SOL in the GTA

So, let’s get this party started…

As you know, I have been liberated form the surly bonds of politics. Freed from the shackles of political correctness. Unfettered to speak my mind without regard to the snipings of the ankle-biters. Free at last, Lord…

A few words about Toronto, now. The housing market in this urban sprawl is the largest in Canada and the local economy the country’s most diversified. Therefore, the common wisdom a few months ago was that my prediction of a 15% decline in the average value of houses was worthless – the alarmist bleatings of a guy trying to sell books to scared people.

But, my view was based on several assumptions, namely (1) The US mess would intensify as 2008 progressed, with inevitable consequences for every centre in Canada, TO included, (2) real estate in Toronto was over-valued relative to the average family income, exceeding the ratio touched just before the last collapse 16 years ago, (3) sales in the sprawl areas of Durham, York, Peel and Halton would tank with the end of 0/40 mortgages and the energy scare, (4) Toronto prices would suffer notably due to the insane extra land transfer tax imposed by the dumb-ass mayor, (5) the local condo scene was massively and insanely overbuilt with 56,000 units in the pipeline and (6) consumers and homeowners in even godless Toronto can get spooked like the rest of us, stop buying and create their own funky little recession.

So, of course, it happened. Even a little sooner than I had anticipated.

In the first half of this month, sales plunged by 18% over year-ago levels, and the average price plunked by 11% across the GTA. Worse, Toronto City real estate has collapsed by the 15% I had forecast months ago. And there is more to come. Lots more.

Meanwhile carnage continues to seep northward from the urban masses. Sales in the swishy Muskoka cottage area have collapsed by 43% this year, killed off by a combination of bad weather, soaring gas prices and – especially – financial carnage and collapsing confidence down in the city. Most affected are high-end properties, owned by the same smart people who bought their Porsches with LOC money.

All of this was predictable, and inevitable. Also not over.

But throughout the decline, it’s been repulsive how real estate vested interests tried to talk the market up, or at least send false signals to potential buyers.

For example, how about this gem from Toronto Real Estate Board president Maureen O’Neill issued just 15 days ago: “Although the market is not as robust as it was a year ago, homeowners are continuing to see strong returns on their investment.” Well, not so much, since a house bought 1 year ago is today worth 15% less. When closing costs and commission are factored in, the loss tops 20% – not that far off the dive in stocks. Making it worse: capital losses on residential real estate are not deductible from capital gains.

Another O’Neill nugget from earlier this month, “Given that these are trying times for the world economy, in context the Greater Toronto Area resale housing market continues to fare quite well.” Compared to what? A bungalow in Reykjavik?

A worse deceiver seems to be anyone associated with CMHC.

This from the federal agency’s regional economist for Ontario, Ted Tsiakopoulos, in an article published yesterday: “The consensus view is that housing markets have turned and that we can expect a slower pace of price appreciation across Ontario. What we’re seeing is employment growth slowing and the pent-up demand for housing finally being absorbed. A natural market response in 2008 and 2009 is a balanced market where you see prices growing at or near the rate of inflation.”

Earth to Ted: Abort, dude. It’s over.

Of course, there is no “slower pace of price appreciation” and no “prices growing at or near the rate of inflation.” Values have declined absolutely, and will continue to fall. Anyone who bought in the past year has lost money. Those who purchased with little or no equity owe more than they own. This is an investment disaster, and the story has barely started to be told.

The mess in the United States is profound beyond belief. Canadians had best understand this, and cast aside false prophets.

Toronto values have declined only by half.


#1 dd on 10.18.08 at 12:51 pm

Toronto Real Estate Board president Maureen O’Neill …
salesman through and through.

#2 Chris L on 10.18.08 at 12:56 pm

If you are in the Guelph area, let me know, I’d like to hear you speak. I checked your “book tours” section but I don’t see a list of speaking engagements. Will you be touring?

#3 islander on 10.18.08 at 1:31 pm

In my fantasy, this fiasco would result in our looking at houses (though not land) as depreciating assets requiring maintenance and renovations. We would buy houses for shelter, as we buy cars for transportation. Savings would be invested in productive assets such as factories, R&D, and innovative systems.

However, since Ottawa seems bent on pumping money into CMHC in an effort (I have no doubt) to prop up profligate homeowners and/or reckless lenders, the lesson we’ll learn from this debacle is that saving is for suckers and debt is virtuous.

Long term, our savings will continue to be misdirected into non-productive assets such as housing. Our factories will close. Our jobs will continue to be relocated overseas. And we will become poorer as a nation.

So much pain for absolutely no gain.

#4 garthfan on 10.18.08 at 1:37 pm

right on garth! if not for you i wouldn’t have a clue. FIRST!!!!!!!

#5 Brittanny on 10.18.08 at 1:41 pm

Garth, can you tell me how and where the information came from regarding “Canada’s banks are the healthiest in the world?”

A survey of Canadian bank clients – small sample, meaningless. No balance sheet analysis was done. — Garth

#6 My_view on 10.18.08 at 3:00 pm

Right on Garth, screw politics for awhile. We all be back at the polls within a couple of years. I smell deficit and bye, bye minority conservative.

I’ve live in the high park area of the T. and man is there open houses signs everywhere….

#7 Keith in Calgary on 10.18.08 at 3:07 pm

People involved in the REIC food chain are all unadulterated manipulating liars. Pretty much every single last one of them.

Here in Alberta the CMHC “talking head” is a guy called Lai Sing Louie. Local blogs out here have taken to calling him “Liar Sing Louie”…….

His most famous prediction was that in 2007 the single family Calgary average price would increase to $550K by year end…… ended in December at $444K.

It is an interesting number indeed, because it accurately predicts the RE market’s future, when taking in the context of Louie’s ethnic background. The number 4 means death in Asian numerology…..and having 444 together is the worst combination you could get.

Funny dat.

#8 Joren on 10.18.08 at 3:11 pm

Toronto Real Estate Board president Maureen O’Neill …
this is the same person that in her election campaign stated that the existing system for dealing with multiple offers provided transparency. I called BS then and still do, as there was (and not that it matter much these days… still isn’t) a “system” that is used 100% across the board by everyone involved to prevent so-called “phantom” offers.

#9 Waiting for a Deal on 10.18.08 at 3:37 pm

Hey Garth,

Do you mean that housing in Toronto/GTA will decline by another 15% possibly?

You’re last statement was a little confusing.


#10 Phil on 10.18.08 at 3:37 pm


A 30% reduction for the GTA is a sure thing. I’m looking at 40 to 50 percent. There is economic hell on the horizon for Ontario. Ford Oakville, Chrysler Brampton, and both of the big steel mills in Hamilton are all on death watch.

#11 Charles on 10.18.08 at 3:46 pm

The following article was posted in today’s
The Automatic Earth

This article illustrates very clearly the seriousness of the financial crisis the world now finds itself in.

The following paragraphs are from this article which was posted on the Reuters News web site on Oct. 17, 2008. The article is titled “Banks borrow record $437.5 billion per day from Fed”.

“NEW YORK (Reuters) – Financial institutions ran to their lender of last resort for record amounts of cash in the latest week, under extreme pressure from the worst global financial crisis in a generation, Federal Reserve data showed on Thursday.

Banks and dealers’ overall direct borrowings from the Fed averaged a record $437.53 billion per day in the week ended October 15, topping the previous week’s $420.16 billion per day.”

$437.5 BILLION PER DAY. That is a staggering amount of money.

The following is the link to the article:

Banks borrow record $437.5 billion per day from Fed

There is no telling where the bottom of the housing market and important commodities like oil may be. You could be right Garth, the price of oil may indeed hit $50.00 a barrel.

#12 greaterfooled on 10.18.08 at 4:12 pm

“prices growing at or near the rate of inflation.”

you think he means prices growing at or near the rate of deflation.”

from where i sit, a 15% drop is a decline in prices, not appreciation. ….. real estate goobly gook-talk lol

#13 Nicholas P on 10.18.08 at 4:21 pm

Hi Garth;

“…liberated form the surly bonds of politics.”

It’s good to see you are taking the “nightmare” of the loss in the political arena to be the blessing it truely is.

I’ve spent the last 8+ months anticipating your next blog daily, never once being left disappointed. However, only once (Halifax, N.S.) have I read about what you forsee for any of the Maritime/Atlantic provinces.

Saint John N.B. is currently in a housing frenzy due to the buzz created by the “energy hub” label. NB Power, Enbridge Gas, and reports of a second Irving Oil Refinery (in partnership with oil giant BP) has people thinking that we are exempt to what industry giants like Jim Rogers see as a “Financial Holocaust”. “It can’t happen here” is the most common phrase heard from all levels, public and private. As if Saint John is the only untouchable place on the planet.

Our family home, a large 3 unit Victorian brick house, bought for 47k during the early 70’s was sold for only 93k 30 years later, grosely undervalued. While over the last 5 years since the sale prices for similar homes have at least doubled, in some cases tripled. Madness!

How do you see the drop in energy prices effecting new and expansive refinery projects? What effect will any cancellation or postponement have on real estate in this area? How will the subprime mess in the US, and the global financial crisis be felt here?

You have many fans here in Saint John and the Maritimes. I am sure they would appreciate your insight.

#14 Jeff Riverdale on 10.18.08 at 4:42 pm

Here is an email I got from a local developer.

They want to pay for new owners’ mortgage payments, strata fees & property taxes for 2 years. Sounds very desperate to me. Almost like California, Florida & Nevada. Also, by reducing the price this way they don’t have to report a price decline in the homes. Just another way for the RE weasels to pretend things are good.
Dear Buyer,


Earn up to a 15% annual return on your Investment!

Mortgage payment – covered!
Strata fees – covered!
Property tax – covered!

Centrally located on Elmbridge Way and Alderbridge Way in Richmond, FLO keeps you at the heart of city living. Nearby, you’ll find a plethora of restaurants, schools, shopping malls and the upcoming RAV line station. The luxurious FLO high rise boasts sublime interiors encased in a sleek glass and concrete exterior. Revel in the comfort of heated tile floors, the beauty of natural hardwood, and the splendor of the distant horizon framed by your vast, floor to ceiling windows. For the gourmet in you, enjoy a premium stainless steel kitchen appliance package complete with gas range, granite countertops and plenty of cabinet space.

These well appointed floorplans range in size from 665 condominiums to 1,455 SqFt townhomes! Visit us at the FLO sales centre at #101 – 7362 Elmbridge Way in Richmond, or call us for more details at 604.276.8832. We look forward to seeing you!


Christopher Lau, Vermont Lee-Kerfoot, Christine Kann
The FLO Sales Team
Presentation Centre:
#101 – 7362 Elmbridge Way, Richmond
Open Daily 12 – 6pm, Except Fridays

[email protected]

About this email: Our records indicate that you would like to receive updates from The Onni Group.
If you would no longer like to receive these updates, please use this link.

#15 squidly77 on 10.18.08 at 5:16 pm

Alberta politicians are ripe for the pickings
Stelmach is
we need a fresh look..a realist
not to green not to much oil
i know its a step down..but it could be a step up

#16 Alan Yeung on 10.18.08 at 5:48 pm

Garth, you mention homeowners who put only a small percentage down being underwater. Do you know what the law is in Canada regarding walkaways (aka. “jingle mail”)? I’ve been trying to find out whether the law in Canada is the same as in the US, where first mortgages are non-recourse, so there is no penalty for underwater homeowners who walk away, but I haven’t found a good answer. Apparently the law in the UK is that first mortgages are recourse loans. I’d figure you would know what the situation was in Canada. It may change the dynamics of the collapse quite a bit.

In Canada you are responsible for your entire debt. If you borrow a mortgage amount larger than your equity, and walk, then you are liable for the full amount, plus court costs and quite possibly an early repayment penalty. The only way out is bankruptcy – and if you think getting credit now is hard, just try that. — Garth

#17 lgre on 10.18.08 at 7:07 pm

jeff #14 – I agree fully, they will do anything BUT reduce cars, mortgage payments and so on..hopefully some of the fools out there can see this.

#18 Dawn in Calgary on 10.18.08 at 7:47 pm

So much for Kelowna — Tell that Bert Chapman fella to put this in his pipe and smoke it. What a tool.

Kelowna condo project hit by financing crisis
Calgary companies stop building after losing bank funds
Geoffrey Scotton, Calgary Herald
Published: Saturday, October 18, 2008

Two Calgary real estate firms are at the centre of a half-completed $30-million Kelowna condo project that became a victim of the spreading credit crunch, after construction activity was halted Wednesday when bank financing dried up.

The 21-storey Lucaya condominium project on the edge of downtown Kelowna was shut down after construction crews were told the builder didn’t have the money to complete the project, which was launched earlier this year.

I have lost respect for all realtors — and I tell everyone I meet that they are no better than used car salesmen.

#19 Sam on 10.18.08 at 8:59 pm


I am going to celebrate this decline with an expensive wine tonite!

#20 Mike B on 10.18.08 at 9:09 pm

I sold a house I owned for 17 years last year in yonge sheppard area. We have been in hover mode for over a year and found the TO market has changed ALOT. We continue to rent . Interestingly enough the small strip mall at the corner with a Metro grocer and national sports was slated for demolition/closing in Jan BUT now has been postponed by Tridel for at least a year as the condos were “delayed”. I am told a Shane Baghai small condo dev. just around the corner is also on hold.
There are many many homes that are either sitting around or being quietly delisted. January will be a very bad month for the stock market and RE market.

#21 Jelly on 10.18.08 at 9:48 pm

Nicholas P,

I am hoping to retire in the Maritimes, possibly
St. John. I love the huge Victorian houses there.
I was thinking about buying there a few months ago
and then renting it out but was hoping for prices to come down in the future so I did not.
I would be very interested in hearing any info about
this area regarding future outlooks/real estate.
Anyone have any ideas?
You would think the Maritimes would be more influenced by all the trouble in the States as it is
said they are more effected by economical challenges than Western Canada.
Garth, what are your thoughts?
How about Hawaii, how low can it go in real estate?

#22 Mini-Garth on 10.18.08 at 9:57 pm

Garth wrote:

“As you know, I have been liberated form the surly bonds of politics. Freed from the shackles of political correctness. Unfettered to speak my mind without regard to the snipings of the ankle-biters. Free at last, Lord…”

So prior to your election defeat what we read was the “restrained” Garth….

Sweat Jesus…

I’m still reeling over Garth’s loss. But not surprised by it. Garth is a true individualist who stands above ideology and the politics of the short term.

That he lost to some technocrat is a sad commentary on the way the system works.

Garth, care to elaborate on your thesis that the US housing market could rebound as people become scared (like they did after 9-11) and put there money in tangible assets like property?

I think there might be some great deals to be had in the hardest hit bubble areas in Florida and SoCal.

#23 Jon B on 10.18.08 at 10:07 pm

I like the new Garth; raw and unplugged.

#24 Keith in Calgary on 10.18.08 at 10:48 pm

Actually used car salesmen are better…….because they have never had to say the following to make a sale……..

“If you don’t buy today, you could be priced out of the used car market forever”

“Used cars only go up in value you know”

“Used cars are the best investment out there”

“You’re nobody if you don’t have a used car”

Ad nauseum……

#25 nonplused on 10.18.08 at 11:05 pm

hey that’s not very nice to used car salesmen! people need cars and a used car never ruined anyone! at least not “completely for life” type ruined anyone.

#26 Kelowna Gal on 10.18.08 at 11:28 pm

Thanks Dawn in Calgary #18 I love the way you think lol. I read this article in our local paper yesterday and knew that this is probably one of many projects that will not be completed.

By the way for those out there who still think that nothing is happening re: housing market here in Kelowna. I had a friend come over yesterday afternoon, and he had been just laid off from his construction job. He was working on a huge condo down by Prospera Place. He was completely shocked to say the least. He had NO NOTICE at all. The housing collapse has hit and hit really fast.

Garth I cannot wait to see what else you dig up now that you’ve been “freed” from government. This Kelowna Gal is still watching and waiting.

#27 eddy on 10.19.08 at 12:01 am

i agree, and also predict a more than 30% drop in TO. we have to pay for garbage pick up now. property tax is just a luxury tax, used to finance Mayor David Miller’s socialist shitopia. one canadian newspaper quoted a banker saying that canadian real estate was not going to follow the US crash because he had not see any significant amount of speculation in the canadian market. here in Toronto , speculation is rampant

#28 ed_pet on 10.19.08 at 12:47 am

now that darkness comes early, one can drive around vancouver and see how many lights are on in newly developed high-rises…
i did this once after an argument, early this year, and even i, had my jaw drop…( for i am among those saying that prices here are out of wack with incomes and in general what i call reality)…

#29 Shawb Allen on 10.19.08 at 1:13 am

Think people have stopped spending on credit yet?

Visa’s report for the quarter ended June 30 states on page 1

“Payment volume grew by 19% over the prior year to $652 billion”

Is that hilareous or what?


Payment volume up 19% for Visa world-wide and we were already deep into this mess. An awful lot of people have not slowed down the buying binge yet. Surely the growth has slowed some by now but wow, 19% growth in the Spring quarter!

#30 dd on 10.19.08 at 2:06 am

3 islander,

Yes savings /investments should be put into productive assets such as factories, R&D, and innovative systems.

There a lot of countries out there that have wasted their energies on building up the housing sector. And what can they show for it? Did we not learn from Japan?

#31 Living in interesting times on 10.19.08 at 3:54 am

Further to Charles posting teh following link titled ” The Money Masters sheds soem light on the crises we are facing. If what is illistrated in thsi documentary we are in big trouble

#32 BMW-Driver on 10.19.08 at 12:02 pm

With the fast emerging possibility of a GM-Chrysler merger, i think a armaggedon scenario in Ontario is developing where half the dealerships are closed and most if not all auto suppliers/manufacturers/servicers dry up. Anybody have the percentage of jobs related to to the auto sector in Ontario?. I think it’s about 20% with most of them in Windsor, Cambridge, Oakville, Durham, Brampton and the GTA. I know the GTA has a ton of manufacturing companies that supply all the knick knacks for the plants throughout Ontario and the US. Nobody realizes the huge impact it has on the spinoff jobs in the GTA but they will soon.

#33 kc on 10.19.08 at 12:16 pm

#5 Brittany- I did a bit of digging for you, here is a thread that gives explanations of the off-sheet exposures, and trys to simplify the $$$ and makes easy understanding of the situation.

#34 zloy on 10.19.08 at 12:30 pm

Garth, welcome back from the dirty world of politics! Looking forward for your news books and unrestrained word of wisdom in this blog!

#35 JO on 10.19.08 at 1:24 pm

Hi Garth
Just wanted to say that I hope you re-run and win again. We need more straight-shooters in office. I have to agree with you on the speed of the decline so far. I was expecting these numbers about 6 months from now. This implies that for the next 2-3 years, prices could fall 40-50 in the GTA. To add insult to injury, NDP mayor Miller’s RE tax and exploding water and garbage rates (taxes in their own right with property taxes going up faster than inflation too) only serve to make things even more ominous. Why do politicians raise taxes at the onset of recessions? Anyway, TO real estate is and will continue to be an unmitigated disaster. Instead of cutting the bloated government and inflated salaries (the report he commission a couple of years ago to look at city finances pointed out many senior managers in city get merit plus inflation raises of 6-7 % total – most get this.), he decides to pull the classic NDP and spend. This will all end badly. Another disaster for the RE market is the CMHC/Genworth/AIG mortgage “insurance” programs. It is (was) under these programs, madated by law under NHA, that helped (and actually enouraged) most of the weak borrowers to get into mortgages they cannot afford. Condo fees are taken at 50 % for underwriting policy..average fee in TO is about 450..tell me what will happen if you pay only 50% of your fee? Anyway, these programs are a total disaster which eventually hurt the prudent and innocent homeowners, depositors, and future borrowers. Has anyone thought about why they offer deposit insurance in the first place??? The whole financial system is a debt based, ponzi scheme. What the monetarist and Keynesian economists forgot to tell us is what happens to the economy and markets when the inevitable day comes where the amount of new debt created is dwarfed by the amount of debt being destroyed via paydown or default. The answer: Look at the DOW chart of 29-37, or Nikkei 89-08. These clowns forget psychology. People as a whole are now risk averse, and living more frugally as well as avoiding debt. These bailouts will fail. The turnaround will come when enough debt has been destroyed, with resulting asset prices (housing especially) down at levels affordable for the average J6P.

#36 Suzukimum on 10.19.08 at 3:29 pm

“On the Way Up”, that was the report of the RE market in Ottawa (Saturday, 18 Oct. Ottawa Citizen). A breakdown of the price increases by neighbourhood showed the increases ranged between 8.6% to 38.5% in 2007-2008. Can can anyone explain what is going on in Ottawa RE market? Is Ottawa immune to the effects of the global financial crisis? Or, we have a larger number of greater fools in this city?

#37 dd on 10.19.08 at 5:09 pm

#123 anonymous on 10.17.08 at 11:04 pm ,

Thanks for the oil update. Peak oil … well I know a lot of people beleive in it, especially with the price tanking. However, there are a lot of great deals in the oil patch today. Prices for all companies are down to 2003 prices! I love it!

I did a little reseach over the weekend and the established Oil Sands companies breakeven point for oil is around $50 a barrel. If the CDN buck decreases it will help out in exchange gains. Support of new projects would be in the $100 + (Fort Hills – Petro Canada).

Jean – Francois Tardiff of Sprott had some great observations on the subject on Friday.

#38 cmh on 10.19.08 at 5:34 pm

I seldom do this kind of stuff, but this post has prompted me to send you another quote

Our Lives Begin to End The Day We Become Silent About Things That Matter ____ Rev. Martin Luther King

Keep up the great work!

#39 Inventory on 10.19.08 at 6:44 pm


Real Estate Board of Greater Vancouver
Unit sales SFH+TH+APT
JAN 1857 / 1863 +0%
FEB 2905 / 2733 -5%
MAR 3053 / 3682 -17%
APR 3308 / 3481 -4%
MAY 3065 / 4409 -30%
JUN 2478 / 4336 -42%
JUL 3955 / 2215 -43%
AUG 3493 / 1611 -53%
SEP 2852 / 1620 -43%
OCT 3093 / 797** Oct 18**
NOV 2416 /
DEC 1957 /

Here in Vancouver sales numbers has been crashing since May this year.

#40 dd on 10.19.08 at 7:01 pm

Great read in the Calgary Herald about the Energy Sector …

Deborah Yedlin Calgary Herald October 18 2008 “The Sky isn’t falling but fuel prices are”

#41 islander on 10.19.08 at 7:02 pm

@ Keith and non-plussed: I have the police on the line right now if you’d like to make a report on which realtor put a gun to your head and forced you or anybody you know to buy real estate….No?…..Didn’t think so

Take responsibility for your own actions.

#42 hal on 10.19.08 at 7:40 pm

I live in Kelowna and I know someone who listed their house a few months ago at the realtor’s recommended price and they never got a single offer. When the realtor came back to take down her sign she was quite upset because houses are not selling and she knows some realtors who have quit the business because they are not making any money. Another friend had his house listed for 1.3 million ( yeah, no shit, 1.3 in Kelowna!) and it didn’t sell either so they reduced it to 1.2 and are awaiting offers. His wife is a realtor by the way…….prices have been reduced in my townhouse complex by 10% with “vendor motivated” on the sign and units that would have been snapped up in a week are languishing for months. I see lots of for sale signs in Kelowna these days with “new price” on the sign.Anyone who says there is no problem here is a bare faced liar.

#43 hal on 10.19.08 at 7:54 pm

I also need to add the the “robust” and “diversified ” economy of Kelowna is a load of crap. It is fueled by building new houses and by us buying and selling them to each other for higher and higher prices and now that the construction jobs and are disappearing the once robust and diversified economy is going into the crapper because most of the jobs here are retail or hospitality related and even that has been diminished this year by lower tourism caused by high gas prices and a high Canadian dollar. It’s only gonna get worse…….

#44 prairiegopher on 10.19.08 at 8:51 pm

I just heard on the news that overall realestate sales in Canada were down over 10%. The number of listings also declined followed by the number of people looking. We are still at the very beginning of this mess. 40 yr mortgages are toast.
A friend’s mother had her house for sale all summer and it didn’t sell. The house was in probably the best location possible. Even after dropping 50k off the initial price it was a no sale. Are there still any doubters about Garth’s theory? If you are still believing that prices are going up reply to this post I have property I need to unload!
By the way Garth, keep it coming, I look forward to each day just to read your updates.

#45 Jasonn on 10.19.08 at 9:53 pm

“Think people have stopped spending on credit yet?
Visa’s report for the quarter ended June 30 states on page 1
“Payment volume grew by 19% over the prior year to $652 billion”
Is that hilareous or what?
See ”


ShawB Allen, your statement doesn’t tell the whole picture. They did a story about this very issue on NBC this week. It turns out that many families are so over their heads in debt, they are paying all of their bills using credit cards. It’s unbelievable, they use one card which has a payment due date in the middle of the month to pay the interest on the other card which has a payment due date at the end of the month. So in other words, they are exclusively using credit cards to pay their regular bills and to pay their credit card minimum payments while sinking further and further in debt. Apparently this is very common and a reason why credit card debt just continues to rise

#46 Keith in Calgary on 10.19.08 at 10:20 pm

Islander said….

“Take responsibility for your own actions.”

Only if there is no realtor involved.

#47 greaterfooled on 10.19.08 at 10:33 pm

on average, Canadians have the most number of credit cards. hmm. i wonder what this implies? debt trap??

#48 Charles on 10.19.08 at 11:06 pm

The link at the end of my post will take you to the 23rd Actuarial Report on the Canada Pension Plan. It gives the state of the Canada Pension Plan on Dec. 31, 2006. This report was tabled before Parliament on Oct. 29, 2007.

On page 66 of this report, it states the unfunded liability of the Canada Pension Plan on Dec. 31, 2006 was 619.9 Billion $.

23rd Actuarial Report of the Canada Pension Plan

#49 y3maxx on 10.20.08 at 12:20 am

Uncle Y3Maxx’s Canadian Economic Predictions…

…It was me who posted on this site that Ontario would be hit very hard to to it being a manufacturing/financing and overpopulated Province.

I am being proven correct…I deserve the Nobel Peace Prize

It was me, Uncle Y3maxx who promulgated that Canada’s three western Provinces should secede from the rest of Canada…Eastern Canada will want to suck Western Canada dry.

Uncle Y3maxx continues to predict that Vancouver will become the No #1 city of North America…Gateway to the Far East and the financial hub of North America….New York and Toronto are now dying cities.

as to my friendly critics on this site….pooh pooh on you.


#50 Brandon on 10.20.08 at 12:54 am

Does anyone know what the real estate situation will be like in London Ontario?

#51 lgre on 10.20.08 at 1:20 am

Suzukimum – yes ottawa is imune and will beat the meltdown for sure, better get in before the prices escalate even further. I will also be purchasing in Ottawa as well..don’t want to miss this once in a life time opportunity.

#52 Client9 on 10.20.08 at 1:29 am

>>(5) the local condo scene was massively and insanely overbuilt with 56,000 units in the pipeline<<

The most under-reported topic in my opinion. Pundits point to the massive immigration as the source for these buyers but we all know the dirty truth, right Garth?

50%+ are speculators- mostly foreign- who have been obliterated in the equities/oil crash- and they will be walking away from their non-refundy’s quicker than a Sidney Crosby slapshot.

Rent people! It’s the only way.

#53 anonymous on 10.20.08 at 2:08 am


“breakeven point for oil is around $50 a barrel”. Shit. I didn’t think it was that bad. I guess all those good ol’ Alberta boys don’t want to work cheap. Hey, they have some pretty expensive houses and trucks to pay for!

#54 Jeff Smith on 10.20.08 at 3:46 am

Has anyone been following the blog by Patrick on the North American Real Estate scene. Its been quite informative because it has daily updates on what’s happening with the RE and economy in general. See it here:

#55 David on 10.20.08 at 3:53 am

Sounds like Ms O’Neill is pretty much down to votive candles and novenas as far as real estate goes. Strong ROI? Since when did anyone get a strong ROI having an over priced mortgage in a collapsing market? The housing bubble collapse is now euphemistically called a balanced market. Cleaning up the financial carnage from this stupid real estate debt bubble will amount to a lost decade for Canada. The old prairie populist rants about the Bay Street Boys are now again back in vogue. The rants are justified. Casino capitalism with nothing down bets and rampant parasitic speculation for some strange reason became the path to wealth creation.
Selling families homes they could not afford supported by zero equity mortgages worked just fine as long as the Ponzi scheme kept escalating.

#56 MAN BEHIND THE CURTAIN on 10.20.08 at 5:36 am

It still amazes me everyday to read about all the different opinions about this “CREDIT CRISIS” we are in.
I have warned people about this coming for years and
despite my best efforts have been refered to as being
pessimistic, full of it, delusional, and even paranoid. This is not a CRISIS it’s reality. I’m not really sure at
what point our society decided we needed Hummers
instead of Hyundias or Mansions instead of bungalows,
but seeing people dive head first into massive debt for
our grandparents would seem unthinkable, why?, to keep up with the jones’es? How did we go from how much? to how much a month? There is an evil in this
world that preys on people who refuse to think for themselves and in the last hundred or so years this group has been left to run un-checked by both the people and more importantly the government of this
country. With the introduction of radio and then to television it has made the job of this evil force as easy
as taking candy from a baby. If you take the family candy jar from the top shelf in the kitchen and just decide to leave it open on the floor for a while thinking
JR will probably just take a couple ju-jubes and close the lid by himself you are delusional. While you are in the shower JR is busy stuffing those ju-jubes down his
throat with both fists until he can’t get anymore in. Credit is like candy, to someone with no grasp of economics, they will gorge themselves on this “free”
money till they puke. Why, because it’s there and everyone else is doing it. Debt is the greatest enemy of
modern man, and the greatest ally of the people who really understand it. If you control debt, you control people, if you control people you control their country,
if you control countries you can control the world. If this
seems beyond belief, do some research on our modern
banking (swindleing) system and you will be very shocked at what you will find. If you wanted control of
the world it would be very hard to do with armies but if
you were to use the humans desire for the good things
in life and give these things to them now and with the
stroke of a pen let them pay over time, they are under
the assumption the banker is the good guy. The good guy always gets paid first. Debt inslavement is by far
the best stradegy to get what you want from people.
They willingly accept it, if not outright beg for it. The bankers will continue to ruin peoples lives as long as they are precieved to be the good guys. What is going
on today is not a CREDIT CRISIS, it is a transfer of wealth from the middle class to the ruling class. How can people actually believe that upping the credit limit
on canada and the US’s credit card (national debt) will
help? The people holding our debt know this full well,
and they are just tightening the shackles on people a
little more just for fun. You have to ask yourself why
Canada and the U.S. are paying interest on this “MONEY” we borrowed from private bankers when
both these countries have it written in their constitutions that they have the right to coin their own money? This is the result of electing polititions that have sold us out to private interests for years and we
as a people are to busy fighting amongst ourselves to
take the time to figure out what the real problem is.
An economy based on perpetual debt is as unsustainable as it is unethical. You end up with a society of value creators supporting value transferers,
who then push it up the pyramid to the value collectors.
They used to call this slavery and now it’s called life.
People have accepted this because it is pounded into their heads with advertising. I beg the people of Canada to wake up and start to educate themselves about the truth of our worlds banking system and how
it started and were it is taking us. Remember slaves never had the right to vote. Good Luck.

#57 My_View on 10.20.08 at 9:20 am

Keep up with the Jones is one thing, its the HGTV programs or as Garth refers to it HOUSE PORN. I even get caught up in the stainless steel and granite tops. Why cant I have it now? I deserve the best.

#58 dd on 10.20.08 at 9:20 am

#52 Client9,

I hear it is approximately 25% spec condo buyers in Calgary. In 2009 there will be a lot of new condos coming to market.

#59 dd on 10.20.08 at 9:26 am

#53 anonymous,

$50 isn’t bad. Any new projects going on will need $100. I guess that a lot of project might be put on hold until oil firms up and cost come down.

If you are looking at services companies look to the gas market. Alberta really makes its money in this sector. $8.00 Natural Gas is idea, however, there is a lot coming to market in the US. Companies are already shutting in gas because the prices are falling to the $6.00 range. But it could change tomorrow if the winter get real cold realy fast.

#60 POL-CAN on 10.20.08 at 10:25 am

Garth…. Or anyone else who can help…

I am looking for historical average and median prices by month for all sectors of Toronto and the GTA. This info should be freely available on-line, but to my dismay it has not been possible to find.

Since I do not trust the official spin, I would like to do my own number crunching and post my findings here for all to see :)


#61 DJ on 10.20.08 at 11:04 am

My suggestion to MAN BEHIND THE CURTAIN……
Unite with all and promote what controlling gang is all about. Why go against it? When we all get underwater what will they do than? Rewrite but you already lived through the good years of your life with some joy! instead of always reaching for that dangling carrot of good tomorrow that never comes……..
My 2 cents
God Luck to you and your wisdom!
Intelligence & wisdom is also known as the cause for gaiter burden and grief for mankind

#62 Al on 10.20.08 at 11:46 am

#36 Suzukimum,

I live in Ottawa as well and noted that the spring/summer selling season seemed pretty orderly. A decent number of homes went up for sale and they pretty much all sold. Didn’t fit with what I’d been expecting. This fall, however, alot of for sale signs have shown up in my part of the city. The only movement is the addition of ‘new price’ signs.

I think the article you read was the local RE types using past information in an attempt to influence the future. As for what is happening, I think we’re just a little behind. Makes sense for a city full of politicians and beaurocrats, that we’d be slow to get with the program.

#63 Roger on 10.20.08 at 1:14 pm

Ottawa is not immune to the downturn!! Prices peaked in June. Click my name to see the full report.

#64 paula on 10.20.08 at 1:33 pm

You may want to pass this article on to someone you know!!! hint hint!

#65 john on 10.20.08 at 3:57 pm

It appears the markets have stabilized and the worst is infact behind us which is disappointing for hardworking, debt free people like me. I was hoping a correction would finally reward people like me who refuse to abuse debt. What has changed in the last few months for the common household since the apparent financial crisis? One can argue nothing really as their monthly expenses have probably decreased (ie. my weekly gas is $60 versus $85 previously). Oh well maybe I have it all wrong and I should jump on the debt train and live life to the fullest….

#66 Shari Sanderson on 10.20.08 at 4:51 pm

I live in Vegas…number one in foreclosures…and its not as bad as everyone makes it out to be. Everything in life is cyclical…especially real estate. The mindset is when prices are high…its ok to buy…but when prices drop…the sky is falling. I have been selling a lot of bank owned condos to clients mainly in Edmonton and Calgary… and the economy at a glance report for September announced record sales to International buyers.

#67 anonymous on 10.20.08 at 5:07 pm


Thanks. I will. Man, I just caught a 22% move in the DIG. I didn’t take anything off. I think there’s a lot more left in the tank.

What are you in these days? You talked natgas and tarsands. Are you long SU? Energy is going gangbusters.

#68 charliegosurf on 10.20.08 at 5:36 pm

@ behind the curtains, great post, yur so rigth, somedy is gonna want to give yu a pill so yu can forget the reality…

the matrix of this world are understand by a few souls, too bad it’s too late to change anything. man, real freedom is a tough thing to get, impossible ou presque.

time to find a nice beach somewere, were the fat greedy people dont rule. drink some rhum, womens and enjoy our godsun. before the party is over…

#69 dd on 10.20.08 at 7:24 pm

67 anonymous,

I am long Suncor, Encana, and CNRL and other midcap energy stocks. It was great bounce we got today in the energy market. The analysis out on the street for the short term (less than 2 years) is all over the map. Estimates from $50 to $110 oil. I really can’t make heads or tails of it. I am long on energy; however, I am still cash heavy.

I do believe that the world is going into a major recession and that will put more pressure on oil and gas stocks to go down (same supply but less demand) in the short run. The layoffs are just starting … you can hear it in the news daily in Ontario, US, and around the world. I think this will be the worst recession since the 1930’s.

The US government is thinking about capital spending ($150Billion). Other governments are starting to align to the same thoughts. This comforts and worries me. It comforts me because the government is doing something about the gloomy situation. It worries me because I think the government is anticipating that the unemployment situation is going to get a lot worse.

Think about it. The world (not only the US) is watching the real estate bubble burst. This is one the greatest credit / financial crashes in history and it appear that unemployment is still ok (6% in CDN and US as reported by the governments). But I don’t buy it. Credit markets are still frozen. Consumers in US, CDN, UK, and other places are maxed out. Financial collapse is still at hand.

I am waiting for the other shoe to drop. It has to because all the information is weighted towards a gross bloody mess. I would love to push all my money into the market today because of all the deals, however, I think there is plenty of time to come into this market.
The main reason I am cash heavy is because I do believe that we might have a 1930’s like depression. When I know that things will not be as bad as that, I will putting more money into the market.

#70 pjwlk on 10.20.08 at 7:37 pm

John #65: You’re going to hear several times in the next couple of years that “the markets have stabilized and the worst is infact behind us”. Exactly the same was said in the US. Believe me, the market is nowhere close to being stabilized. This is just the beginning.

#71 3rdman on 10.20.08 at 7:57 pm

I wonder if TO mayor David Miller and his merry band will re-zone some stalled projects to rental/low income?

Much needed in the core (apparently.)

#72 Inventory on 10.20.08 at 9:02 pm


In Vancouver, we had a ZERO sales day today.
New Listings: 255
Back to Market Listings: 4
Price Changes: 250
Sold Listings: 0

I’m not sure if this is the first time, but this is the first time I have seen it.

#73 john on 10.20.08 at 10:17 pm

pjwlk #70 – I am still waiting for the big shoe to drop however that seems to be a remote possibility now. The best reward for the more modest, debt responsible people such as myself could have transpired had the US avoided the bailout package. This would have set off a set of unprecedented dominoes falling where the overextended (many of those who potray themselves as living well) would have been immediately exposed through tightening credit conditions, increased layoffs and job losses. This is what should have happened to these people. My dad says, “There was once a time when if a family lived in a nice home and had 2 nice vehicles you could quite confidently conclude they were doing okay…nowadays it’s almost impossible to tell if that’s the case.” At almost every stoplight I look around and see BMW, Lexus and other prestigious vehicles driven by mainly younger people. How did this happen? Well as long as the governments refuse to let the free market work the way it is supposed to and let institutions and business fail, these people will continue to not only survive but prosper. It is very frustrating and I long for the day of reckoning when the more modest once again have our voices back!!!

#74 dd on 10.20.08 at 10:28 pm

#72 Inventory,

In a city of 3m people and no sales … get out. Really?!

#75 OZy on 10.20.08 at 10:34 pm

REAL Thanks to All that predicted this unexpected house market crash in Toronto and GTA, so we did not buy when we were almost ready, we would have lost 90000 on a 600000 home. We will not buy until price goes ouch another 30%, no hurry at all.

Since is going to be much worse that that, don’t let TREB place the Trojan Horse in your HOUSE !!!!

Mid-October stats straight from poisoned horse’s mouth:
City of Toronto – minus 15% price chop
Toronto Suburbs – minus 8% price drop

Changing GTA Resale Housing Market Reflects Economic Times

#76 john on 10.20.08 at 10:56 pm

What exactly has been the fallout? Nothing. As I mentioned most have experienced no change in their cash flow perhaps are experiencing even better cash flow. Weekly gas expense reduced; Rates on lines of credit reduced; stock market losses reversing; Am I wrong??

#77 Suzukimum on 10.20.08 at 11:08 pm

Roger, thanks for the link.

Garth advised me not to buy when I was looking in the spring. I heeded his advice. I know the RE market in Ottawa has slowed down because a RE agent who evaluated my house 2 years ago contacts me every few weeks to find out if I needed their service. I get an update of properties that are up for sale daily. I have noticed prices have come down.

It is frustrating trying to figure out who is telling the truth.

We have decided to wait and may missed the opportunity of a life time. By the way, are you a RE agent?

#78 Adil Burney on 10.21.08 at 12:06 am

Toronto was at -3% YoY in September according to CREA. Looks like October will be a lot worse! Especially when you consider the October 15th deadline….

Adil Burney

#79 Tim Johnson on 10.21.08 at 12:38 am

No Ottawa will be no different. Its lagging the rest of Canada in price drops but it will be following. That was a load of B.S. in the Citizen this weekend. Not sure where that came from but with a global recession coming, no place in Canada will be safe from a decline in prices.
Nortel is in bad shape in Ottawa, so is Alcatel-Lucent. The government has started floating ideas such as freezing hiring in the government. The other thing is that the stock market meltdown has had an effect on people’s portfolios unless you were short financials. This will affect the downpayments that people can put on houses plus it may cause people to have to sell their houses especially retirees because their capital has been reduced to generate income. I forsee the government making cut backs in the feds just like in 1996 which will most likely mean layoffs. The construction market is about to collapse leading to the layoff of alot of construction people. I forsee a 25% drop in Ottawa over the next year to year and a half. It depends on whether there will be layoffs in the federal government.

#80 dd on 10.21.08 at 12:40 am

Looking back at the Oct 2007 predictions of 2008: –

Housing prices forecast to be flat in 2008
‘Crazy’ market coming back to earth, Mario Toneguzzi
Calgary Herald Thursday, October 18, 2007

#81 EssGee on 10.21.08 at 1:15 am

Here’s one for those who say that what happens in the US can never happen in Canada.
It’s happened, and it’s far worse!

#82 Marcus Aurelius on 10.21.08 at 1:57 am

Thanks for the column on Toronto. I was wondering when the GTA – the ‘big show’ for the meltdown in progress – would get some attention from an Ontarian like yourself. Most of the chattering classes live here, and the locus of the House Porn industry emanates from here, so your column was prescient, and long overdue. Good job. (And welcome back from the most hilariously screwed up political party in North America). Best comment in your column was the pithy description of the Mayor of Toronto.

#83 JoJO on 10.21.08 at 2:07 am

However stock market TSX is back from bottom 8,800 and current over 10,200 points,so good gain about 20%.
Interest rate is down to 2.5% and today is very important BoC new interest rate and if it’s economy needs interest will be 1%. Employement is very good,and building permits still high.
Finaly we can see new immigrants much more in near future and goverment still hiring like crazy.
Prices maybe will going 10% down , but very soon from March/09 will increased.
People did you see how much money Europe put in the banks $ 2,600 billions, US 700 bilions and soon again $300 bilions, Canada $ 25 billions etc.
Yes is comming inflation but deflation no chance.
So RE Market will going up in Toronto.
No Crash.

#84 Randy Roussie on 10.21.08 at 7:56 am

Toronto is no different from any other city in North America. Home prices track economic realities. But remember, your home is really not a true investment – it is the place where you live. You can always choose to stay in your home until the next price way begins. Such as it is on

#85 Expat in NC on 10.21.08 at 8:29 am

RE: #66 Shari Sanderson

Living in NC I have to say that the media portrays the US situation as completely dire and nationwide. I think there are pockets that are really bad, but in general (and where I live) real estate seems to be going through a “normal” correction (15-20%).

I still believe that Canada is still to face a further correction. I suspect the GTA has another 15% to go at least.

#86 smwhite on 10.21.08 at 10:02 am

#54 Jeff Smith,

Patrick’s website used to me my regular read until Garth’s came on the scene, he has a list, “It’s Still A Terrible Time To Buy”, and those principals apply to all RE, no matter where in the world you live.

I’ve contacted him a few times for info and he’s always be gracious…

My comical read was “” with Casey Serin, he’s been shamed off the net, or in jail, but it was a great example of the stupidity that easy credit created, owning 8 houses no money down? lol

#87 Blacksheep on 10.21.08 at 10:38 am

Comment on current events.

In the shuffling madness
Of the locomotive breath,
Runs the all-time loser,
Headlong to his death.
He feels the piston scraping —
Steam breaking on his brow —
Thank God, he stole the handle and
The train won’t stop going —
No way to slow down.

J.T.- Locomotive Breath.

#88 JB-ott on 10.21.08 at 10:41 am

3 Roger on 10.20.08 at 1:14 pm

Ottawa is not immune to the downturn!! Prices peaked in June. Click my name to see the full report.

I don’t believe Ottawa is immune, but I do think it is dropping from the peak as quickly as first thought:

The average price of residential properties, including condominiums, sold in September in the Ottawa area was $288,006, an increase of 6.1 per cent over September 2007.

Peak was around 294K…

#89 Fisher on 10.21.08 at 10:51 am

All of this has been a great help people. Keep up the good work. Post links if you got them because I need to wrap my head around all of this.

#90 My_View on 10.21.08 at 11:54 am


Get your facts straight, printing more money wont solve anything in the long run. Must be a R/E agent.

#91 smwhite on 10.21.08 at 11:56 am

Jim Rogers isn’t a happy camper…

#92 brazer on 10.21.08 at 12:30 pm

#76 john

What exactly has been the fallout? Nothing. As I mentioned most have experienced no change in their cash flow perhaps are experiencing even better cash flow. Weekly gas expense reduced; Rates on lines of credit reduced; stock market losses reversing; Am I wrong??

A short while ago, you could enjoy a variable mortgage at around prime minus 1%…certainly didn’t hurt “affordability” with that kind of cheap money being pumped into the system.

Try walking into any bank today and ask them what their variable mortgage rate is…you’ll be in for quite the shock. (so will the folks who will be renegotiating their terms soon)

As for the stock market…the TSX going from 15,000 to 10,000 (ie: a 30%+ drop) in a few months isn’t exactly fun for most Canadians.

#93 brazer on 10.21.08 at 12:33 pm

Anyone who suggests the stock market is bouncing back, best look at this chart:^GSPTSE&t=2y&l=on&z=m&q=l&c=

Pension plans, RRSPs and most Canadians’ holdings are down SIGNIFICANTLY.

A few days of markets going up, doesn’t add up to much….Look at the chart for the “truth”.

#94 brazer on 10.21.08 at 12:42 pm

Dealers suffer with clients’ margin calls

Online brokerage TD Waterhouse recently posted a message on its Web site telling investors that stocks in their margin accounts could be liquidated at any price without notice to close the brokerage’s “exposure” to “under-margined” account positions.

“When you see stocks acting the way they are, going down on no bid at all, you know there’s margin calls,” said a Bay Street trader who estimated an escalation to a couple of hundred a day from a previous average of fewer than 10. “It’s forced selling” to cover shortfalls, he said.

#95 Joe Realtor on 10.21.08 at 12:48 pm

This mess gets better!

MPAC has started sending out its property assessments.

What a dogs breakfast this is going to be.

My property has been assessed (at Jan 1, 2008) at 50,000 MORE than I paid for it in March 2008.

Several of my neighbors, who bought after me, have smaller townhouses, have been assessed HIGHER than me.

I wouldn’t be able to sell today and get what I paid for it. I’m okay with that – but it’s the lack of any logic to some of the figures I’m seeing, and the fact we’ll be paying taxes based on those figures for the next 4 years.

But due to the “phased in” assessment, my home is still being assessed at full pop in 2012. At that point, it’ll probably be 100,000 over what I’d be able to get for it- and paying taxes on that amount.

Everyone in the GTA should request a reassessment.

#96 Dave in Calgary on 10.21.08 at 12:53 pm

#58 dd

Re: 25% speculators in Calgary’s condo market.

Don’t forget about the people who currently own a condo, who put their deposits on newer, more expensive condos (upgrading), thinking that the current one would rise in value enough to pay off the newer one before the mortgage started, which in turn would raise in value… ect ect

I don’t think they would be considered speculators, but their effect is the same on the market. Although they intend(ed) to live in the new condo, they will be leaving behind an existing one.

I think you can add that to the 25% spec… the “phantom” market for Calgary Condos, which in turn will add to the problem facing condo developers trying to unload all the these new units in the pipeline.

Look for a lot of layoffs in the construction industry.

#97 smwhite on 10.21.08 at 1:27 pm

And with physical shortages of silver and gold, will this type of action create a spike in prices in the future?

#98 Downsized and Delighted on 10.21.08 at 2:48 pm

#21 Jelly: The very first thing you need to know about “St. John” is that the locals cringe when they see it spelled that way. It is Saint John!! (never to be confused with St. Johns in Newfoundland).

Saint John is probably the foggiest city in North America. At least 30 percent of the flights are redirected to Fredericton (l l/2 hours away). There are times when you cannot see a foot in front of you, the fog is so thick.

The most beautiful residential area is Rothesay, located on the Kennebecasis River just on the outskirts of the city. You should take a look there if you aren’t familiar with it.

Some of those victorians are located in pretty rough areas, but maybe that has changed in the last 20 years!
In any event, they will keep you busy with maintenance, especially outside painting!

#99 Crikey on 10.21.08 at 3:03 pm

Possible dent in Vancouver’s 2010 Olympic dreams?:

Ski resort’s owner faces refinancing deadline
Parent firm has days to rework $1.68b loan

“WHISTLER — The company that owns Whistler Blackcomb ski resort has just days to come up with $1.68 billion in refinancing.

Intrawest is a privately held company owned by private equity funds managed by U.S.-owned Fortress.

Fortress has until Thursday to come up with $1.68 billion to refinance an Intrawest loan.

Intrawest spokesman Ian Galbraith would not discuss the debt, and referred all questions to Fortress.

A spokesman for Fortress in New York would not comment.

Fortress is also financing the $1-billion, 1,100-unit Vancouver Olympic athletes’ village, where cost overruns so far have reached $65 million.

Jim Brander, a professor in the Sauder School of Business at the University of B.C., said the global financial crisis is making it tough for private equity funds like Fortress to raise money.

“If Fortress was unable to get financing, it would owe money right away and it would have to start selling off its investments,” said Brander.

He said there is a slight chance that Intrawest would seek bankruptcy protection.”

#100 Downsized and Delighted on 10.21.08 at 3:28 pm

Garth – To say that anyone who bought in the last year has “lost” money is rather harsh. People have to live somewhere, so assuming that they bought a home that would modestly accommodate their needs, I don’t think you can say that they “lost” money.

It’s only when a person buys more than they need that the purchase becomes an investment rather than a place to live. I think this is a key point for people to grasp…. I’d hate to think what kind of life we would all be living if we bolted from our homes to rental apartments at the first hint of economic downturns.

#101 Jimster on 10.21.08 at 3:38 pm

Anyone who thinks this is going to be some sort of ‘accident’ dosen’t really have a clue whats happening here. Prepare for an well orchastrated inflationary holocost.

#102 Keith in Calgary on 10.21.08 at 5:24 pm

“To say that anyone who bought in the last year has “lost” money is rather harsh.”

The truth hurts…….eh ? I rent my place for 1/3 the cost of buying…..who cares if I can’t say that I own ? My ego is not that fragile.

#103 rjag2034 on 10.21.08 at 5:57 pm

Think of the ripple effect for the drop in commissions from all those realtors. Wouldnt want to be a BMW or MB sales guy right now as I’m sure that they lost half their customers!!!!!

#104 lgre on 10.21.08 at 6:03 pm

owning makes sense when somewhat inline with renting. So, if you bought in the last year then you bought at the height of the market, which means that your mortgage payment and all other payments associated with owning is most likely 2.5-3 times higher then what it would cost you to rent. You need somewhere to live, but there is no point of owning when you can rent for 1/3. I think that’s was what Garth was trying to get at.

#105 CalgaryRocks on 10.21.08 at 6:38 pm

“To say that anyone who bought in the last year has “lost” money is rather harsh.”

The truth hurts…….eh ? I rent my place for 1/3 the cost of buying…..who cares if I can’t say that I own ? My ego is not that fragile.

Well yeah, but in 2005 & maybe 2006 you could have bought a single family home and your mortgage would now be cheaper than your rent on a townhome or even a dinky Boardwal Properties appartment.

I don’t understand what the point of the discussion is anyways.

#106 squidly77 on 10.21.08 at 6:56 pm

canadian plunge o metre

#107 My_view on 10.21.08 at 7:04 pm

To say that anyone who bought in the last year has “lost” money is rather harsh.

Aww, and this is only the beginning. Stop ignoring to what’s happening around you. Its all cycles, sometimes mild others extreme. And all the warnings were there and continue to be. The drunken greedy spenders have lost, time for the disciplined to prosper. After the W Bush administration, the fireworks begin. 2009 will be very interesting on both sides of the fence. Canada will be in the soup.

#108 dd on 10.21.08 at 7:20 pm

#101 Keith in Calgary.

So true so true. If I can put more money in my pocket renting … it is the smart thing! I moved to downtown Calgary and I am renting a two bed two bath and walking to work for $1500 a month. Even today I couldn’t get a deal like that if I bought.

Buying at historical highs is risky (IE Canadian housing markets in 2007). Look at the stock market today … there is less risk now compared to 2 months ago. Now is the time to slowly move that cash from the house that we all sold into the sectors that will out preform in the next x years.

#109 dd on 10.21.08 at 7:23 pm

#98 Crikey,

Murry Edwards still owes part of the resort. They will get the money….

#110 brazer on 10.21.08 at 7:23 pm

My girlfriend and I share the rent on a 2 bedroom condo….$1500 total, or $750 a month each, for a nice 1000 sq foot in a great area in Toronto.

Our gross annual income is about $170K.

We pay no property taxes, no hydro, no water bills, maintenance, etc.

We have friends who “own” and for that luxury are cash-poor. Those that are leveraged will get stuck, others will do their best to hang on as this downturn gets worse.

#111 brazer on 10.21.08 at 7:26 pm

Bank of Canada warns of global recession, cuts policy rate one-quarter point

The bank said global economic forces are having a “profound impact” on Canada.

“The weaker outlook for global demand will increase the drag on the Canadian economy coming from exports,” the bank stated.

“Lower commodity prices will also dampen the outlook,” it said, and “tightening in Canadian credit conditions in recent weeks will restrain business and housing investment.”

The central bank now says Canada won’t emerge from the malaise until 2010, when it predicts growth will rebound to 3.4 per cent.

#112 dd on 10.21.08 at 7:27 pm

#96 smwhite,

Nickel is more of a commodity compared to gold. You can’t really lump all metals together.

#113 dd on 10.21.08 at 7:33 pm

#76 john

I agree with #91 brazer. If I feel poor I will not spend as much. Talk to a person that is retired and see what they say. Gas might have decreased, mortgages might have decrease, however, their portfolios have taken a true hit. People might say it is a paper hit … just wait until earnings take a beating and dividends get cut.

It is a real hit.

#114 brazer on 10.21.08 at 7:35 pm

Low metal prices force miners to cut hundreds of jobs in northern Ontario

FNX Mining Co. Inc. (TSX: FNX) said today it is suspending commercial production at its Levack nickel mine near Sudbury, Ont., because of low prices and high operating costs. As well, North American Palladium Ltd. (TSX: PDL) placed its Lac des Iles mine near Thunder Bay, Ont., on care and maintenance, laying off 350 workers.

#115 brazer on 10.21.08 at 7:37 pm

Chrysler slows Windsor plant

About 3,400 workers on the rotating day and afternoon shifts started taking turns yesterday at one week on the job and the other off.

If current inventories don’t remain in check, Chrysler could extend the reduction to the overnight shift, which will affect another 1,600 workers in a third week, according to company spokesperson Ed Saenz.

#116 Another Albertan on 10.21.08 at 8:28 pm

@107: I believe you are referring to Resorts of the Canadian Rockies (includes Lake Louise, etc) which has seen 50% sold back to Charlie Locke. This is a completely different organization than Intrawest/Whistler.

#117 smwhite on 10.21.08 at 8:35 pm

January 2008…

Those with low down payments can get a mortgage without default insurance from some non-bank lenders. However, they pay a much higher interest rate and extra administrative fees.

Mortgage insurance is no longer dominated by two players, CMHC and Genworth.

AIG United Guaranty, a subsidiary of New York-based American International Group Inc., made a splash when it came into Canada’s mortgage insurance market last year. AIG offers new options, such as a product for buyers who can put down only 3 per cent of the purchase price. The payments can be spread over 30 to 40 years.

AIG’s 3-per-cent-down mortgage insurance product is attractive to people buying in Toronto, says mortgage broker Ann Pope-Todd of Assured Mortgage Services.

#118 brazer on 10.21.08 at 9:30 pm

Just wait till the shoe drops on business loans

During the real estate bubble, a lot of regional U.S. banks were shoved aside in the mortgage market by companies like Countrywide Financial. So how did they get their piece of the action? By lending money to builders and land development companies instead. Five years ago, FDIC-insured banks had a portfolio of $257-billion in construction loans. Now it’s $627-billion, and more of them are starting to go sour.

Last year, those banks wrote off less than 0.4 per cent of those loans. This year, the rate has quadrupled. In some huge categories of loans, the writedowns have barely begun. U.S. banks hold about $1-trillion in loans backed by commercial real estate and another $1.5-trillion in regular business loans. The default rate in both is still far below where it was in the early 1990s. More losses are coming.

And if the past is any guide, it will take years – not months – for all the bad debt to be washed out of the system. That’s why Mr. Paulson’s plan, though helpful, can’t stop an economic contraction. How deep the recession will be, nobody knows. Of this much you can be sure: It won’t be over quickly.

#119 pjwlk on 10.21.08 at 9:30 pm

John #73 The hammer will drop John but everything happens in slow motion. It took 2 years for things to unfold in the US and some people are still wondering where the bottom is.

About 3 years ago it occurred to me while driving on the highway that no one was driving a shit box car anymore. Young kids driving new cars and like you said all kinds of people driving BMW/LEXUS/JAG etc. How can that be I thought when I work so hard, make a very good living yet can only reasonably afford what I’m driving.

Fast foward about a year and a friend of mine who makes half of what I make buys a house North York, an expensive part of North Toronto. How can that be? I bust my hump endlessly and yet buddy has all of the same stuff I have and better in some instances.

You’re dad is right John and what he describes is a family living within their true means. Easy and excessive credit has led to what you see around you these days. It is simply and utterly unsustainable and only a matter of time until they will all succumb the the crushing weight of their own debt.

You and all of those like you will be rewarded for your prudence… You will be vindicated. Be patient. All good things come to those who wait.

#120 pjwlk on 10.21.08 at 9:35 pm

BTW, my sources tell me that Ford in Oakville Ontario will most likely be going to one production shift by March 09 if sales don’t improve between now and then. Like I said, it’s just the beginning…

#121 Downsized and Delighted on 10.21.08 at 10:00 pm

For those of you who are under 30, unmarried, with no kids, why would you want to own a home anyway? Renting an apt. or condo would suit your needs very well. Mobility is very important to you. It is VERY easy to rent what you are accustomed to living in – an apt. or condo with 1 or 2 bedrooms.

But for the rest of the world – those over 30, married with 2 or 3 kids and a dog (ie, your parents), selling the family home and pulling the kids out of school to move
into a rental apt. to wait for the market to flatten – just doesn’t make any sense if the home you are living in is not over leveraged and if it modestly fills your needs.

This is different from buying a mcmansion that you don’t need, and can’t really afford mostly as an investment (even if you live there). I agree that that guy has lost money because he WILL have to sell before the market recovers.

#122 john on 10.21.08 at 10:33 pm

pjwlk – I hope you’re right but I think the timeline has changed significantly. Had the bailout not passed the effect would have been immediately felt by those poorly leveraged with egg on all their faces with minimal (if any) effect felt my those who lived within their means. The problem with most these people with high debt loads and fancy stuff is that they project an image of prosperity and superiority to others. I don’t have a plasma tv and yet I could afford one. Why? Because my current outdated tv still works well.
I think the timeline for vindication has moved from immediate to unknown.

#123 Keith in Calgary on 10.21.08 at 11:02 pm

# 106 DD……..

So true…..isn’t it ?

The wife and I rent a 3 year old….1,200’….2 bedroom, 2 bathroom condo with walk in closets, fireplace, large balcony, etc, in Mission on 26th Ave SW across from the river…..$1,650 a month including parking….everything on our street is $600K – $3MM………this place is assessed by the city at $630K.

Mortgage rates are 7-8% for a 10 year fixed term…..condo fees are $500 minimum on our street….taxes are $1,800 +……utilities…….well…..guess what…..#103 Calgary Rocks can do the math.

I rent for 3% annually of the units cost. Just the juice I would pay the bank on a mortgage is over twice that amount as an annual percentage. And I am throwing my money way by renting according to some!!! ROTFLMAO !!!! Even in 2005/06 it made sense to rent…..and save the difference.

#124 dd on 10.21.08 at 11:08 pm

#114 Another Albertan,

Thanks for clarification.

#125 dd on 10.21.08 at 11:12 pm

#117 pjwlk,

Well said.

Earn a living, pay your taxes on time (get all the deductions you can), live within your means …

It works. Period.

#126 wealthy renter on 10.21.08 at 11:21 pm

Brazer Wrote,

“Just wait till the shoe drops on business loans”

Thank for the post. I missed that article. It is well written and thoughtful. If the numbers quoted are correct, it does appear that American housing prices are starting to fall in line with incomes, at least in aggregate. I also was a bit stunned by the chart showing that at the height of the bubble, home prices were 2.4 times personal family income.

Fast forward toward to Toronto 2008 where average home prices are around 375K (after a large correction) and average family incomes are a smidge above 50K. Incomes are higher in places like Victoria and Calgary, but not much so. And Vancouver? What could be said?

I guess there is no problem here in Canada, so we best move along… :)

#127 CTA on 10.22.08 at 11:34 am

Too many speculators and too much greed. Canadian way of life is no different from the Americans. Real estate values in major Canadian cities will undergo a correction and decline at least to 40-50% over several years as the economy continues to sink, loss of jobs due to outsourcing, decrease in manufacturing base economy, easy financing, especially in the GTA.
Toronto has a glut of condos and is depending on immigrants to purchase them. Immigrants don’t have the money to spend $300,000 for 650 sq. feet of space. Immigrants typically live with several other families of their same culture and slave over 3/4’s of the day working to save money to buy a home. Condo’s are for the Canadian born generation who have become lazy, overweight, and brainwashed by TV, computer games, and diseased by junk food and too many vaccines.
Many baby boomers will leave Canada to live in warmer geographical areas and will purchase the greatly reduced foreclosed homes in Vegas, Phoenix, Carolinas, and Florida, further driving down the price of Canadian real estate.

#128 yuri on 10.23.08 at 10:07 pm

Half way through? Well…it depends on a depth, length and severity of the recession. Listening to Nuriel Roubini at London conference today ( I wouldn’t be surprized by 40 -50%
I wasn’t too optimistic before, but Roubini just killed me today.

#129 s.p on 10.27.08 at 10:41 pm

I’m truly sick of this reading.
This is not america.
Garth says in his example of a home owner losing 20%, if you read it is the real estate agent commission he is talking about and if that isn’t enough he adds in the land transfer tax once they sell and buy a new place.

For whatever reason, perhaps to sell a book this person is trying to get people scared.

I don’t believe it, as well if you own a home an want to move, then no matter the price will be par for par.

If you don’t own it is not going to be paradise as you think.

The only issue people will have is if they own and want to down grade, otherwise they will just hold their property until prices are good.
They always do and it always works.
Why can people think real estate is a waste of money, come on people bought it for 50 grand in our parents days.
If you hold it you’ll always be okay.
The people on this web is desparate never owned a property before and hoping for wonderland.

People won’t give their property away for nothing so re-think your almost free ride into your first real estate venture.

#130 Subby on 10.28.08 at 1:08 pm

Prices in the downtown core continue to rise. Not at the pace they once were, but they’re not going down.

The reason for the fall in average prices is due to the decline is sales. Think about it…if less high-end properties are listed for sale then the average has to go down. Take a handful of $5-6MM properties out of the equation and there’s your 11% drop. It doesn’t mean the market is crashing…it just means less people are selling.

Real estate is more than an investment (it’s actually a lousy one overall); it’s a place to live.
People here aren’t going to be forced to sell (foreclosures just aren’t happening), so they can wait it out (hence the massive drop in listings).

Anyway, i realize this is rambling response, but some of you people need to get a grip.

#131 Jeff Smith on 10.28.08 at 7:09 pm

Here ya go everybody!

#132 John Doe on 11.13.08 at 11:32 am

The link Jeff Smith posted also has some interesting quotes:

“Wolf, who is known for his bearish view of Canada’s housing market,…”

“…his pessimistic view, which is not shared by most of Canada’s economists…”

The biggest lesson I learned in university is to evaluate data.

I’m a homeowner in a traditionally high turnover neighbourhood in the GTA. The million dollar homes one or two streets removed from me are no longer selling for $1M much less $850K, but the one bedroom detached bungalow that looks almost as bad as my 2 bedroom sold for $300K last year. While the buyer overpaid, the reality is that cheaper houses in gentrified neighbourhoods such as mine will always sell, provided they are staged properly and decently maintained. That’s why I put in a new kitchen myself. No stainless steel, granite countertops for me, just pure utilitarianism. So it will sell to a regular family looking to live in a top-notch well-regarded urban hood.

Which brings me to my point: The only data relevant to sellers and buyers is that which reflects the conditions (including borrowing costs) relevant to the neighbourhoods you wish to buy/sell in. Micromanage your buy/sell and even in a seller’s market you can buy well and vice versa.

And of course, never bite off more than you can chew! Live prudently within your means and be patient…

#133 East 905 on 11.21.08 at 8:45 pm

#122 John,

You probably sleep better than the folks you know with fancy stuff bought on credit. You also won’t have to live in your kid’s basement upon retirement.

#134 CTA on 11.26.08 at 7:49 pm

Good post Garth!
Last night’s guest, Catherine Austin Fitts, on,recommends for young people to learn practical hands on skills i.e. building and gardening skills rather than getting an MBA, etc. People need to become more community minded and buy locally. Investing in local businesses that are ethically sound may actually bring back manufacturing jobs.