 07.29.08 at 9:28 am


Nice to see you’re been calling the real estate situation for what it is from the get go.

Grandepriaire Girl & Calgary Ripoff:

Good to see a couple of human beings that can read the writing on the wall. And yes, I agree with GPGirl, Garth would never verify something like this on his blog, it would mean policital problems for him.

NAU – Think of it as a corporate merger, for it is three corporations involved.
And from my research most of the deal has already been inked. People are going to have to start getting vocal and active about this in a big big way.

Maybe the best thing to do is revoke consent to be governed and claim the right to live here in the geographical area known as Canada as a soveriegn human being instead of a PERSON, but Garth will probably tell you you can’t do that either. :)
It’s a grand illusion that hinges on sheeple being sheeple keeping the people in power, in power.
Just like this real estate cycle.

Future expat, nice to see you considering possibilities, but don’t kid yourself, people are more concerned with the price of gas or their mcmansion than with any talk of Security Prosperity Partnership, or NAU, or whatever they’ve branded it these days. Besides, the media has clamped down and isn’t letting out a peep.

for those interested:

cheers all

#18 Mylene on 07.29.08 at 9:41 am

S&P/Case-Shiller May 20-City Home-Prices Fall 15.8% (Update1)

By Timothy R. Homan
Enlarge Image/Details

July 29 (Bloomberg) — Home prices in 20 U.S. metropolitan areas fell at a faster pace in May, indicating the three-year housing slump has not stabilized, a private survey showed today.

The S&P/Case-Shiller home-price index dropped 15.8 percent from a year earlier, the biggest decline since records began in 2001, after decreasing 15.2 percent in April. The gauge has fallen every month since January 2007.

Stricter loan rules, rising mortgage rates and an increase in foreclosures are making it more difficult for prospective buyers to get financing, hurting home sales. The prolonged real-estate slump, along with higher fuel prices a shrinking job market, is weighing on consumers and the economy.

“We’re going to see continued declines in house prices, much more so in problem areas,” Mickey Levy, chief economist at Bank of America Corp. in New York, said in an interview with Bloomberg Television. “The decline in home prices, while necessary to clear the inventories, is building in expectations of more house-price declines, which is keeping potential buyers on the sidelines.”

Home prices decreased 0.9 percent in May from the prior month after declining 1 percent in April, the report showed. The figures aren’t adjusted for seasonal effects so economists prefer to focus on year-over-year changes instead of month to month.


The index was forecast to fall 16 percent from a year earlier, after a previously reported 15.3 percent drop in the 12 months ended in April, according to the median forecast of 25 economists surveyed by Bloomberg News. Estimates ranged from declines of 14.8 percent to 17 percent.

For an economic recovery to take place, “you’ve got to see a bottom in the housing market,” Richard Clarida, global strategic adviser at Pacific Investment Management Co. and a professor at Columbia University in New York, said yesterday in an interview with Bloomberg Radio. “At minimum, the housing market needs to stabilize, and we’re not there yet.”

For the second consecutive month, all of the 20 cities in the index showed a year-over-year decrease in prices for May, led by 28 percent slumps in Las Vegas and Miami.

On a month-to-month basis, 13 of the 20 areas covered showed a drop in home prices. The same two cities led the month-over-month decreases.

Regional Differences

“Regional patterns stand out,” David Blitzer, chairman of the index committee at S&P, said in a statement. The areas that once boomed, such as Miami and Las Vegas, are now showing the biggest declines, he said. Areas in the Midwest, including Detroit and Cleveland, are showing signs of economic stress.

The pickup in the pace of overall price decreases from last year contrasts with other private and government measures that indicated values were declining at a slower pace.

The median price of existing houses fell 6.1 percent in June from the same month last year, compared with an 8.5 percent decrease registered in the 12 months ended in April, according a report from the National Association of Realtors last week.

The cost of new homes, as reported by the Commerce Department, dropped 2 percent last month from June 2007. In the year ended in March, the decrease was 13 percent, the biggest in almost four decades.

Regional Mix

The gauges from Commerce and the Realtors group can be influenced by changes in the regional composition or types of homes sold. Purchases in areas with more expensive homes relative to cheaper properties will bias the figures up.

In contrast, the S&P/Case-Shiller index, and another by the Office of Federal Housing Enterprise Oversight, track the same houses over time and more accurately reflect price trends, economists said.

Reports last week showed home sales remained weak. Purchases of existing homes, which account for about 85 percent of the U.S. housing market, fell 2.6 percent in June to a 4.86 million annual rate, the lowest level in a decade, the National Association of Realtors said July 24.

New-home sales for June decreased 0.6 percent to a 530,000 pace, the Commerce Department said July 25. The same report showed the number of new properties on the market dropped by the most in 45 years, a sign that builders are making progress in clearing out inventories.

1980s Research

Robert Shiller, chief economist at MacroMarkets LLC and a professor at Yale University, and Karl Case, an economics professor at Wellesley College, created the home-price index based on research from the 1980s.

Residential construction companies are struggling to maintain profits. Pulte Homes Inc., the third-largest U.S. homebuilder, reported a second-quarter loss of $158.4 million last week.

“We see no immediate signs of this housing downturn relenting,” Pulte Chief Executive Officer Richard Dugas said in a conference call with analysts.

Congress last week passed legislation designed to bolster market confidence in Fannie Mae and Freddie Mac, the largest U.S. purchasers of mortgages, while stemming foreclosures for 400,000 homeowners. President George W. Bush is expected to sign the bill into law this week.

One in every 171 households was in some stage of the foreclosure process, an increase of 121 percent from a year earlier, RealtyTrac Inc., a real estate database firm, said last week in a statement.

To contact the reporter on this story: Timothy R. Homan in Washington at [email protected]
Last Updated: July 29, 2008 09:23 EDT

#19 Sphinx on 07.29.08 at 9:48 am

Four years is conservative…take the Japanese RE crash as a guide, nearly 17 yrs of slumping RE market. I would not be surprised to see US taking 10 yrs to bottom, this cycle was unprecedented, and so will be the bust. Canada will follow with probably ~6-8 yrs to bottom, shorter than in US because we had less exotic mortgage products.

Volume always leads the price, it’s coming, so to all bubble sitters: Sit back, relax, and let the ‘financial nature’ take care of itself….you will be rewarded. I’m a renter of a detached home, paying ~55-60% of cost of owning it, difference goes to RRSP/RESP. Probably I’d only buy when renting is more than or close to cost of ownership, and at a time when my offer would be the only one on the table.

#20 smwhite on 07.29.08 at 10:03 am

*The following post is riddle with sarcasism*

HMP, good thing real estate is always a winning “investment”. With 10% returns a year and average houses in the area of 400K, people will be able to live off their HELC…

#21 Another Albertan on 07.29.08 at 10:30 am

As relayed through a friend:

Pigeon Lake – a very popular recreation lake/area south of Edmonton – has, at last count, 239 properties listed for sale from a pool of about 2300.

Other unconfirmed rumours:

Another independent oilsands and upgrader developer in Calgary may be shelving their projects entirely due to funding issues (a.k.a. they haven’t yet found a major partner with deeper pockets and/or they haven’t paid their consultants and engineers in months)

Two majors oil companies have already trimmed back or outright fired their 3rd party engineers and designers for their oilsands-related projects. Both are frustrated with the cost escalations and inability to scale design and construction pace and quality. Both are rumoured to be looking at off-shoring future work (not going to EPC firms with foreign partners, but going to the large, distributed international EPC companies.)

Part of one of these stories hit the national papers this past weekend. Everything else is circulating on the streets in Alberta.

#22 Rasputin on 07.29.08 at 10:38 am

RE – NAU. Just a second…putting on my tin foil hat.
Put yourself in the shoes of our ruling elite. I’m talking past the political party sideshows. It’s been decided. The deal is inked. The only problem is getting the population to accept it. How do you do that? Easy. It’s the oldest ploy in the play book. Invent a crisis, use government policy to nurture it, then present government as the solution. How best to do that? Collapse the North American economy and pretty soon people , especially those with a recent history of nanny state dependence like Canada and the US, will beg the government to “do something”. Government will say, “Hmmm I know! how about a common currency and economic union to make things more efficient.?” How do you get people to accept a loss of freedom? May them think it was their idea and it’s for their own good. Complete bull but history rhymes.
Taking off the tin foil now.

#23 brazer on 07.29.08 at 10:41 am

Housing malaise spreads across country

“CREA said there is plenty of good news in the numbers.”

spin-doctors at CREA hard at work.

#24 Mike B formerly just Mike on 07.29.08 at 11:24 am

David in post #14. I sure hope your take on the housing market is correct from a buyers perspective at least.
I have seen a number of properties in the Toronto market still pop up and sell for gobs of money and we have been looking for close to a year. However I will indicate that I have personally seen houses that have sold during a bidding war, three in the Bayview/Sheppard area, that went for large chunks of cash. These were in need of some work for sure. One sold for 801K up from the listing price of 699K.. It relisted early this year for 850K but did not sell. Another sold for 950K and is relisted today at just over 1 million , also sitting on the market and has power cut to it so it is dormant. Another listed for 699K in October and sold for 750K in a bidding war. Back on the market two months ago for $850K and just reduced to $805K having done some minor repairs. So it does appear that the tide is changing . Stuff is not selling quickly in our market but the prices are still outrageous. In an effort to give some people hope in Toronto, you must realize that New York city which was initially immune from any housing price corrections has just posted an 8% drop in prices. I have run into so many people who have said that Toronto is such a buoyant market that prices will not correct here EVER. When you consider that Toronto is a whisper of a town compared to New York City it certainly gives one hope that things here will soon correct as well. As yet I have not seen any big drops and still seeing houses listed at very high prices. Some sell but many just sit there. I guess I should just sit as well.

#25 rant in Calgary on 07.29.08 at 11:40 am

With the U.S. Government bailing out banks and the housing industry, so much for Capitalism.
The U.S. is looking more Socialist everyday.

#26 kabloona on 07.29.08 at 12:38 pm

Correction: It’s socialism for Rich people, laissez-faire for everybody else…. ;-)

Check out Greenspan’s previous bailout of the Long Term Capital Management mega-millionaires.

#27 Calgary rip off on 07.29.08 at 12:59 pm

Grande Prarie girl:

Thanks for the site info. Neat stuff. I kind of gathered as much about the political response i got here, so right on again. I wouldnt have known about any of this if you hadnt posted. Thx.

Sphinx: Right on about waiting. It takes patience waiting and knowing exactly when to act. Appears you have both.

Great site Garth, keep it comin’.

#28 Bill on 07.29.08 at 2:03 pm

I was recently told of a building lot for sale in Canmore for something in the $400 000 range and told it was a steal. When I replied that you’d have to be nuts to buy real estate in Canmore right now I was told that “real estate never goes down” and Canmore was immune because of all the foreign money coming in.

Canmore prices don’t appear to have moved despite Calgary prices going down 5-10%. Time will tell.

#29 brazer on 07.29.08 at 3:03 pm


“With the U.S. Government bailing out banks and the housing industry, so much for Capitalism. The U.S. is looking more Socialist everyday.”

profits privatized and losses socialized…not a bad deal for the folks in charge.

#30 Future Expatriate on 07.29.08 at 4:51 pm

Rasputin, you don’t survive the Titanic by attaching your lifeboat to it. You survive it by getting in your rowboat and rowing just as far and just as fast away as your little arms can row.

No matter how much money they’re throwing overboard.

And no matter how much the others on the deck are shooting guns at you.

That’s why the NAU won’t be happening.

Which is not to say “they” didn’t try. I don’t even think at this point they will be able to merge the US and Mexico beyond the cultural merging already ocurring via illegal immigration. Because they arrogantly thought they could play it both ways; leave the borders wide open while supposedly fighting a “war” “against” “terrorism” where the oil is.

Actions speak far louder than words.

#31 ed-pet on 07.29.08 at 5:40 pm

right on the money daigo ( #12)

some data from futures urban institute, that came out some 2 years ago, showed that about 70% of bc’s goverment revenue comes from outside lower mainland; or otherwise, the dudes sipping lattes and fighting over intellectual crap at starbucks are supported by the rest of the province…

technology and mfg are slim, and once they score, they get bought out…
last time it took about 4-5 years for the prices in vancouver to drop about 40%… funny, i was a kid back than, and i wasn’t even in this country.. but i do my frigging homework…:^))

also keep in mind that raises and drops are compared to the bottom/ top prices so if a house goes up 50% from let’s say 100 to 150, a 33% drop is needed to go back to 100…

or as they say, statistics are like bikini: what they reveal is suggestive, but what they conceal is vital…

and here one for the RE propaganda machine: some people use statistics as a drunken uses a lamp post: for support rather than illumination…

hehehehe.. have a good one people..

oh, and if you didn’t buy RE recently , relax and wait, just relax and wait….

#32 $fromA$ia on 07.29.08 at 7:02 pm

Guys Fozzie Jurock says Vancouver market only going to get hit with 17% drop.

Is this a wishfull statment?

#33 A_M on 07.29.08 at 7:51 pm

There is only one way out. The Fed must lower interest rates to ZERO and leave them there for at least two years. Lending institutions must offer 60 year mortgages, with zero down, and first year teaser rates of 0.5% interest, rising to 30% by year five. The lenders can then repackage these mortgages into securitized funds and sell them to the public to remove the risk from their own books. If the public is skeptical about purchasing these securities, offer them second mortgages against the future equity which they are sure to enjoy in their homes, because real estate prices always go up. The homeowners can now use the newly borrowed funds to invest in the securitized mortgages. There, you’ve just sold the insolvent homeowners their own bad mortgages back to them, thus re-igniting the housing boom AND securing their retirements! How can this possibly fail?

#34 brazer on 07.29.08 at 7:54 pm

Starbucks to cut 1,000 jobs

“In recent weeks, Starbucks has announced the closing of 600 U.S. stores and on Tuesday it said it would close 61 of the 84 stores located in Australia.

The 1,000 job cuts announced Tuesday represent 15 percent of the company’s non-store positions, a spokeswoman said, adding that about 450 of the jobs were already vacant.”

#35 wealthy renter on 07.29.08 at 10:09 pm

Mike B

You have given an excellent post, and your observations of the Bayview /Sheppard area are pretty much what I see am seeing in central Etobicoke, where we are looking to buy. There are plenty of homes here over 1 million dollars (60 of them in W8), and my wife jokes that many of the cheaper homes here suffer from one-hundred-thousand-itis, where the list price is last year’s price + 100K (regardless of the market conditions.)

However, there are cracks in the armour. While the inventory in the area is turning over, grossly overpriced homes and homes in dire need of updating can sit for a long time. There are price reductions as well.

Just a couple of thoughts:

My wife and I make excellent money and we are very cautious with our finances. I don’t know who can afford these areas? Even some areas in Richmond Hill are hitting the stratosphere. These areas are not the Bridle Path or Rosedale! The service sector must be booming in Toronto, or people are drowning in debt. Perhaps it is a combination of both factors, or they all work in Real Estate? :)

The stats are showing that sales are way down in Toronto. I wonder which areas of Toronto are really slowing down? I wonder also how condos sales are going throughout the city? Nothing has been mentioned in the media for a while. The condo section of the Star was puny this weekend.

#36 dave on 07.29.08 at 11:00 pm

There is a certain irony about these discussion threads.

Many of the posters decry the sheeplike idiocy of the masses. However as soon as Garth posts a new topic, everyone floods to the new topic, and any discussion on the immediately preceding topic ends.

Although I think there is a heavy spin on the discussions here, I welcome the different perpectives. I just wish the posters would follow the topics through to a conclusion a little bit more, rather than just ranting how every leadership or authority figure in the financial markets is an idiot.

#37 smwhite on 07.29.08 at 11:08 pm

$froma$ia, Ozzie Jurock is Vancouver’s David Lereah, thank Global media for his “insight”…

— April 2007 – Victoria levelling off.

— September 2007 – Forget Victoria, lets talk about Toronto, PS buy my shitty useless news letter.

— December 2007 – Heck time to start buying USA RE on the cheap(I love the looking down at the cue cards, such knowledgeable “expert”)

— June 2008 – Normal market conditions, little bit of a downturn, 5%

How useful is a real estate “expert” like Jurock, he’s like a weatherman telling you the weather the day after…

#38 canadianoil on 07.29.08 at 11:12 pm

The Canadian morgage industry can not be compared to what is occouring in the U.S.A.

Delinquency and foreclosure rates have scarcely risen.
Subprime mortgages make up less than 5% of housing finance.

Demand for for mortgage backed bonds issued by CMHC is at record levels.

CMHC’s recent global issues have been among the biggest single tranche bond offerings in history.

CMHC raised $12.25 bn CDN last month.
Foreign investors have bought 1/3 of every quarterly issue.

Five year Canadian mortgage backed bonds are trading at 20 bp. below the dollar denominated Libor rate, versus a negative spread of only 15 points for equivalant fannie Mae bonds.

Spreads are tight and risks are low for the CMHC bonds.

CMHC bonds are backed by a government guarantee.
Fannie and Freddie until last weekend, were not.

CMHC bonds have a triple A rating.
CMHC may issue bonds in foreign currencies.
This will strengthen investment in Canadian mortgage backed securities.

Foreign denominated bonds in Asian currencies will open the door to cash rich individuals to invest in these bonds, and they will.

Canadian housing prices will fall and rise.
However, the mortgage industry is safe.

#39 canadianoil on 07.29.08 at 11:20 pm

brazer, have you tasted Starbuck’s coffee?
Australians are rebelling agains overpriced swill in favour of the the coffee houses brought to Australia last century by immigrants, especially from Italy.

Canadians should embrace the European coffee shops that abound in our distinct ethnic enclaves in our cities.

#40 brazer on 07.29.08 at 11:32 pm

sometimes coffee is just a metaphor.

#41 Peter on 07.29.08 at 11:48 pm

GE Money (One of the High Risk Mortgage Lender) decided to leave Canada as of today …They must know that something will HIT the FAN REAL SOON :

#42 Peter on 07.29.08 at 11:52 pm

GE CEO must be sitting in his room with the board thinking “hmmm…we gotta get out soon and capped out their risk limit before more and more of non-performing 40 years high risk mortgages hits their book…”I guess we wont be able to hear the GE PUMPER guy on City TV anymore and I sure will miss his pumping words on how good and how decent is a 40 year mortgage with 0 % down…!!!

#43 Mike.slob on 07.30.08 at 12:50 am

My Real Estate prediction for July 2008:
Sales volume in GTA will be down between
17% and 21%.

Anyway the prices of houses in GTA still going up.
If you see the prices of new properties from Builders in GTA than you can expect again 10% to 20% increase.
I don’t know why?

#44 $fromaSia on 07.30.08 at 1:40 am

smwhite, I rank Jurock just under Rennie and Rennie just barely below Cammeron Muir!

Does anybody remember that Rennie still says that down town Vancouver condos are bullet proof?

Tar and feathers please!

Like that NBA ref, these guys should be sentenced to jail.

Locked up with Mrs. Doubtfire!

#45 Mike.slob on 07.30.08 at 1:53 am

Supply is high in GTA,
Demand is low,
No more 40 year mortgages
Fewer jobs
Higher mortgage rates from october/08

Currently in BC and Alberta many Sellers are accepting offers 10 – 15% lower than the asking price but in GTA
still most of Sellers expecting asking price or even biding ? And remember that avg. income in GTA is lower than Alberta and BC.

Please open the links bellow:

#46 David on 07.30.08 at 5:00 am

Canadian Oil, you are so wrong, terribly wrong. Go read about the last Alberta real estate bust in the mid 80’s, if you are too young to remember. Walk away mortgages and jingle mail might make financial sense for many families with negative equity and zero down for forty years. The banks sure as blazes will not save up retirement funds for these underwater families and seven years of redlined credit ratings might trump forty years of debt servitude. One has to realise that the walkaways will not only be exempting themselves from unsustainable debts, they will also be eliminating themselves from immediate losses realised upon disposition of their properties. The banks will not renegotiate principal owed, so even for folks who can in fact pay, it might make good business sense to default in any event. Just as free money worked wonders in a bubble, the banks will get, much to their chagrin, an avalanche voluntary defaults from the zero down crowd who decide that home ownership in Canada is not priceless.

#47 bg on 07.30.08 at 8:37 am

I have a friend that is a RE Agent for Royal LePage in Toronto. He told me that the general consensus among the RE Agents is that the market is definitely changing and is probably on the brink of major prices decreases in all areas of the GTA. The one undeniable fact is that there are double-digit increases in the number of listings, and double-digit decreases in the number of sales – basic economics indicates that this is causing downward pressure on prices (which we are now starting to see in Toronto – not just Edmonton and Calgary). There are many pockets in Toronto that are selling for much less than they did last year.

Buyers who can afford to wait should probably wait a little while longer to get the full benefit of lower prices.

#48 Steve on 07.30.08 at 9:35 am

House prices start to fall in Canada: what’s next?

MacLean’s Magazine

JASON KIRBY | July 23, 2008 |

With housing markets around the world plummeting, many Canadians have been wondering: could it happen here? The first hint of an answer arrived last week with a report showing that house prices in Canada fell in June for the first time in nearly a decade. Now the question has become: is this the beginning of the fall?

According to the Canadian Real Estate Association, the average house price in major Canadian markets dipped to $341,096, down 0.4 per cent from the year before, lead by declines in Calgary, Edmonton and Vancouver. Those numbers surprised economists, who were predicting slower growth, but not an outright decline. “We’ve seen some rapid run-ups in prices and all good things must come to an end,” says Peter Hall, an economist with Export Development Canada. “But this was a surprise. We would not have called for a protracted price contraction.”

Certainly, the dip is nothing compared to the carnage elsewhere. In April, home prices in 20 major U.S. cities tumbled 15.3 per cent from the year before. Home prices are also spiralling in France, the U.K. and Spain.

Still, after a decade of ballooning prices in Canada, even a small decline will have an impact. “It’s all about psychology,” says James Wong, a real estate agent in Richmond, B.C. When buyers see markets cool, “they start to worry that they’re buying at the peak of the market.” They may decide to wait and see if prices will go down further, which slows the pace of purchasing and allows real estate listings to start building up.

Meanwhile, sellers tend to hold out for a while because they’re used to a rising market. Eventually, though, they lower their prices, rather than risk a further drop. Wong is seeing signs of that already, and says the official statistics often lag behind what’s really happening.

From his vantage point on the front lines, Wong predicts Canada will continue to see a slight decline in prices over the next 18 months. Given how bad things have gotten in the rest of the world, many will be hoping that’s as bad as it gets.

#49 Dave on 07.30.08 at 10:16 am

I’ve been tracking the MLS toronto listings in M5V & M5T (ie downtown C01).

Over the past month listings are up 15%. There is still quite a bit of activity. (although I don’t know if perhaps some removed listings were removed rather than sold).

I reckon that there are a number of people in the market who locked in 5 year fixed a couple of months ago when rates were 5% lower, and thus that represents additional purchasing power which will soon expire.

Similarly the 40/0 Oct 15 deadline will decrease purchasing power, and that will have an impact in the yuppie starter condo’s in downtown T.O. (ie 250-350k).

I don’t think we’re going to see widespread double digit price decreases in Toronto.

But I do think that in the fourth quarter there will be some good deals (10% off) in the downtown condo market (which is where I’m looking to buy)

#50 Joe Realtor (Toronto) on 07.30.08 at 10:22 am

I don’t know where these people are getting their information that prices are up in Toronto.

Sure there are lot of houses that are priced high, but they are for the most part – still sitting on the market.

As always, people think their house is worth more than their neighbors. I give them a range of what comparable properties have sold for – and they’ll tack 10,000 to 20,000 or more on to it saying – “we can always reduce the price in a month or so”. Not the best way to approach selling your house.

The market in Toronto HAS changed, and will change even more. I’d much rather work with sellers these days as selling a house or (especially) condo with unrealistic sellers who still think people will get into bidding wars, think they know more about selling than I do and believe far too much of what they see on HGTV is a lot more work than it needs to be.

#51 confused and a little crazed on 07.30.08 at 11:13 am

Mike slob

I think you are wrong about salaries in Bc being higher than toronto. There are previous blogs indicating as such but I don’t want to rehash the past.

But just look in a general sense. There is TSE – toronto stock exchange. Is there one for BC …no.

All of the hed offices are in Ontario. Everytime I order from my vendors a large portion of it comes from either Ontario or edmonton warehouse

Toronto has more major sporting venues, Baseball, football, basketball, soccer, hockey while BC has only 3 …soccer still has a poor following.

You’re probably thinking of manufacturing which is in a downturn right now in ontario as a reason but neither does BC

#52 Dig Dug on 07.30.08 at 12:35 pm

Dave says “I don’t think we’re going to see widespread double digit price decreases in Toronto.”

WRONG. My prediction is for at least 30% down from peak to trough. Prices are out of line with income and rents, inventory is massive and growing, housing construction is still going gangbusters, interest rates are rising, energy prices are at record highs, and the economy is weakening (not just manufacturing, but banking, M&A, share issues, advertising, legal work etc. are all heading into the toilet).

The attached statistics on the Toronto housing market show that prices are currently 4.18x the average household income. This is 45% higher than the ** PEAK ** of the last major housing bubble in 1989, when only 2.87x the prevailing average income was required to purchase a home in Toronto.

#53 Sabb on 07.30.08 at 12:37 pm

“Peter on 07.29.08 at 11:48 pm GE Money (One of the High Risk Mortgage Lender) decided to leave Canada as of today …They must know that something will HIT the FAN REAL SOON : ”

Get a clue man. GE Money sold its mortgage arm years ago which became Genworth Financial. GE hasn’t been in mortgages for years (residential mortgages). GE Money is the consumer finance arm of GE that does credit cards, personal loans, and brand store credit cards.

#54 Sabb on 07.30.08 at 12:51 pm

Actually I’m wrong from reading that article, but Genworth financial is GE Money’s mortgage arm from years back, wasn’t aware that they continued doing that after Genworth took that area over.

#55 Mike.slob on 07.30.08 at 1:11 pm

To Joe realtor
Avg. prices in GTA(West): Mississauga,Brampton,Burlington are higher than March/April 2008. For exaple you could find many nice semis in Burlington four months ago for 280k to 300k now the prices are 320k to 360k. In North Mississauga (w19,w20) also that time you could find nice semis for 299k to 329k, now the prices are 329k to 369k.
In Brampton is the same story.
I know very well this trend because I didn’t buy property that period.
Stupid RE Market for newer semi 1200-1450 sqft
(3 badrooms, unfinished basement) asking prices are 329K-370k and beatiful detaches are between 399k-449k(over 2000sqft ,4 bedrooms and finished basement).
SO small properties are much higher than ever in GTA(West).Detach houses and more expensive properties are cheaper than last year.Problem is affordability of buyers soon will see in West GTA poor semis(1200-1400sqft) for 400k and beatiful castles for 590k(over 3000sqft).
In many countries housing prices are matched by sqft,
location,even comercial properties are following sqft evaluation.

#56 Ray on 07.30.08 at 1:22 pm

GE Money does have residential mortgage business in Canada. Genworth is more like CMHC.

#57 smwhite on 07.30.08 at 1:23 pm

New buzz word for Canadian sub-prime, “alternative” mortgages…

Sabb, man are you wrong, two different articles stating that GE MONEY has been offering “alternative” mortgages to Canadians for 3 years.

So for all the “we’re different” herd, sorry, moo!

“Its decision to get out of the Canadian mortgage business comes on the heels of similar withdrawals by other players in the Canadian alternative lending area, leaving fewer options for borrowers with low credit scores or spotty credit histories.”

“There were a number of lenders that came into the Canadian residential mortgage market in the last three to five years,” said Jim Murphy, president of the Canadian Association of Accredited Mortgage Professionals.

Also from the globe and mail, sounds like we’re loosing lenders in Canada, thats gotta be good for over inflated home prices. Anyone that thinks the Average Canadian home can “teeter” at 75% over the value of the average America home has to be working in BC’s only major industry that we profit for the housing pain and suffering, puff puff!

The other big news is they KNOW they have to do something about their credit card business unit, wonder why?

#58 hy on 07.30.08 at 1:42 pm


Who the hell would want to live in Mississauga,Brampton,Burlington?

Prices are up there? Thats a pile of bull$hit…

#59 Mike B formerly just Mike on 07.30.08 at 1:51 pm

Thanks WEALTHY RENTER… totally agree with you on WHO IN THE WORLD ARE THESE PEOPLE WHO ARE BUYING THESE HOUSES. I neglected to mention that those three houses were originally sold LAST YEAR in Sept and October when only a few of us were smelling recession. The three houses I posted about earlier are still on the market even today.
We, incidentally sold last year, so we are renters too but have been looking for a year. Oddly enough we had someone across the street broach the very same subject you have aptly pointed out in your post. He and his wife had bought in “cricket club” in a supposedly nice area in North Toronto for $850 K some 4 years ago and now were renovating that same house and renting while the work was being done. He remarked that they could in no way sell and buy another house in the area because prices were in the 1.8 Mill and over price range . He and his wife are in their 50s, two high paid professionals, and were at the top of their earning position BUT still could not even THINK of one person who could afford to buy at todays prices. The answer to your question and his is people are getting into debt because they are living for today. In fact we are friends of a couple with three kids , both self employed, who just years ago paid 1.5 Million for their fairly modest two storey plus pool house. Paid full asking.
They simply state they have no intention of paying off the house EVER. They feel it will double in price in ten years. Of course when I point out that many people bought in 1989 and only in the last few years have gotten their “money back” . Needless to say they laughed at me and said no one has ever lost money in real estate. I kept my mouth shut at that point.

#60 Mylene on 07.30.08 at 1:54 pm


#61 Future Expatriate on 07.30.08 at 2:08 pm

NAU, SPP, dead in the water.

Garth’s ALWAYS ahead of the rest of us…

#62 Future Expatriate on 07.30.08 at 2:09 pm

NAU, SPP, dead in the water.

Garth’s ALWAYS ahead of the rest of us.

#63 Keith in Calgary on 07.30.08 at 2:24 pm

I was over having coffee with my dad this morning. The neighbour has his house for sale “again”. Apparently the sign got hammered in yesterday. Now there is a story here……read on….

Last year at this time he had it listed at $409K….then $399K…then $379K…then $369K…..then he took it off the market last fall to wait for the “spring bounce”.

Today it is $339K………somehow I get the feeling that he is not alone.

#64 Calgary overpriced on 07.30.08 at 3:59 pm


Those sellers are being unrealistic. That dude you mentioned in Calgary probably paid $170K for his house. And so even if he sold for $250K thats not a bad profit. Good luck to him finding a person to purchase a home for that price. Im sure I could do it, but why would I? I can rent forever if needed to, why would anyone buy a house for over $300K that’s worth $170? Lots of sellers in Calgary are in a very bad spot.

#65 The Other David on 07.30.08 at 4:13 pm

I know of someone that was trying to sell in brampton for 8 months now, originally purchased in 2002, and is looking for a modest 20K “profit”, was offered 5k over the 2002 price.

Mind you over $30k+ was spent on appliances and other various renos.

Anyone that bought in the last 6 months can be classified as the Greater Fool.

I bought a house from someone in 1997 for 183k, they bought it in 1988 for 305K, I sold it in 2001 for 245K, similar houses barely made to over 310K this time around.

#66 pete on 07.30.08 at 4:15 pm


Who the hell would want to live in Mississauga,Brampton,Burlington?

Prices are up there? Thats a pile of bull$hit…

Mike.slob who are you kidding? Not 100% sure about the other two but Brampton is dead as no one is buying. I can not believe all the unsold homes and all the reduced signs. Prices are falling all over as many many homes sit on the market. Watch how much the number of homes sold+prices fall and fall hard in the last six months of this year. The economy is sick as everyday you see companies cut hundreds to thousands of jobs almost everyday. Look at Chrysler and GMAC get laughed at by lender as even those big companies can not get credit. A major deep recession is coming. Pay off debts now.

#67 smwhite on 07.30.08 at 4:24 pm

Mylene, that’s a pretty chart, pretty ridiculous, even more when you consider the article is from May 2008 and the housing downturn has already started in the west…

For example, how Canadian Business could ever gauge that Victoria BC’s “economy” is better or “safer” then that of the nation’s capital is beyond me, and using “momentum” as one of the three categories to gauge investment value, just stupid. All the cities that are starting to tip over out west all given grades of 80+. I’m not an expert (although I stayed at a Holiday Inn last week), but shouldn’t you sell into strength. Whats even better is this line:

“We caution you, though, to use our results with care. Nobody can gauge what a city’s economy will be like in 10 years.”

So what, this is a “flippers” chart? Thanks for the wasted 1s and 0s.

They’re missing another column, a grade for “greater fools” in each metro and another for idiot analysts that make useless charts… Print it off and set it by the toilet for use later(lets reduce that “carbon” foot print).

#68 Rob M on 07.30.08 at 5:28 pm

#66 smwhite

snap … well shredded, sir.

#69 Joe Realtor (Toronto) on 07.30.08 at 7:18 pm


If I understood you correctly, you are quoting numbers of houses currently for sale. Not those that have sold.

Take for example: one of the last houses in an in demand townhouse complex downtown was listed was at 465K. (Thanks in part due to bidding wars on previous units pushing prices up) It didn’t sell for 465K. About 15 less actually and I still think they paid too much for it. The last one that sold was under 440.

A condo complex (again right downtown) that earlier this year (before April) would see bidding wars with buyers going to 310-315K with days on market being a week or often much less, is now seeing units sitting on the market for several weeks with prices at 289 (still unsold) or 299 (sold).

So I maintain that the market is changing and that the average sold price is declining. The powers that be may tell you differently however. Bear in mind these are often the same people that tell you that everything is hunky dory, that phantom offers never existed, and that the existing system (ha!) allows for transparency.

#70 Peter on 07.30.08 at 7:41 pm

GE Money and Genworth both are owned by GE and they do mortgages !!! It was on their website at

#71 brazer on 07.30.08 at 7:48 pm

GM to cut 15 pct of US, Canadian salaried workers

“GM, Ford Motor Co. and Chrysler LLC all have announced salaried layoffs in recent weeks as the U.S. market stumbles through its slowest year in more than a decade thanks to high gas prices and a weak economy. Ford plans to cut 15 percent of its salaried costs by Friday, while Chrysler LLC plans to cut 1,000 salaried jobs worldwide by Sept. 30.

The deteriorating U.S. market has forced layoffs at other automakers as well. Nissan North America Inc. also offered buyouts to around 6,000 salaried and hourly employees at its two Tennessee plants Wednesday. Toyota is keeping nearly 5,000 workers on the job despite U.S. plant shutdowns but has laid off 700 temporary workers in recent months.”

#72 brazer on 07.30.08 at 8:02 pm

LB increases mortgages rates…

#73 rant in Calgary on 07.30.08 at 9:36 pm

Why does time appear to move soo slow…..
We have a preview to the horror movie (U.S.) and we have Canadians in denial. Its like watching the movie unfold and the killer is running around with a chain saw ready to slaughter the next victim, and no matter how loud you yell at the screen, they never leave the house.
Just as in “Greater Fool”, you can lead a horse to water but you can’t make it drink.

#74 lgre on 07.30.08 at 10:07 pm

I’m also not sure where Mike.Slob gets his info from, you can buy a semi in brampton in the $230 range and even below. ( check mls ) He must be dreaming this info.

#75 creepy on 07.30.08 at 11:22 pm

Mike.slob is either:
1) a real “esnake” agent, or
2) trying to sell a house in Brampton
i drive through Brampton every day to & from work and see more and more for sale signs popping up. some are now showing “reduce”, “motivated vendor”. any free monthly real estate guide in the GTA shows the Brampton area with more and mor listings. i occasionally take different routes home and see the same thing in almost every area of Brampton.
dream on Mike.slob!

#76 Mike.slob on 07.31.08 at 12:53 am

Sorry,many guys are upset about my comment that in reality today asking prices on MLS(up to 10-years old semis,only ) are higher than 4 months ago,
in North Mississauga,Burlington and even Brampton.
In March/April 08, I almost bought a semi in North Mississauga,but I didn’t.
If anybody had watched this trend,and today
avg. asking prices in thouse areas are higher than March/08,( between 10K to 40k more than 4 months ago) .

#77 Mike.slob on 07.31.08 at 1:36 am

Anyway will see in 2009,when I hope will be crash in GTA, and next 4 years you can see different RE Market in GTA and Canada,too.I expect that bottom in GTA Market will be 2012/2013. So we’ll waiting long time,but if somebody wants bargain property than you should be patient.I would like to be wrong and I would like to see price correction 20% in 2009.

My Real Estate prediction for July 2008:
Sales volume in GTA will be down between
17% and 21%.

I’m positive that for next 8 months you can see only decline of sales in GTA.
From November 2008 we can expect that balanced market in GTA will turn slowly more to buyers market.
But,again very important period in GTA Market will be
March/09 to June/09, when if will be again decline of sales than welcome to crash in GTA Market.

#78 APCM on 07.31.08 at 1:51 am

If only the government would require all offers on houses to be registered on a central database, then I’m sure we’d see a lot less bidding wars because buyers would no longer be competing against phantom offers.
I have walked away from many bidding wars for condos in Toronto (about a dozen, still haven’t bought one) More than once the selling RE claimed that the sellers had already rejected our exact same offer and we should put in more. More than once there was a second offer coming in the same night we put our offer in. More than once the unit had sold conditionally for (insert price) but fell through on financing and now the owner would absolutely not take less. I’m not saying that in some cases this was not the truth. But in some cases I am sure the listing RE was being misleading. It just happened too often to all be true. I mean who doesn’t qualify for financing these days?

#79 APCM on 07.31.08 at 2:05 am

I just wanted to add that the bidding war process in Toronto is the most manipulative thing I’ve ever seen. It’s so annoying, I can’t believe everyone doesn’t just walk away.
It usually goes like this:
1) All showings are scheduled at the same time, so you have an opportunity to see your competition.

2) Then all the offers have to be reviewed the same day, same time in person. So again you check out the competition. Offers are reviewed. Selling agent comes back and says last chance to make your best offer. Potential buyers all eye each other. Then contracts are resigned and resubmitted. We do nothing. We lose out.

Another strategy I’ve seen:
If the listing agent is there, he has a buddy there talking about how his client is coming by with an offer later. Selling RE looks worried, says something like I hope it’s over asking. There’s lots of viewings, better make sure your client gets it. Blah, blah.

Yet another:
No matter what time of day offer is submitted, it can’t be reviewed until tomorrow. Usually because seller is out of town (on a Wednesday?). Then tomorrow there’s more offers on the way. Better put in more money.

Even in a “Hot Market” this all can’t be real. The “Hot Market” makes it more believable. Funny thing is, 2001 my dad bought a condo. Selling agent told him there was the exact same offer by another party. He should put in $5000 more. (ny dad’s was a cash money offer) My dad said I’ll pass. The very next day he got a call saying 2nd offer fell through and would he like to take the place for the original offer. My dad agreed.


#80 Ottawa on 07.31.08 at 8:03 am

Good day,
People deial heard in transit:
It can’t happen in Canada – a year earlier
It can happen in Canada but…. – around 3 months back
It’s happening in Canada but our city is lucky, because our city is different and it won’t happen here – yesterday.

#81 Joe Realtor on 07.31.08 at 9:20 am

ACPM wrote: “Who doesn’t qualify for financing these days?”

More and more – thankfully. Part of the problem has been people who shouldn’t qualify – being qualified.

There are a lot of financially irresponsible people out there. I know of people who make in excess of 100,000 a year default on 80,000 mortgages. Others who got mortgages by fudging the facts on applications.

Agree that some sort of system should be in place for multiple offers. As long as we’re relying on the “integrity” of the Listing Agent there will be problems. I myself have told my clients that I think we should walk away from deals because I think that somethings afoot (i.e. phantom offer, or just out and out greed)

I’ve seen “competition” situations where the Listing Agent claims to have another offer, we’ve walked – and low and behold 2 weeks later the place is still unsold. These two yokels (they’re a “team” in the Etobicoke waterfront area) have a reputation for pulling crap like this.

#82 My_View on 07.31.08 at 9:51 am

I knew they would still blow smoke up peoples rears….

#83 GE on 07.31.08 at 10:03 am

Mike.slob has no idea what hes talking about. He is a Real Estate Agent pretending to be a RE Bear.

Get this idiot off the board, he is making me dizzy with his comments that make no sense.

The GTA Real Estate Market is crashing NOW!!

I have noticed many many houses in GTA selling for $100k less than last year!

#84 Future Expatriate on 07.31.08 at 10:30 am

Fake offers are highly illegal, but many realtors do it “because everyone is doing it” and “we need to do it too to compete.” The usual excuses for illegal bad business practices.

The “eBay-ing” days of the real estate market have ended, this time, for decades. Until the next bubble and pack of unethical realtors push clueless buyers into the empty pool with both feet and eyes wide shut

#85 Toronto Bear on 07.31.08 at 10:44 am

Mike.slob is not an agent. He has been posting on various blogs including toreal blogs for several months, and although is posting style is unique (to be kind), i interpret his recent posts as frustration levels rising due to the obvious trends of declining sales and rising inventory not yet resulting in price drops.

Mike, be patient, the sellers, agents and media are all spewing their denial, and accordingly it will take awhile for widespread (ie, non anecdotal) corrections to occur. At least a few more months, if not another year. It will happen just like it did down south, so be patient.

#86 lgre on 07.31.08 at 11:25 am

Mike.slob I still see that you have not actually checked MLS, my friend sold his semi 3 month ago for $290, 5 years old, hardwood throughtout, finished basement, sprinkler system, backyard with deck and custom waterfall and so on, then he bought a detach 2400sqft 2 years old totally done for $357, yes you can buy semi’s for 350 but that’s only cause they paid 325 a year ago from the builder with $30k upgrades, a pair I know bought a semi and put that much in upgrades from the builder (very stupid I know)

There was a time when new homes where cheaper then resale, now the tables have turned..everyone wanted new so the builders capitalized on it.

In brampton you can buy single detach in the 200’s so once again there must be another brampton you are looking at but it’s not the one in the GTA.

#87 Dave in Calgary on 07.31.08 at 11:35 am

#55 Mylene,

I think that chart has validity… my hometown ranked at the bottom, so it clearly has some accuracy!!

#88 Sold Out of Cowtown on 07.31.08 at 12:52 pm

When I bought my home in Calgary 3yrs ago I had a 60% down payment and an average income of $85000 the previous 3yrs but was refused a mortgage from the banks because I had no credit history. I got a Visa card and only then I was approved for a mortgage lol.

#89 Mike.slob on 07.31.08 at 1:02 pm

GE on 07.31.08 at 10:03
“Get this idiot off the board, he is making me dizzy with his comments that make no sense”.
The GTA Real Estate Market is crashing NOW!!
I have noticed many many houses in GTA selling for $100k less than last year!
So what? If you bought 7 years ago property from 500k,
last year was 1Mill,today is 800k.This is not crash at all.

GE-Is Stupid Moron
My comments don’t make sense because over seven months RE Market in GTA going down with double digits decline but still avg. asking prices are higher than last year.In January 2006 I watched on MLS properties in Burlington,Mississauga,Oakville,Milton,Brampton
Avg.price in GTA was 332K and West was 302K.
Today is fact that the same properties(newer semis) are more expensive about 70K and even more.
What is Real Value on the market?Only demand of the product. Watch any market Materials,Gold,Energy,Stocks etc. If demand decline between 11% to 22% seven months in a row and the price is almost same, than this is not Real Market at all.
Real Estate Sales are same as 2003 so I’m not expecting prices as 2003,but at least should be as Jan/2006.

If you know statistics on RE in GTA you can see for example that in 1986 had sold 52,919 properties,
and 1990 had sold 26,779 properties in GTA.
That was real crash in GTA and prices hit bottom after six years in February/1996( about 40% decreased prices from 1989).
Maybe The GTA Real Estate Market is crashing NOW!!
But the most of Avg.Prices in GTA are higher than last year and even higher than Jan/Feb/Mar/Apr/ 2oo8
I am talking about GTA(West) only.
I never watched on MLS properties with asking prices from 1 mill,and even if thouse are now reduced to 600k(down 40 percent) again thouse are too far from my affordability.
To Madam Inge, she wrote”you can buy semi’s for 350 but that’s only cause they paid 325 a year ago from the builder with $30k upgrades, a pair I know bought a semi and put that much in upgrades from the builder ”
Is it Crash! In 1988 thousands buyers bought properties about 350K and many of thouse had sold in 1996 for 250K. Loss is not only 100K,but also after 7 years paid interest over $1000/month.Total loss is about 200K.
When I’m talking about Brampton I’m watching just 3 small parts of the city,not around NorthWest Brampton or south part of Bramalea/Torbram.

#90 Sold Out of Cowtown on 07.31.08 at 1:03 pm

Rant in calgary, most people have no clue about whats going to happen because we’re all very busy in our day to day lives wondering about Angelina Jolies twins, who’ll be the starting QB for the Argos, stuff like that. Plus most people love thinking about all the equity they’ve built up over the years, myself included. When I bought The Greater Fool in May, the lady at Coles asked me what was it about, I told her and she was livid! Just the idea of real estate going has people hoping mad.

#91 Sold Out of Cowtown on 07.31.08 at 1:09 pm

I read an article on the web about people in the States that can afford their mortgages but just choose to walk away because it just doesn’t make any financial sense to keep paying it. I wonder if the same will happen here.

#92 Mike.slob on 07.31.08 at 1:51 pm

Canadian real GDP growth has been negative
within December 2007(-0.7%) and first quarter 1Q/2008 (-0.3%) only April/08 (+0.4%) and again May/08 (-0.1%).
UNEMPLOYMENT RATE in Ontario from 5.9% last year again jumped up to 6.7% (June/08).

open the links bellow:

#93 David on 07.31.08 at 2:48 pm

Sold Out of Cowtown, you can read my earlier post in this thread regarding the subject of walk aways. In the Mid 80’s Calgary was voluntary default central in Canada. There is an historical record of this happening in Calgary before and the “this time it is different argument” will not provide much in the way of comfort to home owners overwhelmed with housing debts.
I do not have the Canadian statistics for the entire capital base of Canadian banks versus the number of sub prime mortgages that are at risk, but I am sure Garth can get the numbers from the Parliamentary researchers and the numbers might scare people. In the USA the entire capital base of the banking system is $1.3 trillion and the current estimates of at risk mortgages is $5 trillion. Nobody in Canada really wants to hear about how our financial system faces a potential wipeout. As far as Ottawa is concerned there is no problem.

#94 Downsized and Delighted on 07.31.08 at 3:18 pm

It’s another interesting summer, you know, the kind where real estate markets are falling apart and nobody seems to know it. In my neighborhood, there are several homes priced about right, but not selling. Then there are many more priced way above even the peak prices of last year – they haven’t a hope in h*** of selling and you just want to shake those people out of their deep sleep, or dream. But, what the heck. It’s too late now anyway. No mcmansions being built this year in my neighborhood, just a few smaller homes – the obvious end of the big real estate boom in Toronto.

#95 Tyler on 07.31.08 at 4:35 pm

Anyone guess what the average drop of residential real estate prices from NOW to the summer of 2010 will be?, please put rural and city percentages. I’m just curious how deep you think the market downturn will be by then. I know it’s just a guess but I would value your opinions.


#96 lgre on 07.31.08 at 4:44 pm

Mike.slob, are you really saying that the market has to go down to where it was in the late 80’s to be considered a crash? It will not go down to that level but it will level off to affordability, taking income into consideration. If someone was selling a house for a million last year and they can only get 800 today well then yeah that is a big hit, call it what you want, if they paid 500 for it in 95 well then they are ahead…nobody is expecting to get FREE re here, the prices just have to be affordable.

So what? you see a couple of semi’s for sale in Brampton for 349 and all of a sudden ALL semis are 349+, like I said check MLS and if you want a semi you can pick one up for $220 with a little negotiation.

There are TH being sold for a million in the city so now all TH are a million, quit the generalizing, get some facts and stop predicting…unless you are the all mighty

I watch this market religiously and overall average price means didly, last month maybe alot more single detach homes were sold as opposed to semis or towns so that will obviously give you a higher average price.

#97 smwhite on 07.31.08 at 5:16 pm

Sold out of #90… You must already know that answer considering you live in speculation central!

I think that in some markets(especially where speculation is heavy) some won’t have any choice but to walk away?

This is why down payments are necessary and why we are in for trouble in Canada just as much as anywhere else in the world.

Why pay for a home or investment property you didn’t put any cash down on thats upside down? Walk away and save yourself from more punishment. Some won;t have a choice but to walk away…

There are enough smart and contrarian people on this blog that if you can find and post these numbers, I’d be grateful… I’m looking for 2005 – 2006 sales numbers for RE in the United States, I’d like to see when listings increased and sales dropped, kinda like our never ending RE party here in Canada. Can anyone help out?

#98 Rob on 07.31.08 at 5:27 pm


#99 stone cold on 07.31.08 at 5:56 pm

Mike Slob,

Your are really and truly an idiot. where did you leave your brains?

Garth, please do something about this fool, he is driving us nuts. He can’t even speak english and more importantly has no idea what he is talking about.

Stone Cold

#100 Dave in Calgary on 07.31.08 at 6:28 pm

Sold out of Cowtown,

I just love your take on how people fall in love with their imaginary equity. Nowhere is it worse than Calgary I am affraid. Everyone… even those who did not buy to make money, are so in love with their “equity” that they have not taken a moment to actually think about why the price jumped so drastically. But, they will be quick to snap at you that it’s just a “mild correction” and that their sweet sweet sweet home value will keep increasing. Besides, that’s what their realter told them.

And about people walking away from mortgages here like Americans… as much as we hate to admit it, we are very similar to Americans in almost all of our economic habits. High debt, zero savings, and buying homes without thinking about having kids, or actually paying the homes off.

I think if a Canadian has a choice between loosing $30,000 or losing $95,000 (I make up numbers all day at work, so why not now?) they will choose the $30,000… just like our hurting neighbours.

My 2 cents

#101 Brent on 07.31.08 at 8:15 pm

# 90 Sold Out of Cowtown

“I read an article on the web about people in the States that can afford their mortgages but just choose to walk away because it just doesn’t make any financial sense to keep paying it. I wonder if the same will happen here.”

It happened here in the 80’s, I was young, naive and part of it. AHMC almost went under with all the keys being left on counter tops, mine included.

#102 Brent on 07.31.08 at 8:33 pm

Just to elaborate a little, I paid $64,000 for my condo, and assumed a $58,000 mortgage. When the dust finally settled, it bottomed out at $25,000
I went and saw a lawyer in the beginning about what I could do because my mortgage was now greater then the condo was worth. The lawyer pulled out a printed step by step plan (obviously others had been by before me) and he said follow this plan, close your curtains, don’t answer the phone or the door, don’t look like your homw when you are…. you got 6 months after you stop making your payments, leave the keys on the counter and the place clean and tidy.
I did exactly what he said, saved some coin during those 6 months and assumed a $65,000 mortgage on a house that had fallen in price from $120,000 to $73,000. Never missed a beat.
Don’t know if it would be that easy today with assuming mortgages.

#103 3rdman on 07.31.08 at 8:38 pm

RE in Toronto

Buyers you have to remember what Garth said in his book. We’re not quite there yet -its just starting to turn.

As Garth said you have to look to see where values are in about 18 months from now. Be patient & hold off.

#104 Calgary rip off on 07.31.08 at 8:43 pm

Dave in Calgary:

Yes almost everyone here wants their property at prime levels, even if they paid $150,000 for this. Its amazing the mindlessness of it all.

For renters and those wanting to get into the market in Calgary, the best thing to do is to accept eternal renting as a definite possibility here.

This stance will force all those bulls to price their properties still at a price they will make a profit, but more reasonable.

If they dont, people like myself that make $100,000 a year can sit and wait until they IMPLODE. If it doesnt happen, well then, Im still alive, breathing, working, and paying that thar rent payment.

#105 Chuck D on 07.31.08 at 8:54 pm

Stone Cold – I’ve never seen anything you’ve contibuted of any value so I’m puzzled why we should get ‘rid’ of Mike.slob and not you.

Obviously English is a second language to him. Does that mean that he shouldn’t have a right to post?

His posts can be confusing but with him gone who would people pick on? Vultur doesn’t seem to be around anymore and no one really want to take on the conspiracy idiots who want everyone to learn the truth by posting links to silly bullsh*t.

#106 peng on 07.31.08 at 9:42 pm

I love these guys:

#107 Sold Out of Cowtown on 07.31.08 at 9:51 pm

Wheres Vultur? Is he on holiday or trying to sell his homes?

#108 Peter on 07.31.08 at 11:49 pm

Let me tell you, if you do not like what the banks are doing and they are still diving into this mess deeper and deeper by doing these cash back mortgages and keep lending cheap loans, line of credit and fill up peoples credit card to people. Here are some ideas : 1) We should boycott them by not buying their stocks because if something hits the fan, their stock price will be going down the drain and all I can say we are not immune to this . 2) Stop doing GIC in your bank but go with high interest savings account so you can move your money out at anytime (while they say we give you good GIC rate if you do 5 years..step up rates and they take your money and simply takes these to loan it to people by charging them higher and higher interest and fumed UP all kinds of residential and commercial lending)…3) Wait for the real estate market drops instead of buying now and help these flippers to prop up the market price (remember they longer they have to hold their condo, house or whatever properties, the more expenses they have to fork out and in the end, it really hurts their a$$ and they will hit a firesale in the end, drain these flippers guys and gals balance sheet so they feel the pain of flipping while serious buyers are hurting)…At last, it does not matter you shore up 100K of assets in the bank and they give you a free coffee or free lunch so you trust them…diversify is the key..if something happens, your banker may not give you a call anymore because he or she will be out of their job…

#109 Prairiegopher on 08.01.08 at 1:12 am

In case anyone is interested, MLS listings in Regina have gone up approx. 500 since mid May. Prices here spiked quickly last year and are now heading down. Seems to add merit to Garth’s point that markets that rise rapidly also crest and fall rapidly. Our economy is robust, but people are still paying 5% pst, high property taxes, higher personal income tax and driving on crappy roads. But it will be better next year, right? Oh, I forgot natural gas bills are going up 40%, hope it will be a warm winter!

#110 Mike.slob on 08.01.08 at 8:15 am

Wheres Vultur? Is he on holiday or trying to sell his homes?

the latter !!!!!

#111 Its Coming!! on 08.01.08 at 10:21 am
I think its here already!!!!!!!!!!!!!!!!!!!!!!!!!!!!

#112 Mike on 08.01.08 at 11:16 am

Hey Mike.slob re Vultur let sleeping dogs ly…

On the Toronto selling front… I have visited TWO houses over the past weeks which just recently sold. One was in the Sheppard/Leslie area and was a bungalow that they spent a bucket load of cash on…new kitchen/baths/ deck/garage etc on a ravine lot…. only prob close to Sheppard and a bit noisy. They listed mid 600s , reduced to low 600s weeks later and just sold for the price of 587K from a list of 638K.
Another near Yonge and Steeles was a fixer upper …estate sale on a 60 ft lot with an old old pool in the back. Finally after 60 plus days sold for $595 from an asking of the 675K range and a couple of price drops.
This property was in an area surrounded by very large custom homes so the value is there.
August I am told is a slow month for real estate but I suspect Sept and the rest of the year will be just as slow as people rethink the huge financial commitment a house is. I put this info on here because I know alot of folks get sick of people talking about things theoretically slowing down. I am somewhat glad that things are at least selling at 8-10% below even lowered prices.
Perhaps Garth’s estimate are conservative and I certainly hope they are.

#113 brazer on 08.01.08 at 11:26 am

Jobless rate rises to 4-year high of 5.7 percent

“July’s reductions marked the seventh straight month where employers eliminated jobs. The economy has lost a total of 463,00 jobs so far this year.”

#114 brazer on 08.01.08 at 11:35 am

GM losses widen to $15.5B

“GM’s net losses since 2005 total $51.1 billion.”

#115 Bailing in B.C. on 08.01.08 at 11:39 am

The Vancouver Sun Househunting section this morning was curiously silent on the RE market. Usually it’s some hype about how great it is to get into the market, followed by Ozzie Jurock, followed but ads for 500 sqft condos for $400,000. Today it’s just an article on greening your house and making it energy efficient and ads, lots of ads.

If you can’t say anything nice don’t say anything at all…

#116 Calgary Rocks on 08.01.08 at 11:47 am

But it will be better next year, right? Oh, I forgot natural gas bills are going up 40%, hope it will be a warm winter!

We will see. Nat gas prices have crashed in the past few weeks.

#117 smwhite on 08.01.08 at 11:54 am

#105 peng

Unfudging believable! The banks in Canada will be damned if they don’t sink the ship, then again, offering up more “alternative” products to their inventory of shitty mortgage products isn’t a surprise seeing as they just watched the US banks blow up the biggest equity bubble in history the have the government/taxpayer foot the bill; just like it should be a surprise when housing this year nationally doesn’t beat inflation and next year is down 10% factoring in that 4% – 5% inflation.

So anyone clever enough to come up with those inventory and sales numbers for the US 2005 2006 time frame?

#118 confused and a little crazed on 08.01.08 at 1:02 pm

Calgary rocks,

I share your views about the price of oil and gas dropping; however given that winter is coming and gas is still much cheaper than oil, for the interim gas will be still hold its value .. won’t go up much or down but it’s value is still better than the US dollar …what is it? over $500 billion new credit

#119 smwhite on 08.01.08 at 1:09 pm

Check this out.

I know luxury homes are still desirable(and artificially inflating the recent RE increases) but they have the farthest to fall…


I found the info I was looking for after some digging, here’s the links to the points below:

July 2006 – USA RE

(1) Sales

Total existing home sales — including single-family, townhomes, condominiums and co-ops — dropped 4.1 percent to a seasonally adjusted annual rate of 6.33 million units in July from a downwardly revised pace of 6.60 million June, and were 11.2 percent below the 7.13 million-unit level in July 2005.

(Inventory doubles over the next year!!!)

July 2006 sales down 4%, 11% YOY
August 2006 sales down 1%, 12.5% YOY

(2) Inventory

Total housing inventory levels rose 3.2 percent at the end of July to 3.86 million existing homes available for sale, which represents a 7.3-month supply at the current sales pace.

July 2006 inventory up 3%
August 2006 inventory up 1.5% (Most inventory since 1993)

*Inventory doubles over the next year

(3) Price

The national median existing-home price for all housing types was $230,000 in July, up 0.9 percent from July 2005 when the median was $228,000.

July 2006 prices up 1% YOY
August 2006 prices down 2% YOY

*It is important to note that in the fall of 2006 there was a slight rebound in sales, then USA RE descended into the depths of Hades where it now sits. Also of importance that the median price hit a max of 230K nationally; in 2004 time frame the median income was 43K and the average family income was 71K(A drop of 2% from 2001 – 2002).

#120 smwhite on 08.01.08 at 1:17 pm

#110 Its Coming!!

How can that be, the robotic tape recorded message from RE clearly states that all RE is local.

(Nelson Muntz laugh)

Ha ha!

#121 pulunco on 09.11.08 at 1:20 am

I’m sorry I just don’t see the sky falling in all of Canada. I live in Grande Prairie Alberta and we have solid fundamentals.

We have a steady influx of young canadians comming to this town (maybe because Ontario and other provinces have no good paying jobs) fresh out of school making over $100,000/year.

My neighbor manages a trucking company and he is 120 people short; there are many good paying jobs here. Lots of new business and lots of activity.

Lots of oil and gas activity already this summer and lots more to come this winter. Even if oil sinks to $100 a barrel the oil companies are still making good money and visibly investing in this area. And lets face it oil will go up and stay up for a long time as long as people want to drive cars and live in warm houses.

One may say “well the cost of living is too high in alberta” well yes it is higher in places like Calgary but in Grande Prairie you can still buy a nice brand new 1700 sq/ft house for $365,000 and a nice new starter home for $210,000. Figure out the affordability index for yourself when any yahoo can make $80,000 per year here.

One can keep living in places like ontario and wait for the house prices to bottom out, while renting some peice of crap and making $40 000 a year. Or you can move somewhere with strong fundamentals own a nice place and have spending cash at the end of the day. All you doom and gloomers keep renting if you want makes no difference to me.