10 reasons we’re not there yet

Below is another small piece from my forthcoming book, “After the Crash,” one of the counclusions of which is we have entered into a deflationary period which has the potential to create conditions most people alive today have never experienced. Whether that happens or not cannot yet be known.

However, the news today confirms my thesis: US consumer prices and core inflation have fallen the greatest amount in 61 years. That’s deflation. And new housing starts are at the lowest point since records were first kept in 1959. That’s collapse. — Garth

1. Jobs are being destroyed in the post-crash shock that corporations are feeling. The pace of unemployment will be relentless in the coming two years, driving down the economy, consumer spending and borrowing. The number of potential homebuyers will dwindle and as supply of homes for sale overwhelms demand, prices will continue to slide.

2. Government bailouts will fail to reflate the economy of the US, Canada, Europe or China. As stock markets see clear evidence there is no magic bullet, another wave of selling could occur (reminiscent of what happened in the summer of 1930), which will shatter popular confidence and stall any real estate recovery.

3. It is much cheaper to rent a home than to buy one, so until there is a powerful reason to own real estate (like a sure-thing capital gain) there’s no reason to expect prices to rise. Anyone looking to improve their family’s finances will conclude that tenants win in this environment.

4. Real estate cannot rise in value without a steady diet of new buyers, and right now potential first-time purchasers have been shut out of the market by a return to more traditional financing. With the end of zero down payments and 40-year amortizations in Canada and the collapse of the subprime lending market in the US, it takes actual money to buy a house. New buyers will have to save for a down payment – and that takes years.

5. Interest rates may have been forced down by central banks, but that didn’t make mortgages any cheaper. The credit crunch tightened lending terms and rates, just when buyers were thinning out. Bad news for the market.

6. Armies of small-time housing speculators have been caught and crushed in the real estate meltdown. In Toronto alone 30% of all the new condos under development (more than 50,000) have been purchased by flippers, usually for minimal cash and with maximum financing. These people will either walk away from their investments before closing, rent them out for whatever they can get to offset monthly losses, or dump them on the market at fire sale prices. The dampening impact on the market as a whole – prices in particular – should not be underestimated. The last time something similar happened, in the early 1990s, condo values plunged by 40%.

7. Plunging financial markets and plopping house values are hitting the soon-to-be-retired Boomers especially hard. These people had been drivers of the real estate market for decades and have a huge amount of net worth tied up in their homes. Their exit as buyers from the market is a downer for everybody, and the certainty that they’ll be desperately dumping properties in the coming few years will further crash values.

8. Builders and developers are in a vice. Sitting on acres and acres of development land or half-built towers, with millions in bank financing hanging over them, many will be forced to dump inventory at any price. The result will be predictable, and many simply will not survive.

9. As energy costs rise and disposable income falls, a large amount of housing stock will simply be unsalable. Suburbs will fall out of favour, areas without light rail transit or reliable bus transit will suffer more price depreciation, as will homes that are not energy efficient. Price deflation may be our future, but it will be combined with energy inflation.

10. Houses are not cheap enough yet for people to afford them. The basic reason this bubble burst is the most pervasive and powerful. Until the average family can live in a property of their peers, having put 20% of its price down in cash and able to finance the remainder on a third of their income, prices will continue to crumble.

Van homeowner offers $100,000 to unload his house


#1 Calgary rip off on 11.19.08 at 12:11 am

Post #10 Garth:

Yes yes yes. You are correct.

Perhaps in the future there will be no health care and the world will be post nuclear war with no health care workers. If that doesnt happen, I’ll have a job. Perhaps I’ll make more than oil workers and CEO’s and speculators who end up folding laundry for a living like I did before I was in health care. Good luck conservatives in Alberta. Time to go socialist and bail yourselves out before its too late. :)

#2 Waiting for a Deal on 11.19.08 at 12:17 am

I highly recommend reading this before going to bed, or first thing after waking up.

It is more uplifting than the news!

#3 Sean on 11.19.08 at 12:42 am

Is it bad that I’m secretly and quietly celebrating our purchase four years ago of a rinky-dink townhouse here in Ottawa for $127K (now valued at about $150K), and now have about 55% equity?

Just waiting a few more years…..

#4 JHO on 11.19.08 at 12:43 am

Nice post. I had a conversation with my friends sister who recently purchased condo with her boyfriend a couple of months ago – she works in retail and he works in construction. She was saying how lucky she was to buy a 1BR 550 sq ft condo (350k in Victoria) right before 0/40 mortgages ended, otherwise she “wouldn’t have been able to afford it…”

And as she tells me, “with the market in BC going the way it is”, she should “be able to sell it for about 500k in a year, and move into a nice house.”

Hmm, doesn’t sound like that’s the ticket for me. I’m investing all my savings in shamrocks and unicorns…

#5 Derrin on 11.19.08 at 1:19 am

This is one of your better posts.
I disagree with your perception of how the banks and financial institutions will respond. After we make our way out of the rapids the banks will reinvent themselves. Profits drive stock prices which drive compensation. They will find away to reignite the DEBT MACHINE. The amount of cash that will be available will be huge so they will start lending again. Then ….we will be into the next ride to the top and another bigger bubble. I think you are one bubble too early for the doom and gloom picture you are painting. One more bubble then the Candy Store is closed.
Cheers I enjoyed the post.

#6 Larry on 11.19.08 at 1:21 am

Certainly a bleak future for people in over their heads but they had it coming to them so no pity from myself.
I wonder if Canada will go like most European countries where you actually get a mortage rate of 4% that remains the same for the duration of your mortage be it 15, 20 or 25 years or like the US where interest can be taxed deducted. I never could grasp the madness of renewing your mortage rate every 5 years.

#7 JET on 11.19.08 at 1:57 am


The last sentence says it all – so what if a buyer has a big downpayment if their income can’t support the mortgage.


#8 marcus aurelius on 11.19.08 at 1:59 am


Overheard at a gathering of professionals yesterday. The driver cited is Garth’s item #1 – unemployment rate increases. The unvarnished expectation is that all areas have taken a 10% hit already, but by end of 2009 the ‘better’ areas (Lawrence Park, York Mills/Bayview, etc.) will take another 20% hit +/- and the overhyped areas or traditionally fringe areas that have been home to ‘nouveau’ money floated by the boom (Yonge/Sheppard, Beach, Leaside) will take a 40% hit. This isn’t the propaganda that hacks have been flogging to compromised newspapers or to reporters – this is the advice of business people running large brokerages, preparing for reality in 2009.

The days of minimum 25% down (skin in the game) and carry costs that don’t exceed the old 33% of cash flow/income rule of thumb are coming back with a vengeance, once prices readjust rapidly across the board. And don’t think that condos are automatically going to take a bigger hit than some target area detached housing. The $1-2M detached market in the City is heading for a big fall due to the demographics. Immigration is not sufficient to stem the tide against steeper price declines for large,expensive detached units vs. smaller subway-located central condos (where the market is expected to be broader-based re downsizers, young professionals looking for downtown easy access,etc.). The last thing you want to own now is a Leaside-like infill that you bought within the last 2-4 years. Those types of homes are going to readjust drastically because there are fewer people who need them and more owners who are losing/will lose their jobs next year who took on seriously stupid debt to buy them.

#9 Calgarian on 11.19.08 at 2:54 am

In before “Calgary Rip off” to whine that the houses here are still way overpriced and how they’re only worth $200k at best. Yes, we get it.
Prices don’t drop overnight, dude.
I’m looking for a home to buy too. I predict that the prices should correct close to the pre-boom level (ie: late 2005), next fall or so. If it drops lower and sooner, the better for me. It all depends on how oil and gas industry holds up and if people start to leave the city.

#10 Rob#1 on 11.19.08 at 3:04 am

All of these make sense to me. It is not that one feels happy for the sobering (yet predicted) turn of events. There is nothing less amusing than the amusement of pain. It is nonetheless validating that despite being called numerous denigrating terms, we (the bears) were spot on. This hopefully will not get too bad for those who did not deserve it. In the literal sense of deservingness.

#11 Brittanny on 11.19.08 at 5:59 am

Garth, Do you think that wages will decline as well, putting even more pressure on real estate prices?

#12 Sitting On My Hands in Greater Victoria on 11.19.08 at 6:11 am

Very useful list, which helps to firm up our own stance toward buying a home. We’ve been watching listed properties near Victoria and have a tentative plan to buy (with old-fashioned cash) sometime from mid-2009 onwards, if it makes sense then. We’d probably end up paying more than we’d need to before then and, since we plan on starting a family and making some career changes soon, we’ll need all the savings we can muster. So, we’re in watch-and-wait mode and are quite content to stay there for a while.

At the risk of stating the obvious, I would add this to your list, Garth:

“Fear hasn’t peaked yet”.

If irrational exuberance drove at least part of expansion of the RE bubble, I guess the reverse will also be true as the market contracts. I’m a layman who nevertheless tries his best to follow the economic and financial news, but it’s awfully hard to parse it all these days. And it’s really quite striking how suddenly the coverage of real estate in the mainstream media in Canada reached the tipping point. In the past couple of months, gloomy news coverage has probably started to have a self-fulfilling chilling effect on the RE market — sometimes, no doubt because people are better informed and are making wise choices to wait, and sometimes because many people (like me) are a bit overwhelmed by it all. Like many people, when overwhelmed I tend to sit on my hands. I’ll certainly be doing that for at least the next several months until the mix of trends starts to crystallize into something I can understand better. The economic facts are scary in themselves but I’m guessing that MSM coverage of the facts will have spinoff effects that drive the market even lower. Ironically, the RE industry in Victoria has already tried to counter increasing fears among prospective buyers by taking out full-page advertorials and writing op-eds in the city newspaper, which kind of serves to validate buyer fears rather than soothe them. Anyway, keep up the good work.

#13 brazer on 11.19.08 at 8:44 am

Toronto’s MaRS project a step too far

The second phase of the two-square kilometre project, dubbed MaRS, has been put on hold because the developers can’t find enough tenants ready to move into the 750,000 square foot complex by the completion date set for 2010. Phase I of the project was finished in 2005 and its 700,000 square feet are filled.

“The construction has been suspended. It’s a reflection of the market conditions right now,” says Randal Froebelius, vice-president of real estate for MaRS, a not-for-profit corporation. “We don’t want to build an empty building.”

While rumours have floated for weeks that many condominium and office projects could end up being halted mid-construction, MaRS is the first company in Toronto to admit it does not make sense to go ahead. A two-floor parking garage has already been built, along with a concourse extension connected to the subway line, but both will all be mothballed until the economy turns around.


many more such “admissions” coming…stay tuned.

#14 brazer on 11.19.08 at 8:47 am

Seller throws in a free car — and still the house doesn’t sell

The homebuyer who purchases the spacious, two-storey detached brick house on Westlake Avenue will get a new fridge, a gas stove, a finished basement — and a new car.

The owner, who has been trying to sell it for two months and repeatedly lowered the price, decided to list the three-bedroom home in East York for $379,000, with a purchase bonus of a vehicle worth up to $15,000.

“It’s at really good-market value. Here we are giving a $15,000 car away and we still haven’t got the property sold,” said Michael Clarke, the real estate agent who introduced the incentive more than a week ago.

“It’s a sign of the times.”

Expect to see more creative marketing strategies, he said, as Toronto’s housing market continues to cool from record-breaking sales and prices in 2007 to its current sobering state.

“There are more listings out there. It’s tougher to sell your house. I don’t blame them for doing it,” said John Pasalis of the car promotion. He is the founder of Realosophy.com, a Toronto-based real estate Web site.


nice try, but no cigar.

#15 TOguy on 11.19.08 at 9:25 am

I agree with the list, except for the part about rising energy costs. I think oil is headed down to at least $20 per barrel, possibly even $10-15. And I think it will stay down there for several years. Natural gas will drop even more. After that it will slowly start to climb, but it will be more than a decade before it’s back up over $40. Alberta is going to be up the proverbial creek.

#16 Nicholas P on 11.19.08 at 9:42 am

#5 Derrin:

Isn’t the even bigger bubble you forsee just down the pipe? I believe it is called the Derivatives Bubble- conservatively estimated to be be into the QUADRILLIONS!!

#17 squidly77 on 11.19.08 at 9:44 am

calgary realtors on crack
a land of candy canes and strawberry smiles

Note: Property details removed at the request of the listing agent. — Garth

#18 Indicator on 11.19.08 at 9:53 am


I look forward to your new book and am very interested in reading about Gold.

Question for you…
If 9/11 had not occurred and a war with our friends in the middle east soon after, would the world have experienced this global credit crunch ?

Text books have taught me that all economies go through cycles.
On the granual level, we would experience a recession, but not of our current and future magnitude.

Chalk one up to Bush propaganda. It does not matter what people have to say, he sure left a meaningful legacy.

Your thoughts on the influence of war?

#19 Downsized and Delighted on 11.19.08 at 9:55 am

#8 Marcus: Great post. Nice to see someone differentiate types of real estate and it’s potential for the future. All boats rise or fall as they say, but those of us with a few years under our belts know that the Queen Mary runs aground faster than the cabin cruiser.
I was in that $1-2 million category myself and had the same thoughts as you about its future…..even worse actually because it was a property suitable for redevelopment into a 3 million dollar property, making its future even more questionable.

Since I am a babyboomer, I bought a house geared towards a downsizer, not really caring who else would want it. But we babyboomers are lucky that way – our demographic is so large that if we get in on the ground floor, the demand follows. (of course as Garth points out we don’t want to be the last ones downsizing!)

We could be in for a very long period of very slowth economic growth. It will be nice for young families to be able to afford a home again.

#20 peter on 11.19.08 at 10:03 am

Great post Garth.

Not particularly uplifting, but bang-on nevertheless.

P.S., makes me wonder what dinner conversation with Garth Turner and Nouriel Roubini would be like?? One would no doubt learn something, but would need a really stiff drink afterwards!

No, drink first. — Garth

#21 FP on 11.19.08 at 10:28 am

#14 Brazer
The vendors have been trying to sell that house for more than two months. My husband and I were looking at houses in the summer and we were actually in that Westlake property. It was in definite need of a major renovation. The kitchen/bathroom/bedrooms all looked like they hadn’t had any TLC in at least 20-30 years. I didn’t go down into the “finished” basement but my husband went down to take a look and said it was in pretty bad shape. It was a fairly big house on a fairly large lot (for Toronto) and in a pretty good, solid, middle-class neighbourhood. Last year, it would have been snapped up in 2 days despite the work required and probably over asking. What a difference a year makes!
Maureen O’Neill’s claim that vendors are still getting 97% list price is a sham. Over the summer, many properties we saw were delisted and then relisted at lower prices. We saw a house near Woodbine/Kingston Road (aka Upper Beaches) that was originally listed for $429K delist a couple of times and finally sell for $100K less but the listing showed that the vendor was asking $329K and that the house had sold for 100% list after only 2 days on market when the reality was that it had been in the market for months without selling. That would definitely skew the stats so we have stopped looking at the stats that TREB and CREA put out as we know from looking at properties and listings that a lot of agents out there are not acting ethically in order to still advance their own agenda (no surprise). Of course, dear old Maureen will deny that this shady practice goes on at all!

#22 Gord In Vancouver on 11.19.08 at 10:32 am

11. The increasing number of people who are borrowing against their homes – up in Canada this year.

“The CAAMP survey also found that Canadians borrowed more against the equity in their homes this year – 22 per cent compared with 17 per cent in 2007.

They also borrowed more, $41,000 in 2008, up 20 per cent from the previous year. More than half of those respondents used the money to consolidate debt.”


#23 Chris P on 11.19.08 at 10:41 am

Looking for some opinions. If you purchased a rental property with 50% equity that currently makes $1000 profit a month after all expenses bought pre-boom 2001 and is still a reasonable price to carry, do you keep it? That is, the debt is serviced with one of two units rented do you keep it or sell for an ever decreasing amount of money?

If real estate drops in half, then I lose all that potential cash, but what would I do with it otherwise? This is the real issue. If I sold, I’d have all that money and where would I put it? I can’t get my 10% return (which increases all the time since the value keeps dropping) anywhere else and right now all that cash comes from tenants of which increase my equity monthly as all the extra money pays down debt. If I continue to pour that money into debt repayment and the property drops in half returning it to the original level, I’ll still own a property that my tenants paid for and of which was never worth less then the amount I agreed to purchase for.

What sort of economics would take hold for a property to drop in price by half and of which would make me worse off then someone renting? Incomes would be cut in half, affordability would be cut in half as well? Therefore, if I own two properties pre-boom it would be wise to keep them no? My current residence is paid for and also contains two units that rent, making it profitable as well. I have stored my nuts carefully!

Wouldn’t a drop in RE prices be coupled with an increase in interest rates pushing more people into renting thereby maintaining my steady cashflow? If my properties have no debt on them, am I not in a much better position RELATIVE to everyone else?

My goal has been to pay down my debt as quickly as possible, always has. I just can’t see the world that will be in 5-10 years to predict what is best to do in my situation.

There must be a hold call in all of this. My assumption right now is that if you bought pre-boom, keep it. If you bought before 2001, you should ride that property through and if you do, you’ll be at least twice as good coming out of this mess than going in. Agree? Disagree?

#24 TorontoBull on 11.19.08 at 11:07 am

I am lookoing for some info on USA’s influence on the IMF. Can anyone help here?

#25 metaldwarf on 11.19.08 at 12:03 pm

#11 in a deflationary environment debt becomes harder to pay off over time.

This is the opposite to what we are used too in inflation. Garth you should touch on this in a future post

#26 Kyle on 11.19.08 at 12:08 pm

Garth, did you see today’s report from the Toronto Real Estate Board? GTA house re-sale volumes for 1st half of November 2008 coming in at 1,991 versus 3,544 for same period in 2007. That’s a 44% drop! The re-sale market is really drying up fast and suddenly in the GTA…

#27 aloha e on 11.19.08 at 12:13 pm

Toronto mid month results out – they don’t even publish the % declines anymore since they’re so big.


#28 lgre on 11.19.08 at 12:22 pm

‘Looking for some opinions. If you purchased a rental property with 50% equity that currently makes $1000 profit a month after all expenses bought pre-boom 2001 and is still a reasonable price to carry, do you keep it? That is, the debt is serviced with one of two units rented do you keep it or sell for an ever decreasing amount of money?’

how many years do you have to rent the place to make the money you would as if you were to sell the place today? more numbers are needed here to answer your question. If you have lets say $100k in the home that you will walk away with after sold and expenses paid then you would need to keep renting for approx 8.5 years just to make the same money. You would need to talk to an accountant and see what kind of capital gains taxes you would pay on an assumed sales price. In a hot market I would keep it, in todays uncertain market I would look at all options. Math is your friend.

#29 Kyle on 11.19.08 at 12:28 pm

Further to my last comment about sales volumes dropping in 1st half November 2008, if the same decreasing fornightly pattern continues for the last half of November 2008, we may have to look back at the mid 1990s to see the same kind of volumes for November overall. I really believe that house price drops lag volume level drops, but we’ll let history be the judge there…

#30 Missed The Boat on 11.19.08 at 12:32 pm


Alberta’s big boom going bust

“EDMONTON–Energy-rich Alberta’s multibillion-dollar surplus projections have taken a $6.5 billion beating over the last three months as the result of plunging oil prices and crashing markets…..”

What’s next? Garth, Saviour, Prophet….help us…lol.

Buildeth an ark. — Garth

#31 Ruhh on 11.19.08 at 12:37 pm

@ Indicator RE: the influence of war and the economy

The following article makes some pretty big assumptions that I’m not sure I can totally believe but the fact that this was written way back in 2006 makes it all that more interesting… and eerie!

The Proposed Iranian Oil Bourse

#32 Toronto Market Watcher on 11.19.08 at 1:34 pm

Wow, lots of gloom and doom out there… last I read in the Globe & Mail last Friday (you know that well respected publication which prides itself in objective journalism), that all is well in the land of Toronto real estate. And what’s turned things around? The election of Obama did the trick. No kidding. Have a look at the article below.


#33 Toronto Market Watcher on 11.19.08 at 1:41 pm

Oops! Here’s the corrected link to my previous post. Sorry.


Thank you Obama!

#34 Rob on 11.19.08 at 1:50 pm

Carney says Canadian economy getting worse, hints at further rate cuts


Best incompetence proving quote,

“The Canadian economy is deteriorating faster than previously thought and will require further stimulus.”

Duh, Garth’s been saying this for almost a year. Why are you just saying this now?

#35 brazer on 11.19.08 at 2:20 pm

CTV planning layoffs and spending cuts to cope with fading advertising sales

“After much careful and thoughtful consideration, we have concluded that it is no longer possible to maintain the current ‘status quo’ of our company’s operations,” he wrote Tuesday.

He said there will be a hiring freeze across all of CTVglobemedia’s television properties, a freeze on travel and entertainment spending and “some layoffs” as departments streamline operations.

“New projects (and) unspent capital plans will be revised, delayed or halted,” he added.

#36 brazer on 11.19.08 at 2:26 pm

Banking stocks fall following Scotiabank’s warning and nearly $600 million writedown

After markets closed Tuesday, Scotiabank said it will take a $595-million hit to the bottom line due to the turmoil in the financial markets including the bankruptcy of Lehman Brothers, the failed Wall Street investment bank.

“Both the equity and fixed-income markets have experienced significant declines in value and extreme levels of volatility over the last several weeks, exacerbated by the Lehman bankruptcy,” said Rick Waugh, Scotiabank president and chief executive.

October was one of the worst months in the history of North American stock markets, with trading losses in Canada of nearly 20 per cent, wiping out hundreds of billions of dollars of stock value.


i guess our canadian banks are doing quite as well as what had been suggested?

#37 Wealthy Renter on 11.19.08 at 2:31 pm


Thanks for posting the current numbers in Toronto. Can any realtor in the house (pardon the pun) help to clarify some of the Treb-speak in the article. When they say that 831 homes changed hands in the first two weeks of November, do they mean mean completed sales, or are they counting agreements signed (within the period) to purchase a home.

If it is the former, and it is true that homes usually take 60 to 90 days for sales to be finalized, the market would have began its meltdown well before the financial crisis in October.

#38 The Tallyman on 11.19.08 at 2:39 pm

#12 Sitting On My Hands in Greater Victoria said:

“Fear hasn’t peaked yet”.

Yes still too many dream weavers stumbling around with 5 dollar latte’s in their hand.
When Starbucks goes under watch out! Panic!

But seriously, I’m waiting for realistic house prices here in Calgary and though it is coming slowly,
I expect the dismal Xmas retail and job losses in the next few months will escalate price drops.

#39 kitchener1 on 11.19.08 at 2:47 pm

RE #13
There will be many more condo developers that end up as nothing more then a big hole in the ground. No forward thinking, people only want one bedrooms until they marry and start a family

Garth, just some advice regarding your book. It would be fascinating to see a chapter in your new book regarding the social impacts of this housing bust.

I think thats going to be the true story after all is said and done. This bust will have far reaching implication for all demographics.
Young couples and marriage- how do they deal with money issues if one or both of them own condos they are underwater with?

New rust belts forming in places like Chatham/London/Kitchener/Oshawa–all of the places that are heavly dependant on manufaturing jobs.

Boomers having to deal with their kids moving back with them at ages 30 and up

Just a thought

#40 Andrew toronto on 11.19.08 at 2:53 pm

In case there’s a lot of people in denial that a recession ain’t coming here.. I just got an email about a whole wack of stores closings across canada have a look ..

FYI…. before you do any holiday shopping, or get stuck with any unused or not honorable gift cards, take a look at the list below. Keep these stores in mind, you wouldn’t want to purchase a gift card for someone that won’t be able to use it!!

From the email sent to me>>>

It seems there are lots of stores that are closing due to the “recession” and the fact that people are not shopping. If you have any “gift cards” from these stores, make sure you use them, or you will lose them !

Watch those store money cards and gift cards.. and credit slips! Stores that informed the Security Exchange of closing plans between October 2008 and January 2009.

Circuit City stores… most recent (? how many)

Ann Taylor- 117 stores nationwide are to be shuttered

Lane Bryant,, Fashion Bug ,and Catherine’s to close 150 store nationwide

Eddie Bauer to close stores 27 stores and more after January

Cache will close all stores

Talbots closing down all stores

J. Jill closing all stores

GAP closing 85 stores

Footlocker closing 140 stores more to close after January

Wickes Furniture closing down

Levitz closing down remaining stores

Bombay closing remaining stores

Zales closing down 82 stores and 105 after January.

Whitehall closing all stores

Piercing Pagoda closing all stores

Disney closing 98 stores and will close more after January.

Home Depot closing 15 stores 1 in NJ (New Brunswick)

Macys to close 9 stores after January

Linens and Things closing all stores

Movie Galley Closing all stores

Pacific Sunware closing stores

Pep Boys Closing 33 stores

Sprint/ Nextel closing 133 stores

JC Penney closing a number of stores after January

Ethan Allen closing down 12 stores.

Wilson Leather closing down all stores

Sharper Image closing down all stores

K B Toys closing 356 stores

Lowes to close down some stores

Dillard’s to close some stores.

#41 Toronto Market Watcher on 11.19.08 at 4:30 pm

Wealthy Renter, in response to your question, I’m quite certain that TREB reports “signed agreements”, as you put it and not the number of transactions that have closed during the period.

Yes, Aloha e, it is interesting that TREB is no longer providing the percentage declines and boy, are they accelerating quickly. Also interesting is TREB’s selective comparisons to 2006 only when it suits their spin purpose. Maureen O’Neill appears to be having increasingly severe difficulty in spinning these stats.
Should be interesting going forward….

Garth, your forecasting accuracy so far is looking pretty good!

#42 dd on 11.19.08 at 4:37 pm

#9 Calgarian,

Thanks for the note.

#43 smwhite on 11.19.08 at 4:38 pm

#34 Rob,

All part of the master plan of one world bank. All countries have to tow the American economic line or risk their dollar rising against the greenback, which we know is a bad thing in this environment.

#35 brazer,

Funny what happens when the RE industry isn’t pumping money into the media, first Canwest now CTV…

#44 dd on 11.19.08 at 4:39 pm

#17 squidly77,

No Kidding. Inner City calgary prices are coming down big time.

#45 JET on 11.19.08 at 4:42 pm

That list of store closings is likely a hoax. I still wouldn’t buy gift certificates though.

#46 FP on 11.19.08 at 4:56 pm

Job cuts expected from Canadian banks next week

Canadian banks will likely join their U.S. counterparts by cutting jobs when they report quarterly and year-end results next week, Dundee Capital Markets portfolio strategist Martin Roberge predicted.

#47 nonplused on 11.19.08 at 5:11 pm

There is one piece of the puzzle missing though. Since our currency (US dollar & derivatives like the Canadian dollar) are all debt based, and debts are collapsing everywhere you look, a confidence crisis is possible. That results in a collapse of the currency no matter how dire the economic conditions.

I can’t imagine what the Chinese think they are doing holding 2 trillion in US debts of various types when the US is clearly bankrupt at the personal, corporate, and civic level and now some states are insolvent as well. How much further behind could the federal level be?

#48 Dawn in Calgary on 11.19.08 at 5:16 pm

The list of store closings (if true) looks to be US based — would be useful to know what, if any, portion of those are Canadian stores.

Some of them are true, most are not.


I’m not buying gift certificates to US stores, regardless.

#49 Rob in Onterrible on 11.19.08 at 5:36 pm

Garth, Great post and all 10 reasons make sense.

Is this how your new book will read? Oh, darn. I will just HAVE to buy it and that means one less toy for my daughter at Christmas.

It is all your fault.


The book explains (a) what happened and why, (b) what comes next and (c) what to do about it. Your kid probably has way too many toys. — Garth

#50 Calgary Rip off on 11.19.08 at 6:03 pm


Is that your house up for sale in Renfrew(Calgary)? Isnt that where you live? It’s priced appropriately by Ed Jensen of the Calgary Ripoff Everyone Board(CREB), chairman of the bored(no homes selling so getting awfully boring out thar). I can just see the fools who get into this place by actually increasing the offer to $600K to beat out the prospective buyer competition on that shitty shack. Ha ha ha.

Calgarian: Im trying to be the antithesis to the antichrist(calgary real estate bored; MarioT. at the Herald; and idiot sellers). Maybe if the general population can be reminded how far out into outer space Calgary’s prices are this will induce a sudden implosion of the markets when sellers start to panic. I have the feeling though that the conservatives here were raised on the moon or jupiter(or worse yet, Planet X) and have no concept of what real world prices are with regards to what a normal person can and will justify paying(too much oil money on their hands). Id rather be dead than be all those idiots who purchased their shacks at the peak of the bubble. Cant blame them for wanting a home, but the desperation of 2006 and 2007 was laughable. They’ll probably be stuck there in their homes til Armageddon. I emailed Marty Hope at the Herald recently and told him that sellers, buyers and realtors must DEMAND that prices must come in line with reality(ie, to HALF of their current prices).

#51 buy gold on 11.19.08 at 7:04 pm

the S and P stock index is going to 150 points
techical analysis says a double top is happened
so that one good reason we should run for the hills
the end is near

#52 brazer on 11.19.08 at 7:13 pm

Dow plunges nearly 430 to fall below 8,000 mark

NEW YORK – Wall Street hit levels not seen since 2003 on Wednesday, with the Dow Jones industrial average plunging below the 8,000 mark amid a dour economic outlook from the Federal Reserve and worries over the fate of Detroit’s three automakers.

#53 squidly77 on 11.19.08 at 8:53 pm

calgary ripoff..i am told that a reminder to calgarians warning them about big bubbly housing bubbles is imminent

#54 kc on 11.19.08 at 9:14 pm

For those “China Bulls” that still think they will save the world… look out as the police there are preparing for social unrest and full anarchy….


IMA Asia, a business intelligence provider, said it had raised its political risk rating for China from low to medium.

“We are concerned about the potential for unrest within a massive pool of migrant workers who face lay-offs in the construction and export manufacturing sectors,” it said.

I remember back during the election mentioning the “secret” deal with the US army coming across our borders… who now thinks that the Govt, knew ahead of time that things here in Canuck land may turn ugly one day?

#55 Downsized and Delighted on 11.19.08 at 9:30 pm

#39 Kitchener “Boomers having to deal with their kids moving back with them at ages 30 and up”

You mean they aren’t living there now?

#56 Dude on 11.19.08 at 9:55 pm

I don’t know why people are surprised things are getting worse. It has nothing to do with Obama or the reelection of Stephen Harper. Both the US and Canadian economies had plenty of cold hard $$$ pumped into it to make things look better than it really is, otherwise, the parties in power would have gotten really beaten by the voters. Now that the election is done, the props are withdrawn and voila…

#57 dd on 11.19.08 at 9:58 pm

#54 kc,

China bull … What is why the governement is spending $600 billion. Too many people are coming into the cities … not enough growth to offset the increase. The Chinese government will have to take their $trillion dollar suplus and spend it at home before the government topples.

Interesting times.

#58 dd on 11.19.08 at 10:00 pm

#46 FP,

There was a big restructing at CIBC earlier this year because of the fall out. It has been happening already.

#59 dd on 11.19.08 at 10:02 pm

#38 The Tallyman,

Tell the shoppers in the Calgary malls first. I don’t think they have heard that the recession is at the gates.

The malls are still packed.

#60 dd on 11.19.08 at 10:07 pm

#15 TOguy,

Oil will be at $20 if the whole world goes into a depression. And it won’t stay at $20 for long. I hear the operating cost for oil world wide is $US28.00 per barrel. Anything less than this long term and the supply will be shut off. Why produce oil at a loss?

Also OPEC doesn’t have enough production to supply the world. So don’t look to them to supply at this price.

#61 dd on 11.19.08 at 10:19 pm

#51 buy gold

Nouriel Roubini was projecting 600 in a worst case senairo. He doesn’t think we will enter a depression (S&P at 150) but a long U shaped recession. He said total earnings will be around $60 for a 10 mulitple.

At 150 you are talking about $15 in earnings at a multiple of 10. That means every American will stop buying. Period. No fast food, cars, computers, or houses. Highly unlikely.

#62 dd on 11.19.08 at 10:27 pm

#50 Calgary Rip off

“I emailed Marty Hope at the Herald recently and told him that sellers, buyers and realtors must DEMAND that prices must come in line with reality(ie, to HALF of their current prices)”.

Why? The market is the market. For every sale there is a buyer and a seller. Some see deals and some see overpriced assets. If you run the numbers and it tells you that the market is overvalved … you wait. Why demand anything. If the market is overpriced you save money buy not buying.

Do you really want to buy a house that bad?

#63 pjwlk on 11.19.08 at 11:27 pm

#3 Sean Is it bad that I’m secretly and quietly celebrating our purchase four years ago of a rinky-dink townhouse here in Ottawa for $127K (now valued at about $150K), and now have about 55% equity? Just waiting a few more years…..

Waiting for what? Your townhouse to be worth less than what you paid for it and to have only 30% equity?

#64 squidly77 on 11.20.08 at 12:54 am

calgary rip off..oh nothing
dd..hope that calgarians spend spend spend and then spend some more and even then spend even more
its the perfect storm
dont be bitter or envious..you dont want what they have
the trap is set..have a beer and watch them get snared
soon they will no longer want the cheese

it is true that calgarians are in denial
but that plays right into your favour

a fool will act like a fool until the very end

#65 Bottoms_Up on 11.20.08 at 11:20 am

from the link (a 2006 article) in #31:

“Whatever the strategic choice, from a purely economic point of view, should the Iranian Oil Bourse gain momentum, it will be eagerly embraced by major economic powers and will precipitate the demise of the dollar. The collapsing dollar will dramatically accelerate U.S. inflation and will pressure upward U.S. long-term interest rates. At this point, the Fed will find itself between Scylla and Charybdis—between deflation and hyperinflation—it will be forced fast either to take its “classical medicine” by deflating, whereby it raises interest rates, thus inducing a major economic depression, a collapse in real estate, and an implosion in bond, stock, and derivative markets, with a total financial collapse, or alternatively, to take the Weimar way out by inflating, whereby it pegs the long-bond yield, raises the Helicopters and drowns the financial system in liquidity, bailing out numerous LTCMs and hyperinflating the economy.”

#66 Simon on 11.20.08 at 8:14 pm

Pretty hard to feel much sympathy for the wannabe housing speculators. People buying houses with nothing, or next to nothing, down are a part of the blame for the skyrocketing demand and prices that are pushing housing prices well beyond what most folks can afford to pay. This has a horrible impact on folks who actually see their house as a place to live.

#67 dboy on 11.21.08 at 2:45 pm

Great article that sums up the feeling of hopelessness living in Vancouver where you need $900,000 to buy a house, and not much of a house at that: