Not zero


As the new year dawns, the Canadian finance minister drops hints there will be a tax cut coming in this month’s budget. Duh. Of course there will be, plus billions in new spending. Oh yeah, and $22 billion in new debt.

Seven days before that little event, the new US president takes office. From a podium in front of a sea of humanity, he will pledge whatever it takes to get America off its knees. This is code for hundreds of billions of dollars. Actually, it will end up being trillions.

So, we’re at an historic point. A right-wing government in Canada which only six weeks ago tried to cut spending is now embracing Depression-era mega-spending. And a left-wing saviour in America, who will do everything necessary not to become a neo-Herbert Hoover. Are you scared yet?

Actually, you should remember these months. They’ll be unique. Interest rates at zero. People hoarding cash, buying gold, trusting nobody. Politicians doing extreme, unscripted and unresearched things. Giant corporations teetering. Neighbourhood stores shuttering. Real estate, investment, banking and government spokespeople preaching calm and confidence. Media boosterism.

In this environment it will be challenging to discern the truth. Hopefully 2009 will end better than the last one did, but at this point I doubt it. Stock markets may well have bounced off the bottom, but real estate will still be in decline. The big story of the year will be unemployment, the effects of which will clobber retail sales, the car biz and, of course, housing. As I have said here before, Wall Street is a leading indicator while Main Street is a lagging one.

I’m sticking to my prediction that the lowest real estate values in a perhaps a decade will be here with the Spring flowers. Once vendors (tens of thousands of them) who held out for a better market understand it’s actually worse, many will dump in desperation. At the same time mortgage rates will be very cheap (but only for the well-qualified, with lots of down payment cash), boosting affordability levels.

Still, there will be no return to the market conditions of the last few years. This is a new (old) world of 20% downpayments, sane loan-to-value ratios and stricter debt servicing ratios. Once again home ownership will be a privilege, not a right. The notion of ‘starter home’ will make a comeback and once real estate values hit the floor (I’m guessing in 2010), the climb back will be measured, slow and even.

Unless we have a depression. Then, as in the US right now, there will be hundreds of thousands of empty houses which nobody has the balls to buy. After all, there are 20,000 empty new homes in Phoenix and 394 homes in Cleveland, Ohio for sale for $10,000 or less.


Here’s one. MLS ID #2489467

As for the government, and us citizens, all I can tell you is this: It had better work. A massive price is being paid by politicians who’ve never been in this situation before. If they fail, we get not only financial Armageddon, but the mother of all public debts. The odds of that happening are not great. But they’re not zero. Remember that.


#1 Jeff Smith on 01.02.09 at 3:42 pm

I sure wish houses in Toronto could ever ever be so cheap. I will buy one for sure.

#2 miketheengineer on 01.02.09 at 3:45 pm


I have almost every automotive engineer that I have worked with in the last 15 years looking for work and not finding it. We are getting reduced pay, if you still have a job. I see that 2009 is going to be very tough for anyone in this industry. Trying to find work out of this industry is going to be tough too. My friends have been out for 6 or 9 months already. When EI runs out what are they going to do? EI is a joke in Ontario. I hope they extend the benefits like they did for the airline industry a few years back. These are top educated professional engineers, which are highly specialized. It is very difficult to get employment in other fields like civil etc.

Best thing for the government to do is to:

1) Reduce the GST – at least 2%
2) Reduce personal income taxes – at least 5%
3) Reduce provincial sales tax 2%

This would immediately put more money into the hands of the people, who would then be able to “buy” more. Just do it for 12 months. Then if everything is o.k. bump it back up. Reduced taxes are what is needed right now, immediately. If everyone had an extra 10% right now it would really help.

Depending on what happens in the US, we will have a most difficult time in the winter of 2010. That is when things are going to get really tough for a lot of people. Prepare for Winter of 2010. By then, who ever is out of business is gone. The remainder will have a captive market, with less competition. Imported goods will sky rocket in cost, (why, most of our stuff comes from the US, which will be producing less, once the backrupcies peak towards end of 2009). Domestic produced stuff should be reasonable (ie flour, eggs, milk, cheese).

Someone here once said, have a back up plan….we are going into uncharted area. Every day this becomes more evident.

Give generously to the food bank in your city in 2009. If you do, then everyone who needs food will get some. If they have some, they won’t be coming to your door to get it. If we all give, the world will be a better place.

#3 Keith in Calgary on 01.02.09 at 3:56 pm

Governments need to reduce personal income taxes dramatically in order to save what is left of our economy.

To do so, means that the special interests who feed at the trough of entitlement must suffer accordingly.

“Quebec” did you hear that ? The “arts” did you hear that ? “Crown corporations” did you hear that ?

Oil sands, did you hear that? VANOC, did you hear that? — Garth

#4 Gord In Vancouver on 01.02.09 at 4:13 pm

I’m sticking to my prediction that the lowest real estate values in a perhaps a decade will be here with the Spring flowers. Once vendors (tens of thousands of them) who held out for a better market understand it’s actually worse, many will dump in desperation. At the same time mortgage rates will be very cheap (but only for the well-qualified, with lots of down payment cash), boosting affordability levels.

My sentiments exactly.

Phony Market

Don’t forget, last year’s spring real estate market surge was fueled by 40 year/nothing down mortgages, much the same way an athlete cheats by injecting himself with steroids. This “market fuel”, obviously, won’t be around in the spring of 2009 to save trapped market bulls.

Bad Stock Markets

Potential real estate buyers have seen the values of their stocks and mutual funds drop by at least 25%, a factor that will keep many on the sidelines. Before the market crash in late 2007, few people put all of their cash into term deposits as their yields were eclipsed by inflation.

Labor/Employment Market

It’s been awhile since anyone has stated that companies in any industry, except healthcare, are hiring. Traditional stalwarts such as oil and construction are, at best, not hiring. Do you really think that this type of labor market will encourage people to buy real estate?

Looks like Vancouver’s service industry could be in for a tough year – no wonder few here celebrated on New Year’s eve.

#5 Bulls eye on 01.02.09 at 4:29 pm

Artificial spending of invisible tax dollars are at work to create a mild recovery in the markets – this is only tempoary. Many Canadians will invest what ever they have left to there 5000 dollar TFSA account which will help a bit. However at the end of the day this is all fruitless. Investments are going to continue to dry up as not only does personal debt rise, but so does public debt. Now to the pillars of housing and currency…

-Cue the Squirls*sigh*

#6 Wealthy renter 2 on 01.02.09 at 4:48 pm

“…Stock markets may well have bounced off the bottom…”
Surely you jest! Stick to real estate.

Stock markets lead indicators by about 3 weeks at best…… in this current economic climate. They make newer lows and lower highs. That would be a downward line in any graph.
Sideline money is on the sidelines for a reason, because they had foresight, because they got out before everyone else saw it. I leave it here in the words of Dennis Gartman, …..”We have no interest in trading…… leaving it, as we have said here and on television, “To those either wiser or dumber than we; we know not which.”

Without a stock market, there is no economy. Stick to renting. — Garth

#7 ThumbsUp on 01.02.09 at 5:20 pm

A Business Perspective

I run a manufacturing business in Ontario, at the peak in 2004, we had 137 employees. Things started to go downhill starting 2005 – the C$ kept rising, our competitor’s price kept dropping, there was no way we could sell with a profit at that price. My consultant told me those ba$tard outsourced their assembly line to India.

There was no way we could survive, labour cost was about 3/4 of our total cost. It was obvious that we had to cut that to survive. One of our Chinese guys offered we look into moving our operation unit to his hometown in China where he had good connections to local government desperately looking for business investment to get their citizens employed.

It proved to be the most critical business trip I’d had. 10 months after, we were up and running in Midwest China, where average living expense is 1/15 of that here in Ontario.

The unfortunate side of the move was the letting go of 90+ workers here. I could have let 20+ more employees go and leave only the R&D around, but I didn’t, because I can still afford to have them around, however, to be honest, I see most of the positions ’Zombies’.

High cost of dwelling is the main cause of high labour cost, until that changes, I am afraid more jobs will be squeezed out of Canada and US.

Sorry to be ba$tard but we need to survive in this unstoppable globalization tsunami of business operations, businesses need to have profit to keep people around, everyone has to change to survive.

What, oil sand? You can compete with Saudi ? Service & Financial? Who do you serve and finance when there is no business & jobs around?

Ps – We got bailout money from the local Chinese government + 3 extra years no tax operation. And the Chinese market is surprisingly doing well.

#8 squidly77 on 01.02.09 at 5:31 pm

Without a stock market, there is no economy. Stick to renting. — Garth
well you said it..

MLS ID #2489467
even if you paid zero $ for a house it still comes with a price
$200/mo property tax
$150/mo maintenance
$125/mo nat gas
$100/mo power
$50/mo insurance

theres going to be a time when people do not value home ownership as it will be seen as a burden not an asset

will people avoid getting into a relationship with someone whos already over spent on real estate ?

are people going to want to purchase a box up in the sky condo when renting one is 60% cheaper

will people want to buy any kind of property when it robs them of their mobility

situations like detroits and clevelands will spread from coast to coast before this puppy undone
home ownership into the future is going to be looked at as very undesirable
somethings are better rented not bought

#9 Leading vs. Lagging on 01.02.09 at 5:32 pm

Garth, you say (often) that stock markets are a leading indicator and that housing is a lagging one.

In this case, wasn’t that reversed? Didn’t the housing market (in the U.S.) tank first, follow by the stock market ?

The stock market collapse resulted from unknowns becoming known. The renaissance will be in anticipation of resuming corporate profits and GDP growth. Real estate will not improve until buyers see personal income growth, which comes after economic expansion resumes. The lag: perhaps 2 years. — Garth

#10 Investx on 01.02.09 at 5:40 pm

If we’re headed deeper into a recession (possibly a depression) how can the stock market be bouncing off the bottom? Are you saying a bull market is commencing?

Where did I say that was happening now? — Garth

#11 young & foolish on 01.02.09 at 5:43 pm

So much gloom and doom, so much fear…..
But why? it’s only money / debt. And who says it will ever be re-payed. Perhaps the financial system will be re-organized and central banks made redundant (ha!). After all, if “they” fail someone else will step in, take the helm, and issue new rules.

As for real-estate, well there are only 2 ways to make money with it: 1) buy at the beginning of a boom market and sell near the top 2) only buy property that can pay for itself over a period of time.

You make money in RE the same as anything else – buy low and sell higher. That is possible in any market, including this one. — Garth

#12 K-Money in Vancouver on 01.02.09 at 5:51 pm

It’s amazing that many people in Vancouver think the market will rebound in spring. It will be one huge Tsunami wave from the Pacific Ocean that will come crashing down on people. Everyone will try to unload their condos but there will be limited buyers. The rules of supply and demand will kick-in. I know many people who have been laid off and can’t find jobs. Unemployment is on the rise in Vancouver. How do unemployed people buy condos or pay their mortgage.

For years I listened on the radio and looked at ads in the papers about Vancouver being #1 rank place to live, the new Hollywood and the best place on Earth. How many people NOT living in Vancouver would agree with this? So many, so many people bought into it. What people didn’t know was these ads where never broadcasted or advertised abroad. They where advertised to the locals to make them buy over-priced condos. I do give the developers, marketers and realtors credit because they pulled the blanket over so many people’s eyes. One friend claimed he would be able to retire from his one downtown bedroom condo. If you talked about a RE crash it almost seemed people wanted to throw rocks at you.

It’s nice to finally be proven right and not have to see and hear those ads anymore except when I drive around and see the Olympic “best place on earth license” license plates. Now it seems people want to throw rocks at them.

#13 TheComingDepression on 01.02.09 at 6:03 pm

Vancouver market for DECEMBER.: about 860 sales vs. 1,897 last December, a 55% drop. Inventory is about 16,200 listings, down from 19,462 in November. That inventory is up 80% Year Over Year. MOI is sitting at 19 months.

#14 islander on 01.02.09 at 6:25 pm

Keith in Calgary wrote: ” Governments need to reduce personal income taxes dramatically in order to save what is left of our economy. To do so, means that the special interests who feed at the trough of entitlement must suffer accordingly. Quebec, did you hear that ? The Arts, did you hear that ? Crown corporations, did you hear that ?

Garth responded: “Oil sands, did you hear that? VANOC, did you hear that?”

Garth, why do you insist on lumping the oilsands, which is a productive net contributor to our economy, with welfare payments to Quebec, money flushed away on Three Stripes painting, and economy-distorting Crown Corps? I’m with you on VANOC, but nearly every response you give to Keith’s comments illustrates either a blind spot or a hate-on for Alberta. Not sure if that reflects your Torontoism or if that simply plays well to your constituents in Missiscarberia, or whatever your riding was (don’t really care).

I know you’re smart enough to tell the difference between genuine economic generation and welfare projects. But your rhetoric suggests you’re more politician than you’d like to admit.

#15 re-aligned on 01.02.09 at 6:41 pm

“I drive around and see the Olympic “best place on earth license” license plates. Now it seems people want to throw rocks at them.”

When offered one of those plates when renewing my insurance, I responded by asking my car insurance vendor if there was an option of buying a plate opposed to the games. She took that as a “no” regarding whether or not I wanted one.

#16 Vancouver_Renter on 01.02.09 at 7:18 pm

If you think that a few trillion dollars in bailouts and pledges is going to stop this deflationary contraction, consider the following numbers from a newsletter to which I subscribe. Debt out there:

1. $52 trillion in outstanding interest bearing debts.
2. $60 trillion in contingency debts.
3. $596 trillion in derivative debts and bets.

I’m not convinced that hyperinflation won’t happen eventually, but we’ve got a whole lot of deflationary pain to work through first. The bailouts are a drop in the bucket compared to the debt load that has been built up over decades.

The US Federal Reserve would have to hand every single American a cheque for over $2 million to completely wipe this debt slate completely clean.

#17 Telling Elanor/Winston precursor on 01.02.09 at 7:22 pm

“When Franklin says yes, yes, yes.. it doesn’t mean he’s agreeing, it means he’s listening – that’s all..”

Got that America?

#18 char on 01.02.09 at 9:48 pm

Honestly, I don’t think most people at least in Western Canada, get it. Everyone I talk to either doesn’t like to talk about politics or the economy, or they think this is economy nonsense is a temporary blip and as for politics – they’re all nuts.

People are layed off for three weeks in the lumber industry in BC and yet think that’s all it’s going to be. Business as usual, planning trips – not overly concerned.

The stores are still selling furniture for too much and I just don’t get that sense of impending doom.

Sometimes I feel like I’m seeing things completely differently than everyone I know. A lot of people don’t like to follow news and politics, and so I think they have been lulled into complacency. I don’t know, I guess we’ll see what happens.

#19 Joe on 01.02.09 at 9:53 pm

“I’m sticking to my prediction that the lowest real estate values in a perhaps a decade will be here with the Spring flowers”

You call that a depression? Lowest RE values in 10 years is nothing more than a correction in very active market. Can you share with us what changed your predictions in the past weeks (days)?

When did I call for a depression? And you think a further 15% in housing prices in 100 days is “a correction”? Get serious. — Garth

#20 re-aligned on 01.02.09 at 10:42 pm

“money flushed away on Three Stripes painting”

Reaching back 20 years for examples of government waste is a bit desperate – especially considering it was 1.8 mil vs. the BILLIONS wasted in a wide variety of other ways including subsidies to the oil sands (which is what Garth’s original point was I think). The oilsands, with $30/barrel oil IS a welfare project.

#21 TheFirstRick on 01.02.09 at 11:05 pm

#18 char on 01.02.09 at 9:48 pm Honestly, I don’t think most people at least in Western Canada, get it. Everyone I talk to either doesn’t like to talk about politics or the economy, or they think this is economy nonsense is a temporary blip and as for politics – they’re all nuts.

People are layed off for three weeks in the lumber industry in BC and yet think that’s all it’s going to be. Business as usual, planning trips – not overly concerned. …………………
I agree 100%. Remember, BC has one of the highest precentage of medicated people in the country. If it isn’t pharmaceutical happy pills, BC Bud fills the void. Personally, I am a dyed-in-the-wool cynic and am glad, it saved my ass. When I took a secure government job 3 yrs ago, my colleagues thought I was nuts, considering the pay cut. Now, they pop their pills, smile, say things will turn around in the spring, ask me if I want to meet them for lunch.

I can’t, I’m working!!! LOL

#22 Crystal Radio on 01.02.09 at 11:13 pm

“Without a stock market, there is no economy. Stick to renting. — Garth”

There is only one economy Garth and that is the planetary one. The thing you are talking about is merely a ponzi that depends on the use of limited resources. You know, things like petroleum (and for some, like Flaherty, lithium).

About that market bounce of yours, I think you are right. It will be bouncing up – until it hits the wall of corporate earnings! If you got a good broker he should do you some good getting you in – and out again.

#23 Anon on 01.02.09 at 11:26 pm

I live in Vancouver and I make around $60K.

I won’t be in the market for real estate until if is 3x my gross income and my TDS/GDS are 40/30 or less.

That is way off right now.

I would rather rent for a fraction of the mortage expense and enjoy my life. The same goes for many people I know under 32 and I think this is a big problem. Many people in my generation have no interest in entering the market.

I’d rather invest and save and live my life. I’ll leave real estate to the boomers and breeders.

#24 Alex Curylo on 01.02.09 at 11:48 pm

@Gord in Vancouver:

“It’s been awhile since anyone has stated that companies in any industry, except healthcare, are hiring.”

Do what I do, iPhone programming. Can’t go a week without a headhunter calling. Not sure how long that’s going to hold out, but it’s still boom times in that little slice.

#25 real estate expert on 01.03.09 at 12:08 am

1) The U.S. will retain its reserve currency status. The currencies of rising powers such as China are not yet ready to absorb the $7 trillion in reserve assets the world holds, particularly because their bond markets are immature and can’t house reserves as U.S. markets can.
2) The overhang of unsold homes will fall. The U.S. population is growing by 3 million per year, which results in 1.2 million new households. Given the basic need for shelter…whether through the purchase of a roof or renting one.
3) Bank credit will expand…bank reserves have increased from near zero to about $700 billion…the Fed will find the right number, as was the case with the LIBOR problem.
…4/Vancouver will become the new Financial/Trade centre of North America…

#26 nonplused on 01.03.09 at 12:29 am

Well, I’m sticking with my prediction that we get an “Obama” bounce in the markets and then they tank again. Stocks (in general, there may be specific plays like defense, consumer staples, and maybe gold) will not regain traction until people can afford to buy the products the companies make. That won’t happen until the consumer shrugs his debt burden, has a job, and has pricing power in the labor market. I think that day is many, many days away, and the products they want to buy might not be the same ones they are buying now. The stock markets will recover, but predicting a near recovery is crystal ball stuff. I think the baby boomers are just hoping on the last possible salvation, and it ain’t going to come because they all want to sell the bounce and move into treasuries. Sell the rallies now and buy when business looks up and P/E ratios make some sense.

Went to Future Shop today to get a new DVD burner (one crapped out) and there were lots available for $35. Store was really busy though, but not much moving to the tills that couldn’t be carried. Then went to Costco to get mostly water (our water co-op well water is drinkable but not too tasty) and they were out of milk! All of it except chocolate expiring in 4 days! Asked the dude and he said it had been crazy. All of the tills were open and they still had people lined up down the main aisle. And it was minus 24C here so it’s not a day to do unnecessary shopping. I guess if you are at Costco anyway you grab some milk. I couldn’t get the great red F350 diesel (2004) going so we had to take the 1998 Jeep. Love those older Jeeps. New ones suck.

#27 Observer on 01.03.09 at 12:32 am

Char #18,
My observations have been the same. It appears denial is rampant on the West Coast. Because of that, I fear we’ll see the worst pain of all.

#28 Blacksheep on 01.03.09 at 12:43 am

Obama optimism is rampant with the masses.

“Things will be better once B.O. gets in”

The Honeymoon will be brief, markets may rally to 10,000, then based on horrific economic news, will pull back hard to 5-6000, once people realize NOBODY
can stop events now set in motion.

With our consumer based economy, governments want us to buy,buy,buy, but no matter how much liquidity is made available, you can’t push a rope.

The bubble has burst and anyone paying attention is scared sh**less, with good reason.

A steaming train with Obama on the track, offers a
preview of things to come.

That cow catcher on the train is going to do a number
on the millions of sheeple caught, heads down & grazing.

take care

#29 Bobby on 01.03.09 at 12:45 am

#30 squidly77 on 01.03.09 at 12:47 am

calgarys housing market has collapsed
imploded..blown up..crashed pick your phrase

all stats for december 31
tot sales 2008….767
tot sales 2007..1,451
tot sales 2006..2,015
tot sales 2005..1,877
tot sales 2004..1,538

avg price 2008..$366,444
avg price 2007..$400,965
avg price 2006..$361,640
avg price 2005..$273,616
avg price 2004..$233,310
prices will quickly retreat to lesser values than 04

not wanting to miss the party edmonton joins in

its a damn good happening that the elimination of 0/40 mortgages have had little effect on the alberta housing market..i guess we just got lucky

#31 squidly77 on 01.03.09 at 12:50 am

calgarys high was $429,953 recorded june/07

#32 landlord on 01.03.09 at 12:58 am

buying low and selling high is not the only way to make money in real estate. buy cash positive, multiple unit buildings with a stable tenant base and a good cap rate.

if you buy on market appreciation, sometimes you lose, sometimes you win, but if you buy on income you can ride out the ups and down.

#33 9/11 was an inside job on 01.03.09 at 1:48 am

char says “Everyone I talk to either doesn’t like to talk about politics or the economy, or they think this is economy nonsense is a temporary blip and as for politics – they’re all nuts.”

Well of course not! Why talk about real things when it’s far more interesting to talk about hockey (which personally bores the [email protected] out of me).

I’ve come to the conclusion that the vast majority of people are really simple. Whatever they see on their televisions, whatever news CBC presents to them, thats the way it is for them. Even smart folks I know don’t seem to follow what’s really happening. Many Canadians still think that this is just a little recession we’re going to go through just like 1982. However, like many bloggers at Garth’s site, I believe that we’re going into the Greatest Depression.

Wake up sheople. There is a lot more happening than you know:

#34 Mike B on 01.03.09 at 4:33 am

Toronto RE still lots of games out there. Saw a house listed for 750k that recently sold in April 2008 for $580k.
Already getting a dribble of listings which is much more than happened last year. Prices still quite high… No noticeable capitulation of the economic reality. I suspectan early spring market with mixed pricing. Some are putting prices so high that even a 10% rdctn means nothing.

To play devils advocate… technically nothing is really 0%
even getting hit by meteors/asteroids is slim but not zero. Simply because something is above 0% doesn’t mean it is likely. In real terms … Spending money will ultimately have some effect… For the US though… enough to deal with their insolvency… not enough… not by a long shot. They are at record debt levels … What are the odds of them coming out of this in 2009. Not 0% ? Pretty much Zero!

#35 patriotz on 01.03.09 at 7:10 am

Best thing for the government to do is to:

1) Reduce the GST – at least 2%
3) Reduce provincial sales tax 2%

This would immediately put more money into the hands of the people, who would then be able to “buy” more.

Buy more what? Stuff from China, that’s what. Also GST and PST don’t apply to our exports, so cutting these taxes would do nothing to help our export industries which are crucial to our economy.

Reducing the GST was one of the Con government’s worst moves.

What should be done is a refundable income tax credit for everyone, plus lower corporate income taxes, which would encourage people to work, save, and invest more. Not to consume more.

#36 real estate expert on 01.03.09 at 7:19 am

#30 Squidly
Are you “a paid shill”?…I see 2006 prices on the Dec 2008 chart and a return to normalized Dec sales.(Who buys houses in December?)
WHERE DOES IT SHOW “”Calgary’s housing market has collapsed?””…where?..where?..where?
…Garth, where do you find these guys?

#37 derrin on 01.03.09 at 7:44 am

Maybe it will be ok.


I have looked at your last few posts. I don’t see crash….yet.

You should really take a statistics course. Stats101.
Look at the median. Basically your looking at the high and what has taken place over approx a year. I don’t see crash. I see a few people that bought in 2007 and 2008 that have paid too much.

Life is ok…..dude.

#38 Joe ( Hamilton-Burlington) on 01.03.09 at 8:50 am

I cant speak for all of Canada but I can tell you the average detached property in the Hamilton Burlington area a decade ago was $163,016. In 2008 it was $311,908. So am I reading you wrong? You say prices will get to this level in a few months. That is a 52% reduction, not 15%???

#39 Bonnie L on 01.03.09 at 8:53 am

From the London Free Press


Foreclosures mounting

#40 Bottoms_Up on 01.03.09 at 9:34 am

“The most recent numbers from the Toronto Real Estate Board show that, in the first two weeks of December, there were 1,487 sales, or about 48 per cent less than the same time in 2007.”

#41 squidly77 on 01.03.09 at 10:06 am

real estate pre-apprentice
calgary sfh price july 2007 $505,920
calgary sfh price dec 2008 $417,397
for a total sold loss (2008) $88,523
minus fleece-man fees of 5% $20,850
your home adventure cost you $109,373

is that the cost of a sales man education ?
if it is a law or medical school education is suddenly cheap

#42 concerned on 01.03.09 at 10:53 am

What the government should do is RAISE the Bank of Canada rate north of 10% so that people actually have something to put their money into insofar as savings. I do not believe the government can “stimulate” us back into health.

I also believe that they should have NOT given the big 3 automakers a bailout as they will just mishandle the money anyways. The government should have increased the tax 3 fold on GM etc, since they’re now flush with US bailout money hahaha, and given HUGE tax incentives to Honda, Toyota and the like, as they will be the ones sticking around anyways.

#43 Gord In Vancouver on 01.03.09 at 10:57 am

#24 Alex Curylo

Thanks. Good for you. I’m sure you’ll get plenty of contracts in 2009.

FYI, I’ve been employed since 2001 – I was just stating what I’ve seen consistently over the past 6 months.

#44 Gord In Vancouver on 01.03.09 at 11:01 am

#36 real estate expert

There’s nothing wrong with #30 Squidly’s analysis – at least he had the decency to use objective evidence.

You should be thankful that he didn’t use Vancouver numbers.

#45 Republic of Western Canada on 01.03.09 at 11:46 am

#35 patriotz

Your wishes for retro-Communism and central planning will only encourage more massive inefficiency and continue the scandalous abuses of power we’ve seen from the Lie-berals.

The Lie-beral corruption is clearly seen in their insane, wasteful billion-dollar boondoggle of bill C-68; trying to steal all duck-guns away from a law-abiding population. Not to mention the Lie-berals illegal financial scandals of the last decade, their deliberate kidnapping and torture of Dr. Arar, and their recent attempt to overthrow the new legally-elected federal government.

Reducing taxation places much more discretionary, ‘fine-tuned’ purchasing power and ability to SAVE back into the hands of the population. Encouraging responsible personal behaviour in general must the aim of society, not abdicating all decisions to a faceless ‘nanny-state’.

That starts with encouraging responsible allocation of funds, driving at tentatively, stopping overpopulation by limiting production of kids, eliminating mass obesity, teaching good marksmanship and respect of firearms, encouraging alternative news sources (like this one), and the pursuit of higher education and training in whatever field suits one best.

Working, saving, and possibly investing more is the correct goal. However, enabling corrupt, wasteful government behaviour (financial or otherwise) by giving it more control over our personal lives through the income tax system is the wrong way.

#46 Foreign Investor on 01.03.09 at 12:04 pm

Home sales in Cranbrook are off 69% – December 07 – December 08.

One golf mega project is not paying their bills.

Realtors are in denial…..Did they save all that cash they made when Cranbrook was
hyped as the hottest market in Canada….?

Significant layoffs with CPR and Tembec.

Anyone want a 40 year old cardboard shack for 400K?

Contractors that bought high priced lots are starting to get (very) nervous…
……..Why can’t I get 240 per sq. ft anymore?……………..Where have all the line-ups
of G.F.’s gone? Someone please tell them to come back!

#47 real real estate expert on 01.03.09 at 12:12 pm

housing starts december in the thousands
2004 —-240

yet you say nothing is wrong with the housing market.
Here is what CTV has to say

Nov. home sales hit 8-year low amid falling prices
Updated Mon. Dec. 15 2008 3:37 PM ET News Staff

Canadian home sale activity plummeted to its lowest levels in nearly eight years last month, the Canadian Real Estate Association reported Monday.

November marked the second consecutive month of steep decline in the number of houses sold across the country. The number of properties sold by the Multiple Listing Service real estate co-operative in November fell sharply by 12.3 per cent since October.

Seasonally adjusted numbers show MLS sold just 27,743 residential units last month, that’s MLS’s worst performance since January 2001.

“We’re in uncharted territory at this point,” CREA chief economist Gregory Klump told CTV Newsnet on Monday, adding it could be the second half of next year before things improve.

where does it show it has not collapsed. It fell over the cliff already. Wait till spring and people flood the market.

#48 Keith in Calgary on 01.03.09 at 12:30 pm

Who buys houses in December ??……well at least 50% more people bought houses in Calgary during the preceeding 3 years than in this year……heh.

#49 bill on 01.03.09 at 12:48 pm

spent a week in vancouver over the holidays….did some sight seeing…noticed ALOT of condo buildings and cranes everywhere….it’s really unbelievable how much construction has sprouted up there.

went to a coffee shop to grab a warm drink and happened to be seated next to a very chummy fellow who began a conversation with me.

i asked him about all the construction, condos, prospects about the real estate industry in vancouver, etc….and his response was that vancouver was the perfect city for all the baby boomers who would want to retire there; and for this reason, that real estate would do well.

the most interesting part of the conversation, however, that i picked up on, was when he began his rant…he prefaced by saying….”this may be wishful thinking, but…”

he was ranting….but i don’t think he was truly convinced anymore…i think people out there are starting to see the light, but yet they are clinging to “hope” and “wishing”.

it’s going to be a very rough reality check for folks like him in 2009-2010 once vancouver real estate prices go through the floor.

#50 ATM on 01.03.09 at 12:49 pm

Just another doom and gloom from a respected source.

#51 prairie gal on 01.03.09 at 12:51 pm

Keith in Calgary and islander:

Investment in the oil sand is most definitely NOT a net benefit to taxpayers. Its extremely energy intensive, the oil is of poor quality, and the environmental costs are not even yet accounted for.

The destruction of wildlife habitat, water, soil and air pollution, increased downstream cancer rates, and the socio-economic havoc it has wreaked on the surrounding communities in the form of inflated cost of living and wage discrepancy has far outweighed the benefit of a crap barrel of tar.

I would rather see 20 artists each get a grant of $10,000 each to contribute to public discourse as only artists can than one roughneck who barely graduated high school pulling in $200,000 to spend on a fancy new snowmobile.

#52 Dom-GTA on 01.03.09 at 1:12 pm

Happy New Year to all. 2009 is going to be a very exciting and interesting year.

I personally can’t wait until RE hits new lows as I expect to be a buyer again in about 6-18 months, having sold in May of 2008 for a double. But what I sold was a triplex with the rents covering my mortgage so those are always easier to sell even in tough times as people look for help with the Mortgages.

Here’s hoping that the average house price in TO sinks to below $250K as affordability has been so stretched that we need a sanity check. When I saw people making a 1/3rd of what I do buying houses for 400-500K I realised something was wrong….We are definately mirroring the US and 2009 will be our year to really sink.

Good luck to all.

#53 Fred on 01.03.09 at 1:48 pm

A report on foreclosures in London, Ontario

#54 David on 01.03.09 at 2:12 pm

Tax cuts and massive spending increases sounds like the perfect prescription for a structural deficit in Ottawa. Being arithmetically challenged is no impediment to holding high office in Ottawa these days. The zero interest policy gives Canada its first real chance to practise Islamic banking and undoubtedly that will prove to be a stunning success.
Obama is no progressive, if one judges by the overwhelming number of Clinton era neo liberal hacks being appointed. The fact that Obama was among those who voted for a bailout for the Coalition of the Fortunate (READ: Wall Street Crooks) did not inspire much confidence.
The real bottom for real estate will come when prices flat line for 3-4 years and that is about a decade away, so there is now need to rush out and buy a property.

#55 Wealthy renter 2 on 01.03.09 at 2:27 pm

#30 Squidly77, your numbers seem a bit off. However right sentiment.
#36 Real estate expert….I appreciate that you try to bring the balanced view to this blog, but you have nothing to back your comments up….other than your shrieking.

Here is the link with the accurate drop in Calgary prices and sales. In today’s Calgary Herald. These are by far the most accurate stats, since I started tracking 36 months ago. I’m impressed that the media didn’t try and spin some obscure housing stat number to try and make the drop look not as bad .

#56 Farmer's field on 01.03.09 at 2:44 pm

Garth you got the Jeep at a good time. Not just deflation factor.. when the economy turns a lot of first dibbers are going to be picking up new(?) cars that have sat on lots for months. Better fresh from the oven.

#57 Downsized and Delighted on 01.03.09 at 2:54 pm

I hate to disappoint those of you who are waiting for the big drop in house prices (80% of this blog site) so that you can finally get that house that you so obviously crave, but the current market isn’t really all that bad. Lots of homes are selling, even in December. It is slightly weighted to the buyer side, but hardly a bust. In fact, there is lots of opportunity to buy homes that previously would have been in bidding wars. But does that mean anything less is a bust?

A real estate bust is when you can’t sell your home at ANY price. (See Arizona and Florida for clarification).

You can sell ANY house in Canada right now with the right price. Hardly a bust!

#58 real estate expert on 01.03.09 at 4:10 pm

#41 Squidly

1/ “COLLAPSE” means a drop to near zero…your post comment was strictly sensasionilistic.

2/ December sales are always the weakest of any month…considering the slow down and lousy weather…There are some that believe December was the time to buy everywhere across Canada…we shall see.

3/ People still need shelter, rental or ownership…the Canadian system is different from the U.S…Tax free equity…and when you sign on the dotted line you are on the hook.

#44 Gord in Vancouver

Obviously you are from Vancouver, Washington…I’m sure Squidly will cosign your papers applying for Canadian status…but you have to move into Squidly’s house in Oshawa…They need more Communists in Oshawa.

#45 Republic of Western Canada

It’s time Canada split into two…Eastern Canada can have St. Pierre & Miquelon Islands if they throw in the rights to Carl Brewer.

#47 Mini Me Real Real Estate Expert

…Flattery will get you everywhere.
All you renters on this blog keep mixing up “Housing Starts” with “Sale Prices”…..a huge drop in the first does not equate to a similar drop in the second.

…You guys have 5% mortgage rates!!!
…In my day one needed 30% downpayment, income and interest rates anywhere from 10 – 22% was the norm.
…Tax free equity did in fact avge a double every seven years…did it rise to quick these last four years…Yes

Do the math

Canada is the safest G7 Country in the world yet all I see are shortsighted posters on this board overlooking that fact.

#59 squidly77 on 01.03.09 at 4:42 pm

#58 for most people a loss of $109,000 may as well be a loss to zero as it will put them into bankruptcy should they need to sell
as far as your remark concerning dec total sales..learn to read a tables (graph) properly

thanks to 0/40 mortgages being introduced and subsequently yanked back the REIC have ensured that the next 3 years worth of young buyers have all been used up
canadian real estate prices will begin plunging come summer..if you disagree state why?

REIC..real estate industrial complex pushed the government for the 0/40 government insured mortgage program combined with the lower FICO score of 560
and the no-doc mortgage program..they have basically knee capped themselves

#60 squidly77 on 01.03.09 at 5:01 pm

the canadian government wanted to set the bar at a fico score of 650 when they made the changes last fall
but the REIC said thats not fair as to many canadians would be unable to buy a house so they agreed to set the bar at 600..heres a good chart with whats what with FICO scoring

heres one with the odds on the mortgage owner chance of de-fault

#61 squidly77 on 01.03.09 at 5:13 pm

“The lender looks at all the circumstances, and getting a deal approved with a credit score of 580 has been pretty standard,” says John Cocomile of Greedy Mortgage. “This, of course, is assuming solid employment, a strong co-signer or other factors that make the deal sensible.”
the future is a certainty based on the past

#62 double mike on 01.03.09 at 5:16 pm

#58 – whatever. I’ve just checked my landlord’s rates for townhouses in my area. The average rent drop is 15%. I pay much less than 1/3 of disposable income for the shelter and since my last move 3 years ago there hasn’t been a single price increase. Well, the landlord tried every year of course, but I told them to forget it and so they did. This year I’ll make a little 20% reduction. Buying? Thank you very much. I have a life to live.

#63 lgre on 01.03.09 at 5:29 pm

real estate expert – just as you preach no collapse or correction, I’m sure you were preaching RE price increase of 20% yoy forever in the last 5 years, now that was something possible right? why? oh yes, because it BENEFITS you, Give me a break, you come off as you have a crystal ball in your back pocket. Nobody on this site can guarantee any outcome, and yes that includes you..suprised? don’t be. I’m sure Garth does a lot more research on this then anyone else on this blog, hence why he is the guy running it and writing about it, and even he cant predict exactly what will happen.

I love how you have the excuse for December always being a slow month for sales, yes I’m sure it is, but what is your excuse for May, June , July etc, etc?. As I recall Dec is not the only month in a year, well maybe in your beloved Vancouver aka the financial gateway to slavery.

#64 Bobby in Victoria on 01.03.09 at 6:12 pm

I laugh when someone calls themselves a “real estate expert”. I think in reality, the expert is the one that guesses right.
There are many realtors out there that are still clinging to the notion of rising prices and are passing that wisdom on to their prospective clients.
There were less than 250 sales here in Victoria in December and only 370 in November. Given that there are 1400 realtors here in Victoria, my guess is that many will be soon passing on their expertise in new professions.
Happy New Year!

#65 real estate expert on 01.03.09 at 8:31 pm

To all my skeptics…”I come in peace”.

As to my content, it is researched and verified.

…You notice Garth does not disagree with my posts…therefore he agrees with them.

Back to the skeptics on this board…”CAREFULL WHAT YOU WISH FOR MY FRIENDS”…anything is possible in a Depression Catastrophy…Homelessness, Chaos…even Nationalizion of RRSPs, Bank accounts…who knows what.

…For example…if you own property, you are exempt, if you rent, you must enlist in the Armed Forces to gain required credits to purchase a home.

In the U.S. one method to sell off homes…there is a plan for Armed Forces members to qualify for “Special Veteren Govt Mortgages…I kid you not.

“…You notice Garth does not disagree with my posts…therefore he agrees with them.” If you want this to be your last post, keep it up. — Garth

#66 CalgaryRocks on 01.03.09 at 9:36 pm

#42 concerned on 01.03.09 at 10:53 am
What the government should do is RAISE the Bank of Canada rate north of 10% so that people actually have something to put their money into insofar as savings. I do not believe the government can “stimulate” us back into health.

Oh yeah, great idea. And who’s going to pay your 10% interest rate when the economy is in the toilet and businesses, because they cannot cover their borrowing costs, need to lay off people and/or close plants/stores? You think that money just gets created out of thin air because the BOC decrees it?

How about the interest we pay on the massive debts at all levels of government? Governments will require huge tax increases and/or deficits when interest rates go north of 10%.

I am not even going to talk about what this is going to do to the CAN$ and Ontario’s manufacturing sector.

Keep the ideas coming.

#67 Wealthy Renter on 01.03.09 at 10:47 pm

#35 patriotz

“Your wishes for retro-Communism and central planning will only encourage more massive inefficiency and continue the scandalous abuses of power we’ve seen from the Lie-berals. ”

Your neo-con attack on Patriotz is completely unfounded, but it obviously gave you cause to spout off about everything from obesity to guns.

Re-read his post. He is taking a fairly mainstream conservative postion that it is better tax policy to reduce corporation taxes and personal income taxes.

What a retro-commie.

#68 Investx on 01.04.09 at 12:44 am

48 Keith in Calgary on 01.03.09 at 12:30 pm

“Who buys houses in December ??……well at least 50% more people bought houses in Calgary during the preceeding 3 years than in this year……heh.”

Exactly! LOL at Real Estate Expert.

#69 patriotz on 01.04.09 at 1:00 am

45 Republic of Western Canada on 01.03.09 at 11:46 am

#35 patriotz
Your wishes for retro-Communism and central planning

Hello? Since when is cutting income taxes for Canadian individuals and businesses, instead of cutting sales taxes on imported goods from China etc, “retro-Communism”?

What planet are YOU from?

#70 Makeorbreak on 01.04.09 at 10:59 am

Went to the movies and restaurant last night. Both places gave us discount coupons for our next visit…this is the first time this has happened to me. Besides, the restaurant, a very good and affordable vietnamese one, was 3/4 empty on a Saturday night. Something ugly is indeed cooking. Expect a lot of commerces to start shutting their doors soon.

#71 Republic of Western Canada on 01.04.09 at 10:59 pm

#67 Wealthy Renter

The attack on Patriotz’ subversion and confiscation of the citizens’ discretionary spending (or saving or investment), so that it can be replaced with some postponed government-run financial allocation, is in fact completely founded.

Re-read his post. He is advocating replacement of the citizens’ right to allocate their own earned income (by a reduction of the GST/PST confiscation). He wants to replace it with a government-administered, temporary confiscation of that allocation (keeping the GST/PST confiscation but issuing´tax credits´). Again, that is precisely the kind of inefficient government ´nanny-state´ meddling which benefits no one except the government. Primarily, it enables government hacks to justify their own existence, and to keep your tax money interest-free for a period of many weeks.

Repeated, it is neither provincial nor federal governments´ place to attempt to force ´proper´ allocation of purchasing power by keeping it from you until tax-refund time. It is the citizens´ place to properly allocate their purchasing power directly, through proper discipline as I´ve indicated earlier. That is of course contrary to Lie-beral party hack mentality which believes they can manipulate the citizenry to any obscene end, by any means, financial or otherwise. -see previous posting for examples of the Lie-beral´s corrupt, manipulative behaviour.

Patriotz says nothing of reducing personal income taxes. He just wants to have the government confiscate more money at point of sale, use it for months, then ´give it back´ later.

Furthermore, lower corp taxes are of course just another version of the massive bail-outs given to corrupt, inefficient, or obsolete industries by world governments that we´ve seen in the last few months. Using a GST/PST to siphon off citizens´ purchasing money so that it can be dumped into corporate coffers is the same kind of financial atrocity that the recent useless bailouts were.

Communist behaviour, pure and simple.

#72 Robb on 01.16.09 at 10:06 am

Lots of squatting room in the interior of BC. Those that want to get back to nature can learn to hunt, wish and wipe their asses with birch bark. Axes and ice fishing huts on sale this week at Canadian Tire