R.I.P.

In the ruins of the housing bust

10 photographs seared with despair, failure and a Canadian warning

____________________________________________________________

Calgary’s Gateway Midtown. May depositors rest in peace.

More to come…

227 comments ↓

#1 G on 08.22.08 at 11:16 pm

Depositors aren’t R.I.Ping, they are getting their money back, but what a bigtime hassle!

From Yahoo! http://ca.news.yahoo.com/s/cbc/080822/canada/calgary_condo_building_1

Buyers have shelled out tens of thousands of dollars as deposits on the project, but Gelfand said they can get their money back if they want.

“I want to say how regrettable it is, the impact that this will have on our purchasers, on our suppliers and contractors and on our employees. This is a really tough time,” he said.

“But it is really important for all purchasers to know that their deposits are fully protected. They’re being held in trust at a law firm, and they’re also protected under the provisions of the Alberta new home warranty program.”

#2 squidly77 on 08.22.08 at 11:20 pm

great title..btw were you in edmonton today as it seems someone has upset the real estate board..they had to issue a mid-month bulletin people dont panic
there was an article posted on the albertabubble blog today and the
the comments nested below that article created quite a storm
my response to the comments

those comments were shocking for sure though not unexpected
the realtor boards and realtors that support the various boards
be it vancouver calgary or toronto
have pushed the housing picture too far this time
there relentless pumping and spinning of the facts has forced many well paid people into near poverty living conditions
families have to cut down on food because there housing costs are too high
some seniors lose there dignity and half to ask for assistance
all the while they keep on with there pump and dump
they put on rose their rose coloured glasses and tell everybody how lucky they to have a good economy they even consider there meager job to be proffessional
and if anyone dares speak badly about there beloved bubble they instantly label them as being all doom and gloom
its no wonder canadians speak as they do
theyre pissed off big time
and have a right to be

#3 jrochest on 08.22.08 at 11:56 pm

Does this mean what I think it means?

“If you have purchased a suite at Gateway Midtown and you are calling about your deposit, rest assured that your deposit will continue to be held in lawyer’s trust or covered under the provisions of the Alberta New Home Warranty Program and therefore protected under the terms of these two provisions.”

I think this means “Yep, we’ve got it and we’re freezing onto it.”

“We are unable at this time to answer further questions about your deposit as all contracts associated with the project, including your purchase agreement, have been assigned to the senior lender. ”

I think this means “Hell, no, we’re not giving it back — we’ll need it to pay our missed loan payments.”

“You will be contacted by an administrator acting on behalf of this lender to advise you of the status of your contract to purchase.”

I think this could be translated by maniacal, evil laughter…

#4 charles on 08.23.08 at 12:09 am

The following is taken from a series of articles written approximately 10 months ago by Peter Ewart for Opinion250.com (a news/information blog out of Prince George, B.C).

“… and central banks grow dollar bills as plentiful as autumn leaves on some genetically modified tree.”

“We are swamped with so much debt that it appears as if we have passed over into some kind of alternate universe.”

“Reports leak out that financial institutions are refusing to honour lending and borrowing agreements with each other, fearful of acquiring “toxic” debt. To “increase liquidity,” central banks lower interest rates, print more money and inject billions of dollars to calm jittery credit markets.”

“Others say that Greenspan himself is the culprit because he drastically cut interest rates for a number of years, thus paving the way for easy credit to be thrown around everywhere as if the mythical figure “Johnny Appleseed” had been reincarnated somehow and gone to work as a subprime mortgage broker.”

“These “black holes” of debt exist at the personal level in abundance, even when the economy is in the midst of “good times.” But they also exist on a grand scale, at the level of government and corporation.

“In this strange world of derivatives, with its “collateral debt obligations” and “asset backed commercial paper”, a “single dollar of ‘real’ capital supports $20 to $30 of loans.” As a result, on world markets, these risky derivatives stand at about $485 trillion, which is about “eight times global gross domestic product of $60 trillion.” Describing such a situation as a “house of cards”, as Joseph E. Stiglitz does, could be misleading in that we may be giving a bit too much credit to its stability.”

“But you have to give the moneylenders credit for audacity. After pulling off one of the biggest swindles in world history that will have disastrous economic fallout for years to come, they are currently negotiating with government to bail them out with taxpayers’ money. They have put on those ragged hobo clothes they keep in the closet for just such occasions, and will be going to Congress to sing that old Depression era song “Hey buddy can you spare me a dime?” Except, of course, they don’t want a dime; they want billions. Otherwise, they croon, “we will all suffer.”

Today, there is only one way to describe the amount of debt in the world – absolutely frightening. Future generations will look back in amazement at the herds of politicians, bankers, corporate leaders and establishment economists who have refused to address or even acknowledge the extent of the problem, and who, in fact, have contributed greatly to it. Like Nero, they have their fiddles. And, yes, while Rome burns, they play, and play, and play.”

Garth. There has been a lot on the news today about the release of the documentary in the United States titled I.O.U.S.A. and how large of a debt and unfunded liability their government has. This makes me wonder what the total amount of debt and unfunded liability is for this country. With the present and further upcoming drop in the house prices in Canada, I think people will soon be realizing (if they have not already done so) that we are not in a “new era of never ending prosperity” but that we are in a new era of deleveraging as a result of the record and unsustainable debt levels in this country.

I would like to make a request to you Garth. How about using your resources as an M.P. and telling the Canadian people (on your web site) the following information: What is the total amount of government, corporate, and consumer debt in this country, and what is the total unfunded liability in this country for things like Medicare, Canada Pension Plan, Old Age Supplement (and similar programs), and infrastructure upkeep and replacements costs (such as roads, bridges, water and sewer lines, electrical systems, etc etc. It seems to me that since the number of people in this country over the age of 65 is going to approximately double in the next 25-30 years, we should have been smart and had a lot of money in the bank at this time to help pay for these costs, instead of our present policy of “let’s let future Canadians fend for themselves”

#5 Schmoey on 08.23.08 at 12:26 am

Ha-ha, the reason they cite is the rising construction cost? The press release should actually read: “Due to the panicking speculators abandoning their deposits in the project we are stuck holding the bag with no chance in hell. God help us all”

#6 Mike.Slob on 08.23.08 at 1:35 am

Average Residential Prices in Canadian Cities
(July 2008)

Ft. McMurray— —–$680,400 —-203%
Greater Vancouver –$575,256— 172%
Victoria ————–$487,864— 146%
Calgary————– $402,788— 120%
Toronto————– $371,410— 111%
Edmonton———— $335,100– 100%
Ottawa————– $295,134—- 88%
Saskatoon ———–$292,428—- 87%

It’s insane about Ft. McMurray avg.price $680,400?
I can’t believed,about Ft. McMurray avg.price.
It’s the worst place in the world. With -45 C, and industry shit.
Than avg. salary in Ft. McMurray must be $ 170,000
when you compared 1:4 avg. affordability in Canada.
I don’t know how the workers in Ft. McMurray can save
any money?
I watched rental apartments or houses basements,
prices are between 4,000 to 4,800 per month.
So if you are renter you have to spend over 50k per year
for rent,plus income taxes,plus at least two times travel to Toronto or any other city, plus food, and you ended with maximum 25k to 35 k saving per year.
So with -50 C, and 60 to 70 working hours per week you can make the less money than in Toronto,Hamilton,Otawa,etc.

#7 rant in Calgary on 08.23.08 at 2:26 am

Garth,

It’s getting more difficult to argue against your views.
————————————————-

#8 Mike.Slob on 08.23.08 at 2:46 am

“The threat of recession in Ontario is looming and could take a lot of wind out of housing markets.
Give it another year or two and I think you’ll gradually see better conditions for the buyer .”said Scotiabank economist Derek Holt.

http://www.economicnews.ca/cepnews/wire/article/3/110947/

Ontario Headed for Recession, Bank Report Says!
http://www.economicnews.ca/cepnews/wire/article/110895

Ontario workers are earning less money!
http://www.thestar.com/Business/article/483107
http://www.thestar.com/Business/article/483430

Will be next year Great Depression !
I Can’t wait to see what Statistics Canada next report is going to say!
http://research.cibcwm.com/economic_public/download/aug22_08.pdf

Buffett sees U.S. economy weak into 2009!
http://www.financialpost.com/story.html?id=742415

Household debt now rising faster than wealth!
http://www.financialpost.com/money/story.html?id=732170

#9 Radley77 on 08.23.08 at 6:37 am

A picture of Midtown in it’s current “state”:
http://img.photobucket.com/albums/v98/bokimon/BOBO9847.jpg

Also, rumoured to be on hold or cancelled are, OneTen and Astoria in Calgary as well.

#10 Too Bad on 08.23.08 at 9:45 am

Too many happy people on this board at the misery of others.

I appreciate a “fool and his/her money are soon parted” but just because you might be a “bear” it doesn’t mean you have to be mean spirited, and take glee in another’s misery. It only brings you down to their level.

#11 TrueGritCalgary on 08.23.08 at 10:01 am

Radley77, certainly they can’t leave it like that, can they? They should be made to at least finish off the parkade section and then cap it at ground level.

#12 Bobby in Victoria on 08.23.08 at 10:39 am

Interesting article in the local Times Colonist about the pitfalls of condo presales. Unfortunately, too many people don’t read the fine print of their contracts.

Here in Victoria one supposed big development is just a hole in the ground looking for a buyer. Lots and lots of empty condos looking for buyers.

Time to sit on your wallet and wait.

#13 jrochest on 08.23.08 at 11:03 am

If the American pattern is anything to go by, the hole will sit there for a couple of years, then be built into something half the height and much less costly by another company.

#14 pbrasseur on 08.23.08 at 11:04 am

Warren Buffet said that it would’nt be a big deal if Freddy and Fanny stopped insuring new mortgages.

I could’nt agree more I think these organizations (implicitly or directly backed by the governement) are the principal cause of this mess. By taking over most of the risk they allowed other market actors to become irresponsible. Why blame the banks, they simply use the environnement provided to them, taking very little risk as long as they package the loans so that they can get insured. They also welcome higher prices. The realtors and constructors were certainly not going to argue, they were given a chance to make money and they did, this is only natural.

Bubbles are inherent to markets so yes there would have been a bubble without Fanny Freddy or the CMHC, but certainly not one of this this magnitude. If the banks had to face the risks themselves this madness would never have gone this far, sub-prime or not (subprimes appeared only after years of insanity)

But of course politicians will never blame themselves or the state, instead they will pose as saviors and propose to regulate markets to fix the problems. Typical, the state creates a mess by its interventions in the market then uses the mess as an excuse to intervene even more.

The CMHC should stop insuring mortgages. Period. At present politicians (influenced by ideology, electoral condition or whatever) determine how much risk the CMHC should take, this is a recipe for disaster ans disaster is precicely what we are getting.

Garth can we ear you on this? Do you think the state is ultimately to blame? It is reasonnable to think this madness would have stopped earlier without governments trying to “promote access to property” by taking over the risks?

#15 timbo on 08.23.08 at 11:11 am

Everyone has stated that alberta is about oil and our economy is based on price but I say our real economy for the last 3 years has been pushed by construction. Its a house of cards that we are on top of and when, let me guess, 20% of your economy direct and indirectly is related to this and slows what else would naturally happen but a reset in prices. In my 12 years in new home construction I have never seen so many layoffs. I would say that atleast 1/2 of the workers are laid-off. The other fact that people have been using their houses as ATM’s and purchasing wildly into real-estate, reno’s and leisure has also pushed the economy way out of wack.

lets say 5000-10000 workers directly related to construction off work.40000-50000 others indirectly related to the building industry also layed off and there goes your first tier in the deck of cards as all that purchasing power stops. This is happening and I ask anyone to prove it isn’t. I know 4 plumbing company who have serverly downsized their res-construction jobs and builders severly cutting back also. Now the goverment is halting 40year 0 down to kill speculation and banks are tightening lending standards using the US experience as guide to what might happen.

Now the upsizer cannot sell his starter to move up and so-on up the chain. I know 2 people who in the last two years moved up from a townhome to a 3 car 5 bedroom mansion only on sale increases as they flipped up. They did not do the smart thing and reduce debt, they increased it in on the belief that their property was going to be worth millions.The scary part is probably most of their net-worth is the equity in their home value.

Now I do not blame the realtors because they have to make money but if we want to solve this problem that is finally coming to light, the real estate community should come out with the truth , no matter how it hurts and get prices back to a stable platform fast otherwise all we are going to have is a huge glut in inventory and a heck of alot of fence sitting. No one buys, (unless your insane), in a market with rents vastly lower than a mortgage and the mortgage every month going further and further underwater.

This is what is happening so get real. I went from 120 hours in two weeks to 40 and this is not from being a horrible tradesman.

If anyone holds the hope of the angels from BC and back east running out here to buy I just will leave you with one question to answer. How many armed guards are being hired to bringing suitcases full of money from their layoff back home.

And lastly if anyone is hoping for a miracle 10% rise in the next year to get back to summer 2007 prices, i’m sorry but we are going for a ride because what fueled this run was debt and speculation and now the market is saturated.We are going the way of the US and it will be a kicking and screaming event.

just a rant and again garth you are the man (god is a little much).I hate coming home and turning on the computer. Missed supper last night because of the reading on your blog….

#16 RJT on 08.23.08 at 11:12 am

The interesting, but largely ignored issue in this story is inflation. It is true that construction costs have spiralled out of control. That is clearly not the only reason for this failed project, but it cannot be ignored.

People in Alberta confused inflation for prosperity over the last few years. They thought that housing prices (and construction costs) rapidly rising was a sign of “prosperity”. It is not. Rising prices are a sign of inflation, which actually makes people “poorer”.

Now they are starting to see it. Problem is, it’s too late.

#17 EverythingZen on 08.23.08 at 11:22 am

#10

You are deadly accurate my friend. A society that takes temporary pleasure in the suffering of others is a polluted and deeply distressed one. The pleasure is fleeting and quickly reverts back to the hunger for attention, greed and jealously that underlies it. It is a vicious circle of attachment that must be broken.

If you avoided financial loss yourself or profited otherwise then savor your good fortune internally. You should wish not harm on others for any reason. It does not benefit you.

Mr. Turner is apparently trying gain political advantage through this blog and through his book. Ultimately his negative karma will catch up with him, in this life or in another one.

Think for yourself, blog away about the real estate market and it’s ebbs and flows and just be at peace with yourself and others.

#18 rant in Calgary on 08.23.08 at 11:35 am

Too Bad,

Yes, there is some innocent collateral damage, but the arrogance and deceipt spewed by the RE industry has created a few enemies.

To spend an average 1/2 million on a home or investment, you need to do your “home-work”.

Would you feel empathy for someone who put their entire net worth into one stock, then it crash’s? I would still say “Stupid, Who told you that was a good idea ?”

#19 pete on 08.23.08 at 11:44 am

another day, another billion…

http://www.canada.com/calgaryherald/news/calgarybusiness/story.html?id=2d2c0ef2-a78b-4f4b-a7c1-7573080eb544

#20 rant in Calgary on 08.23.08 at 11:45 am

TrueGrit,

I remember Calgary having lots of abandoned half finished buildings in the 80s. Bankers Hall tower two was put on hold a couple of times before it was finally built.
No money=No work

#21 crashing yuppy on 08.23.08 at 11:54 am

This will trigger a Condo Crash.

These deposit holders of the Gateway have just dodged the biggest bullet of their lives. The have been spared buying at the absolute worst possible time.

Get your deposit back, and for gosh sakes, wait in dads basement or rent until this storm passes.

I work in downtown T.O. and I have seen the skyline transformed into a dense forest of condos.

ATENTION CONDO BUYERS there is a thing called DEMOGRAPHICS. That means that the single wannabe professionals who are buyng these 550 sq ft shoeboxs will want to , marry, have kids, not suffer from claustrophobia and move up or out.

Can you spell G L U T.

Its over for Condos.

#22 AM on 08.23.08 at 11:56 am

Too Bad #10

Nobody here takes glee in anothers misery. I think it’s more like the joy of winning an argument. If you have repeatedly been ridiculed for believing there would be a crash, (it’s been so obvious hasn’t it) and the day of reconing comes, yes, you feel vindicated.

Many bears have been saying all along that they feel sorry for the younger families that poured everything into there first home and are only now see the potential to be in neg equity for the next 10-15 years. Hopefully some of these young families got the message being preached here before locking into an overpriced home at zero or 5% down.

#23 AM on 08.23.08 at 12:04 pm

Hey Zen. What exactly are you doing here? This just doesn’t seem to be the place for you.

Does anyone have a link to the yoga and inscents blog.

Ummmmmmm…….

#24 APCM on 08.23.08 at 12:04 pm

#16 – I probably speak for everyone on this blog when I say no one is delighting in the misery of others. All they want is good financial health for themselves and their families. Out-of-control lending practices and shady RE tactics have driven up real estate prices too long and have made affordable homes an unattainable dream for many families.

I, for one, would love to see the government stop insuring all mortgages. This would ensure banks would do their due diligence in granting loans. Imagine what would happen to the price of a home? Most people with good incomes would be able to afford one.
Sure, speculators without solid downpayments wouldn’t prosper, but they can invest their money elsewhere. Where did this idea that a home is an investment come from anyway?

#25 Ted on 08.23.08 at 12:10 pm

http://www.reportonbusiness.com/servlet/story/RTGAM.20080820.wfacelift0823/BNStory/SpecialEvents2/home/

These moves would allow them to shorten the amortization on their home mortgage by 17 years and four months. Their home mortgage would therefore be paid off in 23 years when Steve is 85 and Roberta is 68.

So some bank gave these two a mortgage that goes until she is 85 and he is 102? No doubt CMHC insured… In my view that is not only stupid on their part but completly reckless on the banks part. Why is this type of lending permitted?

#26 Glen on 08.23.08 at 12:37 pm

I feel a bit of empathy for those who dove into that new 4 bedroom, gleaming kitchen with stainless steel appliances

But only a little…..

It’s painfully obvious now that we are heading into one of the biggest real estate corrections in a century.

Losing 30-40% of your monetary worth is going to ruin far too many people. But as the saying does go…”a fool and his/her money will soon be parted…”

#27 timbo on 08.23.08 at 12:38 pm

Just curious Garth, do you want the shovel handed to your party in the next election when the economy goes to sh^t which I believe will happen.

I hope there is a minority goverment and the pc’s get in. After the lightning has been seen, show how introduction of very lax lending has lead to the turmoil we face and have a plan is ready that can stabilize this insanity. Then call the pc’s on the budget and thunder should be heard and a I am sure harper will be shown the door.

I do believe that 30 year mortgage is the real safe bet but to institute this too early would be political suicide. Seen forcing the lending term down on voters which will immediatly drop prices and equity is very dangerous. One thing I might throw out is when (advertising) a property, a full disclosure of past sales and dates and past listing pricing be posted on the advertisement. This would give the public the right to see if it was flipped and how many times the owner tried to list and re-list the property. This might be too harsh , I do not know.

#16 EverythingZen –

” Mr. Turner is apparently trying gain political advantage through this blog and through his book. Ultimately his negative karma will catch up with him, in this life or in another one. ”

How can you gain political advantage by holding a view that directly threatens the financial belief people hold. To say to anyone that you paid too much for something attacks that persons intelligence and ego and will probably make you an enemy. The fact that the book was even published and a blog on-line started by a sitting member of parliment shows me that Mr. turner and the liberal party have the fortitude to take a stand that a true but unfortunatly hurts.
I thank you for your courage, Garth. It’s politically dangerous to be holding a view that directly effects the equity of canadians but the truth must be told. The sooner everyone wakes up the sooner we can fix this problem and I believe if we all get on board we can fix this problem by just watching the implosion in the U.S. and borrowing only the good points that work for them. We are lucky in a way as we are in the rear view mirror and can study the car ahead. Sort of like driving in a snowstorm.

#28 wealthy renter on 08.23.08 at 12:55 pm

Such a beautiful building, and so, so affordable.
Such a waste.

Pass me a hanky. :)

#29 Buy Silver And Gold on 08.23.08 at 1:03 pm

Hi, Crashing Yuppy is right. In Toronto their is to much supply. I learned from watching a report about Miami condo market. To much Supply prices go down. Toronto is heading into the same direction. I don’t care I am going to rent and wait for prices to fall and buy on the drop.

#30 GenXer on 08.23.08 at 1:30 pm

Thank goodness that the Toronto condo market is still a playing ground for the super-rich!

http://yourhome.ca/homes/article/484040

“Toronto’s ultra rich are not like the rest of us – plush condos built for them are still cheap, in global sense. In Toronto, $25 million will get you the priciest condominium in the city. In New York, that’s a down payment. In London, forget about it.”

Could that be because Toronto is not a top tier world class city? Could it be that we don’t have properly maintained infrastructure, that our city is in debt up to it’s eyeballs and that the middle class is being pushed to the fringes and taking good schools, facilities and sense of community with them?

Great that the rich can find a bargain basement $25 Million condo in Toronto – they can have it. For the rest of us, we’ll just accept the fact that we have to be at the top of the corporate food chain, or take out a lifetime mortgage to afford a home downtown.

Me and my neighbours will hang out here in the burbs instead, where we can play with our kids in the driveway, take them to a nice city pool or beach that is still open and not worry about eating Kraft dinner in order to afford our mortgages.

#31 Rick on 08.23.08 at 1:33 pm

[I]10 Too Bad on 08.23.08 at 9:45 am Too many happy people on this board at the misery of others.

I appreciate a “fool and his/her money are soon parted” but just because you might be a “bear” it doesn’t mean you have to be mean spirited, and take glee in another’s misery. It only brings you down to their level.[I/]

After being mocked and called a ‘bitter renter’ what is it you expect?

#32 lgre on 08.23.08 at 1:37 pm

to the 2 brothers at 10 and 16 – nobody is going to lie down and cry because the average person was too stupid to pick up a calculator and run some numbers prior to buying that 600k house in toronto with the foundation caving in. Alot of people bought in the last few years because they were stupid and alot bought because they were being pushed into thinking that prices will never come down, so I feel sorry for the second half but not the first, they deserve what they get.

#33 pete on 08.23.08 at 2:31 pm

#20 crashing yuppy …too funny!

The truth is these deposit holders, eventhough they’ll get their deposits back, just lost out on huge appreciation from when they initially signed the aggreements. Trust me, none of them will be happy.

The first presale buyers for Midtown paid between 150 and 200 three years ago. With building costs doubling since that time, it’s no wonder Resiance Corp is stalling. What this move actually shows more than anything is how acute the labor shortage, wage & material inflation has become in Calgary. But never fear, the interprovincial migrant contstruction workers are on their way to start taking some of the pressure off.

p.s. Are there any builders on this site that would like to take on the challenge of building 1000 sq ft condos in downtown Calgary for under $200,000 a suite??

I wonder if the condo’s in this project…

http://www.canada.com/calgaryherald/news/calgarybusiness/story.html?id=2d2c0ef2-a78b-4f4b-a7c1-7573080eb544&p=2

..will be offered for under $200,000?

#34 Calgary rip off on 08.23.08 at 2:36 pm

Lots of interesting insight from the builders here.

Unfortunately, people in positions of power are saying the market is “stable”. What a load of crap!!!

The point is not so much that bears as they are called are happy at the misery of others, its that it is utterly frustrating and disappointing that at almost $100,000 a year income you still cant acquire a single family detached reasonable house, which is nuts. Speculators and those seeking to profit on this boom are to blame. To appear aloof and detached is schizophrenic and crazy, to have no anger about all this is unhealthy and deceptive. As far as karma goes, thats b.s. The world doesnt work that way. Karma assumes conscience, and many people, rich and poor dont have any, so that argument is a load of crap, sick of hearing about how Garth will be blamed, he has helped numerous people. Everything Zen can you say F.O.S? Maybe you should go play the go game(wei-chi) on the kiseido go game site where you can play go game and get censored by the idiots who monitor the game rooms on that site. Im sure you would piss them off by your authoritative and arrogant views. Your karma is shot to hell by telling people that Garth has karmic whatever. Why dont you say something worthwhile such as how your renters are suffering because they subsidize your mortgage because they cant afford to buy a home in this market? If you are so great, is your karmic debt being enhanced by offering rentals to your tenants at a third of the cost? I doubt it highly. So get off your high horse. Your arguments make me want to go take a dump.

#35 Keith in Calgary on 08.23.08 at 2:58 pm

#30

Here are just some examples, just to name a few…..heard them all from RE agents and newly minted homedebtors firsthand…..

“Only losers rent……..

If you rent you are throwing your money away

Pay yourself not someone else….heh, that is the best one IMHO, for if you run the numbers you’ll soon understand what a whopper of a lie that one is.

If you are not in the market you are a nobody…..

Houses only go up you know…..

If you don’t buy today you’ll be priced out forever…….”

Ad nauseum.

So…..it’s our turn now…….and there are going to be people who cannot stand to hear it.

I hope each and everyone of those greater fools loses everything. You all have a brain….use it.

#36 Jim_s on 08.23.08 at 3:52 pm

#16

Go read some realtor websites in Alberta, full of blatant lies about where the RE market is headed.

I think most people do not wish ill-will on another – I think most people are just flat out fed up with the lies.

I know I am.
If the RE machine wants respect, how about showing some. They spin the truth into some kind of a “believe me if you can” game, then get pissed at public comments. The unfortunate part is that some innocent people believed the lies, and they will end up paying.

->

#37 Future Expatriate on 08.23.08 at 3:59 pm

“Too Bad” 9:45;

The glee you see here and on other bear blogs is not directed at other folks’ misfortune; the glee is at finally seeing all the purveyors and merchandisers and peddlers of BS and their endless false mantras popped out of existence like the various bubbles they created.

The only thing anyone can be gleeful about in times like these is the return of truth and the banishment of BS.

Yes, it will be a very long and very hard climb out of this disaster, but it’s better to be here, now, facing reality, then where we were two years ago on a whacked out LSD trip. Coming down is hard, but reality is better than any fantasy built on lies and greed.

#38 jrochest on 08.23.08 at 4:05 pm

The Zen thing is a troll, people. Don’t feed it.

#39 smwhite on 08.23.08 at 4:11 pm

EverythingZen and his fortune cookie comments continue to add little to no value to this blog except for attempting to “scold” those that are speaking out against a system that is broken.

As a Canadian tax payer I have the right to be pissed off that the government let down those it is supposed to protect; instead of pandering to the banks. Its my/our tax dollars that will be used to bail out persons that are in the rears or have been foreclosed upon.

Too Bad, do you actually expect people to fell sorry for those that flipped a coin and GAMBLED on unreasonable RE appreciation? Get real.

I(and you), as a taxpayer, will have to pay for the greed and ignorance of others, and if you feel any negativity, that’s why. People that seen what was happening all over the world and Canada, and sacrificed their “dream” of home ownership as not to get caught in the mess we were told would never transpire.

The RE industry hasn’t felt sorry for the families they have pushed either into massive debt or out of affordable housing with their LIES and misleading bullshit.

Guess its different now though that the other shoe has finally dropped.

I took a cab home last night and had a great chat with a cabbie that has come to Canada a few years back from Palestine. He was extremely saddened with his prospects of finding an affordable home for his stay at home wife and 4 children.

I said to him, “Hang in there, and be patient, the market is shifting the other way, your time will come”.

He basically said that he didn’t have a choice, with his rent half of what the cost of a mortgage would be.

So if I’m going to feel any pity for anybody, it will be for people like him in that situation, not a RE agent or mortgage representative that is going to find himself having to downgrade his Porsche from a 911 to a Cayman.

I also will guarantee that I won’t loose one wink worrying about persons that speculated on RE and have lost or are going to lose, big.

*HUGS*

#40 3rdman on 08.23.08 at 5:02 pm

Imagine if Hogton, Onterrible had gotten the 2008 Olympics… the debt the glut..

I read in the Star today about London’s dread and new spin on 2012.

#41 3rdman on 08.23.08 at 5:03 pm

-Hogtown-

#42 timbo on 08.23.08 at 6:04 pm

http://albertabubble.blogspot.com/

things are changing garth…get a plan in gear..

#43 Rick on 08.23.08 at 6:14 pm

#37 SMWHITE – Great post.

#44 pete on 08.23.08 at 6:43 pm

Since you mentioned the Olympics…

Does anyone here agree that the announcement and construction of the February 2010 Vancouver Olympic games (of which the venues are now complete) had an effect on the Lower Mainland’s economy over the last 4-5 years?

Well, if you agree, then you probably also agree that the games initial capital infrastructure budget of well less than a billion, had an effect on a population of around 2 million Greater Vancouverites.

Due to rising construction costs since the 2003 announcement, the initial budget surely inflated. So, let’s be realistic and say up to 2 billion (taxpayer dollars) was spent on those Olympic venues.

So the question becomes, is there a chance that the 273.8 billion worth of capital infrastructure investment pouring into Alberta from near and far (and that’s only the major projects in today’s dollars), will have an effect on a population of 3.5 million Albertans?

http://www.canada.com/calgaryherald/news/calgarybusiness/story.html?id=fc08f984-f3c9-4cd0-8f2b-69b7a74a9d27

It’s the last sentence in the above article that states the number and total cost of the projects – for further verification click below:

http://www.albertacanada.com/documents/SP_MajorAlbertaProjects.pdf

#45 islander on 08.23.08 at 7:48 pm

squiggly, you need to grow up.

Realtors did not “(force) many well paid people into near poverty living conditions.

Homeowners who are in over their heads are in that position because they made a decision – of their own FREE WILL – to buy a home.

#46 islander on 08.23.08 at 7:58 pm

smwhite, same with you. If you think the RE industry forced a cabbie to have four kids and that he “had no choice” but to buy a bigger home, you’ve got a screw loose.

What’s sad is some of you people will vote. And you will vote for the political party that promises to absolve you of your bad decisions and weak will.

#47 Calgary rip off on 08.23.08 at 8:58 pm

Islander:

Reality check: The cabbie doesnt make enough to afford any home! Median price $400,000.

Who are you going to find as a client who can pay that?

GROW UP!!!

#48 smwhite on 08.23.08 at 9:28 pm

Islander, first off get your shit straight, but I wouldn’t expect anything less from a typical RE shill with a God complex. Please point out where in my post that I said that “RE forced a cabbie to kids or to buy a bigger home?”

I didn’t, I hope you pay more attention to the details for you lucky “clients”.

Fact is islander, you and many other RE agents were either ignorant to the sustainability of RE(and future economic problems) or “working” the system and screwing people for your own benefit, selling them homes you knew were out of whack with fundimentals.

Your just a tad bit defensive, so I’ll take that as a small admission of guilt.

When 80% of a population’s investments are being managed , maintained and advised by people with little to no investment knowledge or experience, or those with a vested interest where emotion overpowers common sense, shit happens. And its happening now as we all can plainly see. By spring of 2009 you will no longer be able to deny.

Looks to me that the RE industry or at least the few “representatives” dumb enough to stick their head out of the sand on this blog, have hit “anger” of the kubler-ross model.

Yes islander, you and your “Realtor” buddies are losing credibility by the second, good on you, now go back to your cage.

I haven’t seen one agent post his/her full name and contact information on here and stand up for their perceived “truths”, if your going to stand by your opinions and you so special that you deserve that capital “R”, put your money where your mouth is.

There are good people and bad in all industry, but so funny to see that people like islander now want to blame it all on those that ate up their real estate fairy tales, still not taking responsibility for your piece in this debacle.

Islander, I do and will vote, and my first vote is to vote you off the island.

#49 Jim_s on 08.23.08 at 9:36 pm

Islander;

What percentage of speculators are realtors?

In other words, how much of the run up in prices was due to those directly involved in the industry (ie: developers, brokers, agents)? Yet, you then have the nerve to say “if someone is dumb enough to get in over their head, that’s their problem”. Ya, well who created the problem?

I’d be willing to bet that most of the speculation was done by your kind, so don’t push back saying “the average buyer is too dumb to know their limits”.

It is every “average buyers” right to live in a comfortable home, whether it be 800 sq feet or whatever a more fortunate family can afford. To posture yourself above the cabbie like he’s some loser is gross.

->

#50 Rick on 08.23.08 at 9:42 pm

Islander, you need to grow up and simply go away. You grasp at a couple of inaccuracys in two posts while ignorning the thousands of lies and innacuracys perpetuated by the industry your are conveniently turning your back on. Do all of us need to go throught he archives to demonstrate your hypocrisy and subtle come about? Go away, your BS is neither wanted or needed here. Your self serving behaviour is getting tiring. Keep preying on the baby boomers moving to Van Isle, your market, your hope of making it to retirement. I’m just grateful I don’t have to live with *your* concious.

#51 mike on 08.23.08 at 10:10 pm

Zen head is back and pointless as ever. Is there a zen filter available?

#52 cmh on 08.23.08 at 10:13 pm

Jim_s,
You’ve made a good point on some of the reasoning behind the rapid rise in real estate.
What also merits discussion is the working homeless. It is truly pathetic that there are people in Canada who get up and go to work every day and return to a homeless shelter because they can’t afford to live anywhere else.
It’s too bad greed couldn’t be considered a crime in our society.

#53 squidly77 on 08.23.08 at 10:29 pm

realtor spin
yup it seems that realtors are the biggest speculators
thats end with their favorite fear tactic
you had better buy now or be priced out forever

#54 Marcus Aurelius on 08.23.08 at 10:52 pm

Too Bad seems to have generated a lot of responses, mostly consistent – so here’s my own articulation:

Have you spent a few years being insulted and ridiculed by barely-literate, uneducated immigrant real estate agents who laughed at you for questioning the ‘value’ of a Toronto crapcan?

Have you had your banker tell you that you can borrow seven figures on your middle-class salary, to overpay for that crapcan, with the agent telling you – “It’s OK – you can afford to outbid and (over)pay the Vendor’s Asking Price!”

Have you had colleagues who moved their families into those overpriced crapcans cluck at you for being so backward, even though you can ‘afford’ that McMansion?

Have you surfed the web to find tony fat-butt Rosedale matrons-cum-“Superagents” lie and lie and lie about the obvious cyclical nature of real estate markets?

Have you seen the greasy, smiling faces of Toronto brokers as they play quasi-criminal games with other people, and all it took was some common sense among the ‘marks’ to stop the madness?

Now you understand the sense of justice felt when someone who paid hundreds of thousands of dollars over value, to feed the greed of brutish builders and crass agents, lose significant equity, and perhaps suffer family disruption and despair. That day isn’t here yet, but let’s document the coming pain carefully, clearly and with NO SYMPATHY to the greedy fools who thought that no price was the ‘wrong price’ as long as they felt they could find a GREATER FOOL.

Mr. Turner merely provides a focus (and locus) for the Just and Wise – and we all should take pleasure and satisfaction in the abject misery of those who thought they were so smart that they ruined their families. What Canadians lack is a sense of Roman Stoicism. They were perfect marks for foreigners who infiltrated the Toronto market and found out that games like churning listings, jerking around List Prices, faking inside purchases, lying to Purchasers with “faxed Offers” that don’t really exist and all other manner of “Boy aren’t these Canadians dumber than us smart [Iranians][Hong Kong sharpies][Russian stilletto babes] in this new land of Con and Honey” ultimately will put the business of buying and selling residential real estate back 30 years in Toronto. The old, (relatively) honest agents should weep.

#55 squidly77 on 08.23.08 at 11:24 pm

island boy..try living in the real world of commerce

if you live in calgary and are thinking about buying a house at the moment..consider a little chore first
go to your bank withdraw $10,000 from your savings
roll it up..put a rubber band around it and put it in your pocket for 30 days
after 30 days has past..take it out and throw it away..why ?
because thats how much money you will lose monthly by buying a house between now and years end

#56 David on 08.23.08 at 11:32 pm

Islander, maybe weak will is paying $600K for a 60 year old bungalow. OK, fine people stop buying that overpriced garbage. No guns to the head. Who is holding the bag? Sorry no cash out and watch the price deflate drastically. Let those idiots discharge their debts for the next 40 years and have nothing to show for their efforts. Since no one held a gun to their heads they are fully responsible for all debts incurred for their stupid speculative mania. Since you are applying the Catholic Doctrine of free will, is it not incumbent upon the sinner to pay for the sin? Welcome to debtor purgatory.

#57 Brent on 08.23.08 at 11:50 pm

Love this site, and spend way too much time on it. There are some intelligent people on here, but can we learn how to spell??? I hope these house prices in Alberta come down way more. All those people that bragged about how much money their house was worth, while i was forced out of the market, are very quiet now. Nobody is talking about how much they lost. I know of one guy who bought a duplex built in the 70’s with no garage for 320,000 in 2007. Now I see them for about 250,000. I feel bad for him, but even 250,000 is way too high. I keep hoping the prices will drop even further, but in Edmonton there are still so many jobs, so it makes me wonder what will happen. Everybody should read this blog. P.S Where can I get a copy of the book?

#58 squidly77 on 08.23.08 at 11:56 pm

crebb.blogspot.com

#59 Keith in Calgary on 08.23.08 at 11:58 pm

A little story of the Midtown sort….but with a twist.

My sister in-law and brother in-law live in Barra de Tijuca in Rio de Janeiro. They have a high rise condo suite.

Right next to them is a 25 story tower that went bust 5 years ago. It ws a concrete shell the first time I saw it.The apartment buyers got the place out of receivership for nothing (well, the cost of their “entrada” actually) and have slowly been completing it out of their own pockets, and hiring whoever is necessary to do the job. I have seen it about 10 times over the last 5 years and they are about 75% done IMHO. Doubt this will happen to Midtown though.

There is no “REIC” markup and it’s probably a better quality of job once it is done. I just takes 2-3 time as long because they can’t pay for everything at once.

Been thinking about Midtown again, and I think I was right in my initial assessment of what happened. Some where along the line as the market was slowly tanking it became obvious to all concerned, and the flippers and others wanted out, or wanted concessions, and that doomed the building due to their profit (the developers) on the project evaporating. Lots of other places have been built (Arriva) or are close to it now…..I think this time the buyers got nervous. If the market was still going up, they’d still be pouring concrete.

#60 Bobby in Victoria on 08.24.08 at 12:10 am

I’ve always thought realtors and car salesman were one of the same. They just sold a different product.

Ironically, they use some of the same lines to get a sale. My favourite, “there are over 350 people lined up to buy these condos so I need an answer now”. Oh, Oh, over 3 years later, many of these ski condos remain unsold.

Yes, it’s going to get ugly!!!

#61 Bob Smyers on 08.24.08 at 1:16 am

Hi I’m in Calgary.

Interesting today. I hit a bunch of pawn shops in Forest lawn. I’ve never seen so many skill-saws, air compressers, air nailers , finishing nailers, drills, laser levels in my entire life.

Somebody has left town.

While the mrs and I were looking around – was interesting seeing the stuff all these young guys were dropping off. Not stereos, guns, tvs. Tools. They are all leaving town.

I wonder if pawnshops keep track of inventory; it would be an interesting indicator – pawn shop inventory.

Bob

#62 timbo on 08.24.08 at 1:56 am

another link to a 3 part lecture on the U.S. problem that we now face.

http://www.youtube.com/watch?v=uyOWuczlJCA

#63 piccaso on 08.24.08 at 7:26 am

Renters just sit back and relax in your favorite arm chair with a big bowl of popcorn and watch it all unravel. It’s going to be a great movie.

#64 macchiato on 08.24.08 at 7:59 am

Pete said:

“Well, if you agree, then you probably also agree that the games initial capital infrastructure budget of well less than a billion, had an effect on a population of around 2 million Greater Vancouverites.”

By far, residential construction (ie: condo building) have had the biggest ‘effect’ on Vancouver when it comes to construction, the Olympic’s budget is comparative chump change and therfore its effects are relatively much less strong. Lots of people are confused about this.

A friend, an experienced worker in the crane segment of construction in downtown Van., has a base salary of 65-70K, but made >100K with overtime last year. These crazy OT wages will soon end and the ‘effect’ on Metro Vancouver will see its economic cycle go from virtuous to vicious, a positive feedback loop helping to lead to a cascading death spiral of RE catastophe in Vancouver.

The market now is probably just buckling under insane prices, look no further than this craigslist ad for a 1000 square foot, 2 bedroom condo … in North Van, not Van, North Van, it’s 900K:

http://vancouver.en.craigslist.ca/reo/809536611.html

So, you own no land and you pay almost a million dollars for a product that depreciates in real terms. Anyone that has been saying this product is worth so much is deluded. The person trying to this condo in the current market is most likely now the ‘bag holder’ and will feel pain. Look for much more of the same Vancouver as thousands upon thousands more pre-sales are completing.

#65 The Other David on 08.24.08 at 8:34 am

Anyone ever watch Hot Property on City pulse 24, is the host and guests morons or just outright liars?

#66 pbrasseur on 08.24.08 at 8:34 am

@ smwhite and others

You are wasting your time pointing your finger at RE agents the insdustry. They only do what humans do when given an opportunity.

The true culprit is the state and its politicians, because they wanted to ease access to property, they mandated the CMHC (Freddy and Fannie in the US) which did nothing less than allow the banks to lend without risk.

By tampering (on such a scale) with the risk associated to lending they caused one of the greatest and nastiest bubble in makerket history.

I read Garth’s book, he talks a lot a bout the symptoms of this crisis, but never about the true cause.

#67 patriotz on 08.24.08 at 9:48 am

Losing 30-40% of your monetary worth is going to ruin far too many people.

It’s way, way worse than that because of leverage.

These people are going to go into negative net worth, i.e. lose well over 100%.

#68 EverythingZen on 08.24.08 at 10:34 am

#39

Yes, Mr. Smith, you have every right to voice your frustrations. Consider toning down your rage and anger to get to the meat of the issue which is that you believe that housing is overpriced in certain canadian markets. I wouldn’t be too concerned with a bailout as the rates of foreclosures in Canada are not at all unmanageable.

I suspect that most people misplace their frustrations at having an attachment towards something- in this case a house that they can afford- and point that attachment wrongly at the outside world instead of at themselves. The real estate market does not come you harm. It is the way you respond to the market internally that hurts you.

Your suffering comes from attachment. Let it go and you won’t suffer. I don’t hear any comments that indicate abject poverty in this forum. I basically hear about people who want to own homes but not at current market prices. The options are borrow heavily or wait and continue to rent. Weigh them each and decide what’s best for you.

I return to this forum for useful information on the market as I own real estate myself. I learned about the demise of the Gateway project here. Thank you for sharing that information.

Peace & Kindness

#69 Keith in Calgary on 08.24.08 at 10:48 am

Bobby in Victoria……

Actually a car salesman never says ……

“if you don’t buy now you’ll be priced out forever”

“Cars only go up in price, they never go down”

“We have five offers on this car, so you had better put your best foot forward on this one”

How do I know ? I am car salesman…..heh. Have been since 1989. And FWIW we have provincial licensing bodies that have real jurisdictional teeth for resolving disputes or penalizing those who lie and misrepresent.

Here’s the one I belong to…..

http://www.amvic.org/main.htm

Real estate agents OTOH…well, they have been propogating the same LIES for decades, and look what has happened to the chief offenders. Nothing. Robert Zoost in Kelowna was a sacrificial lamb only because someone in the media specifically and deliberately went after him……

CREA’s code of conduct says that “the REALTOR shall never publicly discredit any other registrant”……..

In others words, keep their problems really quiet and out of the public eye…..in my profession, it’s all public and up front.

Funny dat.

When the car business totally ruins the global economy, hundreds of banks, cities and consumers……you will have a good point…..but until then……..carry on.

#70 lgre on 08.24.08 at 11:04 am

I used to watch hot property until I realized how much smoke they blew on that show, the guests and host included.

#71 redcurlygirl on 08.24.08 at 11:32 am

Living here in Calgary ( and being a renter after reading Garth’s book!) we’re so grateful after leaving Toronto in the spring that we DIDN’T jump into the market here…what a bubble! One house around the corner listed in May at $699 000 that’s been vacant is down to 649 000 , then new “lower price” of 599 000 and now “new listing” at $549 000, yes $150 000 drop in three months. It’s still overpriced for a vinyl siding poor reno job that needs a new roof! Calgary realtors need to get back to reality about pricing. I still think with their “spin” especially about statistics and sales and their ” get in the market now” and their overpriced assessments of housing to drive up their own commissions that they have a lot of blame to take for this mess. The whole profession needs to be overhauled. Banks should be the one assessing properties if they’re to be the ones doing the financing. Who gave realtors the power to set prices?

For fun..here’s some American Realtors spin statements taken over the past years when they’re market was tanking…can’t these guys just call a spade a spade?

1. “There’s no question there is a strong demand for housing from a growing population.” – David Lereah, NAR Chief Economist

2. “For the foreseeable future, the demand for homes will continue to outstrip supply” – Al Mansell, NAR President

3. “We’ve been expecting sales to remain at historically high levels, but this performance underscores the value of housing as an investment and the importance of homeownership in fulfilling the American dream.” – David Lereah, NAR Chief Economist

4. “We are returning to more balanced markets between home buyers and sellers… We feel confident that housing is landing softly as rates continue to rise.” – David Lereah, NAR Chief Economist

5. “This is part of the market adjustment we’ve been discussing, with a soft landing in sight for the housing sector. The level of home sales activity is now at a sustainable level. Overall fundamentals remain solid…” – David Lereah, NAR Chief Economist

6. “Higher interest rates are slowing home sales, but we see this as another sign of a soft landing for the housing sector which remains at historically high levels.” – David Lereah, NAR Chief Economist

“After five years of booming sales, we are now experiencing normal market conditions across most of the country… most owners can expect steadier gains in home values for the foreseeable future.” – Thomas M. Stevens, NAR President

7. “Over the last three months home sales have held in a narrow range, easing to a level that is near our annual projection, which tells us the market is stabilizing” – David Lereah, NAR Chief Economist

8. “Now sellers in many areas of the country are pricing to reflect current market realities. As a result, there could be some lift to home sales, but it’ll likely take some months for price appreciation to rise.” – David Lereah, NAR Chief Economist

9. Existing-home sales stabilized at a sustainable pace in August – NAR

10. “…the worst is behind us as far as a market correction — this is likely the trough for sales. When consumers recognize that home sales are stabilizing, we’ll see the buyers who’ve been on the sidelines get back into the market” – David Lereah, NAR Chief Economist

11. “It looks like we’re moving beyond the low for the housing cycle last fall, and buyers are responding to historically low interest rates and competitive pricing by home sellers. In addition, a tightening inventory of homes on the market is supporting prices.” – David Lereah, NAR Chief Economist

12. “Fundamentals have improved in the housing market and buyers see a window now with historically-low mortgage interest rates and competitive pricing by sellers,” – David Lereah, NAR Chief Economist

13. “We also may be seeing some losses as a result of the subprime fallout. However, this is masking improved fundamentals in the housing market, with lower mortgage interest rates and motivated sellers.” – David Lereah, NAR Chief Economist

14. “Buyers who’ve been on the sidelines may want to take a closer look at current conditions in their area – if they wait for sales to rise, their choices and negotiating position won’t be as good as they are now.” – Pat V. Combs, NAR President

15. “The rise in sales and prices in the Northeast region on a fairly consistent basis in recent months is promising because this was the first region that underwent sales and price weakness after the boom. Now, it appears that it will be the first region to climb back, indicating that other regions could follow a similar path.” – Lawrence Yun, NAR Chief Economist

16. “The unusual disruptions in the mortgage market, including a significant rise in jumbo loan rates, resulted in a fairly high number of postponed or cancelled sales…Once we get through these disruptions, we’ll get a better sense of where the actual market is in late fall as conditions begin to normalize,” – Lawrence Yun, NAR Chief Economist

17. “Existing-Home Sales Rise in November, Market Likely Stabilizing” – NAR

18. “Home sales remain weak despite improved affordability conditions in many parts of the country, but we could get a quick boost to the market if loan limits are raised in combination with the bold cut in the Fed funds rate,” – Lawrence Yun, NAR Chief Economist

19. Existing-Home Sales to Stablize Before Upturn in Second Half of 2008 – NAR

Lies lies and more spin…and to think that’s what we here from the Realtors and media here..

#72 Jim_s on 08.24.08 at 11:49 am

#68 Zen;

You are correct… it is the attachment that has many frustrated. I presume an attachment toward food, if unaffordable, would also create a stir.

But I’m not attacking you, I’m just simply saying that you’re point about the “attachment” to RE is valid, and it is the same “attachment” scenario that agents and re-sellers used to prey upon unsuspecting or inexperienced buyers.

“Buy now, or be priced out forever” is a down right lie. It is also meant to invoke emotion, as the slogan is meant to make potential buyers feel emotionally at a loss if they don’t buy at outrageous prices.

The sellers in the industry know this, and did it intentionally. This only shows the degree to which they will stoop to make a sale.

Peace back.

->

#73 Calgary rip off on 08.24.08 at 12:15 pm

Everything Zen:

Cant wait to see what would happen to you if you were backed into a corner. Apparently you are above defending yourself. Pretty stupid. No survival mechanisms, eh?

The long and short of it Zen apprentice: STFU.

#74 VS in Toronto on 08.24.08 at 12:18 pm

Thanks for your site. Incredibly you are about the only person who has said anything about the sad state of real estate. I find it amazing that there is little worry that with oil at $140 in July, the Alberta real estate market was performing poorly. If that economy with all the oil jobs could perform that way, what do people think Toronto is going to do? Office jobs are leaving the city, along with fat bonuses in the financial sector. The manufacturing base is essentially gutted. There are huge amount of condos being developed in a market where jobs are leaving. We know what happens eventually, the banks get very careful in their lending which exacerbates the decline. I’m expecting a real hard decline in the Toronto real estate market to take hold next year. Again thanks for the website.

#75 Keith in Calgary on 08.24.08 at 12:19 pm

http://tinyurl.com/3nmegw

Mish has an interesting article about what really happened to the Chinese RE and business investors looking to cash in big during the Olympics.

Calgary got zero, xip, zilch…..Montreal had a huge debt afterwards and Beijing, well, they got nothing as well.

This post is for those in Vancouver drinking the mountain fresh spring real estate Kool-Aid…..

#76 Jeannie on 08.24.08 at 12:26 pm

Anyone traveling outside of North America these days knows that this ‘bubble’ is a worldwide phenomenon.

The price of really crappy little apartments in Paris, a hovel in London, or a dump in Mexico…and on and on, all have escalated to the moon in a few short years.. I’ve witnessed it personally.

Is all this the fault of realtors, builders, home sellers?
or is there something else at the root of this inflation?

Things do tend to move in cycles, many years ago I too was on the losing end of this ‘boom and bust’ cycle in Western Canada because I couldn’t read the ‘signs’.

It seems that Garth did read the signs, and those who were attentive to his warnings gained big time.
(This is just my unprofessional opinion.)

#77 brazer on 08.24.08 at 12:39 pm

“It is difficult to get a man to understand something when his salary depends upon his not understanding it.”

– upton sinclair

#78 Keith in Calgary on 08.24.08 at 12:40 pm

http://tinyurl.com/3nmegw

For all those hyping the 2010 Olympics in YVR….consider this report from Mish.

Beijing didn’t have an economic boom, nor did Calgary in 1988 where I live, nor did Montreal in1976….so Vancouver is different….right ?

#79 3rdman on 08.24.08 at 12:57 pm

Top of this page:

“In the ruins of a housing bust.”

Look what happens when you have a Mayor doubling as an RE agent or vice versa.

#80 smwhite on 08.24.08 at 1:18 pm

#66 PB

I don’t believe all RE peps have integrity issues, on the contrary, they come in all shapes and sizes( and IQ levels) and I have friends in the field(and its a fifty fifty split on whether they believe the market is in good or bad shape).

As you state, its the whole system, and like all rules and laws, until the system is manipulated to the point where they have to come out with new laws to prevent abuse, people will push until breaking. It still doesn’t excuse some people for a lack of integrity and business ethics.

———————————————————-

If there is a concern of any it should be that the amount of capital that will disappear over the next 5 years and not be available be available for an aging population’s retirement or that won’t be available to the economy. Its no coincidence that the TSX has been basically flat for almost 2 years. So the TSX doing nothing, housing on the slide, prospects aren’t all that hot for the next couple of years, very low interest rates, no wonder the Conservative government is talking election. When the emotion of the herd shifts and they find out they aren’t as “wealthy” as they’ve been told they are, heads will roll.

#81 WetCoaster on 08.24.08 at 1:19 pm

#66

You are wasting your time pointing your finger at RE agents the insdustry. They only do what humans do when given an opportunity

I largely agree, but feel the real culprit is the central banking establishment. This looks more like an end-run for trapping as many people into debt servitude as possible. Banks weren’t satisfied with collecting the ordinary, and highly profitable, compounding mortgage interest over decades. It’s better to throw around tons of loose credit, since there is no risk to them, and then go begging to the government for bail-outs for their “losses”. Never mind they merely created debt out of thin-air, now they will have real $$$ – ie: taxpayer money, in addition to the profits already generated.

I’ve been watching the US debacle unfold since late 2005, and sure enough, Canada follows right along, albeit a couple years behind the curve. Too bad everyone will pay this time; even if you rented and stayed out of the madness, even if you already owned your own home outright and didn’t even partake in the RE market. This is the biggest financial bubble that’s ever been blown, anywhere. It’s been a grand social-engineering experiment and it’s sheer genius on their part.

All of us are going to pay for this – for a long time coming.

#82 poorguy on 08.24.08 at 1:21 pm

The Other David,

I used to watch that show.Not for the information but
to get good laugh.Since I moved to Florida,I did not
get chance to watch.I am very curious to know
what those jokers are saying these days.Lacking
a good laugh for a long time.

#83 van-zee on 08.24.08 at 2:03 pm

Yo Zen

Not everyone is going to appreciate what you’re trying to do or the way you are doing it. The concept of “skillful means” comes to mind, one you may want to refresh. Don’t get too attached to being “above” those who are attached to things, that can bite you in the ass.

#84 David on 08.24.08 at 2:29 pm

Shedding tears over some dumb failed condo development or some tract of useless McMansions seems rather silly. Lamentations aside, the developers really WERE NOT giving the customer what they wanted. Middle class families with two kids need affordable energy efficient homes and unfortunately those are not profitable to produce. Certainly municipal governments saw tax revenues from condos and McMansions as a huge cash cow and asked few questions about the sustainability of what passes for housing these days.
I challenge any of the real estate bulls to provide the NAMES of ANY developers in Canada that have made even a modicum of effort to produce affordable, sustainable and energy efficient housing in the past decade of the bubble. If there are any such corporations, they will most likely have a great future ahead of them.

#85 y3maxx on 08.24.08 at 3:03 pm

The Vancouver/Whistler corridor may possibly withstand any major real estate correction.

Vancouver is North America’s gateway to Asia and so much of the real estate here is Asia/offshore owned.

The high values here have been established/supported for more than just the short term.

Don’t see a downturn yet, not with all these high rise cranes all over the place.

good luck

#86 Dawn in Calgary on 08.24.08 at 3:10 pm

I tried to do my part recently, and posted a plea to ppl in Calgary not to purchase right now, for many reasons. The only reply I got in my inbox? Gave me a good laugh,

“Date: Sun, 24 Aug 2008 09:39:32 -0700
> From: [email protected]
> Subject: Do not BUY now! (Calgary)
>
Home Equity Lines of credit (HELOCS) available now.
If over $50,000 there are no appraisal or legal fees.
One application qualifies for HELOC and investment loan for most applicants.
Lender HELOC specialists will contact in person or by phone depending on location.
This program is national in scope.
Lender is proactive with vigorous turn-a-round!
HELOCS are superior in many cases to a regular mortgage loan
ie flexibility, simple interest, control and cash flow management
Use HELOCS to access home equity, to provide additional funds for investment, consolidate debt or help to purchase a home.

If interested, contact and an introduction card will be faxed or emailed.
No other emails will be sent.

Thank-you for your time.Good Luck”

I laughed mainly because I am a renter and have no equity to cash out! Lucky me.

#87 PeterP on 08.24.08 at 3:42 pm

Anybody wanna see a great PICTURE of what GHOST TOWN CALGARY will look like couple years from now?

http://www.dexigner.com/detail/files/9936.jpg

#88 jrochest on 08.24.08 at 4:20 pm

Y3maxxx —

Why yes, Vancouver is Different! Rich Asians will never pull their money out of a declining market! The Chinese/Taiwanese/Korean economies will never stumble or fall! All the new buildings will be snapped up by investors from Dubai and Seol and Hong Kong, forever!

And in the shadow of the gleaming, empty towers will huddle the actual Vancouverites — residents, workers and business owners — who will toil buiding the monuments to overseas investment by day, and by night, sleep huddled together in the abandoned Pacific Center mall, while gnawing on mussels they’ve pulled off the rocks in English Bay…

A glorious, gleaming, and totally plausible future!

#89 Rick on 08.24.08 at 4:28 pm

#83 y3maxx on 08.24.08 at 3:03 pm The Vancouver/Whistler corridor may possibly withstand any major real estate correction.

Vancouver is North America’s gateway to Asia and so much of the real estate here is Asia/offshore owned.

The high values here have been established/supported for more than just the short term.

Don’t see a downturn yet, not with all these high rise cranes all over the place.

good luck
——————
BS, Vancouvers market is driven by the illegal drug trade, specifically the 6B a year pot industry. Note the two realtors shot dead in the Lower Mainland recently, both apparently having ties to organized crime.

But, by all means, keep spewing the rhetoric if it gives you a warm fuzzy feeling.

#90 brazer on 08.24.08 at 4:33 pm

Banks expected to post lower profits
http://www.reportonbusiness.com/servlet/story/RTGAM.20080824.wbanks0824/BNStory/Business/home

“Analysts forecast pre-tax writedowns of as much as $900-million for Royal Bank of Canada, and potentially more than $2-billion for Canadian Imperial Bank of Commerce this quarter, although estimates vary significantly. Toronto-Dominion Bank will take a $96-million charge because of mispriced assets.

Canada’s banks have already taken more than $10-billion in charges related to the liquidity crunch, notes Merrill Lynch analyst Sumit Malhotra.”

#91 brooklyn on 08.24.08 at 4:39 pm

Calgary Rip Off and others,

Why are you wasting your time with Everything Zen.
You are only displaying ignorance. Who cares?
Ever heard of difference of opinion?
Everything Zen never gets upset and emotional at your attacks. I do not know how you can be bothered!
Choose your battles man, there are so many more
important issues than acting like a kid in high school.
Grow up!
Why don’t we stick to the issues and learn about
the potential for a real estate bubble in Canada,
isn’t that what this blog is?!!

#92 Suzukimum on 08.24.08 at 4:41 pm

I read this blog daily. It appears there is a lot going on in the RE market out west except in Ottawa. There is not a lot of news about the RE market in Ottawa. Is Ottawa recession proof? Is Ottawa going to be unscathed by the the housing bust? I ask my self these questions often and scratch my head when I find out neighbors and friends are buying or bought bigger SFHs. I wonder how they make decisions. All I have talked to are oblivious to what is going on with the RE market in the US, and around the world. I don’t know if they don’t get other news sources besides the local newspaper (which doesn’t report much on the local RE condition) or just chose to ignore the warnings and signs of what lies ahead. Here are some examples of how people make decisions:

#1
A neighbor of mine just moved to their 4-bedroom, 2900 sq. ft. single home. They were rushed into buying in 2007 because they believed prices will continue to soar. That fear was fanned by the developer which raised the price every 3 months.

#2
A friend bought a SFH which will cost over $400,000(and more after all the interest payments). When I mentioned what is going on the RE markets in the US and elsewhere, I was given a blank look. She responded,”Oh, I heard about many people losing their homes in the States.” “We won’t be living in this house for long. Because the kids will be leaving soon.” Yes, they have teenagers. I thought to myself, why buy a bigger house then, especially when price of RE is highest. I didn’t tell her I hope they will be able to sell and make some money in a few years.

#3
Another family with 4 small kids, and one income wanted to build a 5-bedroom house with 3 garages on a 2-acre lot. I told the husband about Garth Turner’s book, the respond I received was, “I’ve never been impressed by Garth’s advice for investment purposes – he was always off the mark in his prediction. He likes to sensationalize things to the extreme (the “end of the world is coming” type of advice). And the same with his new book – the prediction of doom and gloom. He has some good points, just makes it out to be way worst than it actually is or will be. I’ve been following the real estate market … for a few years, and this year we are seeing a slow down. Prices have only gone up a little compared to last year. Good houses are selling just as fast as before. … I see the market starting to cool off a little. I just do not see house prices dropping off significantly, instead I predict very small modest increases.”

#4
Just learned on Friday a neighbor will be moving to a SFH in an over priced neighbourhood in Ottawa. He is not aware that the RE market out west is already crumbling. Just like many others, he thinks that prices in Calgary, etc. are coming down because RE is overpriced there. But not in Ottawa.

My observation is that people will buy the house they want. Their decisions are usually governed by one dominant criterion–want. I tried to warn my friends and neighbours. Just like those who mocked and jeered at Noah who built the ark, they can choose to ignore prophetic warnings about an impending flood.

I may be proven wrong by my neighbours and friends. They get to fulfill their middle-class dream, while I patiently wait for the price of RE to come down in Ottawa.

Overwhelmingly, the greatest emotion middle-class Americans expressed when real estate values in their area plunged was surprise. Many middle-class Canadians, despite two years of warnings, seemed destined to repeat it. — Garth

#93 brazer on 08.24.08 at 5:02 pm

here is what CTV news had to say about midtown…everyone should watch this and make up their minds as to what this might signal…

http://calgary.ctv.ca/servlet/an/local/CTVNews/20080822/CGY_housing_condo_080822/20080822

#94 lgre on 08.24.08 at 5:35 pm

“Look what happens when you have a Mayor doubling as an RE agent or vice versa”

yeah I was thnking the same thing, what’s with the mayor selling RE..that’s messed up on it’s own..lol

#95 Dapo on 08.24.08 at 5:58 pm

y3maxx,

Perhaps the high number of cranes are obscuring your vision from seeing the 20, 000+ RE listings in the GVRD today. How one can miss seeing the sheer number of For Sale signs on every single street is beyond my comprehension though. And how about the almost 50% decline in sales YOY in the Lower Mainland? Those cranes you mentioned? They are part of over 20, 000 more condo units expected to finish construction in the next couple of years. Do you really think prices are going to remain stable? These cycles go on real economic factors not gut feelings and industry BS. As for the Asian buyers, it’s been shown many times over the last few years that the actual number of sales to offshore/foreign buyers in BC is less than 1%. Yes, that’s less than 1%. The Asian market is a myth. The cycle is already entering the downturn phase, this is only the start.

#96 EverythingZen on 08.24.08 at 6:28 pm

#71 Jim,

You cannot rightfully equate the concept of owning a house with the price of food. It’s never been a question of housing being well beyond the means for the average Canadian. Rental accommodations are more than suitable alternatives to home ownership for all but very few people. Rent or own, shelter is shelter but you cannot rent food!

The attachment is to the elusive idealistic notion of ‘if I own a home I’ll be happy’. Let it go friend! You can be just as happy in a rented studio apartment as in a mortgage-free mansion on a hill. Do what works best for your situation but appreciate what you have, not what you don’t have. Surround yourself with loved ones that create positive energy and good causes to pave the wave for your future. Anger and fear come from attachment. Open your heart mind to the beauty that surrounds you.

The happiness is within all of us- not in the outside world and certainly not in the ever-changing real estate market. This blog provides a lot of useful commentary on the state of the market and that’s wonderful. It also has a regrettably large amount of angst and fear that benefits no one save for Mr. Turner’s aspirations in the next federal election.

peace & kindness

#97 WetCoaster on 08.24.08 at 6:37 pm

y3maxx sez…

The Vancouver/Whistler corridor may possibly withstand any major real estate correction.

In the words of Ralph Cramden, “Hardy Har Har”.

There’s stand-up comedians everywhere these days.

#98 Future Expatriate on 08.24.08 at 7:20 pm

BC can kiss the 6 billion a year pot industry goodbye too… when people lose their discretionary income, pot is the first to go. Not to mention the growing numbers of idiot babyboomers who never smoked tobacco but chainsmoked pot for decades coming down with all sorts of lovely cancers despite the propganda from Big Tobacco who has wanted pot legalized since the 70’s when they trademarked all the possible mass market brand names.

Demand will fall with time and more death, just as it did for tobacco. That 6 billion a year industry will be cut by half, then down to a third of that as people wise up.

#99 ON THE SIDELINES on 08.24.08 at 8:02 pm

The reason Midtown ran into difficulty is they ran out of money and couldn’t find additional credit resources, probably because of the tightened requirements of credit. Also I suspect due to cost overruns, which is only spec, not having seen their balance sheet, which would spook any bank.

#100 David on 08.24.08 at 8:06 pm

There are a whole lot of people who DO NOT wish to hear about the housing price freefall which is understandable. The net realisable value of these properties is possibly less than housing owners actually owe and in order to dispose of the property these folks will have to come up with the cash they did not have in the first place for a decent down payment. The actual net realisable value is far short of the assumed liability with zero equity down and a forty year mortgage. Right now in the USA 10% of homeowners owe more than they own and the percentage is expected to increase to 30% in the next year. Expecting a different outcome in Canada is so totally laughable. Finding a qualified buyer for much of this garbage housing will be even tougher as credit standards tighten and down payment requirements increase. Flip this house NOT!!!

#101 Jim_s on 08.24.08 at 8:39 pm

#94 zen;

I like you. You’ve got pizzaz. But, you are horrible at judging people. I’ve invested in SFH developments before and done very well, and own a number of homes. I’m not a renter that you can talk down to, although keep doing so if it tickles.

The analogy between food and housing was meant to show that a basic human need cannot continue to skyrocket in price beyond affordability. Renting is, and always has been, available for those in a state of transition, either newly married, immigrants, students, recently divorced, etc…. Renting cannot be asserted as a long term goal for the middle class. It won’t work. If people don’t OWN their house and feel a sense of community to which they belong, then they will just move. The analogy to food was to show that, IMO, owning a house in the Western world is a basic human need. For some reason, no one else on the blog found that upsetting but you… I think most on here are well educated.

See… what happens with housing is very similar to what happens in an organization. Today there is a ton of upward mobility as many wish to lever their equity into a larger home. So who do you think will fill the void and be the successive owner to the smaller home? As in any organization, if you want a promotion, should there not be a successor available?

Today the housing situation has abandoned the FTHB. There is no way that the middle class individual can move up, as the pool of buyers that can afford to enter the market is falling fast. The housing market churn in AB is comprised today of mostly the wealthy. The FTHB is not entering, and RE will eventually stall.

I think everyone should own a house. I don’t see why that is so disturbing, and why it requires such passion on your part to portray yourself as someone above the situation.

I get the feeling you have investments but are struggling with the fact that they may fall in value. Well, let me speed up the class for you…. they WILL. Good luck denying the trend, my friend.

->

#102 crashing yuppy on 08.24.08 at 8:45 pm

Why is everyone piling up on Islander?

I like the fact that this site has balanced opinion.

I think he has guts to come on the site and provide insight from a realtors point of view.

He is in Sales. People we are ALL in sales. Every job in this world is dependent on selling something be it a concept or a durable good.

Dont blame him for the sin of greed. If you ask me (which you didn’t) this bubble was caused by naive buyers and greedy sellers, not agents. I know of several people who fired their agent because they dared to suggest a price reduction>

Islander, post on brother.

#103 Glen on 08.24.08 at 9:05 pm

Expect 50% loss in home values over the next two years.

History ALWAYS repeats and the numbers are all pointing towards a big big time correction.

#104 squidly77 on 08.24.08 at 9:57 pm

REIN these people have hurt a lot of people
read a bit about them here what so you think ? good or bad

#105 Calgary rip off on 08.24.08 at 9:59 pm

Crashing yuppy:

Realtors arent really the issue, how things are being reported is. I contacted Bob Truman and told him this issue. His statistics may be accurate, but his take on things and endorsing the falsities of the Calgary Herald put potential buyers at risk. Its very unclear why realtors dont try to induce a crash, because there are so many people waiting to buy, such as myself. Bob thought I had slandered his name, which wasnt my intention at all. When I told him of the lack of properties in a reasonable price range $280,000-$300,000 he recommended the NE, half duplexes, and a house(700 sq ft.) in Lynnwood. I wanted to see if he could offer a reasonable solution. NONE of those properties are worth what the market commands. THAT is the central dilemma. It is really too bad that cynical realtors think it is funny when prospective clients make good money $80,000 a year and cant afford to buy a decent home in a decent neighborhood. Consequently, although I never hired Bob Truman, he is now FIRED. He shouldnt talk about “upper class trash” and refer to people who have worked hard for what they have as scum. I personally would rather live in a pretentious neighborhood than one in which dogs growl at me and threaten to break their chains when I walk out of my three bedroom upper duplex and then almost get shot at as I hasten into my vehicle. By the way, this is what I experienced living on Vancouver Island(most of the upper island is RUN by the Hells Angels). Calgary although an overpriced piece of crap is by far a step above what is offered in any town on Vancouver Island outside of Victoria or Sooke.

So really what realtors arent accepting is that prices arent reasonable. They have to continue selling unethically and ignore that fact to survive. There isnt one class of person responsible for these inflated prices. The issue is what to do to get them in line with what people can pay. There are many in Calgary who dont want this because they bought at the peak, but the thing is that if they bought to live in the place, their equity will eventually come back.

The solution would be for Mario T. at the Herald and Ed Jensen to actually neutrally report stats, not followed by, the market is stabilizing or some other falsities, and for Calgary to realize that it is NOT New York City. The culture and the history are NOT there, so the prices shouldnt be, although when entering Calgary in many spots in looks like Brooklyn, like in “All in the Family”.

Bottom line: I dont want to be paying someone else’s mortgage in Calgary that has less education than I do and makes less money per year than I do. That equation doesnt work and I am willing to fight to the death to defend that belief. I along with many others should be able to acquire a reasonable property, such as the one for $265,000 on the mls site in Airdrie which is a 1978 home, nothing fancy, but SFD and has the space to raise a family.

#106 squidly77 on 08.24.08 at 10:40 pm

dont worry about bt..he feels threatened or slandered if you make a comment on an over priced town house
lets face it..realtors are the pawns for the banks and builders..i do not wish to demean all realtors when i say this because there some really good ones out there
but there are virtually no qualifications to becoming a realtor
just the way that banks like it..the banks know that they will say or do almost anything for a quick dollar..as most of them can do nothing else
they lease fancy cars and buy fancier houses mistakenly
thinking that they have finally made it
only to find out that the party ends when the banks says it ends
i am positive that the majority of realtors hold in disdain these new comers to the game..as they dirty there name
the good realtors were here before the boom and they will be here after the boom
the pretenders will be broke and gone

#107 Bill on 08.24.08 at 11:07 pm

calgary rip off #103….where did u live on the island. Kinda harsh “most of the upper island is run by the hell angels” give me a break. Vancouver Island is the Florida of Canada……..and good money will be made as Boomers retire here. Sounds like Calagary is the place for u

#108 squidly77 on 08.24.08 at 11:23 pm

vancouver island the next retirement hot spot
you are kidding right
you are <a =”_blank” href=”kidding right“>kidding arnt you

#109 squidly77 on 08.24.08 at 11:27 pm

bill 105..you are kidding right and never mind about health care
toronto to fort lauterdale..160 min

#110 EverythingZen on 08.24.08 at 11:30 pm

#99
The analogy to food was to show that, IMO, owning a house in the Western world is a basic human need. For some reason, no one else on the blog found that upsetting but you… I think most on here are well educated.
____________
Therein lies your problem friend. I am not being condescending in the least! I don’t talk down to anyone but I certainly don’t consider owning a home to be a basic human right! I like everyone and think everyone is a superstar in their own right and of course entitled to their own opinions and views.

Owning a home is by no means a path to plenty for anyone. I think that may be a Western Canadian mentality but it certainly is not prevalent across the Western World. Just because you/me/society may want to does not mean that we need to. That’s just a mentality ingrained into our consciousness by the real estate agents, the banks, the builders etc. to get us to buy their products and use their services. Look at places like Paris, Berlin, and even Montreal and you’ll find a society of renters no worse off than the rest of us. If you’ve got a family and can’t afford to own a home then rent a home. There are plenty of them out there that’s for sure. It’s all in your head man but not in your heart!

We’re talking about the market and I’m suggesting that the source of the widespread suffering on this blog is not the housing market but rather the way in which people seem to internalize external events like an expensive housing market. Expensive houses are not causing you pain. Your attachment to the idea that you need a house to be happy is the source of your suffering.

While it shouldn’t make you feel better to believe that my kingdom is crashing, if it does on some level to believe it then I’m happy to oblige, :) It’s not about me and I’m not about you- it’s about society as a whole and it’s unending quest for elusive goals that prevent us from experiencing the beauty in front of us now at this very moment in the present. Enjoy your home, your apartment, your mobile trailer, or your palace. Inner peace lies in each of them.

peace & kindness

#111 not a realtor on 08.24.08 at 11:36 pm

One hot summer day, not too long ago, some kids found a high rock ledge to jump into the river off. Someone had to try it first, to see what happened. The child in the group who was the “leader of the pack”, you know, the loudest, most personable outgoing one, was chosen to jump first. He climbed the rock face to a height of 5 metres. He jumped, and as his group of friends watched in suspended shock as he fell in slow motion to the cool unknown, untested waters below they all gasped when after a few seconds he did not resurface. This is the moment they collectively, in an instant, pondered their decision to push him to jump, and they felt a deep, gut wrenching sadness and feeling of ultimate questioning of the unknown. The herd got wrestless, they wondered what to do as they really could do nothing. No one else was willing to jump into the unknown abyss of the deep dark water. Then, suddenly, like Shamu the killer whale of sea world, the boy literally exploded out of the water and inhaled a deep breath. With a smile on his face he swam to shore to the cheers of his friends as they questioned,
“What was it like!”
“Was it FUN?”
“Wow bobby you made it you did it! how deep does it go?”
After a few minutes of youthful exuhberance, the group settled down and another boy who was “second in charge” of the group said he was going to jump, only this time from 7.5 meters!
He climbed the rock, set up his stance, took a deep breath and looked down to the cat-calls of his friends,
“Jump Billy, do it!”
He jumped, and kicked his legs out in mid air into the form of a high flying Karate kick the likes of which Jackie Chan himself could never hope to achieve!
With a thunderous splash he hit the water and shortly resurfaces. Soon the kids in the group who are the most shy, the most reserved, the least athletic, are jumping from even higher points as the leaders of their group were, each one a little higher than the last. Finally, after many jumps, no one child is willing to break the ten metre mark. They hold for many fun filled, lazy summer afternoon risk free jumps at 9 meters. Finally, a boy, named Rael, a “late bloomer” as it were, in the group, decides he will jump from ten metres, to gain the respect of his friends, afterall, he does not want to miss his chance to feel like a tough guy. His friends warn him he is not ready, not athletic enough. With his coke bottle glasses left in the hands of the group leader, who advises him not to do it, but if he wants to he will support and cheer for him, Rael climbs the record height. It is quiet, up that high. He can only hear the wind. It is lonely at the top and getting dark. He wants down, but there is only one safe way down, to jump.
He jumps,
it seems to take forever to hit the water, and he notices how he falls in the stages, each moment taking a lifetime, a lifetime of a feeling of falling. After the third noticable instant of falling he hits the water.
He dies almost instantly as he is impaled by a sharp log hiddin just inches below the water all the other jumpers unknowingly narrowly missed.

Now class,
is the leader of the group responsible for the actions of the others?

Is he responsible for Raels’ Death?

Is Rael, seeing how fun it is to jump, but knowing he is not a “good, informed, experienced jumper” and jumps only once every five years or so, the maker of his own undoing?

Is the leader to be held responsible for Raels decision, even though he told not to, but if he did, he would support him?

Is that stated support by the leader, taken by Rael as an unspoken way of saying “Do it”?

#112 squidly77 on 08.24.08 at 11:41 pm

btw..my last post..no need for a boat trailer you just moore it out back
in the future the mls and realtors will be no more
zillow.com is the future..surf around that above listing
there is a world of information at your finger tips
and no e-mail addresses are required
a poster called quack left a post on the albertabubble a couple years ago..the best post that i have ever read
people wont wake up from the ponzi game thats going on until someone smashes a brick into there face too true

#113 squidly77 on 08.24.08 at 11:56 pm

victoria is this comparable for 530,000 more ?
nope..lets find a house on the water http://www.mls.ca/PropertyDetails.aspx?vd=&SearchURL=%3fPage%3d5%26Mode%3d0%26vs%3dResidential%26ret%3d300%26sts%3d0-0%26beds%3d0-0%26baths%3d0-0%26aid%3d263%26MapURL%3d%253fAreaID%253d764%26mp%3d0-0-0%26mrt%3d0-0-4%26trt%3d2%26of%3d1%26ps%3d10%26o%3dA&Mode=0&PropertyID=6739007 its only $324,000 more than the florida house
you guys are hooped

#114 squidly77 on 08.24.08 at 11:58 pm

garth i am messing up your site a bit..sorry
kinda need a place to preview a post..thanks

#115 Rick on 08.25.08 at 12:01 am

#105 Bill – Oh so BC; Instead of refuting the point it boils down to a “if you don’t like it here, leave.”
I live on Van Isle and the comments about HA’s are dead on, trust me.

#116 Calgary rip off on 08.25.08 at 12:54 am

Bill:

You call Vancouver Island paradise? Maybe to everyone else, not to me. The economy is shot to hell.

My wife is from there. I have never lived in a more whacked place in my entire life. Calgary sucks in many ways, but unless you are retired, the island is lousy. The ferries are lousy, the weather is lousy, and the culture is just well…strange.

I refer to Vancouver Island as Alcatraz. Too many speed traps and people acting laid back because if they acted anyway else they would explode due to the financial strain from lack of work there.

So yes, even in spite of the crap in Calgary its so much better here.

Where I lived shall remain a mystery. I learned not to trust anyone from living there, very two faced and fishy there.

#117 kabloona on 08.25.08 at 1:39 am

Bill, I don’t think many aging Boomers on fixed incomes will be able to retire on Vancouver Island unless the price of housing drops substantially.

#118 No fool on 08.25.08 at 2:08 am

Calgary Rip Off,
My woman and I make $130K combinded a year (no kids) and we can’t find a place in Calgary that is worth spending money on. Seriously, it’s shanty town out there. If I walk into another $400K home in a “decent” (not extravagant) area that’s described as a “handyman’s dream” or a “fixer’er upper”, I’m going to vomit.

We went to go check out a place in Ranchlands the other day. 3bdrm 2.5 bath….nothing too special. As I said, a decent area, but by no means regarded as one of Calgary’s best..actually one of the worst in the NW. The friggin’ sellers had bought 3 stainless steel applicances and put them in the kitchen with the price tags on them. The house price apparently did NOT include the price of the appliances. They wanted you to pay $420K for the house and then another $4-5K for appliances. AMAZING. For the record, the kitchen was straight outta the 70’s, and all they’d done to “renovate” it was re-stain the old wood cabinets/drawers and buy the SS appliances to dress it up (though the BUYER had to actually pay for them). What a joke.

I think one of the biggest problems with Calgary in general – whether it’s housing, culture, homophobia, worldy knowledge, apathy, etc. – is that most of us have never left the damn borders of the province (BC/SK don’t count) to see what’s going on elsewhere in Canada or the world. We think we’re the cat’s ass here in Calgary, and the shanty homes in crappy neighborhoods are priced accordingly. As a true Calgarian, it hurts me to say this, but I call ’em as I see ’em.

#119 holgs on 08.25.08 at 2:24 am

Bill, #103, I’m from the Island too, although I now live in Europe.

You’re a funny guy. I like how you drew the comparison to Florida as if that would support your argument. How is Florida’s economy doing these days, anyway?

Here’s a hint from a realtor in Florida: “Florida at Precipice of Depression.”
“http://realestateandhousing2.blogspot.com/2008/06/florida-at-precipice-of-depression.html”

Will you change your tune and say ‘it’s different here?’

#120 Rick on 08.25.08 at 10:26 am

I’m looking forward to the book, yet to be written, about the effect of organized crime, drugs and the dirty real estate industry in British Columbia and it’s effects on property “values.”

http://www.canada.com/theprovince/news/story.html?id=a4a53b0c-5d2c-4cba-944c-54a765093800

#121 Bill on 08.25.08 at 11:14 am

Wow………Calgary rip off..u r paranoid. I guess everyone on the Island made you that way. As for hells angles, they are a bunch of old guys that are being constantly harrassed by the authorities. I guess it depends on the neighbourhood you live in. If the club house is by your home then you “bought wrong” Maybe east vancouver is run by them to. The Island is way more than Victoria. Although prices have risen dramatically it is still relativley very affordable. When this next adjustment comes it will be even more so. As for the Florida of Canada….the point is Canadians retire here. The largest demographic “Boomers” are coming this way. Their grandparents retired to Victoria, parents to Qualicum, Parksville and Boomers will do Nanaimo, Ladysmith and Courtney Comox as well as the rest of the Island…..it is predictable. Other than Victoria it is still very affordable
Kelowna is done. Way over priced and falling as well as most of the Okanagan. For you naysayers Conte Naste states….”Vancouver Island” the second best Island on the planet. Guess they haven’t heard about those Hells Angles.

#122 squidly77 on 08.25.08 at 11:46 am

lucy in the sky with diamonds
$899,900 reduced to
$799,900 reduced to
$624,900 reduced to
$

#123 smwhite on 08.25.08 at 11:51 am

Vancouver Island is the Florida of Canada……..

Get real!

Vancouver Island isn’t the only temperate island with white sand beaches in Canada, in fact, because affordability is now a major factor, your going to see an influx of grey and blue hairs hitting the east coast in places such as Cape Breton and Prince Edward Island.

There is no shortage of available cheap ocean view/front property that was bought up by Americans, now flooding the market there as well, and prices are well below the unreasonable prices of the west coast.

Why pay 500K or more to end out my days in peace and quiet when I can get double to triple the home out east where there are lots of lakes and ocean, hills and mountains and a relaxed and friendly population?

You guys out there are smoking way to much of that dirty shit.

#124 olives on 08.25.08 at 11:53 am

Squiddly, that first property in Victoria for $729,000 is near the water, but in a very high-crime area, making the price even more ridiculous.

#125 prairiegopher on 08.25.08 at 11:54 am

I’m reading all these comments about prices in Vancouver, Calgary and Toronto. You should come to Regina. Not only do you get to pay an inflated price for your homes(according to Merrill Lynch 50%) you also get entertainment thrown in. On the weekend they shot a hole through the front door of the district Police office. Tried to run a Police Officer down and he shot back hitting a suspect. Here are some examples of what your money can buy in this entertaining neighbourhood! http://www.mls.ca/PropertyResults.aspx?Page=11&Mode=0&vs=Residential&ret=300&sts=0-0&beds=0-0&baths=0-0&aid=1606&MapURL=%3fAreaID%3d1639&mp=0-0-0&mrt=0-0-4&trt=2&of=1&ps=10&o=A
Come one, come all!

#126 lgre on 08.25.08 at 11:54 am

“REIN these people have hurt a lot of people
read a bit about them here what so you think ? good or bad”

I actually read this book about 2 years ago and I found it entertaining , would I follow everything they say? for sure not. The problem is that people who invest with this organization are amateurs and they do what they are told to do without looking for advice or reading or picking up a calculator, so in essence I blame the buyer for getting in over his/her head if the sh*t hits the fan. Realtor, bankers, buyers, brokers, appraisers are all responsible for the housing boom, but as a buyer and being your money you should do you due dilligence, pick up a calculator and do some basic math, if you home ownership cost 2.5 times more then rent then why buy? i have a good friend who is sellng their house now because they came to that conclusion after only owning for a bit over a year, they will lose money for sure but their housing ownership was 3 times their previous rent.

So, Rein maybe somewhat to blame but again it comes down to education, like I said I read the book and did not buy anything to invest in because unless I can get at least a 10% cap rate on my return its not worth buying IMO. Even at 10% after inflation, taxes and repairs you are getting a 5% return.

#127 smwhite on 08.25.08 at 11:59 am

Vancouver Island

http://www.mls.ca/PropertyDetails.aspx?vd=&SearchURL=%3fPage%3d2%26Mode%3d0%26vs%3dResidential%26ret%3d300%26sts%3d0-0%26beds%3d0-0%26baths%3d0-0%26wftg%3d4%26aid%3d235%252c234%252c237%252c241%252c242%252c752%26MapURL%3d%253fAreaID%253d245%26mp%3d350000-500000-0%26mrt%3d0-0-4%26trt%3d2%26of%3d1%26ps%3d10%26o%3dA&Mode=0&PropertyID=7135420

Prince Edward Island

http://www.mls.ca/PropertyDetails.aspx?vd=&SearchURL=%3fPage%3d2%26Mode%3d0%26vs%3dResidential%26ret%3d300%26sts%3d0-0%26beds%3d0-0%26baths%3d0-0%26wftg%3d4%26aid%3d6241%26MapURL%3d%253fAreaID%253d6241%26tte%3d1%26tt%3d1%252c2%26mp%3d250000-500000-0%26mrt%3d0-0-4%26trt%3d2%26of%3d1%26ps%3d50%26o%3dA&Mode=0&PropertyID=7196223

http://en.wikipedia.org/wiki/Temperature_in_Canada

#128 womp on 08.25.08 at 1:30 pm

Bill – lol. Vancouver Island is Canada’s Florida? If only! I bet you think that Quadra and Bay is Victoria’s Yaletown too huh? Maybe Tuscany Village is Canada’s Italy? I mean honestly, what the hell does that even mean?

I’m assuming that you’re perpetuating the myth that we have an endless supply of retiring boomers. Maybe you should check out the BC Census office’s statistics. Oh, and the fact that our house prices are four times what a senior on fixed income could afford. For that matter, that’s pretty much the multiple of what property here costs over properties in Florida. Except in Florida you have actual sand beaches, warm water, sunny weather year round and no ferries. And your cost of living is lower. Hmm, come to think of it, maybe I should move to Florida….

#129 Expat in NC on 08.25.08 at 1:51 pm

No Fool…your words “…is that most of us have never left the damn borders of the province…to see what’s going on elsewhere in Canada or the world.” carry a lot of value.

My wife and I (we are both Canadian) left Canada 10 years ago to live in North Carolina. Not that we didn’t like Canada, we love Canada, it’s our home, but just to see what it would be like. Like “a lot” of Canadians, we always thought Canada was better than the US (people, quality of life, quality of medical care, etc), but we thought we’d give it a try.

Well, what an eye opener. I can only speak about living here in the suburbs of Raleigh, not the US in general, but living here is amazing. People are super friendly, our town is kept pristine, treed boulevards are normal, flowers planted and replanted for the different seasons keeps this place looking spectacular all year, and they DON’T cut down all the trees to build subdivisions, they building around a lot of them. A lot of commercial buildings you can’t see because of the trees, all you see is the company sign (usually decked out in trees and shrubs and flowers) and a treed driveway leading into the trees. If you like sun, well, it has lots of that too.

But the biggie for us is the cost of living. Houses are very reasonably priced, and at a minimum are on 1/4 acre of land. Pretty much everything is cheaper in the stores, and buying online sometimes gets you ridiculous deals (usually with free shipping). Schools are top-rated, and with Research Triangle Park, UNC, Duke, NC State universities all within a few miles, people flock here like crazy (and hence house prices haven’t dropped here…nor did they zoom up over the past 10 years either).

Another eye-opener is the healthcare. Yes we pay for insurance, but the quality of care we get for it I wouldn’t trade for ANYTHING. Thinking back to our doctors in Canada, and our parents and siblings experiences in healthcare in Canada right now (Burlington, Mississauga and Durham Region), there is no way it measures up to what we get here (and yes, we pay quite a bit for the privilege, but the quality of care is outstanding). Again, I can only speak for our immediate area, and yes, I know, not everyone in the US has insurance, etc, etc.

I guess, what I’m trying to say in a long winded manner is that sometimes it’s good to get outside of your comfort zone, your borders, and see what things are like “outside”. Only then may you realize that prices, and in the case of this blog house prices, in Canada seem a little out of whack. Some of the MLS listings you guys post for little homes with crazy prices makes me realize how unfortunately some people in some of these provinces are, and what they are forced to pay for a home. You don’t have to be in financial turmoil for the next 35 years if you are willing to live elsewhere…nor then do you need to make $150k, when $75k will give you everything you ever needed.

We are going to move back to Canada ONLY because we miss our families and relatives. We have started house hunting (Durham Region) and it’s hard to look at houses in the area and say they are worth what they are listed for, knowing what we have seen in NC and grown used to.

Home prices dropping throughout Canada to be in line with what you can get in my part of the US would be good for Canada I personally think. Everyone deserves a decent place to live and call their own.

Apologies in advance if my ramblings didn’t make sense, were too long winded, or if I said anything to offend anyone.

Peace.

#130 Calgary Rip Off on 08.25.08 at 2:08 pm

No Fool:

Total agreement with you. Ive been saying the same for months.

As a dual citizen, I grew up in Seattle, lived in many states, and prefer Canada to the United States. The United States is a piece of turd.

You are correct about the arrogant attitude towards current market value in Calgary. The houses are not worth what they are listed for.

Consider yourself lucky that you havent yet bought one of those Brooklyn type shacks with no trees, 8 feet between your neighbor(nothing against closeness on my part until the kids next door play with matches), and have a 50 year mortgage to get married to the thing.

The only way to survive this insanity(look at Tony Macalpine’s 1985 album cover, Edge of Insanity, this describes Calgary currently) is to think about being insecure. Its kind of like playing the piano, in that your hands are most of the time up in the air. The problem arises as to where to land, which notes you will play. As of present the notes I hear in Calgary are a diminished chord, similar to a train coming as one of those Calgary V8’s is stuck on the tracks and about to crushed.

Its best to remain insecure.

#131 what to do on 08.25.08 at 2:52 pm

So what is it better do to with all this gloom and doom? Pay $1500/month (including condo fees) on a mortgage on an overpriced townhouse or pay $1500/month on an overpriced house rental? Either way it looks like a lose lose situation? What is a person to do?

This is the situation my husband and I are in. We either get in before 0 down goes away (we wouldn’t do 40 year amort.) or continue to pay $1500 for rent and save $300/month. It would take forever to save enough for 5% down, even if the market drops 20%.

It looks like a situation your damned if you do, damned if you don’t.

#132 Indicator on 08.25.08 at 3:13 pm

Yes, we are entering a recession. This should not be a surprise. Most countries are encountering or are experiencing a reversal in forturne. The rich will always get richer, while the middle class will suffer and widen the gap of socio-econmical wealth.
I do agree that the financial monetary decisions have had a great affect on our current situation, but they are not the sole reasons for our dismay.

Yes, jobs lost do contribute to a recession and consumer confidence is a great indicator for products and service purchasing, but the real reason why we are in one…is simply the United States particpation in a War. Maybe this is not the root cause, but this sure does not support a flourshing economy.

If you look into any text book, you will find that economic shocks involving the “war-induced” variety lead to recessions and in some case depression.

Only when the US the major player in the terroism play (who’s the terrorist..that is up for another discussion)ends their war, then years after, the US economy will slowly get better.

Again a WAR is bad for all economies. How long will this one last ??? I guess this will reciprocate the housing market.

What do you think?

#133 Daro on 08.25.08 at 4:27 pm

TO: Everything Zen

Being thankful for what one has can indeed provide peace and harmony. But there is also great peace and fulfillment in doing what one perceives is right and truthful. The anger displayed in these posts may not be useful but the truth may help some people avoid painful circumstances.

What greater expression of love than to help those you do not know. What greater cause than truth. What grander attachment than to honesty. What greater vision of beauty than to open and share your heart mind with others so that ALL are surrounded by truth, honesty and fairness.

Garth and others… Thank you.

Daro

#134 patriotz on 08.25.08 at 4:55 pm

The analogy to food was to show that, IMO, owning a house in the Western world is a basic human need.

This is exactly the kind of nonsense that got the US into the mess it is in today.

Everyone has to eat, but nobody has to own a farm. Everyone needs a place to live, but nobody has to own a house.

Do you know what the traditional reason for buying a house was? Because it was cheaper than renting. And it’s the only economically valid reason for buying a house.

BTW, countries like Germany get by just fine with less than 50% home ownership.

#135 y3maxx on 08.25.08 at 5:04 pm

Last year’s most recent 10% increase in Vancouver is down…currently < 3 – 5% from that peak.

Vancouver is the single main North American gateway to Asia.

…Vancouver Island, Calgary, Edmonton are not North American gateways to Asia.

#136 Sebastian on 08.25.08 at 5:21 pm

Paul Krugman on RE: http://www.youtube.com/watch?v=4XhvG_fD0HA

#137 lgre on 08.25.08 at 5:37 pm

what to do – IMO if the relationship between renting and owning is as close as you describe then buy, I’m not sure what you are renting and where, but you should be able to rent something cheaper (I’m guessing) if not then buy. But before you sign, you have to factor in all costs that you may not be paying now as a renter and see if it still makes sense.

I’m sure some people will disagree with me but thats my take on it.

#138 what to do on 08.25.08 at 6:23 pm

I’m in Calgary so cheap rent is hard to find, especially in the desired areas, we can find something cheaper if we want to rent out someone’s basement but no thank you.

Calgary is just generally overpriced.

#139 Rasputin on 08.25.08 at 6:30 pm

What to Do – I would rent. At least you won’t be losing 1-2 thousand a WEEK in equity. Add that up over the course of a year. Let your landlord take the losses. Think of it this way. If you wait 1 year and save 50 to 100k, well that is a life changing amount. Unless you make a lot of money it represents the principal paid off the first 15 years of your mortgage. I don’t know your situation is and I do know that some people will always be happier owning the nest. But I know what I am doing.

#140 Zebedee on 08.25.08 at 6:31 pm

#129 what to do:

This is a predicament. If house prices start to drop in Canada as they SEEM TO BE ABOUT TO, you should realise that you will probably save more than a thousand dollars a week on the price of a house or condo over the next year or two, simply by waiting it out. Ask yourself how you would feel in two or three years time sitting on a mortgage for a property where you owe maybe $100,000 or $200,000 more than the property is worth. By renting, you are not LOSING money…you will still have to pay to keep a roof over your head with a mortgage, but you would be losing money in addition to your mortgage payments.

If the $350,000 condo today is revalued at $180,000 in two years (more than likely), then you will still owe $350,000 on that property (zero downpayment, and you will have paid off almost NO capital loan in that time). Or you could wait. Property prices will fall by MORE than 50% in Canada before this is over.

Eventually, with upcoming tougher credit conditions, you will probably have to save up to put down at least 10% on a property, but will probably be able to get a nice property for less than $150,000. Start saving NOW for that eventuality.

I was chatting to someone in the mortgage industry today and they say they would not advise anyone to purchase property anywhere in the next two years at least, even though the person I spoke to will have a tough time in business if that actually happens. This professional simply said that in good faith, they could NOT recommend buying property. They told me that the banks will ABSOLUTELY start requiring people to pay down their loans before they can renew if house prices drop, and that as a result, many many more homes than we suspect will come onto the market. For example: If you have a loan of $500,000 on your home, with a two year interest agreement (regardless of overall amortization period), and at time of renewal your home is now valued at about $350,000, then the bank will ask you to pay off $150,000 of your loan prior to renewing the mortgage. They have this right, and within the last hour an industry insider has told me they intend to do this! Most people will not have $150,000 to spare and will be forced to sell the property….and both the home “owner” and bank will lose money. For the bank though, they would rather lose the money earlier than later when the damage will be much worse. This is going to be a bloodbath of phenomenal proportions, and I can only say that for myself, I would rather watch it unfold from the sidelines. Yes, you will have another year or so of high rent, but rents will come down as the rental market floods with homes, so your rental is going to go down. I do hope this makes some sense to you, but it is NOT the same cost to you to buy as it is to rent at the moment. It is a RISK to buy, and no-risk to rent, and I would recommend anyone to view property this way for the time being. I wish you well!

#141 Dear God... on 08.25.08 at 6:49 pm

Expat-NC, I’m 100% totally with ya. You got it right on.
I’ve had the fortune to travel some of the world, incl. the US and even Raleigh (nice friggin’ city)…really nice, actually.
For professionals, the US rules the roost. My cousins who moved down to the US 10 yrs ago have been selling me on the great things about the U.S. and even Mexico (let’s not even get into taxation), and I’m a true believer that Canada’s got a few things going on bass ackwards. If you’re willing to work and work hard, the US is the place to go. Us Canadians are just too much of a socialist/liberal country. We’re ignorant of what’s going on in the rest of the world….hell, in other provinces even. We take care of anything and anyone except for the middle class paying the glut of taxes. It’s insanity. Healthcare, benefits, childcare, cost of living, etc. It’s a tough country to excel in.

I’m aware of that and, thankfully, I’m ahead of the curve. I’m not a very materialistic person, thus living Canadian hasn’t bothered me (I grew up in S. Ontario and am now in Calgary). The thing that bothers me in the end is that I have a great career, so does my sig. other, we save like nutz, we’re not flashy, and we’re renting. It doesn’t bother us, it just makes you wonder what the hell the others are doing.

Anyways, I agree with you in every respect, especially the healthcare system. We tout it as one of our greatest successes as a nation, and it’s substandard at best. I have a 28 yr-old buddy who effectively lost 2 yrs of his life because of a mis-diagnosis on a sport-related injury all because he wouldn’t be given priority for an MRI. He finally went to Buffalo and walked into a clinic and the real problem (sport hernia) was discovered in minutes. My friend was in SEVERE discomfort for 2 yrs because of the substandard healthcare in Canada. It’s ridiculous. Is this what we pay for?

Anyways, sorry for going off topic.

As for the $1,500/mo rent or buy question. Don’t forget to figure into your calculation that you could potentially lose $100K+ in net equity in NO TIME if you buy. That can’t happen if you rent.

#142 No Fool.... on 08.25.08 at 7:00 pm

Agreed, on all accounts.

Heck, I still find it amusing that CREB.COM still hasn’t lowered their median house price below $400,000.00
It’s stuck there as if it were covered in crazy glue despite the fact that the last 6 days have seen MEDIAN house prices below $400k (source: findcalgary.com).

#143 Too Bad, Again on 08.25.08 at 7:06 pm

#129

Do not BUY, period. For at least a year.

I agree with #135 post who says that you could find something cheaper, but if you can’t then don’t sweat it.

We are headed for a big correction in real estate prices and I would hate to think you jumped in at the last minute. Then got hammered!

Prices will start to take a tumble in the fall … you can count on it … Garth listed a rollercoaster ride recently … we are just at the top of the largest increase of pricing/ roller coaster about to drop off.

If you are in a city where there were VERY large gains like Calgary, Alberta, Edmonton, Vancouver etc … you are in for a very fast drop …

Consider the Fall selling/buying season is about to start and those anxious sellers are going to list their place hoping to sell it quickly (read softer pricing) as the number of new home buyers will be diminished after Oct 15th.

So, we will have an increase in properties … and a decrease in buyers … hmmmm …. sounds like a real estate sale.

Then comes spring … when the rest of us who have been waiting to buy something … but have seen the market get away from us and start to return to us … could be enticed to buy but we know even more homes will be on the market … pushing the price lower still.

IMHO, if you save 15 to 20% and you put down 10-20% you will be in great shape.

If you have to save for another year or 2, then do it and pay off all of your debts.

This is what I have done and I am sitting on the side lines until prices drop 15 to 20%.

In addition, to all of the people that made disparaging comments regarding my first post you simply add validation to it.

I currently rent and bearish about the real estate market.

I have been made fun of by realtors, mortgage brokers, investment reps, investment brokers … “Oh, sure a correction” …. ho, ho, ho, ho they would laugh.

I simply smiled and said “You wait, it is coming.”

Do I or did I care? No way.

These “professionals” (and not all professionals previously categorized) are brainwashed product pushers paid very well to lie, cheat and “keep the party going”.

They are below me and I will not allow their thinking to affect my beliefs.

Much like their comments … I don’t care what you think and write.

I still believe we can behave generously, and thoughtful way in making comments of other’s “reversal of fortune”.

Let us make this a forum of collaborative “Bear Knowledge” instead of a blog of bitter and aggressive treatment of fellow posters and unsuspecting lambs who have been devoured by their lust.

#144 3rdman on 08.25.08 at 7:07 pm

#130 Indicator

I thought it was FDR supplying the British then the Soviets during WWII that helped finally pull the US out of deep depression.

More on topic the global housing is in an un [war]related boom-to-bust cycle, we’re dragging a little behind here in Canada – that’s all.

#145 smwhite on 08.25.08 at 7:37 pm

what to do

#135 Igre is spot on and just to add to their comments, if your renting your not paying property tax, home owners insurance as well as maintenance(if the stove, fridge, water heater or furnace goes its the cost of the condo corp or landlord although condo fees cover some maintenance).

You also have to factor in transportation to and from work.

Best thing for “what to do” to do is to get out the calculator and start hammering out the costs of different scenarios. Factoring in rising interest rates 5 years down the highway, would a rate hike of 2% – 3% do you in?

If your willing to buy a condo you shouldn’t have a problem renting a condo, which should cost you less then the house your renting and put more money in your pocket, if you get a rental for $1200, you’ve just doubled your savings, $600 a year ($300 potential + $300 current) is $7200 a year, or in 2 years of savings, enough for a 5% down payment on a 280K unit.

I think with the squall on the horizon, your answer is obvious, (I’ll eat a little crow for this) read para 3 & 4 of #108 EverythingZen’s post. Be happy that your in the position to have this dilemma and your not faced with disappearing equity or a down payment that has vanished with a minor downturn…

Take solace in the fact your lucky enough to have a choice. Home ownership is a privilege, not a right and those that have either worked hard, or saved or were in the right position at the right time. I’m sure many that wanted a home at the top of the bubble in 90 – 91 and decided to wait a couple years and save, and bought in 94 – 97 have huge grins today even with the prospect of a switch in the RE market.

Or move to Maritimes, its great out there! And cheap!

To many people said “WTF” I’ll worry about “it” tomorrow(it being a downturn or being upside-down) if “it” happens, well tomorrow is arriving and some people will be faced with tough decisions.

First time buyers that follow the old fashioned path of saving just like their grand parents and parents will be rewarded with their patience, in time. Don’t give in to the weight your putting on your own shoulders.

#146 y3maxx on 08.25.08 at 8:18 pm

lol…this board is full of “renters”, patting each other on their backs…..all of’em predicting a housing crash of biblical proportions.

…I can’t speak for the rest of Canada…but here in Vancouver…we have two years of established prices at near 90% of peak prices.

Read my earlier posts for reference…Vancouver is the only gateway city to Asia in all of North America.

…Just call Vancouver the San Francisco of Canada…it

#147 cmp on 08.25.08 at 9:20 pm

Bottom line: I dont want to be paying someone else’s mortgage in Calgary that has less education than I do and makes less money per year than I do. That equation doesnt work and I am willing to fight to the death to defend that belief.
———————————————————-

Calgary rip off, very well said.I am exactly in same position as you.I make almost 100K in Red Deer and infact afford these shoe boxes.But I am not willing to pay such outrageous price.

I promise all bears that I will fight to the end……..

#148 dave on 08.25.08 at 9:24 pm

A question…

If you’re a bear who fully expects a 15-50% drop…what would have to happen over the next year for you to decide you had been wrong?

If things flatline for a year, then there are two months of gains?

If there is a 5% drop, then a 5% gain?

I’m just playing devil’s advocate here.

But since most posters make fun of the RE industry who won’t admit they are/were wrong, I think it is always good to assess one’s own position to ensure that oneself is not equally myopic.

Don’t get me wrong – I think there is a downturn coming. I’m just not sure it is going to be 15-50%. (Frankly, I’d be happy to see a 5% decrease in Toronto, with 15% in the downtown condo’s)

#149 Keith in Calgary on 08.25.08 at 10:20 pm

#129 What to do…..

Well……if you buy you will surely lose money as property continues to decline. And you will be on the hook for the debt.

Your savings will only grow. Now some may say inflation will eat at them along with taxes…..but renters with money in the bank don’t have to worry about losing $50-100K in one year…….do we ? Heh.

y3maxx….

Yeah so what, people fly thru YVR, it is a gateway city for airines from Asia. But looks like they are not staying and scooping up all those “fabulous” deals that are out there.

Toronto is also a gateway city to the world for Canada……..wouldn’t want to live there either. And they have the same RE problem as Calgary…….

#150 Zebedee on 08.25.08 at 10:20 pm

Dave:

The global financial system has been bankrupted. This is not and never will be a matter of IF, but is a matter of WHEN. The bizarro world of financial invention over the past decade means that more money will come out of the global economy than most people probably believe exists. Economists have started using the word `quadrillion`. We have no financial models that can give anyone an indication of how this unravels, because the world has not seen a bubble or a mess like this before. We know that Japan lost 80% of its property values in a short span of time with much stronger fundamentals than the planet has right now. Personally, I think when we see 50% losses we will be about half-way through the process and probably two-thirds the way through the losses in price.

#151 sarcasm on 08.25.08 at 10:42 pm

Real Estate Agent/Mayor article:
Is’nt (Bronco Dave) Calgary’s Mayor a Real Estate developer/ builder?

To all the renters on here who are waiting for the market to come down. I hope you all don’t out bid each pushing it back up.

#152 Bailing in B.C. on 08.25.08 at 11:27 pm

y3maxx #144 & #133

Your posts don’t even make sense.

“we have two years of established prices at near 90% of peak prices.”

“Last year’s most recent 10% increase in Vancouver is down…currently < 3 – 5% from that peak.”

Yes…Prices are starting to fall. A drop of 15-50% starts with a drop of 3-5%. That’s the way it works.

Vancouver is the gateway to Asia…
Calgary has high paying jobs…
Boomers are retiring to Vancouver Island…
Saskatoon is still affordable compared to London, Paris and New York…

It dosn’t matter it’s all going down.

Some of the people on this board are renters and the rest wish they were.

I’ve just sold my rental properties and couldn’t be happier, debt free and ready to ride out the storm.

Next on the list is my principle residence. Then I’ll be sitting on a big pile of cash waiting for you (or your bank) to sell your over leveraged properties to me for 35-50 cents on the dollar. Vancouver won’t get away with a 15% drop, as prices ballooned to studid proportions and the only industry is RE.

But perhaps I should keep my mouth shut. The world needs more greater fools.

Looking for a house to buy? I got a nice one going cheap. Prices can’t go down cuz it’s in the gateway to Asia

#153 Bailing in B.C. on 08.25.08 at 11:34 pm

Sorry

Above should read

“50-65 cents on the dollar”

it’s a bust, not the apocalyse.

#154 smwhite on 08.25.08 at 11:43 pm

y3maxx,

Vancouver is the only gateway city to North America from Asia? And your saying the run up in real estate in the city is justified because of this? Thats your justification for the out of control erosion of affordability?

http://www.asiapacificgateway.net/pdf/map_poster.pdf

Well actually Los Angeles is a bigger port then Vancouver not to mention with the addition of Long Beach port there is no comparison. There are about 4 times the amount of containers (TEUs) that go through Los Angeles as there is Vancouver and double the amount through Long Beach.

http://www.nationmaster.com/encyclopedia/Port-of-Vancouver
http://www.nationmaster.com/encyclopedia/Port-of-Long-Beach
http://www.nationmaster.com/encyclopedia/Port-of-Los-Angeles

http://en.wikipedia.org/wiki/World%27s_busiest_port_region
http://en.wikipedia.org/wiki/World%27s_busiest_container_port

I concur with your view on Vancouver being equivalent to San Fran, as they are in for a “Rice-a-Roni” style real estate correction(I remember the days of high tech glory when San Francisco RE was unstoppable).

Your talking up the last two years of “gains” without factoring in the artificial flavouring adding by means of the 40 year mortgage, not to mention the evaporation of equity in the stock market the last two years, the “wealth effect” is disappearing, and so are the RE buyers.

As for your take on renters, pat pat, your assuming everyone that rents wants to feel that “pride” of ownership(or debt) but can’t because we’re paupers?

Maybe some of us like math and found some strange things in the numbers; or some like to hold on to our money, in the advent of a rainy day(thats a metaphor for what lies ahead).

Forth quarter is coming up and with it the end of the fiscal business year, wonder why the Conservatives want to get that election over with before those results(and the end of the 40 year mortgage) come out or the US election is over. Time will tell. (And I am a conservative so I’m not playing partisan politics)

Pat pat…

Dave, your last para, I think your being a little conservative with 5% and 15%, that maybe a national average, I’ll go out and say over the next five years, I would think you can expect at least a drop of 10% for SFH and 30% for condos in the larger more bubbly centres, based on the intro of the 40 year mortgage, I see things going back to around 2006 levels, but like your crystal ball, mine is cloudy too. I think we’ll all know more by as I state, end of the 4th quarter.

S

#155 David on 08.25.08 at 11:45 pm

Y3Maxx who are you kidding, maybe YOURSELF?
ExPat, the US non system of non delivery of health care services has already collapsed, but cool that you are happy with it. At 16 % of USA GDP and outcomes ranking below former Communist Albania that is one winning system. Nothing like coming in 37th place.
Tough place to excel in Canada huh? You sound like Conrad Black who is currently doing time with gang members in a US Federal prison. Black just loved telling us Canucks how intellectually flaccid and stupefied we all were.
Y3Maxx, as for a housing crash of Biblical proportions you would be correct.

#156 brazer on 08.25.08 at 11:52 pm

#144

lol…this board is full of “renters”, patting each other on their backs…..all of’em predicting a housing crash of biblical proportions.

bible not needed…a “mere” 5-10% will sadly wipe out many people who, with no equity, borrowed more than they could afford.

watch and see.

#157 Another Albertan on 08.26.08 at 1:08 am

A couple of things…

First, another unconfirmed anecdote from Edmonton: One house+condo developer was apparently turned down by the bank for $147M worth of funding. I won’t divulge the company directly but will say that they develop properties in Calgary, Edmonton, Canmore, Colorado Springs, and San Antonio and one of the subordinate brandings has a name affiliation with a primary colour. Further investigation and due diligence is left up to the reader.

@146 –

Anyone mulling over purchase options in the next 24 months should probably build a spreadsheet, detailing various aspects of their own cash flow and tracking various real estate listing and pricing details.

Contrary to popular belief, while it may not be possible to call an absolute market bottom, it is possible to quantify possible trigger points. It all depends on an individual’s specific situation – financial and otherwise. There is the potential for a ton of inputs – qualitative and quantitative, macroscopic and microscopic.

You also have to remember that 50 is 333% of 15. That is a massive variance from one extreme to another. All models need to be tempered with some degree of “feel” and need to be tested for realism.

Admittedly, most will not likely use much more modeling than a few basic Excel tabs for simplifying arithmetic and the online payment calculators.

#158 WetCoaster on 08.26.08 at 1:11 am

Dave says…
Don’t get me wrong – I think there is a downturn coming. I’m just not sure it is going to be 15-50%.

Actually, Dave, nobody asked you how it’s going to turn out. This will unwind, just like it’s supposed to.

And believe me, 50% discount will be a relief. It will knock out the previous 5 years’ 100% appreciation…

Better get some sanity back. Maybe some families and regular people can buy a home without specuvestors slicing off their piece of flesh.

#159 WetCoaster on 08.26.08 at 1:23 am

Dave says…
I’m just playing devil’s advocate here.

No. You’re not. It’s called being a mixer. Or some say, a 5hit-stirrer. And your ‘play’ appears to be wearing thin.

August RE stats are going to be shocking. And then, nobody will care about Dave’s attempts at histrionics.

#160 holgs on 08.26.08 at 1:51 am

#144 y3maxx:

“Read my earlier posts for reference…Vancouver is the only gateway city to Asia in all of North America.

…Just call Vancouver the San Francisco of Canada…”

Ha ha… you and Bill #105 are HILARIOUS! It’s quite amuzing watching you guys trying to support your thesis of permanently high housing prices by drawing comparisons to US cities that have already crashed… Either you guys have sarcasm that our sarcasm detectors aren’t detecting, or you need to brush up on your reading of the intarwebs.

Foreclosures smack home prices – down 29.3% – San Francisco

“(08-19) 14:28 PDT SAN FRANCISCO — Cut-rate foreclosed homes being unloaded by banks wreaked havoc on the Bay Area’s median price in July, sending it down nearly 30 percent to a level not seen in more than four years….”

#161 holgs on 08.26.08 at 2:00 am

It’s also amuzing watching me misspell amusing.

Also, from the same article linked above:

“According to MDA DataQuick, the median price for both new and resale homes and condos in the Bay Area stood at a 53-month low of $470,000, compared with $665,000 a year ago, a slide of 29.3 percent. For resale homes, the median was $485,000, a 34.3 percent drop from last July’s $738,500.”

Comparing the West Coast of Canada to the Bay Area / Florida is sooo 2006… Shouldn’t they be comparing their real estate to ours, now that OUR real estate is so much more valuable than theirs?

“Prices in San Francisco will level off and start increasing again… look at Vancouver! They have an HIV infection level comparable to Botswana, but their prices are DOUBLE ours!”

– Anonymous SF Realtor(R), 2008

#162 squidly77 on 08.26.08 at 2:37 am

make up your own mind

#163 squidly77 on 08.26.08 at 2:40 am

always back to the long term median
one is much like the other

#164 squidly77 on 08.26.08 at 3:00 am

seven days in a row at $400,000 even and counting

#165 TorontoBull on 08.26.08 at 9:31 am

http://www.reportonbusiness.com/servlet/story/RTGAM.20080826.wushomeprices0826/BNStory/Business/home

#166 brazer on 08.26.08 at 11:13 am

BMO misses profit target
http://www.reportonbusiness.com/servlet/story/RTGAM.20080826.wbmo0826/BNStory/Business/home

In a note to clients, Dundee Capital Markets analyst John Aiken said the results are disappointing, and reduced his rating on the bank to “sell” from “neutral.”

“The increase in BMO’s U.S. real estate-related provisions will obviously raise concerns regarding the numbers anticipated to be reported by [Royal Bank of Canada] and [Toronto-Dominion Bank] on Thursday,” he added. “There are obviously regional differences in the banks’ various exposures. However, we believe that speculation may cause deterioration in the value of [Royal and TD]’s shares.”

#167 brazer on 08.26.08 at 11:16 am

Commercial real estate investment slides
http://www.reportonbusiness.com/servlet/story/RTGAM.20080826.wrealestatecbre0826/BNStory/Business/home

“Investor uncertainty, scarcity of debt financing and fewer properties for sale pushed Canadian commercial real estate investment sharply lower in the first half of the year, a report released Tuesday by CB Richard Ellis showed.

Investment in the sector, which includes office, retail and industrial properties, fell 24 per cent to $10-billion from $13.1-billion in record-setting 2007. The slowdown is expected to continue, with total investment for the year forecast at around $20-billion, a 40 per cent decline from the year before, and lower than in the previous two years.”

#168 Toronto1 on 08.26.08 at 11:17 am

Some of the RE agents talk about renting like its the plague. Just sold my condo downtown and could’nt be happier to start renting for the next 1-2 years. Brought in 01 so I did well, feel bad for the fools buying now. My predication is that condo in the downtown Toronto area will fall by at least 15% from Aug/08-Aug 09.
Its been mentioned on here before DEMOGRAPHICS. Most of the residents in my condo are in their late 20’s early 30’s a lot are starting families and moving to the burbs. Problem is that there is no one left to buy there condo’s at 275K for a 1bdr plus den, the out of school crowd are living at home in their parents basements or roomates( I know quite a few of them) as even with 30K down their mortgage and maintenance and taxes are too much
ie. 250K mort @5% over 40 years = $1429
Maintenance fees = $300 approx
Taxes $195 Approx
Total of $1924 for a 800sq condo
Assume they make 50kish, that leaves take home of $3000 after taxes, $1000 will not cover car insurance/cell phone/food/TTC tickets/Entertainment etc..
The conseneus that I get from friends and family is that they will rent with roomates or live at home as long as they can.

#169 brazer on 08.26.08 at 11:20 am

U.S. home prices hit record low
http://www.thestar.com/Business/article/485566

“The monthly indices also clocked in record declines. The 20-city index fell by 15.9 per cent in June compared with a year ago, the largest drop since its inception in 2000. The 10-city index plunged 17 per cent, its biggest decline in its 21-year history.”

#170 Calgary_rip_off on 08.26.08 at 11:22 am

#138: Zebedee:

Interesting post about the lender side of things. I believe the insider information may be incorrect. Logically speaking, while banks could try to recall loans before allowing refinancing, if the majority of their clients would go into foreclosure by not having the capital to pay that loan outright, how would this benefit banks directly if the majority of their clients were to go into foreclosure?

Also, while many on this blog are predicting enormous drops in prices in Calgary, the other side of things could be suggested that if current sellers decide to hold out and not sell and there is no inmigration into Calgary, how will prices go down much? The surplus could diminish and the demand could be at the same level, and not much would change. Oil has not crashed, so the oil rich people have nothing at risk, so other than refinancing, and a here and there lowered equity dilemma, how will the housing realistically drop more than 5-10%? I really dont see that occurring, as much as it needs to occur so that people can afford a home.

If anyone has solid statistics supporting an outright crash in Calgary, please list them, I would like to see the median house price in Calgary at $150,000, but the chance of that happening is close to winning the lottery.

#171 MikeB on 08.26.08 at 11:45 am

I guess from Toronto Bulls post he feels that the market is turning around just based upon ONE economic indicator.
The biggest looming issue out there is the FINAL numbers of what will be written down from sub prime and credit junk. We are hovering at 400 Billion but the heavy weights think that is but a mere 1/3 or 1/4 of what it should end up being. How anyone can feel the world will simply shrug off a 2 Trillion dollar global write down without some significant economic upheaval is beyond me.

#172 Silver lining? on 08.26.08 at 11:52 am

http://www.youtube.com/watch?v=9md6jbjJouM&feature=related

A six part series by CIBC’ head economist. Its pretty current and shows Canada simply did not head into bubble territory. Please, if you comment, watch it all first. I just sold my house, and believe prices coming down. Just playing DA here to get some others opinion on our economy after watching the whole thing. Its about 30-40 mins in six parts.

#173 Jamie on 08.26.08 at 11:59 am

When can one expect the rental market to start reflecting lower housing prices? There are still plenty of $2000/month and up rental rates in Calgary. Not exactly an incentive for someone like me to cash in my housing profit and rent for a couple years.

#174 Silver lining? on 08.26.08 at 11:59 am

Squid… as to your graph of median prices shooting to the moon, I can not get the saying out of my head

“Past performance is no indicator of future performance”.

Dont you think it is dangerous to say this is what happened THEN, so this is what will happen NOW. Just like, if you say for years (like you have been) “people who say its different here” or different “this time” are WRONG and IT WILL CRASH.

Well, people who say it is different here, if they say it long enough, will eventually be proven right.

#175 crazy on 08.26.08 at 12:21 pm

As everyone keeps saying “home ownership is a priviledge” why should prices come down 50%? So everyone joe blow can afford a home? Everyone isn’t suppose to be able to afford a home, only those with good paying jobs, or those good at saving. My husband and I make $80,000 a year, and I work at a small print shop making $11.50 an hour (ya I know I’m one of those rare under $12.00/hour people in Calgary) and husband is only a 2nd year plumber. We could afford to buy a home under $350,000 and still save money each month. Right now we are still renting, but we do plan on buying, but we’re not sure when.

I can see prices dropping but by half thats a lil crazy and I feel very unrealistic. If peoples homes dropped that much in value no one would sell.

We can all predict, sit here and through out our ideas but when it comes down to it no ones really knows 100% whats gonna happen.

#176 Jen on 08.26.08 at 12:24 pm

Calgary_rip_off You said it “so that people can afford a home”. Who else will be buying the overpriced junk? Horses?

#177 squidly77 on 08.26.08 at 12:36 pm

<a =”_blank” href=”http://calgaryrealestatemarketblog.files.wordpress.com/2008/08/the-long-view.png“>use your brain

#178 jim on 08.26.08 at 1:06 pm

#168 Calgary rip off

Liked your post (somewhat) questioning a crash in Calgary. Although my colleagues and i do have some statistics supporting another few percent decline in Calgary, we certainly have more statistical research supporting price increases over the next 5 to 10 years in Calgary.

#179 Dave in Calgary on 08.26.08 at 1:12 pm

169 Calgary Rip Off

“Also, while many on this blog are predicting enormous drops in prices in Calgary, the other side of things could be suggested that if current sellers decide to hold out and not sell and there is no inmigration into Calgary, how will prices go down much? ”

* Perhaps flippers and upgraders cannot carry two mortgages

* Flippers and upgraders will no longer purchase starts, specs

* Bust in construction industry will cause many to move out of Calgary, or not be able to pay their mortgage, and not be able to sell without losing money.

* Bust in construction industry will ease labour shortage. Salaries decrease. People can’t afford their $2400 mortgage payments anymore.

* Baby boomers who plan to sell to retire, may not want to hold off until they are dead to sell, and will sell at a lower price than they predicted, accepting the loss.

No one has hard stats to prove a crash in Calgary, but these are some things that I have been thinking about as possible reasons why the prices in Calgary will correct more than the 10% that they already have.

That being said, I am certainly no expert, as many on this blog think they are.

#180 jrochest on 08.26.08 at 1:26 pm

What a million bucks gets you — Marpole, Vancouver, Canada vz Brittany, France.

http://www.yattermatters.com/real-estate/vancouver-real-estate-french-style/

From Larry Yatowski’s “Yatter Matters” blog — yep, he’s a realtor, but the man’s also sane. :)

#181 Jim_s on 08.26.08 at 1:43 pm

#176 Then share them.

#168 As previously noted, the number of speculators in the Calgary market is significant. I have 4 investors that are close to me and between them they own a total of 7 homes, excluding primary residence.

Of course, this is not the norm. But the fact that inventory is so high is an indication that speculation was/is widespread, and a definite bubble formed.

I can’t comment on Toronto…. but AB RE is in trouble.

->

#182 Keith in Calgary on 08.26.08 at 1:46 pm

Regarding rentals in Alberta, Boardwalk Properties, the largest landlrod in our province which has 11,000 units out there says average rents for 2007-2008 DROPPED $85 a month………

Hmmmmm…….

#183 TorontoBull on 08.26.08 at 2:00 pm

@MikeB
on the contrary, the market is tanking big time. Take a look at the year-over-year % declines and increaae in inventory at record levels

#184 Rjag on 08.26.08 at 2:00 pm

Here in Victoria we are seeing decent homes sitting for more than 30-60-90 days. One example is in North Oak Bay by Uvic, house was appraised at $890k, listed at $875k sat there for more than 3 months, dropped several times to $769k and just sold for $710k. Nice house, great area, just no buyers, everyones sitting on their hands.

This is the culling of the herd.

Bear Mountain has lots of foreclosures which doesnt surprise me being that the target market was Albertans and Americans.

Looks like most of the current listings are more than 30 days, it appears theres not as many “new” listings any more.

Anyone have any stats on the volume of new listings as opposed to current and relisted? It would be interesting to see if most of whats out there is just rehashed.

#185 brazer on 08.26.08 at 2:20 pm

#170 Silver lining?

wait for cibc to report their q numbers this week and then make a decision as to that bank’s credibility vis a vis market conditions.

#186 Another Albertan on 08.26.08 at 2:23 pm

Another anecdote from Edmonton from a friend:

“Multiple choice question – The sales technique used to sell the tower in Railtown is a) sales, b) rent-to-own, c) life lease, d) all of the above. The correct answer is d. The only thing not yet modified is the acceptance of children in the building.”

And another:

“Another Railtown tower was lined up for pre-selling. Now some are giving up their deposits. In addition, the pre-built, pre-painted exterior was manufactured off-site. The panels do not fit at the seams so there is an issue with the north-west wind whistling in, not to mention the rain. The builder has apparently borrowed an additional $9M to re-stucco the building and to re-paint it. Do you think there is any profit left or was the potential for lawsuit too humongous? As for the roof, which is flat: There was a “let’s go back to the City” seventh storey that was added as a result of an upfront bullish interpretation of initial pre-sales. The roof now apparently has no drain pipes, as they were missed.”

These projects are being developed by well-established, well-known Edmonton-based developers. Specifics for those in the provincial capital can be had through minimal investigation and due diligence. The names and addresses will be obvious.

#187 Calgary_rip_off on 08.26.08 at 2:33 pm

Jen:

Brilliant question. Yes, people buy houses. I didnt see any dogs buying houses. Do you personally know any dogs buying houses? Or apes?

Until I work at the zoo and find our animal friends purchasing overpriced shacks, let me know how that goes. Then again, our cuddly and not so cuddly animal friends could probably be easily financed with the 0 down and 40 year mortgage plan. They might even survive to pay it off!!

Jim:

Thanks for the response, which statistics are more accurate, the prices going up, or the statistics reflecting prices on single family homes decreasing?

#188 jrochest on 08.26.08 at 2:56 pm

“Although my colleagues and i do have some statistics supporting another few percent decline in Calgary, we certainly have more statistical research supporting price increases over the next 5 to 10 years in Calgary.”

In January 2007, the NAR had statistics supporting price increases in the USA, too.

There are lies, and then there are damned lies….

#189 Boone Pickens jr. on 08.26.08 at 3:01 pm

#170

THANK YOU, thank you so much for that economist link!

What an eye-opener!!!!!!!! I’ve gotta watch it again before i comment…

#190 smwhite on 08.26.08 at 3:22 pm

#173 crazy

Its a “privilege” to own a home, not a “right”, your getting the two mixed up.

Its a “privilege” for the bank to loan me money to buy a home provided I meet the monetary requirements.

Its my “right” to say no to the bank if I don’t like their terms and walk away.

Take a look around you, and not Calgary, look on a global scale. USA, England and Australia (Whom is probably the one country that is the most similar country economically to Canada) are in the midst of housing woes.

For all you people that feel that all this “negativity” towards the market is unjustified, please explain to me then, if things are just fine, why have some lenders ended or are ending the 40 year mortgage product before the cut-off of the 15th of Oct? They’re being pro-active? They want to make the pool of available buyers smaller? That makes no sense. What does make sense is they don’t want customers that will put their balance sheets at risk. The banks are even beginning to admit the mistakes that have been made…

http://www.thestar.com/Business/article/457983

The online banking pioneer — owned by Dutch-based financial services giant ING Groep NV — is immediately scrapping its 40-year amortization product as a matter of principle, its top executive said today.

“We are going to make that change immediately,” president and CEO Peter Aceto said in an interview. “It is really not in the best interests of Canadians.”

For its part, ING Direct says the new rules will have minimal impact on its consumer lending business. Only about 10 per cent of its mortgage customers currently use 40-year amortizations. Existing mortgages or applications that are already in the pipeline will be “grandfathered,” Aceto said.

ING Direct had previously decided not to offer 100 per cent loan-to-value mortgages, even though Canada Mortgage and Housing Corp. insured such products.

“We made that decision on our own,” Aceto said. “We don’t really think that it is a smart fiscal decision for Canadians to make.”

Honesty from a bank, how relieving!

I’m not expert, but I’m also no fool, then again, too many of you have been listening to “experts” in RE and taking “investment” advice from them.

For forty years housing was the best form of forced savings gaining 3% a year and keeping pace with inflation and salaries, and in the last ten it has become the road to King Midas’s gold. What your grandfather and father have been telling you all along wasn’t a lie, just a few too many people missed the point of their message.

Enjoy the next 5 years as the RE piggy bleeds out the speculation…

#191 Rob on 08.26.08 at 4:03 pm

#170

Thanks for posting that link.
Finally something to really debate instead of the usual industry BS which is all to easy and boring — and to a great degree WAY beside the point of this blog.

Keep in mind this talk was held just before the 0/40 legislation went through and he alludes to that, but doesn’t speak to the impact. In his view, probably just aiding the light slowdown he sees.

Personally, I think he’s too rosey on both US and Cdn housing prices and that Ontario is in a recession right now, so a correction to pre 0/40 rates [2005] will continue here and there is always the possibility of a snowball.

Even at it’s most optimistic, he seems to assume that the Cdn buying public [which is now split on whether the US troubles will come or miss us] will listen to or see the long-term optimism – more than a few people invested for short or mid term gains. What happens when the market exceeds their tolerance for pain and they dump? What happens when the bad side of the 0/40 [kids and those with poor credit] leave the market underwater or not able to enter? That is enough in most of the ‘enthusiastic’ market to start wheezing, no matter how you look at it.

Is there criticism of the Unit Sales as Share of New Listings charts [he used in part 5] delineating the Sellers/Balanced/Buyers market levels?
i.e. can it be skewed? is it being skewed by the bulls?

#192 McSteve on 08.26.08 at 4:06 pm

I’m currently a renter and I have spent this last two years trying to time my entry into the market all the while putting my money in the bank and eliminating all my debts. I have been fortunate that I have been able to rent some fantastic homes for very little given that my mother, a RE agent, has had the inside track on a number of properties.

My wife and I make $125K and have saved a substantial amount of money (20% of a down payment for a typical house in our part of the world) and have the goal of becoming homeowners as soon as it makes sense. Aside from the price, we’ve been extremely disappointed in the selection of properties on the market – nothing I’d want to commit $300-$350K ($1500 – $2000 a month for 25 years).

It would seem that the run up of house prices in the last two years has been largely based on cheap money (<6% interest rates) and 40 year amortizations. Given some pretty dire economic forecasts and a tightening in the credit market because of the hundreds of billions lost in bad debts, I am still more than a little nervous about laying out my money. It would seem that there is more upside than downside to the market and $300,000 -$350,000 for a cookie cutter home 60-70km from Toronto seems pretty dear to me. Given gas has been hovering around $1.20 – $1.45 per litre this summer, I would imagine that many will be reconsidering their commuting distances – not withstanding horrific traffic congestion in the GTA.

There also has to be a certain amount of “relativity” in real estate. Even if the Canadian housing market is sounder, how can anyone argue that real estate in Fort McMurray is worth more than some of the most coveted real estate in the world in suburban California? From a speculation standpoint, would you keep buying silver in Canada when you can get platinum for less money in the US?

I certainly don’t have the answers and I don’t like the “unsettledness” of renting, but it just seems too volatile right now. I’m also hearing anecdotal evidience from friends in various trades having their hours drastically reduced – in one case to 3 days a week for a hard working heavy equipment operator who had more overtime that he could manage last year.

Given the above, we are going to continue to rent our lovely modernized log cabin with acreage for about half of what it would cost me to own a townhouse on a 25 foot lot.

If I’m wrong, I’ll just buy next year with the benefit of having a year more savings in the bank and hopefully more interesting properties on the market.

#193 Dave on 08.26.08 at 4:07 pm

#170 Silver Lining…

Thanks for the link. Very interesting presentation.

It seemed like he was surprisingly light on details and facts on the Canada housing market. For the US market he provided facts and a graph demonstrating it was 25% overpriced relative to income, but for Canada he simply said it was priced appropriately and didn’t provide any details/facts.

As such, I consider what he DIDN’T talk about to be as revealing as what he did talk about.

He talked about the importance of the China market, but then didn’t address whether they themselves might enter a relative downturn.

My guess? I’d say he shared some of his secrets, but not all of them. It was a presentation for a particular audience (a college class?), and I’m guessing he knows more than what was included in his presentation.

#194 Calgary_rip_off on 08.26.08 at 4:33 pm

Just saw this listing: C3344398 in Calgary,
its perfect for the person or persons migrating to Calgary from other provinces for work purposes. It gives a suitable crash pad while you bank your money. This property is a realtor’s dream. Its centrally located and affordable to the common working class. Check it out!!!

#195 jim on 08.26.08 at 4:42 pm

Actually, a great foundation for determining the direction of regional real estate markets in North American is the CIBC World Markets research link that was posted in #170. You have to read between the lines a little bit, but not that much.

I’ve tried to share some of my research with you guys in previous posts. But, I quickly concluded that I’d rather share it with people who are at least somewhat open-minded to data that show prices will stabilize and start rising again in Calgary.

#196 jim on 08.26.08 at 5:26 pm

Thanks jrochest #178 for that link,

I’m still laughing how out-of-whack ‘delusion city’ is! Last time i checked i didn’t see any oil wells around that city.

#197 No Fool.... on 08.26.08 at 5:26 pm

#192, CGY RipOff, that place is Awesome and all, but I’d rather just rent out a room in that French Castle instead. Call me insane.

#198 if you don't like it on 08.26.08 at 5:43 pm

if you don’t like it where you are move.

I’m sure there’s some wonderfully priced homes in Newfoundland

#199 smwhite on 08.26.08 at 5:50 pm

#170 Silver Lining, first off anyone that commends Ben Bernake is an idiot, plain and simple(I’m referring to Tal not you).

In Canada its momentum, in the US its a bubble, very enlightening. We are different!

Also to know that I should stop paying attention to the good and bad news\state of the economy, guess I should get the brochures from CIBC delivered directly to my home to know whats going on. Yeah, they’re the winners of the truth telling contest.

Isn’t CIBC is the most heavily leveraged Canadian bank to the USA housing market? Didn’t they also have the “better then prime” mortgage?

http://www.cibc.com/ca/mortgages/better-thn-prime-mortg.html

You put lipstick on a pig its still a pig… But prettier.

We have pretty sub-prime!

He uses Edmonton and its 50% growth as an example and how it has to come back in line a “tad”. Well if you’ve taken out a mortgage that’s 95% of the value of your home and your home has dropped 10% as per the Alberta market, where do you stand?

I’m a CIBC customer and I was offered in 2004 5 times my salary to buy a home, when historic norms are that your home should be between 3 and 3.5.

We’re at 4.5 on average in Canada (70K income based on 330K average home), not bad, but what is the number out west?

My point is this, if you use a product like the “better then (sub)prime”:

Home Value = 500K
Mortgage = 95% or 475K
YOY decline of 10% = 450K

Will Benji T write you out a check for the 25K difference if your forced to sell? Ask him to throw in a few extra bucks to cover closing costs.

How hard is it for some of you to understand this is a matter of affordability, not needing more cash injected in the system, if nobody can afford to buy your property, how do you sell it?

If CIBC is predicting higher oil prices its only because they are predicting the printing presses to go into over time; this will only drive the prices of basic human necessities to the brink. Tal is applauding Bernake for creating inflation to hopefully help keep the home prices artificially high.

Its bullshit economics, going around and around in a circle and it is just going to make the “real” recession we should have had in 2001 – 2002 worse, but then again, that’s what politicians do, delay the inevitable and hand the flaming bag to the next guy.

Setting the stage for a Mitt Romney win in 2012, because the old republican nobody likes and the guy that has the different colored skin and the middle name of the Bush royalty’s arch nemesis are being set up to fail, miserably.

#200 POL-CAN on 08.26.08 at 5:51 pm

In addition to post # 170 here is a link to an excellent economic primer presentation. It is US centric but since Canada has been aping the US for years, parallels can be drawn as the monetary system is of the same type…. Eye opening to say the least…..

http://www.chrismartenson.com/crashcourse

** I do not remember where I found this link…. Thus I have to say sorry for not giving proper credit…..

#201 Jim_s on 08.26.08 at 5:52 pm

#193…. Ha ha ha…..

“I own a car that gets above average mileage and have the data, but I’ll only disclose the data to those people whom I consider to be most worthy. Meanwhile, I’ll keep posting unsupported claims about cars.”

->

#202 Silver lining? on 08.26.08 at 5:55 pm

Jim # 176 Share your wisdom, please.

#203 Dawn in Calgary on 08.26.08 at 5:56 pm

#178
“What a million bucks gets you — Marpole, Vancouver, Canada vz Brittany, France.

http://www.yattermatters.com/real-estate/vancouver-real-estate-french-style/

I have no words. Wait. Actually I do. Is everyone in Vancouver blind and stupid? I cannot believe that there are morons out there that would pay that kind of price for that house, which is similar to our first place for which we paid $74,000.

#204 smwhite on 08.26.08 at 6:00 pm

Funny how Garth gets lambasted for using USA RE data to prove his points yet Tal gets applauded from the herd…

#193 jim

The reason your going to keep that “data” to yourself is because Santa and the Easter bunny worked on that Penske file for you didn’t they?

You can’t produce what isn’t there…

#205 Keith in Calgary on 08.26.08 at 6:03 pm

Jim……

We’re open minded alright, your data will go in one ear and out the other.

If your data made sense the market wouldn’t be tanking now, would it ?

#206 Rob on 08.26.08 at 6:04 pm

#191 Dave re: #170

As a moderate bear, I find your criticisms all bang on but at the same time, this is probably the best representation of the bull line of thinking in the post ABCP/sub prime in Canada I’ve heard [and it’s relatively fresh] and wouldn’t dismiss it that quickly — it should be pulled apart or what else is the dialogue here about, just pumping up the doctrinaire or tinfoiled among us with platitudes [not that you are doing that, but some here are and often]? If it continues down that path, the blog jumps the shark and becomes no better than the bullish, self-interested RE blogs out there.

We also know to take the media reports with a large amount of salt, positive or negative. The fact that much of the news is negative these last several weeks say something, but it’s not irrevocable or necessarily reflecting the reality just because it meshes with the bearish sentiment most of us have.

DING

#207 brown lining? on 08.26.08 at 6:19 pm

..cause its gonna rain shit

Prices in Alberta, and probably Canada, will come back at least to the median price before 40 year and zero down came in in 2006. These instruments came in because prices detached from what people could afford to pay. Probably wont go below that in Alberta, but other places possibly. China and India are so ass backwards in so many ways, and do not have enough fresh water to sustain their population and growth. They will collapse again under their own weight. So, the big “oil is going up and will run out because of increased demand in CHindia” argument is moot. That leaves North America the best place to live/own anything. Dubai might also be good if you can afford it.

oh hey Jim , I have some information that can cure cancer, but, I’ll just keep it to myself.

#208 brazer on 08.26.08 at 7:22 pm

U.S. bank profits plunge 86%
http://www.thestar.com/Business/article/485794

“The FDIC said 117 banks and thrifts were considered to be in trouble in the second quarter, up from 90 in the prior quarter and the biggest tally since mid-2003.”

#209 brazer on 08.26.08 at 7:26 pm

Economy, inflation weaker than expected
http://www.thestar.com/Business/article/485739

“The Bank of Canada is suggesting that second-quarter growth will now be even weaker than the tepid 0.8 per cent projection it made last month, when it lowered its forecast for the year and warned inflation was headed higher.”

#210 lgre on 08.26.08 at 7:29 pm

I also watched Mr Tal’s video, his presentation shows everything is rising but our wages..so I’m not sure how people are going to afford LIVING. Too Bad he didnt talk about that. All textbook IMO.

It’s easy to talk about a problem that has already appeared, I’ll take it with a grain of salt..reality is here.

#211 brazer on 08.26.08 at 7:32 pm

http://www.nytimes.com/interactive/2008/06/24/business/20080624_HOUSING_GRAPHIC.html

click on the links for miami, LA, and vegas…they are particularly interesting.

#212 mike on 08.26.08 at 7:46 pm

#170 CIBC saying the BOC made a rookie mistake fooling the market that int rates would drop but didn’t . Am I not mustaken but isn’t CIBC the ones with the biggest write downs and biggest exposure to sub prime. How rookif is that. Not sure where Ben Tal is going but I do agree with him that sub prime is far from over…. Say 1.5 trillion to go.

Toronto Bull are you of the mindset that T.O. is just softening and not actually going down? Your name seems to suggest that. If so can you explain why you feel that way?

#213 Schmoey on 08.26.08 at 8:14 pm

Calgary_rip_off,
This is your chance to get in the RE market. The property is advertised as LIVABLE, what else can a reasonable person want? Amortise it over 40 years and you are all set for life. It will cost you only half a million over the life of the loan. It is a bargain at $558 per sq. foot, not like those overpriced Miami condos at $200/sq.f, for example. Nice neigbourhood, too. Pride of ownership throughout.

#214 pbrasseur on 08.26.08 at 8:37 pm

Regarding #170

I just don’t get it, how can home prices be higher in Canada than the US, our productivity and disposable income lower, our debt level just as high but our RE market healthier?

Tal also explains that bubbles are about bad credit (ie: no bubble here because no subprime). That’s just untrue bubbles are about buying on the irrationnal belief that the value of something will rise indefinitely, don’t we have that here?

#215 jim on 08.26.08 at 10:11 pm

pbrasseur #212,

Part of your answer is Canada’s the US’s largest global supplier of energy. Furthermore, our productivity/disposable incomes are alot higher than the average in US and we have no debt (sorry, i was thinking about AB, not sure about all the other provinces)

#216 smwhite on 08.26.08 at 10:53 pm

212# pbrasseur,

para 1 that’s a great question and one I know that any RE pumper can’t answer…

Benji T went on record and scolded David Dodge for his comments about CMHC being irresponsible with the intro of the 40 year mortgage.

I guess you have to ask yourself who do you trust more, Dodge or Tal the shill? Tal thinks Dodge was being a little “alarmist” and worrying about nothing as to Canada’s new mortgage “innovation”.

http://www.lowratemortgages.ca/article.php?a=53

http://www.theglobeandmail.com/servlet/story/LAC.20070926.RDODGE26/TPStory/Business

http://www.theglobeandmail.com/servlet/story/LAC.20060715.RCMHC15/TPStory/Business

http://www.theglobeandmail.com/servlet/story/LAC.20061030.RCMHC30/TPStory/?query=cmhc

Puzzle is falling into place isn’t it kids?

#217 My_view on 08.26.08 at 11:22 pm

#170 Silver lining

Thanks for the link, came across this link and found it entertaining. Those dam bankers………….

http://www.youtube.com/watch?v=_36o9TZovGY&feature=related

#218 squidly77 on 08.26.08 at 11:43 pm

US oil imports
Canada also imports oil
imports
we produce about one third of what Russia produces
and about one third of what the US produces
we supply about 10% of the US daily consumption
oil producers
some time in the future Canada aspires to belong to OPEC
OPEC members
we are not a major player in the world of oil
we are adding approx 100,000 bbl yearly to our daily production

#219 squidly77 on 08.27.08 at 12:01 am

Canadas non-conventional oil or tarsand oil is dirty oil
i am not being sarcastic when i say that..it is literally dirty oil..it contains many impurities that are very expensive to extract
sulpher bock
it is also brutal on the environment
environment dont get me wrong i am not against the tarpits
with improving technologies they will become cleaner
but it is a very expensive source of oil

#220 squidly77 on 08.27.08 at 12:04 am

“I read with interest and dismay your press release of June 28 which indicated that CMHC would offer mortgage insurance for interest-only loans and for amortizations of up to 35 years,” the two-page letter says.
good post smwhite

#221 rant in Calgary on 08.27.08 at 12:35 am

Pertaining to # 170 and 214

pbrassuer, Nice sleuthing of the spin.

Economics is a soft science, allowing the economist to tell the boss what they want to hear.

Around the time of Benny Tals talk the Bank of Canada had concerns.

June 12, 2008 (Reuters on B.N.N)

The Bank of Canada also warned that the recent growth in Canada of subprime mortgages and mortgages with no down payment or longer amortizations has left a segment of the population more vulnerable to a worsening economy.
Still, subprime mortgages account for less than 5 percent of all housing mortgages, compared with 14 percent in the United States and is considered to be of better quality.
“A sharp housing market correction, similar to that in the United States, is unlikely in Canada,” the bank said. Policymakers at the bank are closely monitoring the mortgage market but have not yet seen any indication that banks have been hurt by the collapse of the market for some of the more opaque, structured products that have been in trouble during the credit crisis.
“The financial market turmoil — with its associated weakening effect on securitization activity and market-based finance — has not yet had a noticeable adverse impact on the overall growth of credit in Canada,” it said.
The rise in household debt has outpaced that of income and the proportion of debt owed by “vulnerable households” rose to 6.5 percent in 2007 from 6.2 percent in 2006.
———————————————————-

#222 squidly77 on 08.27.08 at 12:49 am

the credit markets are seizing once again

#223 anonymous on 08.27.08 at 1:08 am

crazy,

Prices can shoot up 50%, but they can’t go down. Explain your logic.

You are forbidden from buying for at least one year in Calgary. You need that hard and fast rule because you aren’t smart enough to figure out what’s going on in the housing market. Don’t take offense, Calgary has that effect on people.

You are welcome.

#224 TorontoBull on 08.27.08 at 9:20 am

@mike
please read what I say. My sign-in name has nothing to do with bull or bear markets for that matter. Perhaps you’ve heard that the bull is Spain’s national symbol?
As of toronto market I think that the scale of the upcoming collapse will depend on a) rise in unemployment b) to what extent will immigration decline compared to previous years.

#225 No Fool.... on 08.27.08 at 12:49 pm

Crazy #173,
As everyone keeps saying “home ownership is a priviledge” why should prices come down 50%? So everyone joe blow can afford a home?
___________________

Crazy, the issue is that 1/2 the people that have a home can’t really afford it. That’s the issue, my friend.
Those people that are already stuck holding in sheer fear aren’t the people that will drive the price up or down. It’s the people left out of the market who are now waking up to what’s affordable or not. As loan conditions tighten (and they have to), as sellers get desperate as they slip into financial ruin in the gutter (and they are), the prices start to come down.

Market forces, my friend. It’s just market forces.

#226 Bookmarks about Rip on 10.03.08 at 6:45 pm

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#227 Rupa on 06.17.09 at 8:58 am

Canadian bank stocks will collapse..there are pundits on every street who can predict 20-30 pct up and down move. Based on my 20 years of technical analysis experience, I can see this is the time to sell all Canadian bank stocks. It might go little up in short term but eventually all bank stocks will crash to single digit.. e.g RY from 40 USD to 9 USD. Also do NOT buy GOLD and Canadian Dollar and OIL as well. They all are set to go down in long run..
(Even if you don’t like to publish this, note down the date to verify my accuracy)