Housing starts across Canada plunge…

…and take a 42% wholloping in Toronto

Meanwhile, in Wild Rose country… need a car?

CALGARY, $2.9 Million. Simply the best! Brand new, large 2 bedroom, luxury downtown condo, in Calgary. Fantastic views of the City and Rocky Mountains. Includes all modern conveniences, large patio, 4 underground parking stalls and Mercedes SL55 Convertible. Dedicated direct elevator access. Private Sale. (Globe & Mail classifieds #1083, Aug 9, 2008)

The chart above from Alberta Real Estate Watch: A selected compendum of statements by CREA Chief Econonomist George Klump on the Calgary real estate market, juxtaposed with the real thing. Ooops.


#1 squidly77 on 08.10.08 at 12:31 pm

that graph is for calgary Q1 2008..we are at the minus 12% range now
heres one for edmonton Q1 2008

#2 mike on 08.10.08 at 12:40 pm

Hey got any chart like this for Toronto….My observations in TO is that stuff is selling…. Some truly retarded buyers out there…A house we saw a few weeks ago… No finished basement…. Orig kitch baths …. Large rooms and lot askkng 720k got 710 k …. Just can’t understand buyers ….. Free money and I missed the lineup????

#3 squidly77 on 08.10.08 at 12:47 pm

heres the home page..it updates itself
you can go to any city and observe that prices have a hard time deviating from the inflation rate
what ever they have gained they have always always given it all back..no exceptions
to me its a no brainer that calgarys average price will return to the average mean price of $160,000
but it will over shoot lower for a period of time
that time should be the time that young families jump in a buy there home..patience will be greatly rewarded

#4 Another Albertan on 08.10.08 at 12:54 pm

I attended a bbq last night and wandered into a conversation about Calgary real estate. The participants (friends and acquaintances of mine) were adamant that this was the bottom and it was only up from here. And I mean _adamant_. I asked the small group on what basis they were making their claim of a market bottom.

Not one person cited newspapers or television or blogs or the real estate board or CMHC or _anything_. They all _felt_ (as in emotionally-believed with no external corroboration) this was the bottom. No one had a shred of data – suspect or otherwise.

So I pulled a crisp $50 bill from my wallet while citing references to various forecasters, market data and such, and asked who wanted to take my bet that prices will be lower in the spring of 2009 than they are in the summer of 2008.

No takers on the bet. Actually, I was amazed. The three people actually started laughing because they thought I was making a joke. I upped the offer to $100 and that triggered a “No, we don’t want to take your money. Hahaha.” How magnanimous of them.

When you’ve hit knowing-through-feeling rather than knowing-through-analysis in large financial matters, you’re in a very dangerous time. If this attitude exists anywhere else to any reasonable degree, a world of major hurt – both emotional and financial – is possible for an extremely large number of people.

#5 cmh on 08.10.08 at 1:34 pm

Lets not forget this whole mess was started by Mr. Greenspan and his global associates after 911. (and this statement is backed in the literature). This also spurned outright greed by speculators/investors. All of this fuelled the rocketing rise in real estate prices. In between saving up to pay off student loans and saving to buy a modest townhome, I literally travelled around the world. I’ve made friends all over our planet and still keep in touch with them. Real estate is tanking globally and has hurt countless people. It is doubtful that given the high debt Canadians have accumulated that this country will be shielded from the housing meltdown. However, people will only believe what they want to. These folks fascinate me actually, as they make their assumptions based on their gut feelings, rather than making a concerted effort to do their research and then make statements based on the literature and statistics they discover.
I currently don’t own, but rent again. And I will continue to do so for now. I wasn’t prepared to see my real estate tank further than it had. These crazy real estate gains and increasing knowledge that people were mortgaged beyond their means was starting to frighten me. Althought we have a lot of wealthy people in Canada – there are also many who just appear to be. I became fearful that my home price would tank along with everyone else’s – and chose to get out. My research and conversations with friends in Europe, SE Asia, downunder, S America, the US, S. Africa, Latin America, etc. also confirmed what was underway.
So #4, Another Albertan I am with you. There are already so many people out there who have been hurt badly, and very soon, there will be many Canadians heading for financial ruin. Clearly, one of the most tragic events in recent Canadian history is about to unfold.

#6 TrueGritCalgary on 08.10.08 at 1:41 pm

Another Albertan, they did not want to take your bet because maybe they are too deep in debt to have $50 or $100 to lose.

#7 nonplused on 08.10.08 at 1:43 pm

Almost everyone “knows through feeling”. The cerebral cortex is just there to help the limbic system get what it wants. Very few people actually think these things through, maybe George Soros and the like. The rest of us see our friends buy a new fancy house and we want one too, end of story. Or they get a second mortgage to buy a BMW, and we want a second mortgage and a BMW too, end of story. That’s just part of being an ape.

#8 3rdman on 08.10.08 at 1:44 pm

This Saturday the Toronto Star featured two homes that both went for below asking… Leslieville and [I think] the other was Leaside. Two of the more in-demand GTA hoods..?

#9 Bobby in Victoria on 08.10.08 at 2:09 pm

The graphs look like a carbon copy of the Case/Shiller index for US housing, only a few years behind.

Enjoy the ride, it’s going to get ugly.

Now, I’m looking to buy here in Victoria, when everyone is selling!!!

#10 Gord In Vancouver on 08.10.08 at 2:31 pm

Yikes !!!

What’s scary is that the booming oil industry was supposed to keep the Edmonton and Calgary housing markets from dipping.

Wait until Vancouver’s carnage is revealed.
Maybe not – the 2010 Olympics and Asian immigration will save us !!!

#11 Shifty on 08.10.08 at 2:53 pm

#9 Bobby in Victoria
Wait another 12 to 18 months and reevaluate then. The mid line product is only starting to show softness.

#12 Mitchell Cardno on 08.10.08 at 3:25 pm

What I don’t understand is why do so many people try and have everything at once? Like the granite counter tops, huge house, 3 car garage, etc… that forces you to take a long amortization period and leaves you no “wiggle room” in case of rough economic times. My perspective is of the “young professional”, but I see my colleagues that have opted for the 300k mortgage over 40 years when they probably make around 70 – 80k /yr.

When I do decide to purchase my first home (in at least a few years after school debt is paid, down deposit accumulated & housing market corrected), the first thing I’ll be doing is determining what I can afford with a 10 year mortgage. Not a 35 year mortgage, not even a 25 year mortgage. My first house may not be the greatest, but at least it’ll be paid off in 10 years where most of my mortgage payments would be going towards the equity of the home, not the interest portion.

Regardless of the amount a person mortgages, at a 7% interest rate, the following are the percentage of interest paid over the given amortization period:

10 Years – 39.33%
15 Years – 61.79%
20 Years – 86.07%
25 Years – 112.0%
30 Years – 139.5%
35 Years – 168.3%

People should start out small for the ultimate gains. Mortgage 200k (7% again) for 10 years (pmt = $2322 / month) as opposed to a 400k mortgage for 35 years (pmt = $2555 / month). Assuming that home price tracked inflation, that 10 yr mortgaged home could be sold and used as a 200k down deposit for the 400k home for another 10 yr mortgage. That scenario would have the 400k home paid off in 20 years with less monthly payments as opposed to the original 35 year mortgage!

I seem to be one of the few young individuals that understand a little bit of finance. Maybe it should be time to start introducing a basic finance course to high school students in their curriculum…

#13 Keith in Calgary on 08.10.08 at 3:44 pm

Here’s a Calgary “reality check” that you can cash……

A sign of the times….my father’s neighbour now has a C/S sticker on his for sale sign after 3 weeks back on the market….but the realtor didn’t actually stick it on the sign, she made up a plastic U shaped sleeve with the sticker on it. That is so she can easily slide it on her sign and remove and re-use it as deals fall thru…….ROTFLMAO……!!!!!

He had it listed at $409K last year……my dad says he took $305K…….less the property pimps fee…..that’s a 31% hit from the peak……can we say “bear territory” boys and girls ?

#14 Blacksheep on 08.10.08 at 4:08 pm

Here in Vacouver + suburbs for sale signs are poping up daily on my comute to work.

For sale vs sold signs are running at 50:1 ratio.

People thought Van. was special, and it could not
correct here, how wrong they were.

It comes down to: Supply vs Demand = Current market value.

Lots of supply + very little demand = Declining prices.

Just like the states is only half way through their price correction, it will take years before we find a bottom.

I sold 2 months ago [little gloating] so bring on the crash.

The good news in all this is my child may be able to afford a home in Van. some day.

#15 My_view on 08.10.08 at 4:25 pm

Looking at those graphs, its been a long time for negative double digits. Yikes!

#16 Brent on 08.10.08 at 4:28 pm

Don’t quite get your charts, it looks like prices are back down to pre bubble prices.

#17 Bluesman on 08.10.08 at 4:48 pm

Brent: look at the title: Y-axis = Percentage Growth (i.e., % increase or decrease), NOT home prices.

#18 Re-diculous on 08.10.08 at 5:30 pm

Keith in Calgary

Please advise what “C/S” and “ROTF” of “ROTFLMAO” means

#19 Brent on 08.10.08 at 5:54 pm

The chart says “house price growth”
don’t quite get what the chart is trying to show.

#20 jelly on 08.10.08 at 5:57 pm

Glad to see bloggers are not arguing amongst each
other as much and are quoting pertinent info.
It is much more interesting reading about “the word
on the street” and stories about various individuals
in different areas. Hearing about the cocktail discussions going on at the moment are more
indicative to the environment than you would think.
Those kinds of stories are the things that I pay
attention to almost as much as the charts and numbers.
Interesting, please keep the personal observations
coming and keep your ears open. Please discuss!
Very interesting…

#21 Keith in Calgary on 08.10.08 at 5:58 pm

C/S = conditionally sold (pending sale subject to removal of conditions such as mortgage approval, home inspection, etc)

ROTFLMAO = Rolling on the floor laughing my ass off

#22 Rob in Onterrible on 08.10.08 at 7:16 pm

These graphs are tricky. They show the percantage price increase and it looks like 50-60% price increases 2006 and 2007. For 2008 the percentage change is 0 meaning that the price gains over the last 2 years are holding. It will take -100% to wipe out these massive price jumps but even going back to 1970 the worst I see is -20%.

To me the prices in Calgary and Edmonton are going to stay out of reach for a long time yet.

The charts are clearly marked as showing the percentage price change, not the absolute percentage increase in prices. — Garth

#23 EssGee on 08.10.08 at 7:34 pm

Mitchell Cardno – I have to agree completely.
What you say makes total sense and I’m in the exact same position. I will not take a 40 year mortgage under any circumstances. What you are forgetting to mention is that 99.9% of people are idiots who don’t bother whipping out a calculator. If they had, then they would come to the exact same conclusion that you just did and wouldn’t take a 400K, zero down, 40 year mortgage.

The problem is, my friend, that the market is not run by people like you and I. It is run by idiots who get in over their heads. When the bank comes to foreclose, you see these same people on CNN crying and saying “No one explained to me that my payments were going to rise by 100%”….and “now the bank is coming and taking MY house!!”. I don’t feel sorry for those people, nor will I feel sorry for like minded fools here in Canada who will lose their shirts because they decided to become overnight real estate tycoons!
Remember, until your mortgage is paid off, it is not YOUR house. It’s the bank’s house….and they can take it back whenever they’d like!

#24 Popping-Bubbles on 08.10.08 at 8:45 pm

Here’s an interesting site worth monitoring:


The table on the main page shows that for each major urban market in the country prices are down from the peak from 1.3% to 11%, and that if you annualize the declines (reasonable given declining sales and increasing inventory), prices could drop from 9% (Vancouver) to 27% (Toronto) in the twelve months after the peak.

#25 Nathan in Edmonton on 08.10.08 at 10:28 pm

I think the chart is clear that almost every increase in home prices has met with an almost equal decrease, it is not unrealistic to expect a 50 percent decrease in home values in the next few years.

#26 canadianoil on 08.10.08 at 10:28 pm

International investors are viewing the reduced real estate prices in Canada as buy levels.

Residential real estate in Hong Kong and Singapore are in demand and expensive.
A large percentage of the money is not local but rather from an international clientle.

The quality of life in Britian is deteriorating with knife crimes at an obscene level.

Canada, and especially the west coast is becoming very appealing to Asian and European investors at these new price levels.

#27 rant in Calgary on 08.10.08 at 10:47 pm

A friend of a friend who deals with repo’s told me…
The default rate on second and third mortages in Alberta keep rising. What’s next?

#28 $fromaSia on 08.10.08 at 11:10 pm

Garth, commenting on your graph….those are the biggest erections that go limp that I’ve ever seen, they actually go inside out!


#29 Peter on 08.10.08 at 11:28 pm

As of today, the buyers are now INSANE, all these people wanted were HOUSE RICH, CAR RICH to show them OFF but WALLET POOR…Right at my closest PIZZA PIZZA place, we got a X5 BMW guy buying 2 slices of PIZZA by VISA (CREDIT), we got a nice gal driving a MB SUV buying groceries and has her DEBIT CARD DECLINED and have to load those groceries back on the shelf herself….So, we should not be surprised that some monster homes got SOLD or SOLD OVER ASKING PRICE when these people are finding their way off their BANK OFFERING CHEAP CREDIT and TONS OF BACK 2 BACK LOANS to SUPPORT THEIR BUYING HABIT !!!

#30 Peter on 08.10.08 at 11:31 pm

I would imagine if the housing bubble in the states not being popped, our canadian banks would DARED to give us INSTANT ACCESS to OUR LINE OF CREDIT WITH A DEBIT CARD and let us CREDIT CREDIT CREDIT with anything we need to survive…the more we do, the more we are in a DEEP HOLE …

#31 Jack on 08.11.08 at 1:17 am

One of the reasons a lot of people took 40 year mortgages was because they thought it would maximize their future real estate profits.

With the belief that real estate would continue to rise forever, buying the biggest and most expensive house they could get would give them the biggest price appreciation when they sold to the next greater fool.

#32 David on 08.11.08 at 1:38 am

That $2.9 million Calgary condo with a Mercedes SL55. One has to wonder if he will be adding his Barbie Doll soon to be ex wife with her expensive acrylic nails to sweeten the package. The condo, the car and Botox and boob job Babs thrown in sounds irresistible at that bargain price!
Great graphs there especially when my eyes became fixated on the 1985 data and they became all misty from looking at an obvious bottom of a bear market cycle.

#33 squidly77 on 08.11.08 at 2:08 am

heres a great graph detailing the peak bubble marketing
calgary prices have now fallen to dec 2006 price level
this will no doubt wipe out all that have bought with less than 15% down..as for the ones who put15% down
that down payment has now vanished
thanks bearclaw click on graph
it really is sad and i have empathy for the ordinary families and individuals that were caught up in the mania

but to the vulturs out there..hahaha the joke was on you
boy am i smart..apparantly not may you recieve your just rewards

#34 squidly77 on 08.11.08 at 3:14 am

rob #22..your a prime example of someone who cant see the forest because the damn trees are in the way
you cant see it because you dont want to see it
those graphs are heading straight down..and their direction will be almost impossible to change
home prices love their long term medians
history is a tough foe to flee..as its relentless

#35 vancity dude on 08.11.08 at 4:17 am

it’s different in Vancouver


we have the Olympics! :)

#36 JC on 08.11.08 at 5:00 am

One of the biggest unreported RE stories in Alberta is the brand spanking new ghost towns. On the periphery of the suburbistans surrounding Calgary entire new developments are 80 – 90% EMPTY. It is so bad the developers are parking cars and trucks around these ghost towns to make them appear occupied. But you can drive through these areas and never see a light on or another human being…its like a neutron bomb dropped in some of these areas, Airdrie in particular. And yet they have cranked up their marketing campaigns and continue to BUILD in some, while in others, there are only dusty lots where artist renditions once envisioned thriving neighbourhoods. The local media DARE not talk about this, either…the builders still pour piles of cash into advertising time and space. But it is eerie. Very eerie.

#37 EverythingZen on 08.11.08 at 8:37 am

#3 squidly77 on 08.10.08 at 12:47 pm

Thank you for providing this link Squidly. I find it very informative.

#38 Another Albertan on 08.11.08 at 8:56 am


Nearly a year ago, a major HSBC branch in north Calgary hit their annual targets for consolidation loans in early September. That was 2007 and economic factors have changed decidedly in the past 12 months!

#39 $fromaSia on 08.11.08 at 9:39 am

Vancity Dude,

Average family income in Vancouver is $60K.

Banks are really tightening their lending practices.

You know what that equals?

The Sun article sounds like SOFTLANDING!!!

#40 Dave on 08.11.08 at 10:44 am

#24 Popping Bubbles,

The site you referenced states that the Toronto figures are for detached homes.

However they appear to be the same figures provided recently by TREB for ALL Toronto residential (including condo/rowhouses/semi-detached).

While I don’t disagree with the basic message, I would say that sort of shoddy statistics undermines the credibility of their site.


#41 Dawn in Calgary on 08.11.08 at 11:11 am

#35 Vancitydude

That story is hilarious — the writer is an admitted PR flack. Talk about SPIN SPIN SPIN.

#36 JC

SO true — we went for a drive around Tuscany yesterday to see the homes at the top of the ravine (five figure retaining wall, anyone?)…. and on probably 75% of them was a sign, “Available to purchase” — want to talk about McMansions, these things are behemoths, sitting empty, with nothing but construction vehicles around. The showhome office was busy with young couples and their parents looking at places. I wanted to run in and say, “NO, don’t!” But it’s really their choice, and if they want to ignore all the (forsale) signs, I figure, let the sheeple make their own mistakes.

#42 Crikey on 08.11.08 at 11:36 am

Well, this is a big shock. You mean people buying, selling, building, and decorating homes for each other can’t sustain the economy forever?? ;)

New home prices soften starts plummet
Jamie Sturgeon, Financial Post
Published: Monday, August 11, 2008


“A deteriorating housing market, keenly felt in Western Canada, slowed the rise in national prices on new homes in June to a six-year low, Statistics Canada reported. Contractors’ prices in June rose 3.5% year-over-year, as slowing demand was experienced across major cities in British Columbia, Alberta and Saskatchewan. Month-to-month, prices increased by 0.1% across the country.

Saskatoon saw June prices still climbing aggressively, up 16.3%, but the pace is “down substantially” from May which saw prices rise 30.2% year-over-year, the government agency said. Prices in the central-Sakatchewan city actually depreciated by 2.8% between May and June, as market conditions deteriorated, Statscan said.

In oil-rich Alberta, prices in Calgary rose by just 0.1%, while Edmonton posted a modest increase of 1.6%. “Contractors in both areas cited a soft market as the main factor,” Statscan said. “In British Columbia, year-over-year prices in Vancouver were up 1.8%, while those in Victoria declined by 0.4%.”

#43 MBS-Economy on 08.11.08 at 12:43 pm

More bad news coming down:


As a professional in the mortgage/re industry, my prediction would be 20% decrease in TO, 30% in Van and 40% in Cal, Ed, and Sask by late next year 2009.

#44 Calgary rip off on 08.11.08 at 12:51 pm

Nice post by Squidly: Median price I think $160,000 for Calgary? Bingo. Calgary is not New York City. That above ad with the car might as well show the dude in it with the tool pump, viagra and inflatable Barbie doll. Grande Prarie Girl said good luck finding a house around $180,000. True, thats often what my wife argues. She gets pissed off if I say thats how it should be, that its illogical. $400,000 on a $200,000 house is highly illogical. End of argument.

The stats show a current downward trend, however they will not reach baseline as what the prices were for houses before the boom, because this would entail a huge crash which would more than likely wipe the economy out. Prices have come down, the only ones really hit by this in the short time are buyers who just bought. Those persons who bought depending on making a quick buck before selling are now screwed, those people who bought the place to live in long term will just have to sit tight and their house value should come back. In either case, these individuals as long as they make their payments and pay enmax or direct energy wont freeze to death in the winter, although they may consider eating oats, cornmeal, eggs and potatos for affordability with cool filtered river water to wash it down with, direct from the mountains.

Some would say it is perfectly ethical to buy a house just to sit in it and then sell it a year later at a profit. It may be so, but very risky, and real estate is not the most reliable investment scheme. Perhaps they could invest in the dot com boom, after the fact.

If what Squidly has said about oil projects and statistics in Alberta is true, there are serious problems looming ahead, the least of which is how the builders offering ridiculous 2.6 million dollar condos are going to find well equipped buyers(truly minus the inflatable doll and tool pump).

#45 Mike.slob on 08.11.08 at 1:27 pm

Crazy Builders still increased prices in Canada,but now we can see the Canada’s annual rate of housing starts fell much more than expected in July to 186,500..
Regionally, the decline was mostly centred in Ontario, which saw a substantial decline to 47,800, down from 78,100 in the June report.
The new house price index edged up just 0.1% from May, in line with analysts’ expectations, and rose 3.5% on an annual basis, the slowest pace in more than six years.
*Again the S&P/TSX composite index .GSPTSE was down 174.09 points at 13,167.60 level.
*Oil drops to $112.9 a barrel; gold down at $829 an ounce,silver down at $ 14.6 an ounce..
*CAD/USD 0.9350




#46 Mike on 08.11.08 at 2:38 pm

Even the Americans with their recent Stock Rally think its a multi year bear market with a short suckers rally happening now. Lots of traders out there making some hay on short term gains in stock and selling when they make a bit of cash.
Toronto real estate still has some legs though I see some issues with houses bought last year and hoping for a quick flip not selling. Perhaps there is a small last lurch forward before the Oct 15 deadline for the CMHC 40 year amortizations?? Hard to say but it is a good bet to stay on the sidelines in real estate. Too much hassle to buy and flip a house BUT stock is quick and dirty and it is in the province of what everyone ultimately is looking for…. MONEY. We sold close to a year ago and have noticed a tonal change in the market… no more bidding wars and multiple offers that were so pervasive a year ago. Still…. we think the other shoe will drop in the financial market and the RE market should follow. Perhaps not US sized in carnage?? Although some say that Canadians are higher in debt than Americans and our income to house price ratio is WORSE than the U.S. so the possibility is still there for a very significant correction. Time will tell. There is a large investment group in the U.S. who are currently seeking to buy up alot of the foreclosed properties. Hard to say if this will contribute to a pullout of the market in the US or not?

#47 MBS-Economy on 08.11.08 at 2:54 pm

^ Shaping up to be the perfect storm.

#48 Dave in Calgary on 08.11.08 at 3:16 pm


Maybe they just can’t afford light bulbs, or to turn their lights on.

I’ve had people try to tell me to move to Airdrie because it’s “Affordable”… what a joke. I can’t afford to be finacially married to a crappy town like that, spending my whole life wanting to kill people on Deerfoot.


#49 Bobby in Victoria on 08.11.08 at 3:42 pm

Let’s remember that the role of the real estate industry is to create hype, in order to get people to buy. Prospective buyers will put their purchase on hold if there is the possibility a house will be cheaper next month. That is why the real estate industry will never say prices will dercrease, irregardless of what is really happening in the marketplace.

My recent favourite here in Victoria, is the announcement by the industry that house prices will double in the next 20 years. The purpose of such claims is to push the uninformed so they will panic and hopefully buy. But anyone with just a basic understanding of compound interest realises that you will get the same rate of return on a 3.6% GIC over the same period. No risk but with the same return. And you don’t have to insure it, maintain it or even paint it.

Ask your realtor about that one!!!

#50 Jim_s on 08.11.08 at 4:00 pm

Don’t know how many of you follow Alberta, but I gotta tell ya it doesn’t look good here. Both Edm and Calg are sitting ducks for major price decreases, as inventory is not moving. Buyers are absent, lenders more weary, prices HAVE peaked, and inventory gluttonous. First week of August has been horrible, as prices are basically in free fall. Is it time of year? Is it because of a long weekend? Is it because of global warming….. bla bla bla….

I am close to an exec from one of the major home builders and he told me face-to-face that “he has never seen new housing starts this bad in 27 years!”

Also, the grapevine is feeding us info that apparently 2 other very prominent builders are facing receivership problems, as investing in inventory and spec homes has created an asset bubble and a corporate balance sheet that is asset rich, but cash poor. This is not unlike most peoples personal finances in North America….. except, now prices are falling. It was OK to use your house as an ATM machine when prices were rising, but now the reverse is going to bite those that did it…. HARD. That’s called “illiquid”.

I was in Edm on the weekend driving down the new Anthony Henday and holy cow!!!! are there ever alot of condos sitting half done, empty, looking condemned, with signs on them “buy now”. Whoever is stupid enough to believe the realtors that we’ve bottomed out are the suckers the realtors need during this time to make a sale. Now is the WORST time to buy.

To me, this was all driven by greed. Greed by the banks, greed by the realtors, and greed by the common buyer. Who needs a 3200 sq. foot 2 storey, with 2 kids under 3 in the house? And who in their right mind would feel good about sending a young family into a 40 year mortgage?

Alberta is a sitting duck right now, and things are starting to unfold RIGHT NOW! Inventory is not going away, delists are HUGE, and prices slowly chewing away asset values.

What many specs fail to realize is that carrying a second or third mortgage at 6% annually (in anticipation of the ever present next months “prices rising”) is also chewing away at asset value, as the expense to carry makes no sense whatsoever if selling price is below what you built it for. How long do businesses like that last?

Listening to the realtor slime is laughable. They talk like they know what’s going on, but obviously, as Bearclaw showed, they don’t even know their own vocation (its a vocation, not a profession – nothing professional about their actions).

Time is now to sit and wait. The spec builders, realtors, and investors created this problem, and it will be interesting to watch the machine fall apart, one wheel at a time.


#51 GrandePrairiegirl on 08.11.08 at 4:08 pm

I’ve been trying to find mortgage numbers for the years 2006, 2007 and 2008. These are of course the years for the 0/40 mortgages, as well as 30 & 35 year mtgs.
It would be interesting to see a breakdown on the quantity of new mortgages issued that were 30,35 or 40 with accompanying dollar values. That would give an idea of the mini canadian meltdown to come. I assume our wonderful banks don’t release any related data?
I believe I read somewhere that 37% of all new mortgages were in the 0/40 group. Would just like an idea as to 37% of what. Of course the 37% could have been soft and is more like 40%.

#52 Jim_s on 08.11.08 at 5:03 pm

Mike #46:

Another advantage of stocks during this precarious time is that stocks also can be shorted. There is no way to presently short this RE market, otherwise I’d be all over it, “riding this pig into the ground”.


#53 islander on 08.11.08 at 5:06 pm

Keith in Calgary, a perfect example of a guy dangerous to himself for the little bit he knows and the bitterness that clouds his brain:

The non-sticky Conditionally Sold sticker is a way of not pointlessly wasting a $35 yard sign. It’s impossible to scrape those C/S stickers off without making a complete mess of the sign.

#54 squidly77 on 08.11.08 at 5:14 pm

speaking of vocations

you can narrow it by province or city
some mortgage info here

#55 David on 08.11.08 at 5:18 pm

Dawn in Calgary, those McMansions at $650K have no economic future, except as abandoned squatter tenements or criminal gang controlled crack houses. There is almost no market for these homes now and little in the way of available financing. Five years from now, those will be most unsavory neighborhoods and unsuitable places to raise a family. The unoccupied homes will most likely crumble into the southern Alberta grasslands.

#56 islander on 08.11.08 at 5:24 pm

Booby writes: ….My recent favourite here in Victoria, is the announcement by the industry that house prices will double in the next 20 years. The purpose of such claims is to push the uninformed so they will panic and hopefully buy. But anyone with just a basic understanding of compound interest realizes that you will get the same rate of return on a 3.6% GIC over the same period. No risk but with the same return. And you don’t have to insure it, maintain it or even paint it.

Ask your realtor about that one!!!…..

OK, I’ll play devil’s advocate.

Though housing is poised for a monumental crash, inflation is raging out of control. Double digits if you can get past the official government lies.

In terms of nominal dollars, house prices may not fall as much as the bears are predicting.

I’m not saying housing is EVER an investment in real dollars. I think we should treat it as shelter and nothing more.

However, with so much money being printed by central banks, those fiat dollars have to go somewhere. Banks make money by lending it out, not by sitting on it. There’s nothing saying the banks can’t find a way to re-circulate it back into real estate. And thereby prop up nominal prices. Just last Friday at TD/Canada MisTrust I picked up a counter-top brochure that offered home reno loans for a certain percentage of your mortgage loan – at the time you buy the house. Just another way of pushing Zero down or negative amortization on the public.

Meanwhile, your 3.6% GIC is taxed at your nominal income tax rate, yet is losing ground in real terms to inflation.

At the rate central banks are creating money, there is a solid argument for having money in real property.

I’m not advocating anybody rush out and buy real estate. Far from it. I’m just saying that putting your money in GICs is not necessarily a better strategy than real estate.

#57 squidly77 on 08.11.08 at 5:33 pm

u.k. home sales plunge to lowest levels in four decades

#58 lgre on 08.11.08 at 5:45 pm

living in Alliston, Ont right now I can deffinately say that the market is very poor here, 4 new houses around the corner from me have been on the market for 3 months already fully built, not to mention that they were being sold prior to construction, another bungalow has been started about a month ago and some of the framing is up but I have not seen one person working on that house in at least 2.5 weeks.

#59 Jim_s on 08.11.08 at 5:54 pm

Sure….. charge 7/3% on a sale and can’t afford a $35 sticker?



#60 lgre on 08.11.08 at 5:54 pm

#56 I agree with you somewhat, if you take into account how much money the average person throws into real estate by interest, taxes, repairs..you dont really make any money off RE, at best you get the money you paid into it in the long run but nothing more.

as for GIS’s, yes inflation and taxes eat some of the money but it’s still there if you need it. You dont have to worry about how the market is performing.

#61 Dave in Calgary on 08.11.08 at 6:55 pm

It’s funny how some people see GICs as a “no risk” investment for your retirement. People fail to realized there are two very real risks in investing in GICs for your retirement:

1. Inflation will outpace your return
2. You will never actually be able to retire because you exclusively relied on GICs.

As far as GICs “being there if you need it”, sure, but so is a line of credit, or your house (borrow against it), or if you burry money in your backyard…

GICs are an option, like real estate, bonds, stocks or mutual funds. They are good in certain cases such as:

You think the market is going to tank and GICs are the lesser of two evils.
You are close to retirment (or your kid will be going to Uni next year) and you can’t afford a downturn in the market.

Anyway, my point being, GICs, like any other investment carry their own set of risk and rewards.

#62 Brent on 08.11.08 at 7:04 pm

Yes, but you can’t just put 5% down and have 400 G’s in a GIC.
I’m not bullish real estate, just clearing up the leverage thing.
Leverage can also work against you in a down market because your not getting a margin call from the broker telling you to anti up or sell. Time passes buy and if you have to sell, you might find yourself in big do da.

#63 Bobby in Victoria on 08.11.08 at 7:06 pm

To Islander who challenged my 3.6% GIC example. My sole purpose of using this example was to illustrate how the real estate industry manipulates the data to keep people buying.

You ar indeed correct, there are other issues to consider such as inflation.

However, people will continue to pay inflated prices for real estate if they think that it in turn will increase. Once there is talk of deflation, the market stops as who wants to buy something this week, when it can be bought for cheaper the next week.

They say the rental market is tight here in Victoria, yet there are inumerable condos sitting empty. No one is buying them, but any prospective rents won’t come close to covering the costs.

It’s going to get ugly!!!

#64 Keith in Calgary on 08.11.08 at 7:22 pm


When property pimps such as yourself have to resort to such money saving measures you know we have won……..heh.

#65 ken on 08.11.08 at 7:23 pm

Real estate will be for a place to live not a investment for at least the next 10 years.

#66 Jim_s on 08.11.08 at 8:14 pm


But for some that bought between ’05 and ’07, it will be a place that will suck them dry, as these current price levels are not only historically unsustainable, but presently unaffordable.


#67 confused and a little crazed on 08.11.08 at 8:20 pm

Hi Guys,

I know this is a little late but for those who still believe the US credit crisis is passing …please see this and judge for yourself…because credit still isn’t $$$


maybe it won’t affect us… afterall we are the best place in the world. ;)

#68 My_view on 08.11.08 at 8:20 pm

Bobby in Victoria

Early thirties myself, I have accumulated a very handsome GIC return. Plus maxed out RRSP`s, respectable stock portfolio. The rule is to invest a little in to something you don’t quite know……….Hell; I will try real estate…NO THANKS. I love being PAID for just having genuine anytime liquid…..CASH IS KING!

#69 lgre on 08.11.08 at 8:58 pm

Dave it dosen’t matter which way you slice it, RE is no more of a money maker then a GIC over long term. Just like buying a triplex nowdays in Toronto for a $600k INVESTMENT and getting that great 6% cap rate, lets see what an investment that is.

my aunt bought a TH in 91 for $127 sold in 07 for $196

total payout was $290k and still not paid off, so tell me that she made money? that is just P+I and maint fees, didnt even include any taxes, bills or work done on the house.

She bought when the market was low and sold when it was high and still didnt make any money.
This pertains to the average persons RE INVESTMENT.

unless you pay cash or pay your house off in the first 5-7 years the average person is not making money once all things are considered.

#70 jo on 08.11.08 at 10:45 pm

here in the People’s Republic of Toronto, most of the sales
are in the 500k range, to first time buyers. thats because Mcguinty gives them a rebate on Land Transfer Tax which was extended to resales this year, and Mayor Miller gives first time buyers their tax back up to 450k purchase, so a first timer paying 450k or less would actually pay less than they would have a year ago. The million plus range has tanked, you have to cut a massive cheque just to close- around 40k range per million for the two taxes, these are not land transfer taxes , they are luxury taxes- make the rich pay. So most of what miller collects, he has to give back, it was a concession he had to make in order to get council to approve it “first timers exemption” appeased the conscience of the socialist dominated city council . Speaking of Miller , after every Canadian tv station, cnn and bbc show massive propane blasts in residential parts of Toronto, Miller comes on radio saying he wants to review the bylaws that allowed this to happen while saying that its the province that gives out the licenses. Can you believe it? Why not review the incompetent stooges who run city hall, many of whom are related to each other, of course they have to be related- no one else would hire them.

#71 MBS-Economy on 08.11.08 at 11:10 pm

Real Estate is NOT an investment unless you can flip it out within months, generate positive cashflow thru rent, or bought it with cash. Financing a $300,000 mortgage means you’re paying ~$1,600 monthly where ~$1,200 goes towards interest during the first 5 years. Which means you’re paying over $70,000 in interest which you won’t recover along with yearly taxes, insurance, heating, maintenance over 5 years would mean you’re over $100,000 in the hole. Anyone who has a 25+ year amortization will LOSE money if they sell within first 10 years of their mortage … Period.

Regarding renting out condos, if you can’t generate a positive cashflow then you will LOSE money in the long run. Condo’s don’t appreciate as fast and special assessments will put a dent in your investment faster than you can say ‘damn it’. Inevitable rise in maintanence fees will wipe out any slim profit you will make as well. Sometimes you have know when to cut your loses and fold.

#72 GregK. on 08.12.08 at 12:09 am

Bob Ransford is a senior consultant with Counterpoint Communications who formerly worked in the real estate industry in real estate development, finance and investments. Bob has over 25 years experience in business and public relations. Bob has demonstrated the benefits of effective communications where it counts and where it can be measured – on the bottom line.

For example:

“While much of the rest of North America ponders doom and gloom, here in Vancouver we plan for reality.”
(Vancouver Sun, August 9, 2008)

#73 Peter on 08.12.08 at 2:22 am

Igre, Buying a house cannot be work at GIC but for some ethnic group, buying a house and living inside means WEALTH ACCUMULATION + BENEFITING FROM LIVING IN A SHELTER and they tended to sell after they want to move back to their home country when they retired or moving out to a condo or retirement home (facility) to live their lives … For some homeowners, they tended to doing something called “BUY LOW, SELL HIGH”, think they can make $ 100K on the old house but at the same time, some tried to RENT and live until the perfect storm…they buy back at LOW prices but most (80%) of them are only doing something called “CONVERSION”, means “BUY HIGH and HOLD” it until it reach a higher price…Thats why for some ethnic group, they would look GIC, Stocks or Mutual Funds as SOFT ASSETS and it does not a PHYSICAL means of it…a house will provide them with some feel call “PHYSICAL” and “BRICK & MORTAR” term..

#74 Peter on 08.12.08 at 2:27 am

They all know that they will need to pay for all those property tax, maintenance, renovations and stuff but most of these people would question “Why RENT while the Interest is LOW and DOWN payment is LOW ? “…Where now, I can get something in PHYSICAL without the worry of getting rent increases and kicked out and I can renovate or divide a few rooms in the basement or make the living room into a room to rent it out to cover their mortgage….Some GTA homes have widen the driveway that includes less lawn and divided into 7-8 renter’s with the owners living inside…$ 350 x 7 = $ 2450 RENT in CASH and if they have long term renters (3-5 years and they do this 3-4 times over the life of their mortgage), it means these renters will eventually help them to cover most of their mortgage payment and lots of people are doing it this way !!!

#75 jrochest on 08.12.08 at 2:41 am

Squid — I think that e-mortgage site is the *best* thing you’ve ever posted. A world of information, very little of it good.

#76 David on 08.12.08 at 3:51 am

Middle class families have been overspending on both rentals and mortgages for quite a few years now and what that means is less to save and less money spent on the other necessities of life. Low interest rates and easy/sleazy money propped up this wretched Ponzi scheme up for too long. So much middle class family income left far too many middle class families at risk of something as simple a minor interest rate hike or a slight dip in income.
Prices in many areas of Canada have tripled in the last decade while family incomes stagnated in inflation adjusted terms.
This severe correction will ultimately leave many middle class Canadians better off, except for the dumb and desperate who were naive enough to believe in the big housing cash out, in lieu of a well planned retirement plan.
For the realtor crowd, no amount of cheap debt financing and stainless steel appliances will save you now.

#77 confused and a little crazed on 08.12.08 at 3:52 am

because the Us econ is hitting the crapper…more paper money less value/ dollar there will be a movement towards gold and other commodities…not oil because growth to far to fast. Minerals growth only the last 1-2 years. it’s not going to break any records but will increase in value simply because dollar worth less. it too will falter once interest rates go higher

#78 Calgary Rocks on 08.12.08 at 9:59 am

my aunt bought a TH in 91 for $127 sold in 07 for $196

total payout was $290k and still not paid off, so tell me that she made money? that is just P+I and maint fees, didnt even include any taxes, bills or work done on the house.


Your numbers don’t really add up. or her maintenance fees must be extreme. At 7% and /w 300$/month maintenance fees I only get 247K over 16 years (assumed 20 year amortization). And the period between 2000 and now has seen much lower interst rates than 7%

Did you take into account the rent that she would have had to pay otherwise? If you average 1K/month for 16 years that’s 192,000$ taxable. Substract that from your calculations.

Also add the cash$$ that she got when she sold because with 69K ‘profit’ and the fact that if she amortized over 20 years the house was almost paid off at year 16. Therefore she probably walked away with something like 155K CASH in her pocket. Does your landlord give you that after 16 years. Don’t bet on it.

Oh and condo’s are usually not where you get the most bang for your money.

#79 Calgary Rocks on 08.12.08 at 10:28 am

Dawn in Calgary, those McMansions at $650K have no economic future, except as abandoned squatter tenements or criminal gang controlled crack houses.

If you want to throw 650K on a house in Calgary you can get several in the University district that have been perfectly maintained and upgraded. Right next to some beautiful million $ single family infils. Way better neighborhood and situated smack in the middle of everything.

They’re not selling right now so hopefully they will drop but I am not sure how much. It does not look like those people are hurting for money.

#80 Calgary Rocks on 08.12.08 at 10:32 am

Another advantage of stocks during this precarious time is that stocks also can be shorted. There is no way to presently short this RE market, otherwise I’d be all over it, “riding this pig into the ground”.

You’re about 3 years late to this party. Could have shorted the home builders, financials, building materials, you name it. Fannie, Freddie etc… Stock market anticipates, does not follow.

#81 Jim_s on 08.12.08 at 11:09 am

You’re about 3 years late to this party.

3 years late? Get a grip. What were home prices 3 years ago vs. today?

I was referring to the high principle prices that homes in AB are exhibiting. Right now they are at their relative peak, and will fall sharply over the next 2 years. It would be nice to capitalize on the bubble created and currently maintained by ignorant speculators and home owners, who previously used their home as an ATM machine as prices rose. That will cripple them, hence my reference to shorting the sharp decline in principle prices about to happen.


#82 James on 08.12.08 at 11:39 am

Calgary Rocks-
“You’re about 3 years late to this party. Could have shorted the home builders, financials, building materials, you name it. Fannie, Freddie etc… Stock market anticipates, does not follow.”
No, it is not too late. Take a look at Home Capital Group – Canada’s subprime mortgage lender. The stock chart looks very bearish.

#83 Sam on 08.12.08 at 12:07 pm

what is meant by ‘ housing starts’ ? What does it indicate ?

#84 Dawn in Calgary on 08.12.08 at 12:24 pm

#72 ” Bob Ransford is a senior consultant with Counterpoint Communications who formerly worked in the real estate industry in real estate development, finance and investments. Bob has over 25 years experience in business and public relations. Bob has demonstrated the benefits of effective communications where it counts and where it can be measured – on the bottom line.

For example:

“While much of the rest of North America ponders doom and gloom, here in Vancouver we plan for reality.”
(Vancouver Sun, August 9, 2008)”


In other words, as I’ve said, he’s a paid PR flack for the real estate industry. With 20 years experience, that’s why he was hired, he just knows better what message will sell.

I have a degree in PR — I know bullshit when I smell it.

#85 Jim_s on 08.12.08 at 12:41 pm

Aside from the reason(s) for the RE price increases over the last 3 years, there are some very logical reasons, other than the credit squeeze and current over built supply, why these prices cannot be maintained.

1) Aging population: If the baby boomers of Canada need to move out of their 2-storeys and into retirement villas, what will that do to SFH supply?

2) With prices at historic highs and average income above what most first time home-buyers can afford for a home, where will the new pool of entrants come from? Some bulls have argued immigration.

Also, I’d be curious to know what the average income is amongst first time home buyers? Some cling to the idea that average incomes in AB are strong, which will maintain house prices. But what is the average income among 24-32 year olds?

Sure we’re “different” than the US meltdown, but that doesn’t mean we don’t have some massive hurdles going forward to maintain these ridiculous house prices.


#86 U.B.A.B. on 08.12.08 at 1:12 pm

One Third of New Owners Owe More Than House Is Worth (Update1)

By Bob Ivry

Aug. 12 (Bloomberg) — Almost one-third of U.S. homeowners who bought in the last five years now owe more on their mortgages than their properties are worth, according to Zillow.com, an Internet provider of home valuations.

Second-quarter home prices fell 9.9 percent from a year earlier, giving 29 percent of owners negative equity, said Zillow, the Seattle-based service that offers values for more than 80 million homes. For those who bought at the 2006 peak of the housing market, 45 percent are now underwater, Zillow said.

Negative equity and declining prices are making it difficult for homeowners to sell property for a profit. Almost one-quarter of U.S. homes sold in the past year were for a loss, Zillow said. That contributes to the foreclosure rate because some homeowners can’t absorb the loss and end up surrendering their homes to the bank that holds the mortgage, said Stan Humphries, Zillow’s vice president of data and analytics.

“For homeowners who need to sell, this is a gravely serious situation,” Humphries said in an interview. “It can also be harmful to communities where the number of unsold homes adds more to inventory and puts downward pressure on prices.”

The highest percentages of homeowners with negative equity were located in California. In four of the state’s metropolitan areas — Stockton, Modesto, Merced and Vallejo-Fairfield — the number of homeowners whose mortgage debts exceeded the values of their properties topped 90 percent, Zillow said.

In five more California areas — the Inland Empire (Riverside-San Bernardino), Bakersfield, Yuba City, El Centro and Madera — the percentages were more than 80 percent.

Foreclosure Sales

In Stockton and Modesto, more than half the sales in the second quarter were of foreclosed homes, Zillow said. Almost 15 percent of sales nationwide were foreclosures, the company said.

Prices fell on a year-over-year basis in 140 out of 165 markets, Zillow said. Pittsburgh, Oklahoma City and Austin, Texas, were among the markets that saw rising home values, the company said.

The 9.9 percent decline in home values was the largest on a year-over-year basis in at least 12 years, Zillow said. The median home price of $206,919 was the lowest since the fourth quarter of 2004, the company said.

“Sellers are starting to adjust their expectations,” Zillow Chief Financial Officer Spencer Rascoff said in a Bloomberg TV interview. “More sellers accepting a loss is actually a sign of optimism. It means that the transactions might start happening. There are so many sales contingent upon the buyer selling their home.”

The Zillow Home Value Index is the median valuation for a given geographic area on a given day and includes the value of all single-family residences, condominiums and cooperatives, regardless of whether they sold within a given period, the company said. The index at the national and metropolitan area levels is calculated using a weighted average of the median home value for each county, Zillow said.

To contact the reporter on this story: Bob Ivry in New York at [email protected].

#87 Lorne on 08.12.08 at 1:32 pm

There are several ways to make money in a real estate correction. One is to write two year options on higher end properties in areas with strong medium-term outlooks (AB and parts of ON). Even better if they have to move (job relocation, etc) and they agree to lease it to you (so they can cover their payments/save their credit) and give you the right to sub-lease it. I’m living in one now where i’ll probably make around 200k when i exercise my option to purchase 22 months from now. Not a bad two years ‘salary’ for having to live in a beautiful riverfront mansion.

#88 APCM on 08.12.08 at 1:33 pm

Just a quick anecdote about credit:

Late 2006 or early 2007 I went to a major bank in Canada to get pre-approved for a mortgage. I was shocked at the amount they would loan me (especially since my parents were declined a mortgage in 1991 and they made the same amount of money then that I do now)

But what I did notice when I looked at the mortgage banker’s computer monitor was at the bottom there was a column of about 10 names, a column of personal information and column on the right-hand side that said either approved/declined. The majority of the names in the right-hand column said “declined.” I would say about 6 or 7 out of 10. I only glanced at it for a minute while she was on the phone.
But I am wondering what this says.
I’m not 100% what these columns were referring to, so just wild speculation for fun.
I think it could mean 1 of two things: Either not everyone can get a mortgage or every one is talked into getting preapproved for a mortgages no matter who they are as long as they’re 18.

Also, while I was there I was told to apply for a line of credit. When I asked why, she told me I may need to make a purchase in the future like a car or home renovations or I may have an emergency and I can use money from the line of credit.
I asked her if I had to pay it back.
She looked at me if I was a moron.
But she was the one acting like she was giving me a gift.

But it surprised me.

#89 brazer on 08.12.08 at 1:45 pm

July housing data ‘fairly ugly’

“This report was fairly ugly, and points to the growing body of evidence pointing to cooling in the Canadian housing sector,” said Millan Mulraine, an economics strategist with TD Securities.

#90 prairiegopher on 08.12.08 at 1:46 pm

Looks like the Merrill Lynch story has upset the local RE spin doctors in Regina so they have come up with their own stories. It’s hard to sell a house when you know it’s overvalued by 50%! Chttp://digital.leaderpost.com/epaper/viewer.aspxheck out the link

#91 brazer on 08.12.08 at 1:47 pm

UBS takes $5.1B hit in mortgage crisis

“The new results come on top of writedowns totalling $37.4 billion over the previous nine months.”

#92 prairiegopher on 08.12.08 at 1:47 pm

Sorry the link should be http://digital.leaderpost.com/epaper/viewer.aspx

#93 brazer on 08.12.08 at 1:50 pm

Looking to buy? Sell?

“For outright skepticism about the housing market, try the blog written by Liberal MP Garth Turner. Mr. Turner recently wrote a book called Greater Fool, which argues that a real estate mania has affected not only the U.S. market, but parts of Canada as well. As a way of promoting his work, Mr. Turner has set up a Greater Fool blog that catalogues all signs of trouble in the housing market. A good blog is an opinionated one, and Mr. Turner delivers. Check out his July 16 posting for a vintage performance.”

#94 Jason on 08.12.08 at 2:36 pm


What are your thoughts in regards to the possibility of housing start slowdowns driving housing prices up? Right now some of the local realtors here in Saskatoon are saying that this is a good time to buy because there is very balanced inventory level. They say that with the huge inmigration the city is experiencing each month that the current inventory will not last long, and once the good properties get weeded through, people will have to join a long unpleasant waiting list until new homes are once again built to meet the demand. While the ML report said that housing prices are set to drop, there is similarily mixed opinions from the local realtors in this regard. Some say that our high housing prices are justified by the huge commodity boom and economic growth we are experiencing, while others say that they are just plain overvalued. Just wondering what your thoughts are on the Saskatoon market in particular – is it a good time to buy now that higher inventory levels are available? Are the local realtors correct that prices will continue to rise and possibly end up spiking once again due to the limit availability of housing due to the slow starts? I am being forced into looking at home ownership as rents have skyrocketed (over $600 increase a month this past year :( ) in the past year and the amount I am paying to maintain my small 1 bedroom apartment is nearing what it would cost be to buy into the entry condo market. Call me a cynic, but should our local housing market take a downturn, I don’t see our rental companies lowering rents so in the end it may be cheaper to own should a price correction take place.

Thanks in advance for your advice.

#95 Not buying in Sasktoon! on 08.12.08 at 2:45 pm

So, I’m curious, when do rents decrease along with house prices? Ever? I ask because I’m renting (obviously) in a house that I’m pretty sure the owners bought at the peak of the bubble.

#96 TrueGritCalgary on 08.12.08 at 3:32 pm

Jim_s, could you please tell us the name of the Calgary builders who are in trouble?

#97 Shifty on 08.12.08 at 3:48 pm

Debt Nation: Are we in over our heads?
Broadcast: January 15 and 22, 2006

As never before, Canada is a nation in debt. In fact, we’ve reached the point where the average Canadian family owes more than it earns.

In 1984, Canadians owed about $187 billion in personal debt. Today we owe more than $801 billion.Personal bankruptcies are near record highs. In 2003, for the first time ever, the average Canadian household owed more than its annual take-home pay.

We carry 74 million credit cards – three for every Canadian over the age of 18. Credit counselling agencies say they’re busier than ever. Students are often graduating with accumulated debt of $25,000 or more. Consumer debt levels are rising much faster than incomes and have been for years. Savings rates are at record lows.

#98 Mike B formerly just Mike on 08.12.08 at 5:22 pm

Jo # 70 Man you are right on the money…. The city always gotta blame someone else. The planners blame the city that passed the strategic plan.. they blame the OMB…. Hell…. they are the ones who allowed the plant to be built near housing. How common sense is that to not put something explosive near a residential area. Talk about dumn asses. You are also right about who the city hires…. watch these guys work doing simple tasks around the city….3 looking and 2 working. Great ….my tax money at work.
Thanks Miller

#99 Jim_s on 08.12.08 at 5:22 pm

Sure, Betty Crocker and Aunt Jamima……. C’mon pal, you think I’m gonna publicly divulge that?

You’ll find out soon enough.


#100 Calgary Rocks on 08.12.08 at 5:34 pm

3 years late? Get a grip. What were home prices 3 years ago vs. today?


You were talking about the advantages of STOCKS not real properties and this was the basis of my reply.

If you were so prescient about the direction of real estate you would have been able to profit by shorting the above stocks. That was easy money and a great hedge too. But, you obviously can’t short someone’s house.

Someone mentioned a canadian sub-prime a few messages back. You can always short that if you think gloom & doom is around the corner. I am sure there are others.

#101 Calgary Rocks on 08.12.08 at 5:36 pm

So, I’m curious, when do rents decrease along with house prices? Ever? I ask because I’m renting (obviously) in a house that I’m pretty sure the owners bought at the peak of the bubble.

If vacancy rates increase rents will decrease.

#102 Jim_s on 08.12.08 at 5:42 pm

Here is why property values will plummet in Alberta. Look at the graph leading up to the bubble…… absolute balloon of inter-provincial migration.

We haven’t had NET migration below 5,000 in 2 consecutive quarters since 1996! Sad part is, those that are leaving lived somewhere….. those houses that they lived in or rented need to either sell, sit vacant, or keep getting relisted ’till the next time prices rise in 2028!

Speculators are in trouble.


#103 Brent on 08.12.08 at 6:32 pm

Hi Jason,

Typical realtor comment. It’s never a bad time to buy. It’s never worse then a balanced market. As for the commodity boom, checked the resource stocks or the TSX lately? Resource stocks are tanking.

#104 Chincy on 08.12.08 at 6:57 pm

#102 Jim_s : Great chart…do you have this chart for BC?

#105 3rdman on 08.12.08 at 7:08 pm

I keep hearing about immigrant solution. Immigrants with capital will have to sell their own homes back there before buying here. Don’t forget the markets are hurting worse elsewhere in the World. Also I’ve read recently that immigrants from over the past 20 years are [statistically] having a harder time moving up in earnings than previous generations.

So I don’t see this as being an easy solution for plugging excess RE inventory.

#106 Jim_s on 08.12.08 at 7:54 pm

This puts things into perspective.

Ride the house value Roller Coaster.


#107 jrochest on 08.12.08 at 8:35 pm

Jason — oh, for heaven’s sake.

There’s 1555 properties for sale in Saskatoon. That’s three times the usual number, and most have been sitting for months. Condos, in particular, are oversupplied, since so many rental apartments this is NOT a ” very balanced inventory level.” This is a glut. :)

And as for this idiocy:

“They say that with the huge inmigration the city is experiencing each month that the current inventory will not last long, and once the good properties get weeded through, people will have to join a long unpleasant waiting list until new homes are once again built to meet the demand.”

This is absurd. The last count of population indicated that the city has lost 2,000 people, and certainly tenants are moving away because of the rents (you can make more in Calgary and rents are comparable — so why stay?) It’s possible — but unlikely — that there will be an increase in in-migration, but the idea that you’re going to have to tragically line up is absurd.

A good place for info (which several of us frequent) is Norm Fisher’s Saskatoon RE blog:


He’s a realtor, but a good one: the commentators are mostly bearish, but there’s some amusing bulls. :)

I’d not buy a converted apartment condo if someone GAVE me a down payment: I think they’ll be selling for less 100,000, on average, within a couple of years. They’re elderly rental units that have no reserve funds or amenities.

Never buy ANYTHING out of fear, especially not something that you’ll be paying for the next 25 or 30 years. If the prices go down (pretty much a certainty, in my opinion, and that of Merrill Lynch) you’ll be stuck with something you cannot sell, you cannot rent (since carrying costs are much higher than rents) and that you cannot walk away from.

#108 squidly77 on 08.12.08 at 9:07 pm

bbc..the UK housing crash
bbc..no sub-crime here..but wait a minute
can 4% of sub-slime mortgages bring the entire market down ?..you bet they can
yup..everything is ok til some one gets poked in the eye

#109 squidly77 on 08.12.08 at 9:23 pm

the psychology of boom bust cycles

#110 3rdman on 08.12.08 at 9:35 pm

Re my post #105

Folks please don’t think I’m being anti-immigrant.
Canada will always need newcomers.

I just mean’t in the near term I dont see it as a solution for a housing bubble.

#111 patriotz on 08.12.08 at 9:40 pm

So, I’m curious, when do rents decrease along with house prices? Ever?

Unless you have serious overbuilding (like in Florida) or a severe economic decline (like a shutdown in a single industry town) rents will not go down.

Rents are not determined by house prices, they are based on actual supply (i.e. number of units) and actual demand (i.e. number of households). A housing price bust just brings prices back in line with rents. Rents determine prices in the long run, not the other way around, just as earnings determine stock prices.

#112 jrochest on 08.12.08 at 10:31 pm

Mind you, if stuck homeowners who can’t sell have to rent out their units to try to cover part of their costs, there’s more available on the rental market.

And all those condos have to go somewhere — the rental market is the most likely place. But this takes a few years.

#113 Jim_s on 08.12.08 at 10:31 pm


Here is the link to all the info across Canada. Click on the left side column for the topic, then choose the location.

Here is the graph for BC.


#114 Jim_s on 08.12.08 at 11:01 pm

Many come to AB for work. Many have experienced what it is like or have made their money, and are now leaving.

This was posted by squid on the Alberta Bubble blog, and it is worth a read.


#115 Bluesman on 08.12.08 at 11:11 pm


I have a question for you. All other things being equal, would it be better to buy or rent one’s primary residence in a country whose debt/gdp ratio is rising (as ours is from 35% in 2006 to 68% now) or falling as it was during the liberal reign in the years prior to 2006?




That’s the dumbest question in the short history of this blog. — Garth

#116 Republic of Western Canada on 08.12.08 at 11:37 pm

#96 TrueGritCalgary – ‘FancyShacks’, for starters…

#117 Bluesman on 08.12.08 at 11:52 pm


Are you saying that my question is lacking in intellectual acuity? What part of the question do you not understand?

Understood it all. Dumb. — Garth

#118 jim on 08.13.08 at 1:03 am

Sorry folks, but the flood of job seekers are starting to pour back into alberta. I’ve got connections in the right departments that tell me it is so. Guess it was bound to happen with all the job losses in parts of ON and starting in BC.
Oh and while I’m here, unless all you wonderful Ontarians are here on vacation (btw thanks for carrying us through our rough times decades ago), we sincerely welcome you to north america’s most economically free region and if you need any help landing a really high-paying job (not that you will), let me know.
And be sure to tell your family back home to keep on manufacturing all those valves, pressure vessels, structural steel and other fabricated parts we’re using to build our oil upgraders and refineries.

‘ Bluesman ‘ we have no debt and have a gdp closing in on 300 billion… oh, you were talking about canada… sorry

#119 sarcasm on 08.13.08 at 2:39 am

So let me get this straight… your saying not to buy a house?
But my realtor, newspapers, friends and puppet economist said no better time to purchase…get in before the 0-40 is gone.

That rollercoaster sure looks fun! Why does it drop off at the end?

#120 smwhite on 08.13.08 at 10:16 am

Ain’t enough immigrants(inter-Canadian as well) coming into Canada to off-set the mass out-flux of retires that will be looking to cash out of their homes(Or their second homes) in the next 5 – 10 years. Drop that racket, its not a magic bullet to all Canada’s RE problems.

Seems to be a lot of questions about rent versus buying, I would suggest reading the Real Estate chapter in the David Chilton book the Wealhty Barber if you can’t wrap your head around rent versus buy(Especially when were sitting on the highest point of the roller coaster).

So now with the TSX receeding, so begins the decline of RE’s net worth. May those with common sense and patience prosper.

#121 Mylene on 08.13.08 at 10:39 am

Man. and Sask. to lead Canada in growth

Manitoba and Saskatchewan, not Alberta and British Columbia, will be the country’s hottest areas economically in 2008, the Conference Board of Canada predicted on Tuesday.

The two lower-profile prairie provinces should post the highest gross domestic product growth rates in Canada this year, the Ottawa-based business think tank said.

The Conference Board released its latest economic forecast this week.

Red-hot Saskatchewan will grow at a 4.2 per cent clip, while Manitoba’s economy will expand by 3.6 per cent in 2008, the Conference Board estimated. Their results are being driven by high oil and gas prices and soaring demand for those provinces’ grain crops.

“Attention this year has shifted away from Alberta to Saskatchewan and Manitoba, as high prices for nearly all of their natural resources will make them the two fastest-growing economies in Canada,” said Glen Hodgson, the Conference Board of Canada’s chief economist.

The former kings of the Canadian economic mountain, Alberta and British Columbia, will see economic activity moderate this year, the board said.

A poor oil drilling season and labour shortages have slapped a ceiling on Alberta’s growth potential. The Conference Board figured that the oil-rich region will expand its economy by 2.6 per cent in 2008.

British Columbia is getting stung by forestry sector woes and Canada’s sluggish manufacturing industries. That should lead to the western-most province growing only 2.2 per cent.

Both provinces should bounce back somewhat in 2009. The Conference Board estimates that British Columbia will grow by 2.9 per cent, while Alberta’s economy will bounce even higher, at 3.3 per cent next year.

Similar to the western-most provinces, Canada’s economy will expand slowly this year, by only 1.7 per cent, improving to 2.7 per cent next year.

The Conference Board has one of the more optimistic forecasts for the Canadian economy. Its own survey of economic predictions placed the consensus at GDP growth of 1.2 per cent this year.

Nationally, the biggest millstones hobbling Canada’s economy are Ontario, where the ongoing manufacturing slump is having the greatest impact, and Quebec, whose export industries have been hit by the high loonie.

Overall, the Conference Board forecast that Ontario will grow by a paltry 0.8 per cent this year before rising to the national average for economic growth in 2009.

Quebec should fare even worse in 2008, as its economy is expected to shrink by 1.4 per cent.

Further east, the economies of Nova Scotia, New Brunswick and Prince Edward Island will all post expansions in the two per cent range this year, according to the Conference Board.

Finally, Newfoundland, which grew by more than nine per cent in 2007, will barely push the economic needle into positive territory this year, with an expected growth rate of 0.2 per cent in 2008.

#122 Calgary rip off on 08.13.08 at 11:02 am


On that high paying job in Alberta….good luck buying a house here with that. Perhaps the reason Stelmach gets in in Alberta is that the majority of Alberta outside of Fort McMurray, Calgary, and Edmonton, is somewhat affordable. Otherwise, the NDP or Liberals would get in.

You must make around $120,000 per year to get a decent single family home detached in calgary. We arent talking a McMansion. Of course you could go for the 40 year package before October 15th and enjoy ridiculous amounts of debt on that house marriage.

Maybe the economy will be up in Calgary, maybe down in the near future. The housing costs rent and buying dont support a rapid influx of interprovincial migration and current statistics dont reflect that either.

More than likely prices will begin a steady decline, but unfortunately, will not go back to where they were at 2004 or before then, this would incur a massive shock to the economy.

So those individuals you mention Jim will likely end up renting, in essence supporting the local economy by renting. That’s ok, but for most people not truely motivating unless in dire situations as experienced in many parts of B.C. and Ontario where unemployment is high.

Individuals will be forced as I and my family were to migrate out of B.C., for example, and take on someone else’s mortgage, which doesnt affect house sales, at all, prices will continue to drop.

Notice also Jim that the local Calgary Herald doesnt report much on housing anymore lately, because there isnt anything positive to say, the boom is over.

#123 jrochest on 08.13.08 at 11:34 am

Saskatoon’s Star Phoenix’s lead headline — Page one, above the fold — is a 4 page long (!) refutation of the Merrill Lynch report. The head of the Saskatoon RE board and the CEO’s of several building companies all assert that the report is ABSOLUTELY WRONG.

I think the report hit a nerve.


No, really! Sask has never had such a wonderful economy! Sask RE has been ‘undervalued’ by 40% for the last 20 years! The average family income is well above 85K a year! Record inventory and dropping sales mean nothing, nothing!

It’s a little sad, really…

#124 Calgary Rocks on 08.13.08 at 11:53 am

You must make around $120,000 per year to get a decent single family home detached in calgary. We arent talking a McMansion. Of course you could go for the 40 year package before October 15th and enjoy ridiculous amounts of debt on that house marriage.

‘Decent’ SFHs are NOT for first time buyers. Ask Garth, he’ll tell you what 1st time buyers should get into.

#125 Dawn in Calgary on 08.13.08 at 12:53 pm

#122 Notice also Jim that the local Calgary Herald doesnt report much on housing anymore lately, because there isnt anything positive to say, the boom is over.

Very true — the Herald’s RE Shill, Mario T., has been conspicuously absent of late. I get a kick out of the ads now that throw in a year’s worth of groceries or gas if you throw down a deposit now.

Also, the ads are now emphasizing the total monthly payment rather than the overall cost of the home — perhaps more palatable to potential purchasers, but they need to read the fine print — similar to the ‘subprime’ in the US, these ‘special’ monthly prices are only good for a year or two, then the payments will reset to the market rate.

And the greater fools rush in….

#126 dotava on 08.13.08 at 1:42 pm

#106 Jim_s on 08.12.08 at 7:54 pm

Excellent raid – do we have parashoot?

#127 Bluesman on 08.13.08 at 1:46 pm

Ok, well Garth doesn’t feel like thinking about my question so I’ll put it out to others who might want to entertain more abstract notions.

The question is, would it be better to rent or buy one’s primary residence (e.g., take out a mortgage with 20% down) in an economic environment in which the country is increasing or decreasing its national debt?

Here is a list of countries and their debt levels:


I’ll take a stab at it first. Well, all other things being equal it might be better to rent when the country is increasing its national debt because the increase may indicate that the country has overspent and needs to pay back its debt so the country’s economy may be going into a downturn and there won’t be enough money to spend on federal projects. Therefore, renting would be advisable because one would be more flexible in moving to where the jobs that are available are located.

On the other hand, if the debt is “good” debt such as the situation in the Netherlands according to Anonymous on the vancouver condo info blog, in which expats from the country go out into the world and invest in businesses then the country would be in a more healthy fiscal situation and it may be better to buy a primary residence.

So to answer the question for Canadians, we would need to know whether our rising external debt is “good” debt or “bad” debt.

Caveat: Of course the home purchase in the decreasing debt or increasing “good” debt situation would only take place after the bubble pops (circa 2011 or later, at least in Vancouver).

Please comment.

#128 Crikey on 08.13.08 at 2:03 pm

Coming to a country near you? Hmm..

“One Third of New Owners Owe More Than House Is Worth”


This bit of the article is particulary scary:

“For those who bought at the 2006 peak of the housing market, 45 percent are now underwater”

#129 brazer on 08.13.08 at 2:05 pm

A Bottom in Housing? You’ve Got to Be Kidding

interesting video…

#130 Calgary 123 on 08.13.08 at 2:10 pm

‘Decent’ SFHs are NOT for first time buyers. Ask Garth, he’ll tell you what 1st time buyers should get into.

A decent SFH is for whomever can afford to buy it. Many first time buyers make twice as much money as some of the existing home owners.

Ask Garth, he’ll tell you what 1st time buyers should get into.

I thought Garth was advising anyone to stay away from the RE market all together, for the time being. Or maybe there is another Garth you refer to (realtor?), from “flip that house”?

#131 Mike.slob on 08.13.08 at 2:38 pm

Still is a very,very difficult for the new buyer in the real estate market.Still the Market in GTA(West) prices going up,no more bargains or newer semi 1700 sqft for 280K. My income is 74K and my wife doesn’t work.
Because I don’t like condo unit then I’ll be for sure renter for next 3 years, or maybe forever.
I don’t know about rest of Canadian RE Market but asking prices in GTA (West) increased when you watching on MLS properties up to 350K.
What’s left? Only junks and poor condos…

#132 jim on 08.13.08 at 3:12 pm

Hot dang we’re fortunate to live in this country! As long as some parts are always doing well, we all collectively benefit ~

As recently as 2002, Alberta’s merchandise exports for the entire year were less than $50 billion, suggesting Alberta is within striking distance of doubling its exports in just six years. Alberta’s surging export performance has made it a Canadian trade powerhouse, surpassing Quebec in 2005 to become Canada’s second-largest exporting province behind Ontario — with which Alberta is closing the gap.

“It did grow quite sharply in the past few years,” said Reurink. “It means more money for the businesses that operate here, they pay their workers, they pay out a profit to their shareholders . . . they pay into the government coffers. It’s a very positive thing.”

While higher energy prices are a major facet of Alberta’s continuing export success, StatsCan figures show that there is strength in the province’s export performance almost across the board.

#133 Marcus Aurelius on 08.13.08 at 3:30 pm

Garth – great site. Especially given all those disguised agent blogs that delete/edit all posts that depart from the ‘Buy Now, Buy Often, Life’s Good’ mantra. The new word in Toronto is “Levelling”. Prices no longer go up forever, it seems. Sometimes they just ‘level’ – a nice Canadian word. You notice that the US Bubble Roller Coaster graphic also “levelled” – for about a second or so, just before each screaming dip.

All real estate markets are local, so unless you know micro-stats for particular areas, then the periodic Canadian, Ontario and even GTA trends may not be helpful or predictive in determining on-the-ground reality. I’ve spent several years watching the following happen in what used to be called ‘North Toronto’ :

1. Agents and Brokers who have been in Canada less than 10 years lecturing/blogging about why some street with cars on blocks in the driveways at Bathurst and Finch are in a ‘prestige area’. Don’t they know that some buyers actually LIVE in Toronto?

2. Fabulously wealthy Ex-South Korean Army lieutenants (?), extravagant Russian Mini-mafia, fungible Iranians and others who need to find a way to ‘invest’ their hard-earned money in Toronto rather quickly. For them, it’s just good business (even if they have to sell at a loss after the bubble bursts). For the rest of us, buying next door at the same price would be a really dumb idea. But it’s nice to see that they have ‘enablers’ like ethical real estate agents to help them.

3. Certain streets and areas where builders and their helpful agent/brokers drive street prices way, way up in a very short time. If one were suspicious, one would say that this is ‘methodical’ (like Biblical locusts). Ever notice what really happens with those early listings? Could agents be ‘selling’ to other agents or builder clients? We’ll never know because no one has gone into the records and done an investigation. Why not start with Avenue Rd/Lawrence? That would be fun, all you cub investigative reporters out there. It used to be that ‘street comparables’ meant something. If some of these ‘market-making’ boiler-rooms were selling securities instead of real estate, this might be an enforcement ‘concern’. But at CREA, OREA and TREB they’d probably just call it ‘hustle’.

So who’s to blame? Well, no one seems to list the dumb-as-hammers late Baby Boomers, who were raised as ‘special’ kids and have a ‘special’ view of reality as a result.

They seem so self-satisfied when they pay $1.5M (financed 75%) for some crap can in Cabbageville Town-upon-Leslieville-on-(the)-Beach (or whatever particular offal the lender-builder-agent Axis of Evil is peddling). I’ll bet they don’t even realize that the wizened Senior Partner of the Firm listening to them crow about this over a Glenfiddich, is really just wondering how they are going to feed their spoiled larvae when the Firm has to downsize. First step: try to sell the house.

#134 RJT on 08.13.08 at 3:42 pm


It’s funny how you’re trying to recruit Ontarians to Alberta on this Blog, in order to save your specs (unsellable), and prop up the overbuild local Calgary RE market.

Not sure if you’ve ever been to Ontario, but they actually have many good aspects of thier economy. Sure, right now the Auto sector is getting crushed, along with related manufactoring. However, the biggest advantage many Ontario communities have over Alberta is cost of living (ex-Toronto). Folks can start a small business in Waterloo for example, and actually find retail/warehouse space at a decent price, they can afford a home, and can actually find employees. All things they cannot do in Alberta, without vary high wages or massive debt.

I don’t think you’ll see the influx of rich workers that you want to buy your specs off you. If I were you, I’d just lower the price now, and sell them before the mortgage rules tighten and the market goes into a tailspin.

Hoping that migrants from Ontario will save you is like hoping Santa Clause gives you that new Wii game you really like. It’s better to go and buy it yourself, cause Santa isn’t real. (sorry kids)

#135 David on 08.13.08 at 4:11 pm

The overall Canadian economy had its biggest job loss figures in July 2008 in the past 17 years. Most of the job losses were in Eastern Canada and were in highly paid industrial sector jobs.
The Loonie is showing signs of tanking against the US Greenback. The high Loonie helped mask many of the inflationary effects of a sinking US dollar, so now the fig leaves are gone. The Alberta Advantage and land of bread and manna argument is wearing pretty thin these days as recent Alberta migrants decide it might better and cheaper to live somewhere else. Calgary Rip Off is correct about things. If $120K annual income can not provide sustainable housing then far better to rent.

#136 Calgary_rip_off on 08.13.08 at 4:22 pm

Calgary Rocks:

Didnt know there was an approval rating or a class system to getting your first home.

You state what many who live in Calgary feel. The feeling is that the first time buyer should suffer by buying an overpriced condo or overpriced shack. Both arguments are illogical.

Its better to accept that pricing for what is currently market value is way out of whack for earnings potentials. This discrepancy has already undergone a one year correction, which continues so that the A$180,000 but priced at $400,000 single family average detached home can once again become available to the economy supporting first time buyer.

No good priced houses in Calgary=Calgary built on sand, not rock, and its a very slippery slope.

#137 Westcoaster on 08.13.08 at 5:30 pm

Mitchell Cardno said:
What I don’t understand is why do so many people try and have everything at once? Like the granite counter tops, huge house, 3 car garage, etc… that forces you to take a long amortization period and leaves you no “wiggle room” in case of rough economic times.

It’s simple – GREED.

#138 Vizzle G-Unit on 08.13.08 at 5:45 pm

I just happened upon this blog and, man, I tell ya, it’s a site for sore eyes. Calgary’s full of so much propoganda, it’s insane. I moved out to CGY in 2006 from Ontario b/c I just need a change. I thought housing was out of control in ONT, but here it has been insane.

Despite (fortunately) having a household income of $120,000+ and some decent savings, my woman and I have had the intestinal fortitude to hold off from buying into the mcmansion rage with a $300,000 mortgage.

I’ve been talking the lady friend out of buying a place for about 18 months, but ever since the Spring08 stats on Calgary sales started rolling in, I find myself having to explain myself less and less about WAITING to by a house every month.

Garth, my good ol’ pops in ONT (who’s actually still a RE agent at 68….and maybe the only honest one EVER – god I admire him) told me about you and your website. I gotta say, it’s an oasis for right-minded people.

And to whomever had that one post about getting into a coversation at a dinner party and offering a friendly wager….buddy, I’ve had that conversation once a month since I arrived in Calgary 2 months ago.

#139 Vizzle G-Unit on 08.13.08 at 5:47 pm

Sorry…make that 2 years ago…not 2 months.

#140 David on 08.13.08 at 6:18 pm

Bluesman, there is a difference between sovereign debt and personal debts. Sovereign debts are collective, in other words what do WE as Canadians owe the world for buying our Treasury Bonds, propping up our Loonie or helping us to maintain our standard of living through debt financing. To make it simple you only have to look at what YOU personally are responsible for home wise. I detested the Right Wing Bolsheviks in Alberta very much, but I bought a house there anyway because I had children and dog, the place was comfortable and it was cheaper than rent.
There is good debt and bad debt as well. Borrowing a million to go to Vegas might be a bad debt. Borrowing $25K to expand an entrepreneurial venture or send your kids to college might be a very good debt. It is all about stream of value into the future (asset acquisition) versus debt servicing costs and income potential from buying an asset.
In 1776 the new found American republic ran out of credit chits from continental Europe. The monarchs and bankers of the day who rejoiced in smearing mud on British ambitions decided the credit line to the USA was limited and time to pay the bills. The same applies to post communist Russia, who nearly defaulted in the mid 90’s under Yeltsin. Putin paid the bills with interest.
The best primary residence will always be where one is living today and if the market is wildly out of sync home price wise with respect to economic fundamentals then quite simply rent.
And by the way I love Blues music.

#141 brazer on 08.13.08 at 7:57 pm

Support highest in West for mortgage crackdown

“Prices are now falling in a number of overheated markets including Calgary, Edmonton and Victoria, causing some critics to say the government missed the boat by cracking down on lending rules too late.”

#142 Brent on 08.13.08 at 8:02 pm

Saskatchewan is high on crack right now, they just want more. Eventually the high ends and it can be a very painful withdrawal. Just ask some Albertans.

#143 peter p on 08.13.08 at 8:03 pm

As inventory increases and sales continue to decrase you have a perfect storm. This housing crash is just getting started. Those looking to catch a falling knife will get cut bad as the housing crash has much much more to go and thus in the first inning of a baseball game. Look out below

#144 Calgary rip off on 08.13.08 at 8:47 pm


The only situation in which it would be of concern to not buying a home is if the country in which you lived had an immediate economic impact on citizens directly from its level of debt. There is a very indirect relationship there, but its like saying if I buy lots of burritos at Costco will Taco Bell benefit? That doesnt make a lot of sense, but thats about the relationship there. Theres even more of a correlation between someone having relations with their date and then getting AIDS than the impact of a countries debt level on the citizens personal debt.

What is really important Bluesman is 1)is the house you are buying really worth what it is listed for(or is it an erroneous price due to false market values such as in Calgary-Mario Toneguzzi and hos at the Herald take note); 2)are you in a position to take a 25 year mortgage with a decent amount down on the house; 3)is the house likely to lose value in the short term due to the economy; 4)do you like the house(does it have a decent yard, is it sound, is it in a decent area where you wont get shot at or growled at by dogs or gang members, is it big enough); 5)does the why reason for you buying the house justify the cost. Those are some of the reasons for buying versus renting.

When I came from British Columbia I didnt buy in Calgary because the prices here are so obviously overinflated-most of these buyers lately and 2006 to present must be really really dumb, or, they have bought the home because they really like it and can deal with the payments because they have a great place to live which is right on! Again, most of the homes here in Calgary that are really worth $180,000 are presently $400,000 priced. Why would anyone buy into that? Even speculators would be insane to do what has been done to Calgary. It stills makes more sense to rent here, but that may be changing slowly. Even so, at $32/hour I am hard pressed to buy one of those $400,000 shacks for my family because I dont even qualify and I make around $70,000 per year with callbacks.

Bottom line: Dont worry about the debt of your country when buying a home, unless you live in St. Petersburg(old Leningrad) or somewhere else where the mafia and the underground forces are at work.

#145 Boone Pickens jr. on 08.13.08 at 10:18 pm

Does anyone know where the Horseshoe Canyon Formation is in Canada? Somebody told me it contains over 500 trillion cubic feet of natural gas trapped in subterranean coal seams – which couldn’t be right cause that would be almost three times the total US reserves. Trying to figure out where it is cause i think it might be a good place to invest in some PROPERTY, AFTER the CORRECTION of course.

Anyway, following T Boone Pickens lead.. does anyone here want to venture a guess how many coal-fired power plants in the US are presently being refitted to burn natural gas? How about how many nat gas plants are proposed or are currently under construction?

#146 Calgary Rocks on 08.14.08 at 12:01 am

Didnt know there was an approval rating or a class system to getting your first home.

Absolutely there is. You compete with baby boomers on their 4th home with 300K-500K cash to put on their ‘dream’ home. You better believe that the 1st time buyer is not going to win this game unless daddy’s helping.

#147 Calgary Rocks on 08.14.08 at 12:06 am

I thought Garth was advising anyone to stay away from the RE market all together, for the time being. Or maybe there is another Garth you refer to (realtor?), from “flip that house”?

You should read Garth’s articles from 2000 forward as well as his book and then you will now what you are talking about. I was talking about the type of property and not the timing.

I like sarcasm from people that are clearly clueless. Thanks for the laugh.

#148 Calgary Rocks on 08.14.08 at 12:08 am

A decent SFH is for whomever can afford to buy it. Many first time buyers make twice as much money as some of the existing home owners.


It doesn’t matter how much you make. It matters how much money you’ve got saved and how much money you’ve made from owning different homes accross 30+ years.

1st time buyers have none. Baby boomers, who they compete with have tons.

Again you are clueless so educate yourself. Please.

#149 Another Albertan on 08.14.08 at 12:19 am


West of Drumheller.

Some links to get you started because Google is apparently broken for you:



#150 squidly77 on 08.14.08 at 1:24 am

bearclaw posted this desperate article from the edm journal

#151 squidly77 on 08.14.08 at 1:40 am

look at this mess written by the edmonton journal

#152 Bluesman on 08.14.08 at 2:22 am

David and Calgary Rip off:

Thank you for your thoughtful answers. I would have thought that if the country is spending foolishly and going into debt that inflation (the purchasing power type) would increase and that would impact on the ability for businesses to get credit (credit crunch), increase unemployment, etc. making it more of a buyer’s market and if one bought a home and then had to move for work it might be difficult to unload the house and consequently rents would decrease making it a wiser decision to rent rather than buy.

I read on Ben Jones Housing Bubble Blog a few years back about someone’s grandmother moving from one rental house to a cheaper one and so on as rents declined (after the stock market crash of 1929 when the easy credit tap was turned off). Apparently she and her husband were able to look after their family and even save money this way while others were paying mortgages on houses they couldn’t sell — they didn’t even have money for food, clothing etc. So that’s where I see the correlation between a countries economy and one’s personal situation. Also, during times of high inflation the currency may be devalued and rather than having to pay a mortgage it could be a better idea to have your money invested in gold or foreign currencies that will help hold the value. So that is where my thoughts lie.

I wonder why Canada’s debt is increasing. Does anyone know? Have we borrowed a lot from other countries and we don’t have enough money to pay them back like the situation in the States where foreign countries have bought US treasury bills and they have to pay back the interest but they don’t have enough reserves to do so and they just keep printing more money and going further into debt? Maybe it’s because we invested in something that will pay us back in spades in the future? Maybe we are spending more on military spending than prior to 2006?

You would think some of our politicians would have answers to these questions.

Please comment.

p.s. I like the blues too:)

#153 jelly on 08.14.08 at 7:15 am

Boone Jr.,
Horse Shoe Canyon is not far away from Drumheller
(north of Calgary). Perhaps you will want to purchase
property in Drumheller as I believe it is the closest
“town”. I imagine it is not cheap there (where is it
a deal in Alberta at the moment?!), but hopefully in
this crunch time you can get a good deal(s) due to
dropping in price and peoples’ getting nervous.
Is this confirmed that there is a lot of oil there?
Where did you hear this from? Will there definitely
be “drilling” there or is this speculative?
Any info appreciated…

#154 Calgary rip off on 08.14.08 at 10:39 am

Calgary Rocks:

Perhaps you should have a word with the surgeons that are in their early 30’s where I work at the hospital. I wonder if they are more affluent than the older individuals who are flipping from one house to another. I dont think that cardiac surgeons are paid well for their open heart surgeries, maybe they require cash flow from their more affluent parents, at each surgery(about 4 a day, they earn $10,000 per surgery or thereabouts). Your arguments dont apply in all cases and are rather sandy, these arguments go along well with the typical hos at the Calgary Herald propaganda.

The point is that basic single family housing as much as many would have you believe, is NOT AFFORDABLE in Calgary. Again, $400,000 for a basic single family detached home that is really worth around $180,000 is ridiculous. Therefore, again, interprovincial statistics reveal migration presently at a negative. Think about it. Is it logical for someone to want to move to Calgary to support an owner’s mortgage through renting? Unlikely, unless there are no jobs from wherever they are coming from, and when they do come, they rent, not buy, because things are overpriced. The net result? Drop in overinflated housing prices, which has happened for about a year now.

Hopefully you are correct for the baby boomers wishing to retire in style in McMansions in Calgary. Otherwise, there will be significant realtor cash flow problems in Calgary. Perhaps the owners need to take stock in Viagra and balloon pumps because the bubble is sagging and deflated.

#155 Bluesman on 08.14.08 at 10:44 am

Calgary Ripp off:

I’m not so sure that there is not an indirect relationship between a country’s debt and its citizens personal finances. Remember the 90’s and early 2000’s when Jean Chretien was busy cutting federal transfer payments in an attempt to pay of the federal deficit run up by the Mulroney Gov’t in the 80’s (were you the consumer and corporate affairs committee chair during some of that period Garth? I hope this is not a dumb question for you). Remember the phrase by Chretien “Stay the Course”? Well, it was in reference to us paying down the federal deficit. It did directly affect our personal finances because it was our taxes that were used to pay the deficit/debt. We used to have a lot more services in Canada — music and art programs in the schools, people would answer the phones and help you when you phoned the government offices, we used to have better roads and hospitals and libraries were opened on the weekends, graduate students would be funded for years and years, home ownership grants were floating around, leap grants, lip grants, you name it. We used to live in houses rather than rabbit cages. Remember all that?

It does affect the citizens’ personal finances also when our taxes go to pay for medical coverage, too. With universal programs we all get medical coverage and that way we don’t have to pay the fees on our own like they do in the US and other countries. We used to get a lot more for our tax buck. We still do get a lot compared with people who live in some other countries where there is no personal income tax and little federal debt, but yes federal debt does affect our personal finances directly.

I’m not sure why you think there is little correlation between federal and private wealth. Look at the US right now with an external debt level of close to 100%. Are the citizens not suffering more financially (foreclosures, negative equity) than they were a decade ago? Sure there are some uber-wealthy people who are not affected so much, but that is about 1% or something like that. When national debt goes up who pays it off? Us, with our taxes. And the government has to use the money to pay the debt instead of providing infrastructure for the citizens and investing in capital for the country.

Look at the vancouver condo info blog to see that since 1980 the median family income in Vancouver has gone down $100. Have taxes gone down $100 too compared to what they were in 1980?

If someone could tell me why Canada’s external debt is increasing that would please me greatly.

My 2cents.

Rock on and peace out, dudes.

#156 squidly77 on 08.14.08 at 10:48 am

more then 75% of canadians aggree with the government and the changing of the mortgage rules

of course some (with a financial interest) see it this way

bob truman says
“Nearly one-quarter of Canadians do not agree with the federal government’s mortgage lending crackdown, a proportion that rises to nearly a third among non-homeowners. Many Canadians oppose tougher mortgage rules.”


i for one am sick of mortgage brokers realtors and house gamblers gorging themselves fully backed by the Canadian government.
at the same time driving home prices higher and higher making housing less affordable for all Canadians

#157 Bluesman on 08.14.08 at 11:37 am

from my posting above:

“I am not so sure that there is not an indirect relationship…”

should read as

“I am not so sure that there is not a DIRECT relationship…”

#158 Calgary Rocks on 08.14.08 at 1:42 pm

Perhaps you should have a word with the surgeons that are in their early 30’s where I work at the hospital. I wonder if they are more affluent than the older individuals who are flipping from one house to another.

I don’t know, how much are they spending on paying off their student loans? How about their Lexus payments? Are any of them whinning about spending 70K on a car or is it just housing that’s the problem?

#159 Rasputin on 08.14.08 at 3:41 pm


A housing revival in this city of 438,000 on the shore of Lake Erie may portend deeper drops in U.S. markets. Prices for entry level homes in Cleveland had to tumble 37 percent from a September 2005 peak to an almost 11-year low in March before enticing first- time buyers. That may be a sign that U.S. markets with the biggest price increases during the 2000 to 2005 boom have much further to fall before stabilizing, said David Blitzer, chairman of Standard & Poor’s Index Committee.

”The areas of the country that saw prices go through the roof and then fall into the basement won’t be the first ones to see an upturn,” Blitzer said in an interview. ”It’s more likely to come in a place like Cleveland or other Midwestern cities that largely missed the boom.”

I’m not smart enough to know what this means. Darn finicky first time buyers! Perhaps a friendly Calgary or Toronto agent can clairfy (spin) this for us.

#160 Calgary rip off on 08.17.08 at 12:43 pm

Calgary Rocks:

Good luck selling your house.

#161 Jeannie on 08.17.08 at 6:53 pm

A couple of years ago I paid for a Real Estate course from an Edmonton R.E.”expert”, it was well attended, can’t remember the guys name.
He was very hot on buying condo’s in the out-lying districts surrounding Edmonton…Red Deer and so on, I’m curious to know if the company is still in business? I think his name was Jim something, maybe.

#162 CalgaryRocks on 08.17.08 at 9:22 pm

Good luck selling your house.

Well thank you but I feel some sarcasm. You’d love to own my house. It’s a decent SFH, sitting on a 6200sqft elevated lot with a great view from the back yard.

Located 15 minutes from the Foothills hospital in rush hour and about the same from downtown, although I don’t work downtown so I don’t really care.

I only paid 185 for it when we moved here from Florida in 04. Pretty sure my P&I&T is less than most people’s rent but that’s not really fair because it’s not my 1st house. It’s pretty much a classic Garth approved home though.

The bad news is that it’s not for sale. The good news is that you may be right, the house may drop back to 160K like squidly predicts in which case we may become neighbours, haha, assuming someone on the street sells. There’s only been 2 families selling on the whole street since I moved here.

It may also go down to 130, the 2001 price or maybe it’ll be worh the price of the lumber. I don’t know any more than you. Hope to see you in the neighbourhood soon! :)

#163 jose on 09.08.08 at 5:48 pm

Anything for sale must be affordable to buyers. when affordability drops sooner or later markets reverse to the equilibrium state until the average person can afford the average house.

The shot of grace to RE in the industrialized nations is going to be the BABYBOOMERS, old people are mostly sellers and there’s lots of them.

Houses will come back to being a shelter and a hedge against inflation at best.