Buy, baby, buy


US real estate economist David Lereah’s book (left) and the unauthorized sequel.

In the midst of a real estate meltdown one year ago so intense it was about to vaporize Wall Street and see 10,000,000 US families end up with mortgages bigger than their equity, David Lereah told America not to worry.

“The good news is that the steady improvement in sales will support price appreciation moving forward,” said the high-paid chief economist of the National Association of Realtors. And, so anyone who may have bought a home expecting “price appreciation” was likely swept away, becoming another speck among the ten million.

The NAR is the voice of the American real estate industry, now so thoroughly discredited by its abject failure at responsibility that housing could be out of favour for another decade. This reminds of the statement last week by Canada’s housing ‘expert,’ Royal LePage boss Phil Soper that “consumer confidence is anticipated to recover, prompting real estate activity to pick up once again in the latter half of 2009.”

As absurd as that statement was, virtually every major news organization in Canada dutifully reported it, likely prompting a few dewy-eyed, house-lusting young couples to take the property plunge. But why would real estate veteran Phil Soper say such a crazy thing? Why did smart guy David Lereah do the same? Do they really think they can change market conditions simply by making them up?

A few days ago I gave an interview to a magazine for financial advisors in response to the Soper statements. Here is how it was reported:

While most homeowners would be relieved by the survey’s buoyant tone, Garth Turner, author of Greater Fool: The Troubled Future of Real Estate , says he’s disturbed by it. “The downturn only started for Canada two quarters ago, and Soper predicts it will be over in three quarters. How’s that possible when the U.S. will see a fifth dismal year before it hits bottom?” he questioned.

Royal LePage has been off the mark with past predictions, however. In 2007, the firm predicted momentum would carry over into 2008 and position Canada’s real estate market for steady, yet moderate growth.

“People who followed that report and bought homes — especially with zero-down and 40-year amortizations — would be in serious financial trouble today. The odds are, one year later, they’d have negative equity,” Turner said.

Turner predicts ’09 might bring better tidings for the financial markets but it will be dismal for real estate. “Canada is following an identical trajectory to the U.S., just with a two-year lag. It will collapse, though more gently than the States.”

Hours ago I received an interesting email from a woman realtor in Toronto in response to that article. “I would think if you want to continue your quest for a political career, you should be more careful with your the numbers you throw around. I would think it wise to back up these predictions,” she wrote. “You must be careful and understand the impact you may have on a market that can help pull Canada out of this recession. When people feel their homes are a good investment and a safe haven, they have a tendency to spend more on them and this does help to create jobs and help the manufacturing  and retail fields.”

Hmmm. I like the suggestion that my best chances of getting elected again are to lie to Canadians so they have “a tendency to spend more.” That’s responsible. If it were possible to spend our way out of a problem by buying bigger houses, borrowing more mortgage dollars and shopping our buns off, then life right now would be grand. Instead, we have a debt hangover which is starting to have exactly the same impact on Canadian society as it did to the south. Enough Lereah. Enough Soper.

Real estate is a fine investment and a great asset to own. But so was General Motors stock. There’s a time to buy, a time to sell, a time to hunker. There’s also time to stare in amazement and dismay at those who so squander leadership.

Read what David Lereah is doing now.


#1 real estate expert on 01.12.09 at 9:17 pm


“”There’s also time to stare in amazement and dismay at those who so squander leadership.”” Garth

…Whether it be Political or Economical leadership…having Kenysian Economics in play…with out fiscal responsibility…ie Gold/Silver Standard…the current Roman Empire is doomed to fail.


Security for the 2010 Olympics is now approximated to become $400 million to $1 Billion…up from the initial $100 million.

…I posted long ago here that if figures like the above will be required…then in my opinion scaling back or cancelling the Olympics is a better alternative…best to spend that kind of dough on new infrastructure.

Would just make Vancouver an even more elite city…the next Financial/Trade and Leisure Capital of North America.

imho…very humbly submitted

#2 Another Albertan on 01.12.09 at 9:22 pm

I was skiing yesterday with a friend – a VP at a Fortune 50 company and a very astute finance guy.

We were talking about Calgary real estate and he jumps into an anecdote about his own house purchase.

“While we were house-shopping a few years ago, my wife got continually angry with me for not using her parents’ expertise. Her dad is a retired manager with CMHC and her mom is a retired realtor. After being badgered for a while, I finally lost it and explained to my wife that I did talk to her parents and unconditionally refused to talk real estate with them after that conversation. Neither of them could accurately describe what an amortization schedule was. So if that is the extent of the economic and finance expertise of a couple who spent their careers in mortgages and real estate, thanks, but I’ll take care of myself. I can’t imagine the advice they dispensed during their careers. The really scary thing is that they retired as multi-millionaires.”


#3 Rory on 01.12.09 at 9:28 pm

My first comment – this realtor is either very successful with not a wit of conscience or she is the worst and really has not a clue. She follows in the footsteps of Lereah…maybe she really is Soper …whadda think.

Garth, why would you want to be in public service and have to deal with, excuse me, nits like this…jeez like telling the truth is a disease – amazement & dismay also and I’m sober.

#4 TomOfMilton on 01.12.09 at 9:42 pm

I could have cried when reading the link provided:
“Mrs. Lereah, a CPA who also works at home, decided the only way she and her husband could work in the same house was if they pretended they were at outside offices. They communicate during the day by email and cellphone. Every morning, Mr. Lereah drives to a Dunkin’ Donuts or McDonald’s and eats in the car, just as he would have on his commute to NAR.”
…on how they work from home. It seems so empty and artificial. Almost as though the unhealthily busy lifestyle is all that keeps the marrige …uh ….functioning. Guess you can’t judge from the outside but well it made me sad.

#5 Sail1 on 01.12.09 at 9:42 pm

You must be careful and understand the impact you may have on a market that can help pull Canada out of this recession.

Garth, I had no idea your influence is so vast. We should be calling you mighty Garth, seeing you have enough power to change the course of a recession\depression, according to the woman Realtor.
I have really underestimated you influence.

#6 Investx on 01.12.09 at 10:07 pm

From the linked article:

“Mr. Lereah, who says he left NAR voluntarily, says he was pressured by executives to issue optimistic forecasts… ”

Gee, what a shock. Realtors and the RE associations deserve the garbage reputation they have.

#7 ThumbsUp on 01.12.09 at 10:43 pm

The realtors and unsophisticated homeowners may never realize it is in fact the cheer-leading of realtors (bad ones) themselves & the easy money made available by the banks/lenders and the Government agency (Fannie/Freddie/CMHC) killed the market, resulted in today’s global financial/economy meltdown;

Greenspan and Paulson blame the ‘investor’s demand for MBS /CDO/CDS’ for causing today’s mess; Realtors in the US blames Peter Schiff; so it’s not surprise that Garth is the target of the Canadian realtors.

It’ll take time for the us public to learn the real truth.

#8 shmoe on 01.12.09 at 10:47 pm

real estate unwinds are very slow. Collapse it will be, but expect it to take years to reach bottom. Years. Look at the US. Look at graphs of the early 90s bust. Prices are very sticky. Sell now, if you can. And then be prepared to wait a few years.

#9 TomOfMilton on 01.12.09 at 10:49 pm

I’ve been anticipating a drop in house prices since I sold a rental property 18 months ago…so I guess this makes me one of the “vultures”. I have numerous friends waiting for the right time to buy their first house, but from reading what is written here, I’m starting to feel that I may not be wise to purchase as quickly as my friends…since prices will slowly decline after a sharper drop. Or that seems to be the consenses.
For buyers not having a home as yet…they would need to worry less about the slow decline period.
Anyone see fault with this logic?

#10 Patrice on 01.12.09 at 10:58 pm

I like this one.

Nice little article.

Nothing new but a good assesment of our current situation.

Encouraging consumer confidence is good when everything is relatively grounded; but when we are going into a recession, it becomes fooling and beeing dishonest with the public.

Another way to phrase this could have been:
Eating enough is healthy; but when you become morbidly obese, eating more isn’t going to help.

#11 Joshua on 01.12.09 at 11:17 pm

Did you make that second cover yourself? If so, you need to give up blogging/politics because that is some funny s%^* and you are wasting your talent.

#12 UBC flubs it on 01.12.09 at 11:22 pm

Over at UBC, this study has already proven way off the mark. Maybe Real Estate Expert is the prof.

Table 1:

Estimated 2nd Quarter 2008, House Price Level, Pct. Price Change for Equilibrium, Est. $ Change in Price for
Equilibrium Market, Condition
Calgary 456,800 ‐7% ‐32,000 unbalanced
Edmonton 406,500 8% 32,000 unbalanced
Halifax 289,400 ‐20% ‐58,000 very unbalanced
Montreal 277,200 ‐25% ‐68,000 very unbalanced
Ottawa 323,900 ‐25% ‐81,000 very unbalanced
Regina 347,100 ‐25% ‐87,000 very unbalanced
Toronto 419,400 0% 1,000 balanced
Vancouver 754,500 ‐11% ‐85,000 unbalanced
Winnipeg 290,400 ‐25% ‐74,000 very unbalanced

Most markets have already corrected well beyond the thresholds UBC claims would bring the market into balance, and there’s no sign of any let up.

#13 Winnipeg is no Different on 01.12.09 at 11:49 pm

I love the shadowy realtor’s admonition: “you should be more careful with your the numbers you throw around. I would think it wise to back up these predictions”.

Maybe she meant to send her e-mail to Phil Soper.

#14 Happy Renter in North Van on 01.13.09 at 12:34 am

“I would think if you want to continue your quest for a political career, you should be more careful with your the numbers you throw around. I would think it wise to back up these predictions,”

However, this Toronto “Realturd” has no compunctions about how Royal Lepage and CMHC come up with their wildly optimistic predictions about how real estate prices are supposed to rebound in Q3 of 2009.

#15 Kilt on 01.13.09 at 12:36 am

Hehe, sounds like Mr L is headed for divorce city. Doesn’t sound like the wife is too happy with the change in lifestyles (and income).


#16 Lance on 01.13.09 at 1:13 am

C’mon, Garth. We need to feed a steady stream of new greater fools in to the real estate market to keep our artificial debt-driven economy growing through the rest of this decade.

On a side note, I finally found a greater fool to buy my home. I’ll put the money in the bank and wait a year or so and swoop in on some desperate home owner.

I feel kind of bad doing it, but I can’t feel responsible for other people’s choices.

#17 David on 01.13.09 at 1:27 am

David Lerah worked for the Ministry of Good News Spin much the same as Phil Soper will be doing in Canada. These types are the songbirds for the real estate industry and responsible dissemination of misinformation about housing realities.
There is a diminishing amount of good news data to harvest from industry statistics, so the shills resort to the next best strategy of calling for a more balanced market and boldly proclaiming that the housing market has bottomed.
Another Albertan , that story is so hilarious and unfortunately likely true. The other day, I was at the arena to watch the local junior hockey team. I had the grave misfortune of having some illiterate and innumerate dunce realtor park his H2 Hummer next to me.
David Lerah now has the distinction of being the world’s second most discredited economist after Greenspan. Desktop publishing some insipid newsletter in a home office is a tawdry career ending

#18 dd on 01.13.09 at 2:01 am

Wow … so you caused the real estate meltdown with your straight talkin.

#19 Da Hk Kid on 01.13.09 at 2:10 am

Just another CAN RE guru who claims to know something about the market she is in. There is one thing for sure, she is very worried about her future! Garth, you can give her some realistic advice but she was toast before she started and like most agents permanently lost!!!

If you really want to see the underbelly of RE Agents, come to Hong Kong and have a discussion with a Realtor and find out what bottom feeders they are and have always been and the manipulation of the market.

Two thirds are driving taxis! Sorry renewed their taxi licenses since the SARS.

My advice, as you self direct your own finances, self direct your buying and selling of real estate. It’s just another contract you lawyer can draw up!

#20 Phil G on 01.13.09 at 2:21 am

Hi Garth, thanking you for honest reporting of facts against the unethical behaviour of others to make a buck.

#21 Grantmi on 01.13.09 at 4:40 am


Don’t you mean Garth Almight!!!


#22 Future Expatriate on 01.13.09 at 5:06 am

Realty industry experts should be EXTREMELY grateful that we don’t burn people at the stake in the city square anymore… which is not to say the fad can’t come around again, like the Bubonic Plague…

#23 Mini-Garth on 01.13.09 at 5:52 am

As mentioned before, the guy in the article is a salesman.

And every industry has their own salesmen just like him whose job is to promote and talk-up their industry.

It’s what lobby groups and trade associations do.

They live in their own ideologies, and they often have very little sense of history or ethics (and often even reality). They’re driven purely by short-term self-interest.

It’s just the way the game is played.

#24 Rick on 01.13.09 at 6:44 am

I like the NAR’s claim that they didn’t influence Lareah and that he came up with his analyses by himself. What a coincidence that his successor also comes up with the same pie in the sky analyses ‘by himself’.

#25 Sail1 on 01.13.09 at 7:22 am

Jan 13, 2009 04:30 AM
Be the first to comment on this article…
James Daw

Garth Turner bucked conventional wisdom in his most recent book, Greater Fool: The Troubled Future of Real Estate

According to Jim.

Garth, it sounds like your extreme with xurbia but he is giving you some credit.

#26 Sail1 on 01.13.09 at 7:29 am

To early in the morning, for the post #25.

#27 real estate expert on 01.13.09 at 8:38 am

Apples and Oranges Factoid…

…In all of 2008, 2.6 million people lost their jobs, the largest slump in employment since a 2.75 million drop in 1945 when the country demobilized at the end of World War Two.

In 1945 we lost 2.75 million jobs out of a workforce of 57 million whereas in 2008 we lost 2.6 million out of a workforce of 146 million.

…Also in 1945 many families were one income households.

That’s a big difference.

…Vancouver, the next Financial/Trade and Leisure Capital of North America.

#28 Jado on 01.13.09 at 8:39 am

I was planning on buying my first home in 2009, however after reading this article (and many of the previous ones) I don’t mind holding off buying a home till the end of 2009 or even 2010. However I live in Ottawa and the “feeling” around town is that Ottawa homes will not drop as much as the rest of Canada because the majority of Ottawa residents are government employees and their jobs are more “secure”. I understand if things get worse, even government employees will be in trouble; but is Ottawa going to be more sheltered in anyway?

#29 Signal Loss on 01.13.09 at 8:52 am

I can understand the realtor’s point about being careful about what you say when the media come to you for opinions, but, come on, the facts speak for themselves. Garth is simply compiling the facts and putting them in one place for people to examine and assess. As he has opinions of his own, he voices them. This realtor should be concerned about her role as a professional and the potential exposure that carries in terms of the advice that she gives to her clients.

#30 Mike B formerly just Mike on 01.13.09 at 8:58 am

Love all you pompous postings indeed.
Vancouver the centre of the economic universe. Nice try realtor. Your top notch city is in debt up to its eyeballs and now can’t pay for the olympic buildings. Can you say bailout money. Read the news much . A 500 Million dollar loan. Not much chance of that town being the centre of any economic future when it can’t even balance its own books. You may claim that they did not forsee the cash holders going belly up but the reality is that the olympic games in general are money pits and hardly worth the effort.. Took Montreal 30 years to pay off its olympic debt. You can have the games Vancouver but your chances of being any economic powerhouse are zero and none.
You may be a real estate expert but that is the only thing you are an expert at.
Most realtors just live to hear themselves talk and the likes of David Lereah only support that fact. I have met but a handful of realtors who really know their stuff and also have the humility to admit they don’t know everything. You seem to lack humility and intellect which is a rather deadly combination especially when you are one who likes to sport the monicker “expert”.

#31 dd on 01.13.09 at 9:08 am

real estate expert on 01.12.09 at 9:17 pm 1/

“Would just make Vancouver an even more elite city…the next Financial/Trade and Leisure Capital of North America.”

What? By taking on millions in debt Vancouver will be the number 1 trade centre in NA? What are you smokin out there?

#32 smwhite on 01.13.09 at 9:21 am

#18 dd

Guess the truth is a powerful thing…

So now comes the whining from the RE parrots, self fulfilling prophecy…

RE is still without a clue that people have maxed out their credit. Only way for people to get more credit is to get higher wages, and that ain’t happening over the next 12 – 24 months.

How about tax cuts? Ha Ha!

#33 Bill-Muskoka (Not Anymore) on 01.13.09 at 9:46 am

Garth, I see you made the Star again today!

Surviving a depression with Turner

And, again, have rattled the chains of the Inflation Dragon Guardians. Good for you Garth.

#34 Jim on 01.13.09 at 9:49 am

Why should we be on the hook for decisions made in an undemocratic way by incompetent, corrupt, stupid people.

These $#%^& should be criminally prosecuted.


#35 smwhite on 01.13.09 at 9:49 am

#28 Jado

…the “feeling” around town is that Ottawa homes will not drop as much as the rest of Canada because the majority of Ottawa residents are government employees and their jobs are more “secure”.

Yeah, its a wonderful thought but not logical. Kanata was actually just behind Windsor last year for biggest drop in price, albeit somewhere in the -2% range(sorry can’t find a source but it was in the Citizen) and the commercial RE market is taking a hit(Not hard to read into what that means). Now the last giant, Nortel is on the brink. People escaping the dying tech sector in Ottawa has helped keep prices in the west of the city under control.

I had the luxury of buzzing around the MLX on Friday and one thing I noticed, NO ARROWS UP on prices, they are all moving in the same direction, DOWN.

Also, people are not being honest with themselves and are “nickel & dime-ing” the prices. I’m closely watching 3 homes on my street, each have been on the market since the fall and each have had $5K to $15K off the prices, which is nothing.

The same agent that was showing me the status of the market had sold his own property in October and stated to me, in order to get rid of it, he had to market his home 10% less then what the market is asking, none the less, he sold in less then a month.

Homes are not moving, they are sitting and I’m afraid that many are thinking the “spring” will turn things around, it won’t the party is over. Barhaven had a ton of available properties, all pretty similar especially when considering the price($350 – $400), so who jumps first will sell; starting the avalanche.

I also looked into the POS offerings from the banks/trusts. They are progressively growing.

Ottawa is not immune… The dead, divorced, transferred or axed, will help move all Canadian markets down as there will be more motivated sellers then motivated buyers.

I’m currently thumbing through the CREA 2008 report, it isn’t a wonder why RE agents are so cheering, its the Gregory Klump super beast thats pushing this propaganda to the agents, and there are just as many agents with a mind of their own, then there are with an original thought.

#36 The First Rick on 01.13.09 at 10:03 am

Wow, the momentum is sure building. My 2009 prediction once again.

SURVEY SAYS!! Realturds will replace lawyers as the least respected “profession.”

#37 Kestral on 01.13.09 at 10:12 am

The British are already eating squirrel flavoured chips. How long before we start eating the real thing?

#38 Kestral on 01.13.09 at 10:17 am

btw, I find all the “My house in [xxx city] is immune”, it’s just a fancy way for saying “My poop doesn’t stink”. If it’s poop, it stinks, and if it’s “real” “estate” (aka “cardboard” “house”), then it’s going down like a streetwalker on Saturday night.

#39 Tony on 01.13.09 at 10:23 am

Looks like someone else also noticed that Garth is a little over the top at times. Eating squirrels…haha. Even the Koolaid Kids – that shake their pom-poms every time you burp – are wondering about that one.

Mr. Daw also made note of something that I was recently wondering about as well. In predicting what’s going to happen in the next 2 to 5 years, (A = traditional recession to F = full-blown depression), you will predict A, B, C, D, E, F, at various times. Of course, when looking back after it’s all said and done, if “C” is what happened, then you’ll go back to your article where you predicted scenario “C” – and of course you’ll be right. Then, you’ll pat yourself on the back, and say “For my next book…”. It’s easy to be right when you’ve covered all the possibilities at different stages along the way.

I do not like real estate agents for many reasons, but the realtor from Toronto raised a good point and a hilarious point.

The good point: You do have impact on the market because of the media exposure you receive, and the fear that you propagate does influence people to do counter-productive things for the economy (see post #28 Jado). If all consumers keep acting this way regarding their purchases, it will further delay our recovery.

The hilarious point: Continuing your quest for a political career? Haha. I think she meant to say your quest for more exposure to sell books – as politics had nothing to do with it (even when you tried it from both the red and blue sides). If you had any integrity as a politician, you would have remained independent when you left the Tories. Oh well, no need to beat a dead horse – your constituents took care of that issue.

That was useful. Have you seen the book, or did your lips get tired reading the Star review? — Garth

#40 Marty ex "realtor" on 01.13.09 at 10:43 am

What goes up…: Sir Isaac Newton lost 20,000 British lbs in the South Sea Bubble. ” I can calculate the motions of heavenly bodies, but not the madness of people,” he said of his investing experience.
I hav’nt read Garth’s book yet but I can say with some confidence that he appears to be certainly on track.
After 25 years as a Realtor, I have just resigned from the the franchise world of real estate along with the Canadian and Ontario and local board Associations. I have chosen to be an Independent Broker as my lawyer describes… a rogue broker! Yeah! As a carreer long committee member and past pres of local Board, it disturbs me that unless you put a positive spin on the current trend, you will be shunned by your colleagues. Truth is…real estate trends are totally predictable. What is not predictable as Sir Isaac suggests, is how high or how low the dollars will flow! Ask any reputable Realtor who safeguards the real MLS numbers what the currrent ratio of sales to inventory is in your market area. Then ask what that % ratio was at the peak highs and peak lows of past cycles. FYI the CREA national stats go back as far as 1980.
Allow me to give you some perspective of our last recession. In Ontario the real estate market peaked in 1988 where 63% of all homes that were listed for sale, sold at a median price of $161,270. By the end of 1989 the ratio slid to 46.2% as median prices climbed to $184,605. Now the bust! In 1990 the S/L ratio for Ontario slid to 29.2% (official bottom) with median prices at $175,859. Stay with me now… it gets better. The biggest driving force to improve demand relative to existing inventory was $price$.
By 1995 the ratio slowly climbed back to 41.1% and median price… an 8 year low $155,003!! (source – Canadian Real Estate Association).
In virtually every geographic area that I watch…sales go up as the price comes down!!
Now you have the “BIG Picture” of what to watch for. Find out what is happening in your local market. I am no expert but in my 25 years of studying real estate trends across Canada, there seems to be many common and obvious traits.

It has been said before: “Every bubble and market crash has the same important elements. Greed and unrealistic expectations will contiue to foul people’s judgement as it always has”.

#41 cowgirl kiss on 01.13.09 at 11:08 am

The Star reviewer was “lost” when survival tactics for a depression were mentioned?

Maybe at some point down the road they will not seem so crazy. Later in the year, I can just see the reviewer asking, “Where is that book, again, honey?”

I googled an American “how to survive a depression” site last fall, and I was shocked when I read the advice that people should consider storing more “ammo” in their houses for undisclosed reasons. Hmmm. Now that is extreme!

#42 Mike B formerly just Mike on 01.13.09 at 11:19 am

In actual fact Garth is hardly the biggest doom and gloomer out there. Krugman from the New York Times calls for a depression no if ands or buts. Garth in all honesty is probably on the mild side compared to others like Roubini and Schiff from the US.
Link to Krugman


#43 JET on 01.13.09 at 11:32 am

The business of predicting the future is definitely fraught with land mines, but I don’t think people get the point – it’s the insurance policy idea. Some people don’t buy any insurance, some buy 50k to cover final expenses, some buy 100k for a little extra, some buy a million or more to make their descendents rich.

I’ll read what the book has to say and then form my own opinions with an open mind and based on my own situation. For 20 bucks, I’ll think of it as a good meal for my brain!

#44 Bulls eye on 01.13.09 at 11:34 am

I think it’s important to add that the comming times are to include continued moral decay – our generation is not diciplined to weather this. Like it or not D2 is on it’s way – it’s not the end of the world yet, properly said I would refer this to an “end of an era”. Exciting opportunities await – electric cars, solar power homes, new carrer opportunities, family time, etc. The years ahead and to those who are prudent now will have a head start. We need to be forward thinking – but for now we need to act quickly to avoid the fustration with debt, family/friends trouble, as desperation does funny things to people. Best to move and meet new friends. There is always a smile somewhere – but third, family trouble.

#45 Gold Bug on 01.13.09 at 11:48 am

#39 Tony,

Predictions are dangerous, especially about future. Nobody can predict what will happen, the best seers can only have the narrowest ranges of predictions.
Majority is seldom right, but never in doubt; the tipping point is coming, though.

Re: good point: If snow could affect real estate sales in Ontario last year, and high property taxes in Toronto this year (both silly statements were made by RE associations), then Garth’s book will affect the house sales too. And so will a butterfly flapping its wings on the other side of the planet.
I would assume that Garth is far outweighed by the whole establishment including the Federal government which only 3-4 months ago said that everything was dandy and no deficits; given that a different tune is played now (google latest Flaherty’s and Harper’s statements), according to you they will bring the real estate prices down as well. People are financially illiterate and were/are being taken advantage of, that is the crux of the matter.

Re hilarious point: I think you forgot there were several politicians that crossed the floor and changed the party allegiance. I would agree with your statement if you insisted that politicians represent people, not parties. As an independent, a politician has much less clout.

Re being over the top: yes, Garth may be over the top re
“be prepared, nobody knows what will happen”, but so are the RE agents: RE will always go up in price. If UK is more financially conservative than US, how come UK is having such severe financial problems? Could our mentality be similar to UK mentality and could we have similar problems? Germany too? google “Iceland riots”.

If you heard of events in Sarajevo, Bosnia in 1992, nobody there thought the war would break out, even when it was happening in Slovenia, later on in Croatia, and then Bosnia (eastward-moving cataclism, similar to price drops here). Ditto Lebanon.

I strongly recommend googling Nassim Nicholas Taleb.
Nobody pooped ther pants because the toilet was too far away, but because they made the decision too late.

I am looking forward to reading Garth’s book (already ordered) and see if I can find a flaw, maybe you should too. So far, based on the blog and other news, …

Good Luck.

#46 AM on 01.13.09 at 12:24 pm

#40 Marty
Great post. It’s refreshing to hear an ex-realtor with years of experience admit that he is not an “expert”. Lets reserve that title for those who hold PHD’s.

#47 East 905 on 01.13.09 at 12:55 pm

Hi Garth,

Your autographed book arrived in the mail today. Thanks! This blog alone is worth the price.

I am not a high-roller and won’t be making any big RE “investments” (probably EVER), but your advice, and that of my fellow bloggers, nudged us to pay down our existing mortgage more aggressively. So instead of a remaining 22-yr amortization, we’re going to wrap this baby up in 7 years. I have also change my tune on owning a cottage. Why scrimp to buy a small shack the kids will be fighing over in 40 years, when we can rent anywhere we want and simply enjoy our time together?

Does your new book accurately predict the future? We’ll find out. I know I’ll learn something.

#48 Dawn in Calgary on 01.13.09 at 1:10 pm

Interesting piece in the Edmonton Sun today…..

“The disturbing tumble in house prices is more evidence of tough times ahead.

“It’s getting so bad the Edmonton and Calgary real estate boards now appear to be fudging the stats after the Edmonton single-family dwelling price peaked at $426,028 in May 2007. The Calgary SFD crested at $505,920 two months later.”

#49 Kate on 01.13.09 at 1:29 pm

The CTV Vancouver station ran a much-publicized spot on the current “buyer’s market” for Lower Mainland condos. The content was assinine, utterly without basis, and bookended by mortgage ads (one from BMO in the segment, and one from TD immediately after). No suggestion whatsoever that even RBC is predicting that home prices will continue to decline in 2009:

#50 Indicator on 01.13.09 at 1:36 pm

#40… well said.

#51 jess on 01.13.09 at 1:46 pm

i predict an increase in advertising related to reverse mortgages …

I read the commissions are excellent -sell 6-make 42k .

When you start reading about these you will also find many problems!

#52 hmm.. on 01.13.09 at 2:16 pm

this will give u an idea what are we against

and an IMF report

#53 Pointblank on 01.13.09 at 2:21 pm

Hi Garth,

It has come to my attention that Realtors know squat.

In good times they are used to talk about trends and help Architects and Developers with layouts and catch phrases and marketing to present what people want to hear. But at the end of the day they are just salespeople on commission.

I had a chat with a couple of realtor “friends”. They honestly think the market is going to hit bottom and even turn increase moderately by this spring-summer. In my field (development/architecture) I am very confident that even Vancouver, which will host the worlds largest advertising campaign (Olympics) will not hit bottom and level out until mid-2010.

Until then we are going to see drastic changes in real estate values, loss of construction and consulting jobs and a tighter building market where the cost to building will go down (budgets) by around 30% to keep things going because that’s what the market is demanding until things level out.

Basically, Garth you’re right. And it sucks.

#54 Pointblank on 01.13.09 at 2:29 pm

I stand corrected:

#40 Marty ex “realtor”

Marty knows what he is talking about.

#55 dd on 01.13.09 at 2:45 pm

#32 smwhite,

It is funny. Just when RE is front page news the industry is facing up to the problems. However, they cannot say it outright … always with the sugar coating.

#56 Jelly on 01.13.09 at 3:12 pm


Why are you on this blog if you think Garth has no integrity as a politician?

Anyone with any intelligence knows that most politicians would change their party if it helped to serve their purpose. After all, it is not as if they are SO distinct from each other (the main two anyways).
Do you really think Canada would be very different if run by Tories or Liberals? Think again, you’re delusional
if you think what they say they stand for, they actually believe in. You think Stevie actually believes in all that pish he spouts off? At least Garth is more honest.
Garth was just trying to play the game, but was black balled because he was speaking the truth about real estate and the economy.

For God’s sake, it’s not as if he’s changing religions or something!

You suffer from holier than thou complex, obviously.
Get off the blog, you talk utter shite.

#57 Jelly on 01.13.09 at 3:20 pm


Oh yeah,

I can’t believe someone would go so far as to DO things to sell more books!

The audacity!!

Talk about state the obvious, duhh!

You would probably to do everything in your power to make sure your books did not sell right?

After all, most of us here believe he is trying to get his message out to help people as well as make money.

I have no problem with him making cash,
I hope he makes loads of it and does not
have a heart attack having to work in politics
in a thankless, boring, and ungratifying job.

I don’t at all think ol’ fattie Stevie got the last laugh at all! It is just going to get better for ol Garthie in my opinion. Most people are going to hate Stevie and love
Garth. He is the one that is going to be soaking it up on the beach….
I can picture it now…
ha ha

#58 smwhite on 01.13.09 at 3:20 pm

Some interesting notes from the CREA Member Survey 2008:

* Only 34% of realtors in 2008 were in the business during the last bubble, that might be why there is such defiance from RE with the points on this blog.

* 44% of Realtors in 2008 had less than 5 years in the business.

* The split was, in 2008, 87% got into real estate after a career change and 13% were first time realtors.

* In 2008 realtors surveyed, 30% had a university degree, 31% college diploma or equivalent, 35% a high school diploma.

* 44% of realtors only had between 1 – 10 listings in 2008.

* 40% of realtors made between $0 – $50K, 20% made between $50K – $75K & 25% made between $75K -$150K, 10% made between $150K – $225K. About 5% made between $225K and $300K.

#59 Jelly on 01.13.09 at 3:27 pm


You are not going to believe this but I am in the process of building a new house for profit.
Bottom line, I wanted to finish the project 2 years ago as I knew all this would happen but my husband said he did not have time to get it built.
I was not worried about it because I was planning on moving the family into it and renting my other residence.
Now with all this happening and only getting worse,
I feel like pulling the plug and letting it sit there as there are going to be a lot of deals coming up.
(the foundation is done)
I remember when I bought the lot, I signed a contract stating that I would have it built within one year.
What would the village do, sue me if I did not complete it? It is a small village close to Lethbridge that I think I may have to move into or rent out so as not to take a loss.

Garth, what do you think?

Let it sit, and run for Council. — Garth

#60 Dawn in Calgary on 01.13.09 at 3:28 pm

Add raccoon to the squirrel menu….

#61 JO on 01.13.09 at 3:35 pm

Industry “leaders” are accountable to no one except the people who pay and own them. It has been said there are over 30K lobbyists in Washington who have full time, very well paid jobs to influence, dare I say corrupt, the 500 or so members of Congress. Do you expect the majority of economists working for bank / RE / and other purveyors of financial products to come out with a public call that is negative for the market they cater to ? Yes, it is wrong to publish a forecast against one’s personal opinion or the obvious fundamental factors, but the reality is for most people in RE there is usually no accountability and being humans, they do not want to get fired or demoted to toilet cleaning if they come out with a negative forecast.

I am not going to be buying until at least 2011. Even that will likely be too early.

Keep up the good contrarian voice Garth…it’s a corrupt world out there.

#62 smwhite on 01.13.09 at 3:43 pm


Its Marty McFly coming back from the past to tell us about the future! Thanks for the sip of the “sugar-free kool-aid”! This only enforces Garth’s “sales drop first theory”.

Just to add, currently the #1 & #2 issue presented by the customer to realtors in 2008 was, wait for it:

(1.) Cost/Affordibility – 63%(2008) – NA(2007)

(2.) Property Taxes – 13%(2008) – 27%(2007)

(3.) Renovations – 7%(2008) – 25%(2007)

(4.) Utilities – 7%(2008) – 17%(2007)

(5.) Safety – 5%(2008) – 17%(2007)

In 2007 the perception was RE was going to continue to climb Everest, so neighborhood safety and crime were of concern, oil and natural gas effected utilities, and with even increasing prices, lots of cash to dumb into renos for the record resales that were had in Ontario in 2007.

Now, the main concern is affording to pay the mortgage and the property taxes.

The survey in 2009 will present the following #1 concern, being “upside-down” in my recent home purchase.

#63 islander on 01.13.09 at 3:59 pm

46 AM writes: “It’s refreshing to hear an ex-realtor with years of experience admit that he is not an expert. Let’s reserve that title for those who hold PHD’s.”

So only PhDs can be experts? What a small world you live in.

Lereah was a paid industry shill. Only fools believed what he had to say.

#64 jess on 01.13.09 at 4:30 pm

Lereah along with all the other motivational coaches who preach optimism or their brand of optimism were the new “church” for the desperate people who wanted to believe.

#65 Bobby in Victoria on 01.13.09 at 4:37 pm

Asking a realtor, who works on commission, for a realistic assessment on the value of a home, is like asking a used car slaesman their opinion on a used car.

A colleague once summed it up quite eloquently. He refused to take realtors as investment clients as they tended to believe their own hype.

I’s really going to get ugly out there!!!!

#66 Brent on 01.13.09 at 5:07 pm

Interesting article in todays Edmonton Sun about the real estate industry fudging the numbers to paint that always a good time to buy….

#67 BBC on 01.13.09 at 5:31 pm

“……When people feel their homes are a good investment and a safe haven, they have a tendency to spend more on them and this does help to create jobs and help the manufacturing and retail fields.”

WHO IS THIS PERSON……is she telling her family the same advice?! This is about a stupid as telling an alcoholic to get a job in a bar!

#68 Jimster on 01.13.09 at 5:34 pm

Dawn in Calgary says “Add raccoon to the squirrel menu….”

And they make warm hats too!

#69 TS on 01.13.09 at 5:36 pm

Garth, great post as always!

One of the biggest lessons that people can take from this situation is to first CONSIDER THE SOURCE before blindly accepting what someone says to the media!

This is of course true whether we are taking about business, economics, politics, the environment or any other topic.

Since this isn’t a political blog we need not bother citing the litany of falsehoods that have come out of the current Federal government and some of the blatant lies that contributed to your electoral defeat, but they stand as a glaring example of how vested interests try to manipulate public opinion.

In the summer of 2007 we watched banks in Europe begin to dump billions of dollars into the financial system to try and keep it solvent, while at the same time claiming to the media that ‘everything was fine’.

The important thing is to always watch ACTIONS and interpret those actions within the context of the vested interests someone may have to take those actions.

We watched the actions of the European banks back in the summer of 2007 and realized that things were heading for the ditch big time….and that all of the prognostications in the media were simply put out there to try and soothe things – but were NOT based in reality.

As a result we began selling all of our equity based mutual funds in our RRSPs in the summer of 2007 and fully exited the mutual fund markets before the big crash happened in the fall of 2008.

The result was saving well over $100,000 in our RRSP plans. Unlike many people who are down 40% or more and are having to put their retirement plans on hold, we are still on track to meet our 2009 funding targets.

It’s really a simple lesson…judge others by what they DO, not what they say.

#70 Derrin on 01.13.09 at 6:29 pm

Looks like some deals are to be had at the bottom.

Yes folks can you say recovery. Can you say Canada’s Banks are in better shape.
Yup…….Oh Canada.

#71 K-Money from Vancouver on 01.13.09 at 6:40 pm

I love reading posts from real estate experts from Vancouver. I get a good chuckle out of it. Many Re agents truly believe this spring will be diffirent. They honestly believe there are thousands upon thousands of people with piles of money just waiting to buy. Wait, what happens if those people don’t exist…..

#72 real estate expert on 01.13.09 at 6:44 pm

#30 Mike B formerly just Mike

…I’m not a realtor…

Having lived for nearly 40 years in TO and nearly 20 here…I sincerely believe, really, Vancouver will become an elite city….Canada is the safest G7 country and the future for Canada is “west” thru Vancouver.

…I do not include Vancouver Island, or the BC interior.

I have also been on record, early on, scaling back or even cancelling the Olympics wouldn’t bother me an iota…spend the $400 – $1 billion on security costs instead on new infrastructure.

#73 MBS-guru on 01.13.09 at 7:33 pm

so the woman realtor wants everyone to think the world is honky dory and we should all continue buying overpriced homes under unsustainable debt levels and maxing out our credit cards to keep the economy moving??? …… Garth, email her back and tell her that she is either STUPID or SELFISH.

#74 Jelly on 01.13.09 at 8:13 pm

Real Estate Expert,

You want to spend 1 billion on Security costs instead of Infrastructure? WTF?
Are you brainwashed that terrorists are a massive threat? I promise you that there is more danger in
the financial state of the US and thus Canada.
Watch IOUSA if you do not believe me.
There are many “Real Experts” that have always stated
this and are very intelligent people who know a lot about everything-far more than you or I could ever know…
I guess you never even put two and two together that 9/11 was convenient for the US to go into Iraq.
I suppose you will be one of those idiots that allows the government to implant a microchip into them all in the name of “National Security”?
No way would they use it against you, would they?
Seriously though, there is talk about microchipping all of us as kooky and crazy as it sounds. Some people even go so far as to say “it is the mark of the devil” from the Bible and tell everyone to refuse it if they try to make us get microchipped because of security.
Crazy stuff! I would not trust it.

#75 TheFirstRick on 01.13.09 at 8:22 pm

#71 K-Money from Vancouver on 01.13.09 at 6:40 pm I love reading posts from real estate experts from Vancouver. I get a good chuckle out of it. Many Re agents truly believe this spring will be diffirent. They honestly believe there are thousands upon thousands of people with piles of money just waiting to buy. Wait, what happens if those people don’t exist…..
We exist, we are just going to wait a bit longer than spring.

#76 real estate expert on 01.13.09 at 9:01 pm

#74 Jelly

You insert inappropriate language in your posts.

…I will not post to you again if you continue.

I’ve asked Garth why he allows you to do so.

Not surprising…You also misread my last post.

…Quiz question…

What is Montreal’s biggest winter season industry?

#77 poorguy on 01.13.09 at 9:46 pm

Dettached house?

#78 TomOfMilton on 01.13.09 at 10:22 pm

I’m heartened when people demonstrate sceptisism to anyone proclaimed an expert. I find myself screaming inside when I think the public is listening to another “expert”.
I want to say think for yourself. Test the ideas you hear. Talk about it (like here). Try it. Get advice to start more thought. And then do it yourself. Be your own expert. This could apply to buying/selling houses, running your own company, doing your own taxes, bookkeeping, fixing something on your car, raising a family, planning a future. Sure it takes time and Lord knows I’ve made mistakes… but WHAT A FEELING!
You have more control. You won’t feel helpless talking to the service dept at the dealership, or with the accountant or at the bank. You will feel less and less the victim of another “expert”.
I’m careful in conversations now to not discourage people who are trying out something new. Instead I pump them for what they found out through direct experience and tell them of mine if they want to know.
And silently thank God that one more person is breaking free from the grip of the so-called expert.

#79 whiterock on 01.13.09 at 10:46 pm

“real estate expert”
You are very annoying and repetitive. Perhaps it’s age related. If you find what I say “inappropriate” please, please decide to not post again. Let me be the first to thank you in advance for doing the right thing.

#80 Derrin on 01.13.09 at 11:03 pm

Jelly or White Rock or whatever you call the matter between your two ears………
Please refrain from bad language…….thank you.

#81 EJ on 01.13.09 at 11:15 pm

#71 Derrin Denial:

“The bottom”? That would be absolutely hilarious if the truth weren’t so tragic.

#82 Jelly on 01.14.09 at 12:54 am

Real Estate Expert,

You really are a big baby if you can’t handle grown up words. The “inappropriate” words you think that I use may seem harsh but they really are a way of exemplifying strong feelings and to be honest some
words that may “colour your cheeks” are used as comedic description.
I find people who get offended at mild swear words as very boring and frankly, act like they are something special,holier than thou. I mean after all, colourful words have their place, life would be boring without them I feel. They can be very funny actually.

Get used to people using words that you find offensive, after all, it appears that it does not take much with you.
I think most people would agree that you have bigger problems than thinking yourself above others. At least they are honest and have a sense of humour as well as originality.

#83 Kash is King on 01.14.09 at 7:11 am

#79 Tom, very, very nicely put. Right on the mark.

Red flags should pop-up for everybody, anytime they see a for-sale ad with the word “professionally” being touted to somehow give an air of superiority to fluff up the value of whatever it is they are trying to peddle.

You know: “professionally” renovated ( there are NO bad contractors out there…right?), “professionally” restored or repaired…. I have been on the receiving end of “professionals” before…

My favourite is antique cars that have been “professionally” appraised for some wild number like $100k , but in a manufactured “bargain” are miraculously for sale at $30k… right. Give it another year, I’ll give you $3k. Maybe.

The above noted distorted “professionally” contrived values, are now going to cause insurers to have an EXTREME moral hazard exposure, as some of them have been foolish enough to cover piles of these on their books, on an “Valued Basis” Form 19a .
In other words if an “accidental loss” were to befall the $100k “valued” car with a 19a… the insurer has to cough up $100k, no depreciation.

In an extreme downturn, let’s say the antique car owner loses his job at Nortel, for example, can no longer make his mortgage payment, goes to sell his car…gets a high offer of $2k…looks at his “Valued Basis” insurance endorsement…realises he’s just one matchstick away from getting $98k more than market on his car…then has all kinds of money for the mortgage. How convenient.

Hopefully the insurer has reinsured all of this through one of the many Reinsurers that dwell out there in the big world of CDSs and CDOs.

#84 Jelly on 01.14.09 at 10:25 am



You seriously think we use should watch our language?
This is what is negative about Canada and the US with some groups of people that are so judgemental and boring. (insert dorky, nasal voice here)
I find it SOOO funny how you assume we must not be very intelligent.
From what I recall from your earlier posts, isn’t that Calling the Kettle Black?

Thank GOD I don’t have to be bored beyond belief having to be in your company.

Pathetic, where did all the real men go?
I am not talking about brutish, disgusting men, there is a balance obviously, but this mamby pamby ethos is so embarrassing when they mingle with British people and other cultures.
At least they have a laugh and don’t lose their mind over little words…

#85 TomOfMilton on 01.14.09 at 9:44 pm

I keep hearing about buying gold. I’m hoping people reading that are realizing the difference between buying gold stocks and buying actual gold. If you are thinking that having gold will help as a medium of exchange because things are so bad that money is just paper…well…stocks are just paper too. Now if you are saying gold is a smart investment as a stock that is another thing …just hoped people would clarify of what type of purchase they are talking about. It would help me a little. :)