Those car town housing blues


Well, it sure is interesting what a little financial Armageddon will do to folks.

Some friends emailed me this weekend with a problem. They’re in an Ontario town heavily dependent on the car business, where far too many auto plant workers are now either on layoff or living on a knife’s edge waiting for their jobs to vanish. Houses aren’t selling too easily, in fact some have been on the market now for two years. Prices have raced lower as a result, after their romp higher on news three years ago a new car plant would built not far away. (As it turned out, that billion-dollar facility opened, then sent workers home.)

Yet despite the job losses, the uncertainty and the financial stress, my friends have seen two curious things happen: Sellers, even desperate ones, are rejecting low offers, and the number of active listing has taken a dive. They wonder why.

The answers, I’d say, show why real estate’s the most flighty and emotional of investment assets, able to swallow whole financial futures in a single gulp.

First, there’s fear. People who have lost their jobs understandably fear the future and more change. Daily routine, friends at the shop, a structure – it’s all gone. So, deep down, there is a profound reluctance to also give up the home which is now a refuge. Many sellers actually don’t want to sell. And they won’t, certainly not while feeling victimized by some damn property vulture.

Second, there’s denial. By my rough count, about 50,000 homeowners across Canada have taken their places off the market in the last three months, since the crisis moved in. Almost all of them tried to unload at an unrealistic price, got no action, and decided to bail until the Spring. Universally they believe prices will be higher and the storm will have blown through by then.

Big mistake.

This means the number of listings will start careening higher in about four weeks, just as some very jarring economic news hits us. Unemployment is exploding, a mess of high-profile retailers are going to roll, some shuttered car plants won’t be reopening, the government’s sinking into a pit of debt and the news is going to get worse, not better. This is a recipe for crashing housing values as supply mushrooms and demand withers.

So, the advice to my friends – frustrated at being unable to get the bigger home they need – is to list their own home immediately and aggressively, get a lengthy close, and then swoop down on the property they want with a clean unconditional offer in May or June. After all, presenting an offer to a pissed-off, unemployed, dejected person with a low-ball price and a condition on selling another home is just going to earn some abuse.

And rightly so. Vultures make big targets.


#1 Suzukimum on 01.11.09 at 10:33 pm

Come on, it can’t be that Toyota plant in Woodstock, Ontario.

#2 Smith on 01.11.09 at 10:39 pm

This post rings loud and clear in London, Ont. Sellers were stubborn and would not budge from their unreasonable prices. Agents disillusioned their clients into thinking prices were stable, London was immune. Well, the numbers are in: unemployment is up, forclosures are up, taxes are up, and the homes are dropping from the market after little or no interest.

A hub for manufacturing, SW Ontario is a sad place to be for RE this year.

#3 vulture says 50% by spring on 01.11.09 at 10:47 pm

I am just waiting to make my little vulture trip back to the sunshine coast.
I will be waiting till March 1 2009 by then the bottom will have fallen out of the market on the coast.
I am taking assessed values on houses and dropping them by 10%.
this will bring a homes price down about 30% from peak..

#4 Observer on 01.11.09 at 11:12 pm

The pain of falling prices on the west coast won’t be anywhere near bottom in the spring of 09. It may start gaining its momentum by then but surely the spring of 2010 will see things on the coast far worse than 09.

#5 joshturbo on 01.11.09 at 11:15 pm

I’v just talked to some friends with-in a large house building company and they are staying very busy, which totally shocked me. either there busy cause of pre-buys or people think its hit bottom. i think we just begun. :(

#6 average guy on 01.11.09 at 11:29 pm

The biggest losers will be the serious sellers who blew away the last 8 months trying to sell privately, oblivious to the fact the market AND values were rapidly sliding away from them. Property Guys didn’t explain that to you, did they? Well at least you saved 5%.

#7 $fromA$ia on 01.11.09 at 11:33 pm

It seems that the 2010 Olympics budget is skyrocketing. Something like more than 9o0,0o0,oo0!

The lucky houses that do sell are selling well below their astronomical city assesments!

Looks like the parties over before the parties begun.

This will be one Olympics that is to be pissed on.

Garth, whats your take on Vancouver RE, you mentioned another 21% haircut for 2009.

Could you see the city assesments dropping to meet current market conditions or does the city still want to hold those high assesments so they can collect their tax to pay for 2010?

I wonder how this is going to work out, clearly the parties over.

#8 Not Registered on 01.11.09 at 11:40 pm

I believe you are talking about Oshawa

#9 nonplused on 01.12.09 at 12:20 am

Vultures are supposed to swoop in and eat dead carrion, not struggling live animals. That means stick to bank foreclosures.

Here is how it works for the soon to be dead: you are trying to sell a house that is now worth $500,000. Problem is you have a $600,000 mortgage. You have listed for $650,000. (hey, hope springs eternal.) You get an offer for $525,000. The problem is, you can’t sell at that price because you would have to come up with $75,000 to pay the bank and all you have is $30,000 in RRSP’s. You are dead either way. For the underwater homeowner, limping along with the hope of a sale until the bank takes it back is really your best option. The judge might let you keep the RRSP’s. These folks can’t sell, and that is why the “low ball offers” are pissing everyone off.

Wait until the foreclosure process does its God ordained job and then start making low ball offers on those units. For the bank, it’s a business, not a life. They will take the highest offer when they need to sell, write off the loss, and move on. Most homeowners just simply can’t do that because they don’t have the money to take the write off.

The whole idea that you can now just run around making offers for what the home is probably worth is ridiculous. Due to the financing behind the house, the owner likely cannot sell it for that price. The bank won’t let them and they would be ruined.

The ruin may come, but it will come at the hand of the banks, not voluntarily.

#10 van on 01.12.09 at 12:28 am

to #3, 30% drop from the peak is nothing since prices went up (at least here in AB) 100-150% the past 2-3 years.

We’re already close to a 30% drop from the peak already in Edmonton and Calgary (old criteria).

I expect we’ll drop to about 50% from peak by end of 2009.

#11 Investx on 01.12.09 at 1:09 am

I wonder how much the perception of RE will change. Future discussions will be interesting: “Remember when real estate was such a great investment? Remember the meltdown of 2008?”

And have I annoyingly told you that the financial capital of the world will be Toronto?

On the cover of the current Toronto Life magazine issue (

“Why Toronto will be the Next Global Financial Capital”

For real. LOL.

#12 Jeff on 01.12.09 at 1:13 am

I agree with listing immediately and aggressively. But the long close seems to be a risk… why? Because let’s say the buyer feels they got the property at a 5% discount… they are happy… then as closing approaches the market drops 15% during that time… well now the buyer is down 10%… do they close? Maybe not… it’s a nail biter for the seller and their Realtor and a payday for the lawyers.

#13 kitchener1 on 01.12.09 at 1:18 am

My guess would be that you are alluding to the Toyota plant in Woodstock. That would live two metropolitian areas within driving proximity. Those two would be:

London- its possible but London is also being hit hard from the layoffs in St Thomas with the truck plants closing. If people there are waiting for a recovery then they are dreaming.

Kitchener/Waterloo/Cambridge- Possible, I see houses on the market here for 6 months plus with no action, even after price reductions and relists on mls.

The other factor for a spring free fall is the large # of layoffs being announced recently. Once someone gets laid off, they have UI for 9 months(in Ontario), a lot of people will be putting there homes on the market once they get their pink slips. I think the max UI benefit in Ontario is around $1500 month, hardly enough to carry a mortgage/food/car payment etc…

#14 Zoronqueen on 01.12.09 at 1:43 am


thanks for that post. We are trying to unload our 2nd home right now. We are getting a termination contract with our current agent as they are unrealistic with their listing price and refused to budge on their commision. At peak listings where as high as 394K, now at 335K not even one offer. A similar house in the neighbourhood sold for 317K with listing 320K. So now we are running against time. How much to list to attract buyers??

We are going to use back our buyers agent who will not charge us any commission as he wants to stay in the business. Also he is in agreement that house prices will continue to fall. He told me he sold a house in Dec by asking the sellers to list 5K below market value and it got sold in 2 days.

The realtors who want to stay in business must use some other tactics ie. lower their commision along with persuading seller to lower prices.

Too bad I read your blog too late. We bought in Sept, 2130 sq ft home in Magrath, Edmonton with finished basement for 517K which at the time seemed like a good deal. Lots are 250K. Just got our city’s assessment.


And that is only a projected decline, if recession worsens, we’ll be lucky if our house is worth 450K.

Also if we manage let say to get 310K for our old house. after paying off our 120K mortgage. What to do with the balance??

#15 confused and a little crazed on 01.12.09 at 1:57 am

hey vulture say by 50 %…

Aren’t you waiting for 50 % as opposed to 30 % as your blog name indicates…just wondering?

or is it starting to look when it hits 30 % but buy @ 50 %. why are u so sure?

#16 David on 01.12.09 at 3:23 am

It is understandable that families would have little desire to be acquiescent to obvious price vultures and would be happy to see the back of them after some tepid poorly attended open house weekends. What is happening in the USA and will eventually happen in Canada is that unoccupied foreclosed properties will be the market leaders insofar as sales are concerned and will be the market driver as far as price trajectory. Credit Swisse is predicting one in six residential mortgages in the USA will be in some state of foreclosure by 2010-2011. Those numbers are alarming considering that in a normal housing market the default rate is usually .25%-.50%. This is unpleasant news for those who wish to sell, as they will be competing against quit claims and power of sale properties.
The Gilded Age of residential housing is dead and will not be coming back. Like any asset bubble that deflates it is the case of lose today or lose even bigger tomorrow on the home sale.

#17 Da Hk Kid on 01.12.09 at 3:28 am

Garth, typical too late lowering of expectations which will find the seller wondering why they didnt sell when then could.

My advice to your friends is simply sell now and rent as the carry of rent is always cheaper then top of the purchase market.

Pocket whatever equity is left in the house and/or pocket the difference each month compared to what you are paying now for P+I+T.

Then get ready to pounce when reality sets in. There is no recovery in 2009 or likely a bottom in 2010 in the USA so lagging Canada would seem to bottom after even if we see a recovery first.

You will want to do the following at this time, put down as much cash as possible and lock into a fixed rate before rates inflate to double digits.

If you can grab a low interest 7 year fixed then after 7 years you can pay it off or more reasonably eat the higher rates given most of your principal is paid off.

I cannot make a case for even owning real-estate however for the first time in my life as I believe the growth will be very slow on value for a decade.

The only reason to buy would be to hedge against potential high inflation and that your landlord could hit you hard with increases given supply and demand and his/her costs to carry a house that was not well financed in the first place.

For me, I will buy two properties in the future, one in Australia and a vacation property in SE Asia. Australia is likely one of the worst overpriced real-estate markets which I missed buying into 5-7 years ago.

#18 Ann on 01.12.09 at 3:55 am

Garth, what happens when the price you’ll get to make the sale takes it below the mortgage? I know someone who diligently saved, put 10% down, got 10% off the list of the modest house they bought in the summer of 2007, and are now fearful for their retirement (7 years away). To sell would probably mean they take less than the mortgage owing – meaning not a cent to buy a tiny retirement home, plus suddenly a brand new bill to the bank for the remainder of the mortgage. They hope hanging on for the 7 years will see a turn around. What do you think?

#19 Vancouver_Renter on 01.12.09 at 4:07 am

About a year ago I watched a program on TV that discussed the California real estate meltdown. A realtor on the show specifically advised the viewers that the only way to sell in a deflating market is to hold your nose, get extremely aggressive with your asking price, and make the sale happen quickly. The price may seem like a giveaway relative to the healthy prices of the past, but in a year you will be happy that you used this strategy.

She further warned that too many people, instead, let their emotions and greed take hold. They chase the market price down, month after month, always asking just a little too much. In the end, they end up selling for a far lower price than if they had been aggressive in the first place.

It’s funny how powerful and illogical greed can be. You don’t even know it is at work in your heart until you face this kind of situation. In the past, I have made the same mistake several times with publicly traded shares I’ve held. I’ll consider selling a $10 share and it will drop to $9. I’ll then think, “If it goes back up to $10, I’ll sell.” Then it will drop to $8. I’ll then think, “If it goes back up to $9, I’ll sell.” And I’ve ridden it the whole way down. I’ll then wake up one morning and think, “What just happened here? Why wasn’t $9 or $8 enough? Where did this crazy greed come from?”

I know that many Baby Boomer have experienced consistent, year-after-year healthy house price increases here in Vancouver for the last 25+ years. The last significant fall in prices (and the prices fell well over 50%) was in 1981. So I imagine that dealing with greed and emotions in a falling market is something new for that generation. But lessons won’t be learned until many have lost a fortune. They’re ride it all the way down and then will one day ask, “What happened?”

#20 HalifaxFamily on 01.12.09 at 5:50 am

We’ve seen places unlisted in Halifax as well. It’s crazy though. There are some pockets of places that have sold well – and are still selling – albeit with a longer time on the market. On my walk to work every morning, I see houses for sale but they do sell.

It’s probably an issue of denial in Halifax. Conversely, it could just be that the houses here (in a certain area) sell better than others (or have ‘greater fools’ buying them).

I spoke to the shuttle driver of a dealership on Friday. Indicated they sold 4 cars all week (luxury). Things are slowing down. I was the only one he drove back and forth!

#21 HalifaxFamily on 01.12.09 at 5:52 am

#22 islander on 01.12.09 at 6:24 am

Garth, can I tweak that advice a bit?

If you’re selling, I recommend a tight close.

The longer the close, the greater the likelihood your buyer will back out. Not sure about other provinces, but in B.C. the deposit is virtually meaningless; it’s often held in one of the realtor’s trust accounts as a neutral party and cannot be released unless the deal completes or both parties to a deal agree to release it.

In other words, buyers can and ARE walking way on deals. When most deals are held together by deposits of less than $10K, they’re taking their chances they’ll get their entire money back.

The key in this environment is to sell, close the deal and get the money in your account. Rent for a while if you have to. Moving costs aren’t THAT high.

Then take the rest of the year to lowball the sh!t out of everybody else.

Very true. This is why I always insist on a substantial down and a clause stipulating it is the property of the vendor. Realtors hate that one. — Garth

#23 Jonathan on 01.12.09 at 7:13 am

Up in Durham they are listing new homes $100,000 off. You can get a detached 2700 sq ft home on a 50′ lot for $289,000!

#24 Sail1 on 01.12.09 at 7:55 am

# 9 nonplused

Wait until the foreclosure process does its God ordained job and then start making low ball offers on those units. For the bank, it’s a business, not a life. They will take the highest offer when they need to sell, write off the loss, and move on. Most homeowners just simply can’t do that because they don’t have the money to take the write off.

You have failed to include a large sector of the market. Many families have purchased new homes. They will gladly reduce their resale in order to get into their new home. The alternative of getting stuck with to homes will not be a pleasant one in today’s environment.

#25 kc on 01.12.09 at 8:10 am

hey garth, further to your Deflationary Spiral… how about this one for forcing deflation?

Tembec squeezes 10% from suppliers

“Effective February 1, 2009, all suppliers of material to Tembec will have their prices reduced by 10% from the current prices paid by the Company. We recognize that this will put a squeeze on your margins, but this is a situation that we and most other manufacturers are facing with this economy. If this request can not be accommodated, we will be forced to take our business to another supplier. I trust that you will continue to be an important and long term supplier to Tembec, and that you will accommodate this request. We will have to work together to get through the current economic crisis and maintain a strong business relationship.”

Now this is the start of the mean and nasty DOG eats DOG to survive….


oh, many pages back I was explaining about what happens when 1 industry towns lose the meat and potatoes, Being in forestry I have lived thru this a few times in a one industry town… the smart ones see the writting on the wall on split ASAP… the real losers are the ones who hang on till the end hoping for that golden parachute to open, however, by the time it does arrive, it seems to be made with lead. 15 years means NOTHING when the kitty is dry. You never seem to get back ahead after wards for the climb out is and can be steep. Knew a guy who was smart with his money bought and rented out 3 properties in a forest dependent town, (let me say that this place employed 150 direct jobs in a town of 3000) in the last major down shift during early 1990, he put a bullet in his head when the forest shut down past 4 months. I suspect many more of these stories are going to be on the rise.

#26 Expat in NC on 01.12.09 at 8:29 am

#23 Jonathan

Can you tell me where those new homes are located? Link would be awesome. We might be moving back to that area soon (after the RE prices have dropped of course :-)).


#27 midas on 01.12.09 at 8:33 am

#19 Vancouver Renter

Well said! Couldn’t have said it better myself.

Gloomy as it may sound I personally do not believe that RE will provide any return on investment even at today’s prices in the lifetime of anyone over 40. A 500K house today that will go down to 200K or less by 2011 may come back to 500K by 2021 or so. However that 500K in 2021 would probably have the same purchasing power as 200K today. So realistically that property would have to appreciate to around 1.2M in 2021 to pay the same return as it would today. Now if you wait till 2011-2012 and buy a property or two for pennies on the dollar then that would be a worthwhile investment but no sooner than 2012. This thing ain’t anywhere near bottom yet, not even in the States and we are two years behind. Australia is another year behind so #17 if I were you I would wait till 2013 before touching anything in the land down under.

#28 real estate expert on 01.12.09 at 8:43 am

#22 Islander

…Agree with Garth…

Get “a large, irrevocable deposit, upon subject or conditions removal”

….and insert, “commission payable upon completion only”.


The trend has begun…hire the 1% no frills realtor…pay for your own advertisements…save a bundle


Offer your listing as a “Sale or Trade”…you will be surprised at your new possibilities.

…the 3%-5% savings of real estate commissions can be used as an added down payment towards the deal you buy.


List your property on Craigs List if you are not pressured to sell immediately.

….Sign back any offers presented to you with “Arbitrary” Subject or Conditional approval by the Vendors Lawyer/Solicitor”.

Inserting this “Arbitrary approval” is very very important protection for the Vendor.

good luck to all

#29 real estate expert on 01.12.09 at 8:45 am

….Sign back any offers presented to you with “Arbitrary” Subject or Conditional approval by the Vendors Lawyer/Solicitor”.

Inserting this “Arbitrary approval” is very very important protection for the Vendor.

#30 dd on 01.12.09 at 9:06 am

#4 Observer,

So true. West Coasters are in great denial. It is going to take a year for the prices to get to lower levels.

#31 eddy on 01.12.09 at 9:46 am

i agree with Garth’s advice- get rid of it now. I might add ‘before it’s too late’. Houses always depreciate physically, now the ‘financial asset’ we call a house is depreciating too. Imagine trying to sell new cars with 5.5% mortgages, and no ‘red tag event’
Everyday i become more pessimist about toronto prices and i’m thinking 30% from peak may be too little. and now i’m worried that mayor miller, after the proven disaster of his land transfer tax, has an easy excuse to nail every property owner in the city with a tax increase because (in his own words):”The people of Toronto will not stand for a cut in services” by services i assume he means free housing and welfare, language training for immigrants ,etc because we pay for garbage pick up now, and a surcharge for vehicle renewal stickers.

#32 patriotz on 01.12.09 at 9:50 am

Could you see the city assesments dropping to meet current market conditions or does the city still want to hold those high assesments so they can collect their tax to pay for 2010?

1. Assessments are performed by the BC Assessment Authority, not the cities.

2. Assessments are an estimate of market price on July 1 of the previous year. They are not supposed to reflect current market price and are not adjusted for market changes either up or down, other than for that annual date.

3. City tax revenues are not determined by assessments. City budgets determine total city taxes. Assessments only determine the amount of taxes each property pays out of the total.

#33 eddy on 01.12.09 at 9:53 am

one more rant, let’s divide sellers into two groups-
have to sell and want to sell. if you are buying- only deal with people who have to sell. and very soon their prices will drag down all prices. then the ‘want to sell’ people become the ‘we missed the boat’ category

#34 jess tree on 01.12.09 at 10:19 am

how do the assessors determine value ?

#35 Jelly on 01.12.09 at 10:52 am

vulture says 50% by spring (#3)

You contradict yourself saying 50% and then 30% by
spring of 2009.
What knowledge do you have about booms and busts and how long they take to pan out?
It seems like it would be convenient for you in a few short months to expect a bottom.
How do you figure that the States have taken years in a recession/real estate crash and we have just started in comparison to them?
Your thoughts lack clarity and insight.
Expect the bottom to take a lot longer than 2-3 months!

#36 Makeorbreak on 01.12.09 at 11:04 am

Just received my municipal taxes bill last week. Had a raise of about 5%, first raise in Gatineau in many years, in this 40 year-old area. Wouldn’t want to be in a 3,500 sq home in a new development.

People that refuse low-ball offers will soon find themselves on the street, when the bank reposess their house.

#37 Mike B formerly just Mike on 01.12.09 at 11:06 am

Apart from real estate the big big question constantly being bandied about is “great depression II”
See what Paul Krugman from the New York Times, a nobel prize winner.
His take… well see for yourself at yahoo finance't-Save-Us-from-Great-Depression-II?tickers=gm,tm,%5Edji,%5Egspc

His position that lending rates can’t solve the current problem or have never solved the problem… witness what happened in Japan.. 10- 12 years of near 0 or 0% interest rates. His position is that fiscal spending is what is needed.
My question is How will this impact Canada?
Most people should come to the common sense conclusion that it will BIG TIME. Which is why, in a nutshell, Garth’s approach, which some tout as opportunistic, is pretty rife with intelligence and honesty.

You decide yourselves.

As for RE in Toronto. I still keep getting listings piling up and some monster expensive ones going on the market in areas not normally on the market. 4 plus million dollar homes for example. Come late January and after Obama takes office you will see a seismic shift in Real Estate in this country , certainly T.O.
Even reduced properties are just sitting there like dead ducks.

#38 Peter on 01.12.09 at 11:20 am

Jan 12
There were no single family homes sold yesterday in Calgary. That’s the first time I’ve ever seen that happen. Sales are now down 70% compared to 2008. Pending sales are increasing, however, now up to 140. That’s about half of what there was last year at this time. The average list price of pendings is $451,987 which should translate into a final sale price of about $425,000 over the next week. Condo sales are down 64%.

Weekly Sales Report for Homes and Condos in Toronto and the GTA from TREB Market Watch. This report is updated once TREB releases the data.
January 7, 200

Av. Price $330,056

December 2008 – $361,415
January 2008 – $370 000

#39 patriotz on 01.12.09 at 11:34 am

how do the assessors determine value ?

Sales of similar properties, the same as a bank appraiser does. Obviously they go into less detail for each property and automate a lot. You can see assessments and sales here:

BC Assessments online

#40 kitchener1 on 01.12.09 at 11:45 am

#31 Eddy
mayor miller, after the proven disaster of his land transfer tax, has an easy excuse to nail every property owner in the city with a tax increase because (in his own words):”

The city holds all of the cards in terms of property tax increases. MPAC is a joke, however if enough people challenge their assements the City of Toronto can just change the mill rate that property taxes are calculated on and your taxs will still go up.

#41 O'Ryan on 01.12.09 at 11:55 am

I know it’s been said already,but I strongly suggest sellers price very aggressively. I sold my home in Kelowna last May by doing just that. I think we were quite close to the top of the market,but I wasn’t going to risk hanging on to my house for a few thousand dollars. I priced ten thousand below the comparitives in my neighbourhood,got two competing offers(which were nicely above the asking price)and asked for a closing date 3 weeks from the offer. Done. Money in the bank and renting for awhile. Maybe a long while.
How serious are you about selling? Don’t be greedy. Get out while the getting is still somewhat sort of good.

#42 Bill-Muskoka (Not Anymore on 01.12.09 at 11:55 am

Just talked with our neighbor who has their home listed. They expect nothing to happen until Spring,. They are elderly and moving to B.C. where they found the market stagnated as well after being there for a month. Lotusland is still believing their self- made dream of inflated home prices.

People are going to do what they feel (maybe even think) is best for yhem regardless of the RE industries efforts at Flim Flam.

As to the auto workers. Well, here is your reality. Your union may think holding a hard stand against wage deflation is going to work, but the market is clearly saying’ Yes, You WILL!’

It is a cold, sunny day today, and the sun is the thing that keeps us all going. My neighbors who just returned from B.C. said they were so happy to feel the sun again after being in perpetual cloudland for a month.

Anyway, the day goes forward, and so do I.

#43 Mike (authentic) on 01.12.09 at 12:18 pm

Record day in Calgary for Real Estate?

Today, the 11th of January, Calgary hit a new Record for home sales; no not a record for most sales in a day, highest price sold or even the lowest price ever sold. According to stats from Mike Fotiou of First Place Realty.

The new Calgary Record was not a single house sold in Calgary that day; not even the cheapest house out of more than 4000 listings and growing.

There isn’t a more loud and clear signal that there is something rotten in Calgary Real Estate than this and it’s just going to get worse. Spring buyers are in for a shock of their lifetime as sales plunge month over month for the 8th month in a row now.


#44 Canned Goods and Buckshot on 01.12.09 at 12:22 pm

re: long vs short closing date
Previous posters have suggested a short closing date to prevent buyers from backing out, even after they have signed on the dotted line. It sounds like in certain circumstances some people think a contract is not a contract. I guess that is a good reason for wrapping it up early.

My concern with a short closing date is that if we are worried about our banking system, for instance, a run on the bank, then potentially the proceeds from the sale of your home are going to get tied up while you are house hunting. Even if the deposit is insured, CDIC isn’t going to be cutting a cheque the next week. If the SHTF in a big way, having some security in your home would be a big comfort. I would feel less secure in a rental or motel or crowding out a friend or relative. At this particular time with the fast moving events at hand I’m not sure I would feel comfortable with a short closing date if I had to stick the biggest part of my financial assets in a bank and turn it into, in essence, a bunch of magnetized zero and ones. Thoughts?

#45 Investx on 01.12.09 at 12:26 pm

Toronto Land Transfer Tax partially blamed for RE dip:

“While a struggling economy was primarily responsible for the dip, real estate experts also pointed to bloated year-end numbers from 2007, caused by high traffic ahead of Toronto’s impending land transfer tax.”

National Post, “No surprise here: 2008 sucked, real-estate wise”

So, how do you explain the 905 crumble? — Garth

#46 Investx on 01.12.09 at 1:14 pm

“So, how do you explain the 905 crumble? — Garth”

It didn’t crumble as bad as the 416 area…

“The 905 region was spared some of the pain, seeing average sales dip only about $20,000, from $360,307 in December, 2007, to $341,847 in December, 2008.”

#47 Mel Eager on 01.12.09 at 1:40 pm

# 9 NonPlused

Hi, Where are Power of Sale homes listed/adverstised?

Are they ever sold by Auction and how does one bid on them.



#48 David on 01.12.09 at 1:48 pm

I found a few interesting stats in the paper last week regarding average sales prices for Winnipeg, Toronto and Vancouver provided by Royal LePage Real Estate Services.

2002 ASP
Winnipeg – $143393
Toronto – $319357

2008 ASP
Winnipeg – $228188
Toronto – $433540

Calculating the annualised compound growth rates based on average sales prices between 2002-2008.

Winnipeg – 8.05%
Toronto – 5.23%

In virtually all instances the growth of average home price increases during the bubble outstripped things like dividend yields from blue chip stocks. Little of the price growth in housing was supported by rising incomes or large equity contributions from the buyers. The housing market collapse is really going to produce some major financial pain and a high number of sellers in no hurry to realise actual losses.

#49 dd on 01.12.09 at 1:48 pm

#43 Mike (authentic),

Wow … not a single sale.

Garth is right … if you want to move a property, do it now and price aggressively.

#50 jess on 01.12.09 at 1:53 pm

“80% subprime lending was for refinancing families that already owned their homes.”

The two Income Trap
Why middle class parents are going broke

#51 squidly77 on 01.12.09 at 2:12 pm

calgary now down $89,000..plunge o metre

#52 lgre on 01.12.09 at 2:26 pm

“While a struggling economy was primarily responsible for the dip, real estate experts also pointed to bloated year-end numbers from 2007, caused by high traffic ahead of Toronto’s impending land transfer tax.”

This is nonsense, if you are thinking of buying a $600k shack in Toronto and a couple of thousand of extra taxes is going to defer you from doing that..well guess what? you can’t afford it in the first place…just like people who buy SUV’s and can’t afford to pay for the gas.

Realtor’s and builders will blame everyone from banks not lending to politicians raising taxes to companies cutting their work force..BUT one thing and the most important thing they never talk about is that the prices are way out of line with income..the higher the price the higher the commission. They would love to see these 3 entities work with them just so the fools keep buying and their pockets are filled with ridiculous amounts of money for doing nothing but filling out some paperwork. I’m in the wrong biz.

#53 Richard Silver | Toronto Real Estate Blog on 01.12.09 at 2:26 pm

In an area where there are lots of similar properties that might work for your Buyer, why not pick the top three and contact their Realtors. Tell them you will look at offers from their Sellers tomorrow night at 8 PM so the Sellers will be in competition to bring in their best offer. It is a flip on the past few years of Sellers looking at multiple offers from Buyers. Put the shoe on the other foot!

#54 vulture says 50% by spring on 01.12.09 at 2:32 pm

Regarding post #3 and #35 clarification
My blogger handle is
Vulture Says 50% By Spring.
To clarify my blog was that…
I wrote an offer on a house on the sunshine coast b.c. in October at 25% off the assessed value ($209,000.) They where asking 25% more( $329,000) than the assessed value… remember the where only asking. The agent said that he was not even going to put in my offer …but did …and came back with a counter at 5% off the asking price.. I did not counter.
Garth said I should have stuck by my guns and countered with a low offer…but I am waiting…
the house is still for sale and now will counter with an offer at 30% off assessed value..

There are 3 numbers here their asking price,the assess value and my offer.

So this house peak to trough -55 % in the spring….
Hope this clarifies…
Vulture says 50% by spring

#55 MBS-Economy on 01.12.09 at 2:39 pm

#43 Mike (authentic)

Maybe b/c it was a Sunday?. I don’t now if that might be why there was 0 sales.

Jan 09 sales will be 50% down from last year and Feb 09 will be 60% from last year based on the early projections that we have at our financial company. Spring will pretty much be armaggedon for anyone in the real estate industry.

#56 dotava on 01.12.09 at 2:53 pm

#6 average guy on 01.11.09 at 11:29 pm

You sound more like average or low end realturd.

#57 jess on 01.12.09 at 3:01 pm

#50 outdated link sorry go here
search: subprime

#58 Popping Bubbles on 01.12.09 at 3:23 pm

Investix… but you still can’t attribute the difference in price declines between 905 and 416 to the introduction of the new tax.

1) Prices in 905 weren’t as high as in 416, particularly in the $1MM plus category which has been whacked very hard due to stock market declines, etc.

2) 416 has far more condos, a sector which is (and will continue to be) under significant pressure

3) 416 is fueled by the finance sectors (lending, IPOs, M&A, etc.) which were hit first (Sept 2007) and harder than average.

I don’t doubt the tax had an impact but in the general scheme of what is going on in the world it is a rounding error.

#59 nonplused on 01.12.09 at 3:30 pm

#18 Ann

You know someone who is 7 years from retirement and they still have 90% of their house mortgaged????? Simply incredible. It’s the accumulation of these types of decisions that lead to the huge heaping pile of financial problems we now face as a nation or planet I guess.

People, if you ever plan to retire you need your house paid off at least 10 years before retirement and you continue the payments at the same level but redirect them to your RRSP’s or other savings for a top up.

If you have a mortgage you will not be retiring! You’ll be wearing a blue uniform and saying hello to a lot of people you don’t know.

#60 nonplused on 01.12.09 at 3:44 pm

#24 Sail1

I don’t think people buying new houses are target market for vultures. Families who inadvertently end up owning 2 homes have a seemingly amazing ability to carry both, or at least that’s what I have seen from speaking to a few families I know who did get caught. They are as likely as anyone to be bankrupted by a lower selling price because chances are they over-extended themselves to get the new house and the supposed equity in their old house was likely a key factor in deciding how much to pay for a new house.

I knew 2 families (through kids sports team) who upgraded and got caught. Neither listed aggressively and both were at last contact still holding the second property waiting for a bid. The idea was that it was better to carry 2 mortgages for a year than potentially sell for $50,000 les than it was “worth”.

These poor people will be processed by the foreclosure process as well and they will not sell willingly.

#61 nonplused on 01.12.09 at 4:03 pm

#47 Mel Eager

In the US they put “Foreclosure” signs right on the For Sale sign because they know a good number of people are looking to negotiate with banks as they are more reasonable than underwater homeowners.

But in Canada I think you just have to tell your agent that you are specifically interested in foreclosures. There aren’t that many around yet (that’s a big YET) but realtors can see the status on their special MLS access.

#62 Investx on 01.12.09 at 4:10 pm

#58 Popping Bubbles

” Investix… but you still can’t attribute the difference in price declines between 905 and 416 to the introduction of the new tax.”

PB, you raise good points. Thanks. I don’t believe 905 is immune to the slumping RE market. In fact, I’m arguing this point with a friend and trying to account for the difference in slowdwon in between the areas.

#63 JET on 01.12.09 at 4:36 pm

I plotted the average prices for single-family homes in the GTA from 1966 to 2008, with an exponential moving average (EMA). Seems prices are about to cross below the EMA (i.e. stay away for a while if you can).

#64 OttawaMike on 01.12.09 at 5:17 pm

Very true. This is why I always insist on a substantial down and a clause stipulating it is the property of the vendor. Realtors hate that one. — Garth

On my recent sale my agent(a personal friend), told me that the deposits are very difficult to seize. Court costs often exceed the deposit amount and then you still have to fight for the in-trust deposit. She went on to say that the sales contract really is not worth the paper it is written on and it is a dirty little secret her industry does not like to share.
When you have the buyers certified cheque in hand is really the only time you can breathe easy. This is a good reason to structure the down$ in the way Mr.Turner suggests above.

#65 JO on 01.12.09 at 5:58 pm

The psychology of any large market moves in cycles as most know. Clearly, these potential holdout sellers are still in the classic denial stage. Similar to any stock holder who sees their shares go down more than 10 % in the face of clearly deteriorating fundamentals and refuses to sell..most fortunes and many investors repeat the same fatal error of falling in love with an asset and refusing to unload it when fundamentals and more importantly, pyschology and technical indicators suggest a sale.

Most major bubbles in history have followed a reasonably predictable path. For housing, you had a sensational multi year price rise that was multiples of what the asset, illiquid and poorly diversified that it is, has done over a very long period of time. From 2001 to 2007, if the housing price index rose almost double, then the bust should last roughly the same number of years and take prices down to near the price level that existed just before the start of the bubble. This is even more likely this time as most of the “rise” was due to the greatest debt/credit inflation bubble of all time. It is common to see a vicious decline accelerate from the peak into its 2-3 year stage, and then have prices decline very slowly into a stable period of no price appeciation. The housing market will bottom within a year or two of the time when the average person, economist, or other person tells you RE is the worst asset in the world and looks at you like an idiot for wanting to buy it. Methinks this time will not happen until at least 2011-2013 in Canada. We should be there within 18-24 mts in the US.

Expect the vast majority who jumped into the RE market in the last 3-4 years attempt to blame everyone and everything for making a disasterous “investment”. Vultures would be well advised to learn some MMA !

#66 jess on 01.12.09 at 7:13 pm

The U.S. unemployment rate surged to 7.2 per cent in December, its highest level in 16 years.

“What I think is more troubling are the figures in the United States which really do indicate the period of difficulty we are entering in terms of the global economy,” Harper said.

Meanwhile back in kitchener taxes are increasing 3.98%, 25% increase in sewer/water and unemployment is at 7.7

Mr Harper should find life here troubling…

#67 poorguy on 01.12.09 at 8:16 pm

“Mosaic to slash 1,000 Saskatchewan jobs”

#68 Obama-UAW boyz on 01.12.09 at 8:20 pm

No handout requested from Ottawa and the provinces yet by the big 3.

So what is the conclusion? Canada may well bear the brunt of plant closures.

Plus GM wants to niche the Pontiac brand and Canada is dealer heavy.

#69 Bottoms_Up on 01.12.09 at 8:41 pm

I just received my $86 quarterly GST cheque. For the first time ever came a notice: “Your 2009 resolution: Beat that debt. Get budgeting tips and tools, Visit”

The Canadian government is on to deflation.

#70 Boffo on 01.12.09 at 8:42 pm

An interesting look at the relationship between price, sales, and inventory.

Like Garth said, you have to swallow your pride, price aggressively and get out now… or you’ll be left with the rest trying to beat the bottom

#71 nonplused on 01.12.09 at 11:49 pm

It might already be too late to get out now. I had a heck of a time back in April using very aggressive strategies. I don’t think the buyer would have qualified today. He was going with a 40 year amortization (but not an insignificant downpayment) but had stated that he need to rent the basement out “to make it work”.

Once foreclosures start to rise, everyone will be truly trapped. You can’t out negotiate the bank selling machine. They want the asset off the books and the cash on them, and thus monopolize the market once they are in it. Just look state side.

#72 TorontoEngineer on 01.13.09 at 1:53 am

On the cover of the current Toronto Life magazine issue (

“Why Toronto will be the Next Global Financial Capital”


lolololol. Yes Toronto, that bastion of innovation and boldness in the field of finance.
Please. Somehow I doubt the local economies of Shanghai, Hong Kong and Singapore are trembling with fear of competition.

#73 613 Happy where I am on 01.13.09 at 9:55 am

This past weekend, the Ottawa Citizen, in its Saturday Real Estate section, acknowledged that other places in Canada are undergoing real estate price adjustments, but that the Ottawa market is expected to remain stable and may even experience a small increase in prices. The reason why is because federal government jobs are stable (at least at the moment) and the Ottawa area did not experience any big gains in prices as some other areas (namely Toronto and Vancouver.)

I think they are delusional but what do you think, Garth…

The condo I rented (in Ottawa’s best building) came on the market in February of 2008, went through a torrent of price reductions and is still for sale, 11 months later. Yeah, very stable.– Garth

#74 Andrew toronto on 01.13.09 at 2:53 pm

Garth where we relaly this close in september to a what is being mentioned below and if so them , I suspect we are still not out of it has you have pegged the risk still at 20percent chance .. what signs should we be looking for that that 20percent risk will increase dramatically… I should be recieving your book in a couple of days can’t wait ..

———————)read below

During the final months of 2008, as the financial markets imploded, talk on trading desks turned to food and water stockpiles, generators, guns, and high-speed inflatable boats. “The system really was about six hours from failing,” says Gene Lange, a manager at a midtown hedge fund, referring to the week in September when Lehman went bust and AIG had to be bailed out. “When you think about how close we were to the precipice, I don’t think it necessarily makes a guy crazy to prepare for the potential worst-case scenario.”

Every word is important. Those who ignore them may well do so at their own peril. — Garth

#75 Rob5 on 01.14.09 at 6:44 pm

#72 TorontoEngineer

[correction – apologies]
I enjoyed that Toronto Life story puff piece too.
They put something so ridiculously out there on the front cover yet – it’s bordering on tabloid.

That we’ve been able to obscure our own banks crappy performance to date [barely in typical Canadian snobbish ‘We are not American’ fashion] and are only propped up by the fact that we consolidated long ago was never mentioned.

#76 Ralph on 01.14.09 at 11:57 pm

You can blame the moneylenders and real estate experts all you want. But it takes two to tango. People were living beyond their means.

Problem is we have too many “experts” dispensing advice on just about anything. Even Garth Turner comes across as an expert and is hoping to make money from his book sales.

I think I will save the twenty dollars by not buying one of his books. Don’t get me wrong there is lots of good advice that he gives but its all common sense. It doesn’t cost you anything to use your own.

#77 VALDYMYR THE OLLIE-GARCH on 01.15.09 at 6:24 am

For the Bernard Madoff who has everything …

#78 VALDYMYR THE OLLIE-GARCH on 01.15.09 at 6:34 am

Looks like Antonio Clement will be running in Brampton next time …

Nortel shares plunge on TSX

So what does Antonio do? … Throws $30 Million down on the table. Terms and Conditions? FUGGEDABOUTIT!

A commemorative for Antonio …

Tony Clement commemorative gravy boat