Trust

van-on-sale

Trendy Yaletown - balloons, yes, throngs not so much.

This churned-up, battered ground has been covered before, so I will make it brief.

Last month real estate sales in British Columbia were down by half.  From its high point on May Day, the average Vancouver home has lost 19% of its value, or $123,000. In the Fraser Valley, sales are a disaster. In Kelowna listings have ballooned and sales plopped. In Victoria the average price is down about $75,000 from six months ago, and sales for the year fell almost a third.

This is a housing market under stress for one overwhelming reason: Average families cannot afford average homes. And the situation, lower interest rates aside, is getting worse.

There reasons are obvious to us all.

* More people are out of work and unemployment will be the most momentous economic story of 2009.
* Forty-year mortgages and zero down payments are now gone, eliminating a bunch of moist young buyers who inflated sales in the past two years.
* Chastened and newly risk-averse banks are lending more cautiously and prudently, which means gone are the days of people being offered loans requiring 70% of their income to service.
* Everybody knows the economy is fragile, tentative and at the tipping point. With governments poised for a do-or-die dive into bottomless vats of new debt, this is hardly the time to be taking on chunky loans to buy an average Van house at $648,000 or a bung in Victoria at $550, let alone one of those $700,00 cliff-hanging jobs perched over Lake Okanagan.

Like I said, everybody knows this. But not the realtors of BC, who days ago held a fib-fest and invited the media, populated as it is by young things with new condos now threatening to eat them alive.

“If you don’t have to sell, wait until the market stabilizes,” said condo king Bob Rennie.

“This is no housing recession.” Said developer Michael Audain. “This is a loss of consumer confidence.”

“While the economy will be weaker in 2009, real estate sales will be higher than in 2008,” intoned BC Real Estate Association chief economist Cameron Muir.

And because these guys are either (a) industry spokespeople, (b) developers and business leaders or (c) high-profile economists, all the words they sputter are written down, edited and then spread to the masses. And this, I would say, makes them culpable. They’re in positions of public influence.

We’ll update this post in one year.

_____________________________________________________

Home sales, prices plunge in Q4

TORONTO (Globe) — The economic slump and a drop in consumer confidence caused house prices to dip during fourth quarter, according to the latest figures from Royal LePage. It says the real estate market in Canada posted an overall decline in both unit sales and in prices during the fourth quarter of 2008.

Royal LePage says the average price of detached bungalows dipped by 4.8 per cent during the quarter to $319,640. The average cost of a standard condo fell 5.2 per cent to $233,230 and the average for a standard two-storey home fell 6.3 per cent to $376,140.

Some cities with strong local economies, such as Regina and St. John’s, NL, posted double-digit year-over-year price appreciations, while larger cities such as Toronto, Edmonton, Calgary and Vancouver, recorded declining prices. Royal LePage says 2009 should bring gradual improvements as low mortgage rates and government efforts to revive the economy begin to take hold.

117 comments ↓

#1 dd on 01.25.09 at 9:49 pm

Oh you forgot to add

“Inventory will be lower because there is a correction to a more balanced market, making 2009 one of the best times to buy or sell a house.”

#2 Future Expatriate on 01.25.09 at 10:01 pm

Latest news from down south… fully TWO-THIRDS of all US foreclosures not even on MLS yet! Banks dragging feet.

http://money.cnn.com/2009/01/21/real_estate/ghost_inventory/index.htm?cnn=yes

Yes, this is officially a disaster. When the remainder of those foreclosures hit the market, it will go down another 50% from where IT ALREADY IS.

#3 Chincy on 01.25.09 at 10:04 pm

Garth,

Read the province today, there is an article quoting Rennie…unbelievable how he can insist this is the time to buy; of course he caveats anybody looking to sell probably shouldnt right now…it must be a competition thing. I suggest you ask Mr.Rennie or any others to debate the so called fundamentals they speak of…this city of Vancouver has lost all sense of rational and fundamental thought.

#4 Investx on 01.25.09 at 10:30 pm

“This is no housing recession.” Said developer Michael Audain. “This is a loss of consumer confidence.”
——————————————————–

It’s amazing how they get away with such stupid statements.

#5 Wil on 01.25.09 at 10:36 pm

…and yet here in Victoria my tax assessment went up $40,000 this year because I took out a building permit to renovate my bathroom.

we’re all messed up.

#6 G on 01.25.09 at 10:51 pm

http://vancouvercondo.info/wiki/index.php?title=Quote-tracker

Here is a quote tracker is anyone is interested in seeing what these people had to say before the bust happened.

#7 Kevin In Vancouver on 01.25.09 at 10:51 pm

Everytime I hear these industry shill’s real estate platitudes I gag. The terrible thing is that the majority of the populace defer to their fictitious “authority” which has been implicity confirmed to them by the very fact these rags print their nonsensical ramblings. Their statements are misleading at best and will play a role in the upcoming financial ruin of many. I know of no other financial industry where such clear misrepresentation and spinning is tolerated.

#8 J. Martin on 01.25.09 at 11:03 pm

Thanks Garth, I recieved your signed copy of
After The Crash and I`m starting to implement
the suggestions that I can afford.

It`s quite apparent we`re in a big pickle.!!

On a lighter note and smaller scale have I
got an investment for you folks. A $2.00
investment with a return of over 3000% in 3
mos. or less. Why a return like that would
give the most hardened loan-shark palpitations !

Now that I`ve got your attention, here it is.

A package of seeds costs under $2.00 and should
return at least $50.00 of produce in less than 3
mos.

In our small town grocery where we shop, Hot House
Tomatoes were selling for $3.99/lb. My wifes first
seed catalogue just came in and they have seeds for
a tomato (Beefmaster Hybrid) that weighs up to 2 lbs.
WOW, I can hardly wait to attack that monster with a
salt shaker !! Also think of the fabulous ROI.

Keep Smiling !!!

#9 POL-CAN on 01.25.09 at 11:13 pm

Off topic but this explains the sudden and huge budget deficit…. That 75 B had to come from somewhere right?

Canada’s 75 Billion Dollar Bank Bailout
The $64 Billion Federal Budget Deficit is intended to Finance Canada’s Chartered Banks

http://www.globalresearch.ca/index.php?context=va&aid=12007

#10 Garthlover on 01.25.09 at 11:22 pm

Garth said: “We’ll update this post in one year….”

I think you should edit that statement to say “…in SIX months”, because your forecast should match the 50% by which BC RE prices will be dropping

#11 bumbum on 01.25.09 at 11:23 pm

if you toss a real estate agent off the empire state building and ask how he’s doing, he’ll say “fine” all the way down.

#12 john on 01.25.09 at 11:23 pm

The propaganda being spewed out to the uninformed by the Realtors,and also our Harper government has already done irrepairable damage to so many people. We were told our banks were rock solid,our economy was the best that we had nothing to worry about (less than 120 days ago). This guidance has destroyed many peoples futures and unfortunately will destroy many more because so many ill informed people still believe it. Now we are headed for massive debt and poverty,the actions of a few power hungry people will change our society for generations.

#13 Slim on 01.25.09 at 11:31 pm

I have been looking for a house in St. Albert, just outside of Edmonton and it appears that some of the houses that were built last fall expecting to be sold and have been virtually sitting idle all winter are being pulled in favour of a spring sale. I am going to be very interested to see if spring fever will be enough to maintain buyer confidence and sell houses at listed prices.

#14 Chris on 01.25.09 at 11:38 pm

Creepy, I swear I read the same post on Ben’s blog 2 years ago!

#15 JET on 01.25.09 at 11:51 pm

No different in Toronto: http://www.theglobeandmail.com/servlet/story/RTGAM.20090123.reBelford0123/REStory/RealEstate/home

“In my view, the numbers suggest this is still a seller’s market,” Mr. Lamb says.

#16 o'really on 01.25.09 at 11:51 pm

Consider the factors that will mire BC in a major fiscal crisis and ramping up of provincial taxes soon.

a) the Olympic Debt bomb- timed to go off after the next election, guaranteed to sink any socially progressive government in seas of red ink.
b) the Demographic bomb – have you tried to get medical care or geriatric services in BC lately? The retiree wave from western Canada and points east have overloaded care services already (wait another 10 years, it’s going to be very disturbing). I visit an elderly relative in a retirement home in Vancouver; there’s a lot of lonely elders there who ‘ve retired here to escape the snow back home only to discover that they’ve also left all the friends, family, and familiar surroundings. It’s heartbreaking.(not to mention bank-breaking).
c) rural depopulation – a lot of the 1 industry towns are quietly folding up; unemployed truckers, loggers, fishermen, mechanics, millwrights, teachers etc. will have to go to where the jobs are…… (or stay and run grow-ops ?)

It may be greener out here, but the green isn’t money, it’s moss.

#17 liquid on 01.26.09 at 12:10 am

How realtors Help.

Outstanding.

A few of my favourites:

http://www.albertasource.ca/realestate/video/mov/realtor_licensing.mov

http://www.albertasource.ca/realestate/video/mov/accreditation.mov

http://www.albertasource.ca/realestate/video/mov/code.mov

More here:
http://www.albertasource.ca/realestate/multimedia/video.html

Be sure to check out a written history of speculation in Alberta as well:
http://www.albertasource.ca/realestate/industry/history.html

#18 Gord In Vancouver on 01.26.09 at 12:13 am

Bob Rennie lost all of his remaining credibility when he said “If you don’t have to sell, wait till the market stabilizes” and “I think there’s some really good buys out there” within the same interview.

http://www.canada.com/theprovince/news/story.html?id=7f1be2f7-8cd4-40e8-be64-793e68704581

I’m shocked that a 52 year old real estate veteran could do such a lousy job of hiding his high level of nervousness. Those who fail to note his contradiction are in for a heck of a rude awakening.

#19 EW on VI on 01.26.09 at 12:57 am

Quote from realtor when asked what he thought the market was going to do:

“I’ve got two [email protected] and neither one of them is crystal.”

But please Garth, we’ve had enough of the realtor bashing. We all get it. Some of us always got it. Please by all means report the sales/price stats. We can then all take responsibility for ourselves.

However I am still waiting to hear from First Rick on the misrepresentation of strata area that caused him so much grief years ago. Was the area not clearly indicated
on the registered strata plan? This could prove useful for anybody considering buying a condo now or later.

#20 JoJo on 01.26.09 at 12:57 am

Yep,
It’s defflation time? Gold price $ 900 or 1200 CAD.
Food price more expencive,all services,transit, and property taxes are higher 10%. And still and can’t see RE Crash in Halton,I think that houses are more
expencive than 2007,2008.
Fed Goverment annouced $ 50 billions defficit for next 3 years and it’s comming defflatory time? Canadian dollar went in toilet from Nov/2007 has lost 40% value.
When your currency losing value against $ US and Euro, than is clear infflation. Still I can’t see many Power of sales on MLS.

#21 $froma$ia on 01.26.09 at 1:43 am

You know Garth, I am really surprised that Faterdy passed over the likes of Rennie and Muir for his advisory counsel….er’ maybe he didn’t want to be lied to?

#22 David on 01.26.09 at 1:59 am

Wil you are correct!
For the privilege of taking a dump and shower in your own home you will be taxed extra.

#23 Vankover on 01.26.09 at 2:00 am

Oh and don’t forget the guy who lists his house on the mls in a large sub-urban district with the opening line “the price is non-negotiable” at 599K for 1246 square feet. *sarcasm* sign me up!!!! The house has been sitting for over 4 months….

Vankouver

#24 $froma$ia on 01.26.09 at 2:03 am

Oh, and by the way, last year I was thinking of buying so we got a pre approved mortgage with TD through a seperate broker and it was for $570,000. Tell me how can a couple that earns $120k a year borrow $570 F**Kin’ Thousand dollars?

Vancouver scenario, I buy a home for $770 with $200k down, then my wife gets pregnant oh but I have a suite that gets me a whopping $850 CASH! but my mortgage payment is $3000 a month and my take home is $3700.

Tell me… All things considering regarding a family and house upkeep/repairs taxes etc, would my family be living on the edge?

I am in construction so if I get hurt, whos going to cover my mortgage, Cameran Muir?

#25 re-aligned on 01.26.09 at 2:40 am

Just an anecdotal post here. I work with supposedly educated professionals in a Vancouver ‘burb and the echo chamber in that circle plus the circle I’ve met through friends here is unreal – Olympics, retirement boom, yada yada – basically a toned-down version of what the NV guy who posts here says. The same bull is repeated over and over and it’s self-reinforcing. (There’s a great scene from the Simpsons where the lottery jackpot gets inflated in each telling at Moe’s tavern and there’s a run on lottery tickets in Springfield – very similar to LM RE) Dissenting opinions are few and far between. At my workplace (about 75 people), there are three of us dissenters and we’re very quiet about this topic as there are people in our midst who are absolutely boned in RE – good, smart, unfortunate people. The lucky piece for me is that I’m from out of town and my outsider perspective tells me that SFHs should not cost 8X median income – it’s absolutely insane, but inside the echo chamber, it’s “buy now or be priced out forever”. I was also fortunate enough to spend time in Japan in the ’90s and as a result, I’m familiar with the possibility, reality, and results of a bubble. Bubbles are believable and real to me, but not to the echo chamber population. I was also in Nagano for the games. It was a fantastic get together for people from around the world but it ain’t all that! There was no RE boom in Nagano nor did I see the world banging down the door to move there. I’m very distressed at the naivete of my fellow citizens and colleagues and I worry about them and others. Just why can’t a single mainstream journalist ask some simple straightforward follow-up questions to the three horsemen? (Rennie, Muir, Jurock) Why can’t this spell be broken?

#26 Einsam Solo on 01.26.09 at 3:37 am

Given the uncertainty of the economy, I would have expected sales to drop nearly 100% .

Although fewer in number, anyone buying now truly deserves the title of “greater fool.”

And shame on the so called professionals who influence them.

#27 HalifaxFamily on 01.26.09 at 5:19 am

http://www.theglobeandmail.com/servlet/story/RTGAM.20090126.wroilpatch26/BNStory/energy/?page=rss&id=RTGAM.20090126.wroilpatch26

This is bad news for Alberta.

#28 HalifaxFamily on 01.26.09 at 5:25 am

http://www.theglobeandmail.com/servlet/story/RTGAM.20090126.wroilpatch26/BNStory/energy/?page=rss&id=RTGAM.20090126.wroilpatch26

I didn’t realise this… but they said 2200 over the past two months?

“”Most of it has been since the New Year,” said Nair Bailey, a long-time Calgary recruiter who keeps a running tally and says engineers let go over the past two months number at least 2,200.”

and…”In 2008, the association registered about 6,400 people, up from 6,000 in 2007. ”

Does this mean that 1/3 of engineers have been let go? If so, that is very very serious for the economy.

#29 Apocalypse Now on 01.26.09 at 7:04 am

http://thehousingbubbleblog.com/index.html
This is a good site for a preview of what is coming soon to Vancouver. Here’s a quote: The Fresno Bee. “Home prices in the Fresno area have plunged below the national average. The median price of sold houses in December in Fresno and Clovis was $154,000, a 39.6% decline from a year previously, said Jared Martin, president of the Fresno Association of Realtors. Pending sales — transactions that hadn’t closed — carried a median price of $144,840.” “We’re below the national average [of $181,000], and we are in California, not Nebraska,’ said Patrick Conner, owner of one of Fresno’s largest residential real estate firms.”
Don’t be surprised if Vancouver ends up going lower than Halifax. For all the naysayers out there, would you have believed two years ago that median pricing of houses in California, anywhere in California would be lower than the national average? Who would have believed that parts of California would go so low that the median price would end up lower than that of houses in North Dakota?
In the last post someone misquoted I Timothy 6:10 as ‘Money is the root of all evil.’ The correct quote is, ‘The LOVE of money is the root of all evil.’ Money is not evil, money can be used to do as much good as it can be to do evil. As a matter of fact Titus 1:15 tells us that ‘Unto the pure all things are pure’ and this includes money. Guns are not evil because they can kill people, people who pull the triggers are; food is not evil just because it can make people obese, wine is not evil just because some people get drunk on it. It is how money is applied that brings about good or evil results; therefore it is deceptive and misleading to misquote from scripture to prove a point; leave that to preachers and priests, they do that every Sunday when they pass the offering plate. At least preachers and priests only do that on Sundays, politicians on the other hand do it every day. Let’s keep this blog honest or we are no better than they.

#30 dd on 01.26.09 at 8:03 am

#27 HalifaxFamily,

There are estimate that there will be 20-25% unemployeed engineers.

#31 extco on 01.26.09 at 8:40 am

I phone a friend of mine yesterday. He is a manager at a window manufacturing company in GTA.
Since October 2008 sales are down at least 60%.
50% of their staff are out already.
Most of sales were to developers.

#32 Another Albertan on 01.26.09 at 9:05 am

Alberta has over 50000 registered Professional Engineers. It is the single largest association of the senior professions. Alberta has one of the highest per-capita rates of engineers in the population in the world.

Every EPC firm has rafts of contract personnel. You’re hired for a specific project and you are let go when the project is completed (or in these cases, delayed/cancelled/terminated).

Fluor, Jacobs, Colt, Bantrel and the myriad of niche players have been walking contractors by the dozens out the door for a number of months. The real question was (and still is) “when are they going to start to lay off permanent, fulltime employees?”.

The owner/operators (the oil companies themselves) have also been laying off contractors. They really try to avoid terminating FT employees (it’s bad optically because these are the numbers that are really reported in the media through specific stories – note the continual references to Schlumberger and Halliburton’s layoffs on the field service side of things)

And the article is vastly understating earnings. The range would be more in the order of $75 to $150/hr, depending on seniority and specialization.

#33 dd on 01.26.09 at 9:15 am

Recent layoffs

Pfizer 8,000
Sprint 8,000
Home Dep 7000
CAT 20,000

The news just seems to be getting worse.

#34 Ben on 01.26.09 at 9:26 am

RE 27: Does this mean that 1/3 of engineers have been let go? If so, that is very very serious for the economy.

No, 6,400 is the number of new P.Eng licenses APEGGA granted in 2008. I don’t see it in the article, but I would guess that there are somewhere around 50,000 P.Eng’s in Alberta. The article states that 2,200 engineers have been let go in the last few weeks, and that the number would be closer to 3,000 if procurement/management types were included. Bases on the 3,000 figure not referring to designers etc, I suspect that the 2,200 engineering number might also include designers as well, and may not be a strict count of P.Eng job losses.

It is a bleak time for engineering in Alberta, and Canada as a whole. Nobody is investing in new natural resource plants/capacity, and manufacturing is diving as well. There is no need for engineers and support workers in this environment. We could very well be entering a period for engineering similar to that seen in the 80’s, which were bleak in the Canadian engineering world.

#35 Another Albertan on 01.26.09 at 9:31 am

Just got off the phone with a colleague in Houston… Schlumberger is planning another massive round of layoffs. The first round – the one quoted in media – was just field personnel. The second will involve office staff in all areas and the cuts are world-wide. Interestingly, the cuts quoted in the past are only from North America. Spin is being applied because the company has definitely cut people around the world, not just the US and Canada.

When the world’s largest service companies – who still run very lean during the good times – start cutting to the bone, the small regional players and mom-and-pop shops really have to worry about their futures, especially when a handful of exploration companies can account for the majority of their incomes.

(Note to the tinfoil hat crowd: Halliburton’s government and ‘war’ contracts are with its Kellogg Brown and Root arm. Engineering and logistics aren’t in the same business universe as oilfield services.)

#36 North Vancouver Citizen on 01.26.09 at 9:45 am

$23 $froma$ia

“”Vancouver scenario, I buy a home for $770 with $200k down, then my wife gets pregnant oh but I have a suite that gets me a whopping $850 CASH! but my mortgage payment is $3000 a month and my take home is $3700.””

…Buy a triplex…

#24 re-aligned

You don’t mention Sydney Australia

#37 U.B.A.B. on 01.26.09 at 9:46 am

IBM is secretly/quietly laying off 16 000 including 1 600 in Canada (Markham) this month. They started last Wednesday and continuing until the end of the month – there’s so many employees being let go that it will take them a week and a half to process them all.

#38 Dale on 01.26.09 at 9:58 am

#29
You know there may be a bit of silver lining in all of this. Maybe companies will get a little more hungry for business.

Last summer I was looking for someone to replace 1 of my windows. It was fixed and I wanted one that would open. I called 8 companies. Several told me they weren’t even interested in my business unless I was replacing 5 or more windows. One gave me a quote over the phone so much higher than what I’d expected I can only speculate that they couldn’t be bothered coming to even check things out.

8 companies. No one interested in a quick and easy $5-600 bucks.

I finally managed to find another guy through a friend of a friend who would come to give me a quote. Not happy about “only” doing one window but I got it done. Of course I was last on his list of priorities and it still took 4 months to get it done. Never has $600 been so difficult to spend!

My brother wanted to get his roof reshingled last year. Ready and willing to spend the money. No one would return a phone call for a quote. He also wanted to replace ALL his windows and was ready and willing to spend the $10k or so it would cost. Same thing. He finally gave up.

#39 U.B.A.B. on 01.26.09 at 9:59 am

ING is cutting up to 7,000 staff

http://www.cnn.com/2009/US/01/26/ing.job.losses.banking/index.html?iref=mpstoryview

#40 john on 01.26.09 at 10:00 am

TRUST and attempts to MISLEAD –a poll on CBC online.>>>

#41 john on 01.26.09 at 10:02 am

TRUST and attempts to MISLEAD (sorry i forgot to paste the poll) here it is>>Your Vote
Myth/Fact: He said it!? PM Harper’s 2008 economic comments
1. On Sept. 15, 2008, Stephen Harper said, ‘My own belief is if we were going to have some kind of crash or recession, we probably would have had it by now.’

Myth
(169) 22%
Fact
(595) 78%
Total Votes: 764

2. On Sept. 15, 2008, Harper said, ‘The Canadian economy’s fundamentals are solid.’

Myth
(48) 6%
Fact
(717) 94%
Total Votes: 765

3. On Sept. 23, Harper said, ‘I think when ordinary working people. . .see a gala of a bunch of people at a rich gala all subsidized by taxpayers claiming their subsidies aren’t high enough. . .I’m not sure that’s something that resonates…’

Myth
(154) 20%
Fact
(605) 80%
Total Votes: 759

4. On Sept. 26, 2008, Harper said, ‘The only way there is going to be a recession is if they (the Liberals) are elected and that’s why they’re not going to be elected.’

Myth
(305) 40%
Fact
(451) 60%
Total Votes: 756

5. On Oct. 6, 2008, Harper said, ‘There’s nothing on the horizon – notwithstanding the storm clouds, and they are significant – (that) indicates to me that we should immediately go into deficit.’

Myth
(239) 32%
Fact
(515) 68%
Total Votes: 754

6. On Oct. 7, 2008, Harper said, ‘I think there are probably some great buying opportunities emerging in the stock market as a consequence of all this panic.’

Myth
(82) 11%
Fact
(666) 89%
Total Votes: 748

7. On Oct. 11, Harper said: ‘You’re asking me to say what would Canada do if our economy went to hell in a handbasket. This government is running the economy so it can’t go to hell in a handbasket.’

Myth
(381) 51%
Fact
(372) 49%
Total Votes: 753

8. On Nov. 22, 2008, Harper said, ‘These are, of course, the classic circumstances under which budgetary deficits are essential.’

Myth
(213) 28%
Fact
(545) 72%
Total Votes: 758

9. On Nov. 22, 2008, Harper said, ‘The financial crisis has become an economic crisis, and the world is entering an economic period unlike – and potentially as dangerous as – anything we have faced since 1929.’

Myth
(233) 31%
Fact
(522) 69%
Total Votes: 755

10. On Dec. 15, 2008, Harper said, ‘The truth is, I’ve never seen such uncertainty in terms of looking forward to the future…. I’m very worried about the Canadian economy.’

Myth
(338) 45%
Fact
(420) 55%
Total Votes: 758

#42 JL on 01.26.09 at 10:02 am

Any info on the Ottawa market?

#43 North Vancouver Citizen on 01.26.09 at 10:05 am

#23 $from$asia

One question for you

…What does a similar property sell for back in Asia where you are from…..double?

#44 john on 01.26.09 at 10:08 am

ANSWERS TO CBC POLL –post #38……………………..Answers
They are all fact. Here’s some background.

Fact. Background: on Oct. 20, the Toronto Stock Exchange’s main index suffered its worst weekly loss in almost 70 years. The Canadian dollar had its biggest one-day drop in almost 40 years.
Fact. Background: the TSX dropped 35 per cent in 2008, causing millions of Canadians’ investments and savings to plummet.
Fact. Background: this statement became well known in the 2008 campaign among people who receive arts funding and their supporters.
Fact. Background: the Liberals were not elected and the Conservatives won a minority government. The Bank of Canada declared Canada on Dec. 10, 2008, that Canada was entering a recession.
Fact. Background: the federal government will run a $34-billion deficit in the coming fiscal year and a $30-billion deficit in the following year, a senior government official said on Thursday, Jan. 23, 2009.
Fact. Background: Harper said this in an interview with the CBC’s Peter Mansbridge one week before the 2008 federal election.
Fact. Background: Harper reacting to questions from reporters about priorities in future program cuts.
Fact. Background: Harper said this during a speech at the Asia-Pacific Economic Cooperation forum in Peru.
Fact. Background: In a speech to chief executives of companies from the 20 Pacific Rim countries that make up APEC, Prime Minister Harper compared the current economic crisis to the one in 1929.
Fact. Background: Prime Minister Stephen Harper said this in a CTV television interview.
…….Our problems are not only realtors –IT STARTS FROM THE TOP! ………what i find really amazing is how many people do not realise what actually is going on!

#45 TheWhiteKnight on 01.26.09 at 10:37 am

Housing prices may be going down but have you been to the grocery store lately? Prices are higher and not going down.

Oil is headed to $50, $100, and then $200 by 2011.

Inflation is on the way quicker than you think.

#46 The First Rick on 01.26.09 at 10:42 am

#18 EW on VI on 01.26.09 at 12:57 am ……
However I am still waiting to hear from First Rick on the misrepresentation of strata area that caused him so much grief years ago. Was the area not clearly indicated
on the registered strata plan? This could prove useful for anybody considering buying a condo now or later.
==========
Sorry, I was away for a bit and wasn’t following the thread. The developer and his realtor misrepresented the square footage, the developer folder, the realtor died, everyone pointed fingers at each other. My oh my the issue is too complicated to even try to explain here. What I was eventually compensated was a drop in the bucket compared to my actual losses and costs. So much for the professionals leading a first time home buyer, eh? Sure I could have sued, I chose mediation instead as my pockets are’t deep enought to deal with the Civil Legal System in BC.

My advice to anyone thinking of buying in to a strata property in British Columbia? Don’t. At least until the Strata Property Act grows some direction, teeth and clarity.

#47 dekethegeek on 01.26.09 at 10:42 am

Garth,
You left out the worst Real Estate Hack in the Lower Mainland.
Good old “it never rains ins Vancouver” Ozzie Jurock.
The guy has NEVER said anything bad about the Lower mainland real estate market. He’s flogging crap in the southern US these days.
He was highlighted on one of the Local evening newscasts a few days ago and even the other realtors that were on the discussion panel were shaking their heads at his obvious BS. In a year he’ll still be saying,(and I quote) ” It’s never a better time to buy!”
The Real Estate folks are finally going to know what its like to actually WORK to sell a house. Can’t wait.

#48 smwhite on 01.26.09 at 10:44 am

#9 POL-CAN

Thanks for the link… Good read.

#23 $froma$ia

$570K? The banks will do whatever they can to suck the last few remaining sane folk into the abyss of mortgage hell coming to a neighborhood near all of us!

I had a similar experience with my bank, that’s why I started down this path of searching for the truth in light of currency devaluation, precious metals as a hedge, deflation/inflation and government masturbation…

The only good thing about all these layoffs are the balance sheets are getting shored up for the next big market move, I see sideways action for a while, unless your buying something yellow and shiny or black and gooey…

#49 The First Rick on 01.26.09 at 10:46 am

#35 Dale on 01.26.09 at 9:58 am

Try running a small business and survive off singular jobs. Then get back to us, OK?

#50 North Vancouver Citizen on 01.26.09 at 10:46 am

Only person we should still trust is Garth because we can’t even trust Peter Schiff anymore….

http://globaleconomicanalysis.blogspot.com/

#51 smwhite on 01.26.09 at 10:47 am

A little to add to the deflation / inflation debate:

(1.) http://www.safehaven.com/article-12254.htm

(2.) http://www.pcasd.com/the_case_for_gold_and_gold_stocks

#52 smwhite on 01.26.09 at 10:52 am

#39 JL

I checked out the MLXchange a couple weeks ago via a realtor friend, POS are up across the region, and it seems that Barhaven and Kanata are building up McMansion inventory… In fact there is an influx of homes in these areas sitting at the 350K range, no buyers.

This Friday I’ll be visiting again and will be able to get some year over year statistics. But just from my own neck of the woods, homes are sitting and lots of inventory compared to over a year ago.

http://www.homesinottawa.com/index.cfm?fuseaction=reports.trends

#53 TheComingDepression on 01.26.09 at 10:59 am

Just in..another analyst states CANADIAN BANKS are Bankrupt. You are all going to lose a lot of MONEY! Economists from all over North America are stating the BANKS are going broke and will CLOSE. Click on the “name” above.
Rennie will be jumping off his Gastown apt. roof but will find out it wasn’t high enough and should have tried the Woodwards building.

#54 J Walker on 01.26.09 at 11:14 am

http://www.theglobeandmail.com/servlet/story/RTGAM.20090123.reBelford0123/REStory/RealEstate/home

I wrote the author of this piece to find out why he was only speaking to Mr. Lamb and not any consumers who are in the market. I also asked him why he had not brought up the affordability of homes as being a reason for falling home prices and a reason why they may fall in future.
Here is a portion of his response

“First home ownereship is not a right. If you can’t afford a house, don’t buy on.

Second while Mr. Lamb does indeed have a vested interest he at least has a depth of knhowledge of the industry where ordinary consumers have zip.”

So the industry is the only credible source of information and the consumer knows “zip”. That apparently is the view of the Globe and Mail.

Stunning.

#55 $froma$ia on 01.26.09 at 11:48 am

#40

I am not from A$ia. I am a homeless white trash Canadian with ca$h. My name refers to the influence of Asian money here.

#56 smwhite on 01.26.09 at 12:00 pm

14%+ Unemployment in the USA…

It is estimated that persons “under-employed” in the USA is equal to that of the unemployment numbers… (Look to CBS 60 Minutes web-site and the story on DHL)

So if we have 7% unemployment in the USA, plus 7% under employment, math math tells me we’re easily at 14%, which doesn’t include folks where benefits have expired or that are currently living off funds from layoff/contract buyouts.

http://www.financialpost.com/story.html?id=1158982

http://www.cbsnews.com/video/watch/?id=4752358n

#57 wjp on 01.26.09 at 12:09 pm

# 50…I just love when people come here to market their goods…not very credible…sorry!

#58 AM on 01.26.09 at 12:33 pm

#42
“Housing prices may be going down but have you been to the grocery store lately? Prices are higher and not going down.

Oil is headed to $50, $100, and then $200 by 2011.

Inflation is on the way quicker than you think.”
_____________________________________

Oil is going nowhere until world demand picks up again and that’s not for the forseeable future.

Why are you using groceries to guage inflation? Do you think the demand for food has disappeared? I’m still eating…are you? A look at retail sales of non-essential items may give a better indication of inflation/deflation. You mention that house prices “may” be going down. Think off all the things that go into a house like appliances and furniture. Are the prices of these items going up? No, they are deflating.

#59 Kash is King on 01.26.09 at 12:41 pm

McMansions?

http://www.marketwatch.com/news/story/say-goodbye-mcmansions-homes-getting/story.aspx?guid=%7BAADD01FF%2DCCEC%2D4B22%2D9328%2D042B81EB6F23%7D&tool=1&dist=bigcharts&

#60 smwhite on 01.26.09 at 1:00 pm

#47 North Vancouver Citizen

Thanks for the post, some interesting points from Mish, but he doesn’t sound much different then RE bitching out Garth for being “wrong”, give it time, Schiff is talking about a ten year bull run on commodities, not a three month portfolio surge in light of whatever happens. Mish knows that and is cherry picking… So if in two years time oil is at $20 and gold at $500 scold him for being wrong, but the party is only started.

Mish doesn’t discuss the supply issues with silver or gold, just Schiff was wrong…

I don’t know what the CPI and core CPI numbers reflect in the USA as of today but we found out that food is up 7.5% YOY in Canada, that goes along with the theory of disinflation in assets and continued inflation in the necessities of life…

Like I say, we’re three months into this bear market, we all know that commodities took a beating because of over leveraged busted ass firms that actually had to sell of their tangible assets to cover all their stellar MBS and other useless paper dealings.

Take a deep breath and wait for it, Canada is positioned well in commodities, now we just need some investment in these sectors so that when the call goes out for fertilizer, oil/gas, gold/silver/nickel/copper Canada has lots to offer the world, not just the broke ass US of A…

#61 john on 01.26.09 at 1:02 pm

Are Realtor’s really that incompetent OR do they just simply believe Harper? Its quite possible you know,after all when one considers the millions of our tax dollars that are invested in economic projections and Harper is our prime minister? One has to wonder..were all the warning signs ignored or was it just a simple quest for power with no regard for the hardships of the believers? Hmmmm im sure we all remember when Garth stood up and told us what to expect on so many occaisions(Garth was right) and the Harper government did everything in its power to discredit him? You be the judge! (my appologies for dwelling into politics but it is all relative i think? )……………………….Will a little red ink buy Harper the time he needs?
Last Updated: Friday, January 23, 2009 | 5:49 PM ET Comments22Recommend35By Keith Boag CBC News
It was not quite a year ago that former Liberal finance minister Ralph Goodale began to warn that the Harper government’s cascading tax cuts would soon whittle away the surplus and lead the country back into deficit.

Almost no one took that seriously — just the opposition sounding off — because the prevailing political orthodoxy was as simple as it was rigid: deficits, never again.

Prime Minister Stephen Harper and Finance Minister Jim Flaherty listening to pre-budget submissions from the premiers. (Adrian Wyld/Canadian Press) As it often turns out, “never again” is a unit of time that can pass in a heartbeat.

In an unusual twist, virtually on the eve of Tuesday’s budget, the Conservative government has confirmed that the deficit it promised it would never run will amount to about $64 billion over the next two years.

And that will be just the beginning because the government has also said the next balanced budget will be at least five years away.

It’s easy to see this as a political disaster. The coming deficit will not be due entirely to the stimulus package the government unveils this week. A significant portion will be a consequence of the narrow margins for error that Finance Minster Jim Flaherty left himself while simultaneously underestimating the severity of the economic recession.

So as the Conservative party begins its fourth year in government, and Stephen Harper his fourth year as prime minister, they can look forward to a future that is significantly more challenging than anything they have experienced before.

What’s more, it is a future made even more tenuous by the prime minister’s political style

#62 Wealthy renter 2 on 01.26.09 at 1:08 pm

#30, my sources say March. The December cut in expenditures translate to late Feb to March Layoffs. The numbers are expected to be massive.

#63 dd on 01.26.09 at 1:13 pm

#57 Kash is King,

Real sized homes for real sized paycheques.

Going back to basics. It worked in the past.

#64 dd on 01.26.09 at 1:16 pm

#56 AM,

Food prices will come down too. If fertiziler, farming equipment, and other prices are coming down why not food. Might take time but if we slip into a depression food prices will come down.

#65 smwhite on 01.26.09 at 1:39 pm

#56 AM

(1.) In 2000 oil was at approximately $20 and is now below $50 a barrel; in inflation adjusted terms its up about 11% a year since 2000.

At its peak last year oil was up almost 33% a barrel YOY since 2000, and you want people to focus on Core CPI and leave or this “volatile” component out?

So considering, we’ve had massive inflation in energy even at today’s prices, we had a much needed retreat in the price, or disinflation.

(2.) I’m guessing that thewhiteknight used groceries as an example, because EVERYBODY eats. The rich and the poor; but it mainly affects lower class as they don’t have the expendable income to truly “affect” the core CPI numbers. So as these “essential” items that are disregarded by core CPI go up, so does the price basic necessities, like smokes, beer, whiskey, bread, milk, fruit and veggies. You’ll see the core CPI numbers slowly drift down as people spend more on the essentials, lower and middle class.

(3.) Its hard for non-essential items to give indication of true costs, as supply of appliances, auto or electronics increase, the prices will move down, but at the cost of production(and employment). Unless raw materials drop substantially the cost of producing these items remains relatively the same.

Yes, your getting a deal on a LCD 720p 60mhz 40″ screen because Sony has 100,000 sitting in a wharehouse in China and needs to cut prices to move for EOY. It doesn’t mean that in 2010 they will produce as many, they will produce less of the new 1080p 120mhz 40″, at the same cost to you…

6 years ago it cost $600 for a 15″ LCD monitor, today you can get a 32″ LCD monitor for that price, have we had deflation over the past 6 years or is it advances in technology?

Deflation is always in abundance during boxing day sales…

#66 Zebedee on 01.26.09 at 1:54 pm

#56 ~ Inflation IS evaluated by the price of consumer goods, food in particular. The CPI is the metric for estimating inflation and it is supposed to use as a guide those things we have to buy over and over again to maintain our lives. Food is a key component of that! Grocery bills have escalated beyond comprehension and far beyond the percentages the authorities would have us believe. My weekly grocery bill has more than doubled in the past year, and it doubled in 2007 as well. The CPI is held down by dubious means these days. Such as excluding the cost of housing. Such as replacing one good with another good to give the impression prices are more stable than they really are.

#67 Bill-Muskoka (N.A.M.) on 01.26.09 at 1:58 pm

Here is a lesson in successful Flim-Flaming!

Ol’ Blue

A young cowboy from Miles City, Montana goes of to college, but halfway through the semester he foolishly has squandered all of his money.

He calls home. ‘Dad,’ he says, ‘You won’t believe what modern education is developing. They actually have a program here in Bozeman that will teach our dog Ol’ Blue how to talk.’

‘That’s amazing!’ his Dad says. ‘How do I get Ol’ Blue in that program?’

‘Just send him down here with $1, 000,’ the young cowboy says, ‘I’ll get him in the course.’

So … his father sends the dog and $1,000.

About two-thirds through the semester, the money again runs out. The boy calls home. ‘So how’s Ol’ Blue doing, son?’ his father wants to know.

‘Awesome! Dad, he’s talking up a storm. But you just won’t believe this. They’ve had such good results with talking; they’ve begun to teach the animals how to read.’

‘Read?!’ exclaims his father. ‘No kidding! How do we get Ol’ Blue in that program?’

‘Just send $2,500. I’ll get him in the class.’

The money promptly arrives. But our hero has a problem. At the end of the year, his father will find out the dog can neither talk nor read. So he shoots the dog. When he arrives home at the end of the year, his father is all excited.

‘Where’s Ol’ Blue? I just can’t wait to talk with him, and see him read something!’

‘Dad,’ the boy says, ‘I have some grim news. Yesterday morning, just before we left to drive home, Ol’ Blue was in the living room, kicked back in the recliner, reading the Wall Street Journal. Then he suddenly turned to me and asked, ‘so, is your daddy still messing around with that little redhead barmaid at the Blue Sky Café and Tavern?”

The father groans and whispers, ‘I hope you shot that S-O-B Before he talks to your Mother!’

‘I sure did, Dad!’

‘That’s my boy!’

The kid went on to be a successful lawyer.

#68 PTDBD on 01.26.09 at 2:05 pm

Admit The Messenger

Without fanfare or notice,
without speech or ceremony,
the desperate Housesitters
scuttled and hid in prorogue.
The citizens were left to ponder
futures twisting in the cruel wintry wind,
their discarded votes littering the vacant corners.

Now, well fed, well paid, well rested,
in fine, laughing form,
with much pomp but no different circumstance,
they stride once more with rods erect and gilded
to present another millstone.
words
drop
into
the heart of the empty abyss.

Government if necessary,
but not necessarily government.
Reality did not change,
they were simply not aware.
Reality will not change,
they really don’t care.
Oed und ler das Mehr.

#69 marx_engels on 01.26.09 at 2:36 pm

This is the ‘hot’ message received right now via internet!
—————————-
“Buy Toronto Real Estate Now!!
—————————-
This is what I strongly believe. I have been in the business of real estate for close 25 years and have experienced the ups and downs of our markets. In every down market my business has grown because I was able to dig down and do the work required. I never gave up, was prepared and committed to moving forward.

This market is different. I don’t see the market staying the way it is for years to come as in past recessions. Previous real estate recessions had elements in it which we do not have. Higher interest rates, higher unemployment and higher inflation to name a few. This market is different. What we have is a stagnant market which will remain this way for perhaps several months in 2009, but will come out of it strong in 2010. When the market turns around, prices will increase, and mortgage interest rates will increase. This slower market will be short lived.

For the first half of 2009 we have an incredible real estate window in front of it. An amazing opportunity to purchase attractively priced properties than in past years, incredibly low mortgage interest rates, an abundance of mortgage money for qualified buyers is right in front of us.

Now is the time to buy a property, to move up, to add to our real estate investment portfolios or to begin one. I have never seen a better time in my 25 years to buy property in Toronto. All of our clients who are able to use equity from their homes should consider buying an investment property of some sort. Clients who purchased properties in the early 2000’s and who need a bigger family home should do it now.

The real estate opportunities of the next few months are too good to let go by without getting our clients and ourselves involved. The “Window of Opportunity” in our present Toronto Real Estate market should be taken advantage of.

Real Estate is always a great investment, and now is the best time in years in buy.”
————————————-

#70 young & foolish on 01.26.09 at 2:48 pm

it’s funny, all the anger about RE salesmen …. so what if they “over-sell” their “product” … don’t all sales people tend to do that? … did not the Romans have
a saying about buyers and their responsibility?

now that all the easy credit is gone, it’s real incomes that matter, and they too are now in danger due to
lay-offs

all that debt has to be re-priced to levels that are in
line with what can realistically be re-paid

#71 eddy on 01.26.09 at 2:57 pm

i think :
1) if you want commission controls for Realtors, contact Jack Leyton, he might listen to you with a serious face.
2) people should not buy real estate over the internet
3) uninformed and ill informed people should not be investing in highly speculative markets, like real estate- they belong in social housing
4) I’m revising my Toronto forecast- It’ll be retro 80s prices and mortgage rates to match.

#72 joshturbo on 01.26.09 at 3:14 pm

WOW

http://money.cnn.com/2009/01/26/news/economy/job_cuts/index.htm

Well all I can say is Alberta is getting scary, thousands have been layed off in Fort Mcmurray, Edmonton and Calgary . im sure the rest of Canada is feeling the same way i am !!! So depressing

#73 Dale on 01.26.09 at 3:17 pm

#46 The First Dick on 01.26.09 at 10:46 am

Try running a small business and survive off singular jobs. Then get back to us, OK?

——
Why are you being such a sarcastic dickhead?

These weren’t small businesses, and they are actually marketing themselves as being in the “business” of doing “singular” jobs. Home Depot for one. Actually they said they’d come and never showed.

Well people if you’re looking to make some money, apparently doing all the work the bigger guys can’t be bothered doing because “they won’t survive” is a way to do it.

#74 David Bakody on 01.26.09 at 3:18 pm

POL-CAN on 01.25.09 at 11:13 pm

Thanks …. i have passed on
Big Time …..

I wonder if Agents will lower their fees and lawyers as well. Garth I understand what you mentioned about getting a house ready for sale …. but … our agent in Burlington said …. sell as is …. less hassle in the long run … he made reference to a house down the street that couple thru in almost a cord of wood that was in the garage …. long story they brought some wood in to burn and it had bugs and the sued and won for a complete debugging of the entire house! Guess it has more to do with luck than anything.

#75 Just a Girl on 01.26.09 at 3:28 pm

#58 smwhite wrote: “I don’t know what the CPI and core CPI numbers reflect in the USA as of today but we found out that food is up 7.5% YOY in Canada, that goes along with the theory of disinflation in assets and continued inflation in the necessities of life…”

It’s not exactly a necessity of life, I know, but … when red peppers are $5.99/lb. people like me start eating green peppers at $1.99/lb! ;)

(and yes I am thankful I can afford peppers of any kind)

#76 JO on 01.26.09 at 3:49 pm

Jack Layton, if ever elected, would the greatest threat to our nation’s long term viability and social programs. A classic Socialist – tax and spend, take from the most productive / successful / prudent and turn around to use our tax money to reward failure, mediocre complainers. If the NDP wins at a Federal level, I will seriously consider leaving. Socialism is a fraud. Look at Western Europe. UK and Italy will likely be both broke by mid 2010. And guess what, health care and social programs will be cut for everyone big time. Japan is already rationing health care. You will probably need to buy a permit to breath air or drink water in a left wing gov’t. They live to support big gov’t and tax the hell out of productive people. No one ever talks about how much unemployment, lack of investment and savings, and lower forgone GDP growth comes from the high taxation and big gov’t policies these people bring.

We do not need more rules/regulations, since they didn’t stop us from getting here. A simple phasing out of fractional reserve lending and removing our money out of the hands of the BofC and held relative to the value of Gold would prevent the next depression. We are heer because of massive debt and spending. The PC’s are an embarassment, so maybe we can put PC and NDP and Liberals all together in one ring and host a Royal Rumble. They all stink and deserve to be bruised.
JO

#77 nonplused on 01.26.09 at 4:08 pm

#2 Future Expatriate

My new crazy idea is that the 2/3rds of foreclosures not on the market are not coming to the market. The banks are going to throw a big TARP over them and hope the market recovers before they have to realize the losses, just like they are doing with the MBS market.

Whenever the government gets involved, things get worse.

#78 Zebedee on 01.26.09 at 4:10 pm

The countries with the best standard of living are the really socialist nations like Finland and Sweden. However, they have approached it intelligently and seem to have rather good politicians (an oxymoron, I know). Canada is essentially a socialist country, which is one of the reasons I choose to live here….if it turns fascist like the US of the past 8 years then I would seriously consider getting out of here myself.

#79 nonplused on 01.26.09 at 4:19 pm

#27 HalifaxFamily
“Does this mean that 1/3 of engineers have been let go? If so, that is very very serious for the economy.”

APEGGA has something like over 40,000 members the last time I saw a number. 6000 per year is the number of new applicants. I don’t know the rate at which members are withdrawing.

#80 Mike B formerly just Mike on 01.26.09 at 4:22 pm

J Walker 52… Very strange attitude from Brad J. I met him last summer and he was very sheepish on condo world especially his own projects. He is a realtor through and through not an entrepreneur. He likes to do his own projects because he can make a ton of dough that way.
Is his take on real estate in Toronto correct.. NOPE..
condos are sitting there for eons or just are taken off the market. He loves these things because they are like hotcakes… he can sell them by the stack full.
He is print worthy and supposedly tv worthy .. but that ain’t saying much these days…
He is no economist by any stretch of the imagination.

“it’s a seller’s market still” Well that statement should put to rest any hope of credibility BJ Lamb may bring to the equation. Please tell me that lower sales numbers means greater sales and higher prices. Many condos have been taken off the market because there is an expection that they will get huge dollars for these shoe boxes. Scratch below the surface and you will see that this is the beginning of a very bad cycle for condos . Some buying opportunites may exist but you need the right seller and agent… a dumb buyer and a shrewd agent. Isn’t this the same old same old agent babble over and over. “some people will be kicking themselves that they didn’t buy in december or early in the new year” Typical hype to get the market going .
Guess they need the cash flow .

#81 Darryl on 01.26.09 at 4:38 pm

# 50
Your blog site advertises a cure for cancer. How can that be? How then could I find the other information credible?You obviously only visit this site to plug yours.

#82 BB on 01.26.09 at 4:44 pm

Just a question:
If you are buying a family home, with the primary purpose to raise your family, when is it a good time to buy? I think RE is overvalued but the place I am selling is overvalued as well. When do the numbers make sense to upgrade? I do have to live somewhere.

#83 wishtorent on 01.26.09 at 5:12 pm

#67 marx_engels wrote “For the first half of 2009 we have an incredible real estate window in front of it. An amazing opportunity to purchase attractively priced properties than in past years, incredibly low mortgage interest rates, an abundance of mortgage money for qualified buyers is right in front of us.”

This is my first post but I have been reading the blog for a while now. You remind me of the “mortgage specialist” I saw a few days ago. He told my fiancee and I with a straight face that this is the best time to buy “ever”. He also told us he would be willing to lend us a mortgage upwards of $500,000 for a couple that earns $120,000/yr. We are both young, but thanks to this blog not stupid. This is the advice that has friends of ours getting into their houses with no chance of saving a dollar and losing equity immediately. He also suggested a 35yr arm, and said that we can double up payments anytime so that if we miss payments because of Christmas or whatever then it will be deducted from that balance. Why would I miss payments if he was telling me that I am basically in a great financial situation? The entire meeting rubbed me the wrong way. I want to say thanks to all of you who post. Your opinions and Garth’s knowledge have given me the confidence to not except that bullshit. Thanks again.

p.s. My fiancee wants a house, but I’m trying to get her to rent….We’ll see how that goes!
Oh, and he also said that his goal is to turn us into millionaires by the time we are 30…hahaha (through RE of course)

This is my first post but have been reading the blog for a while now. You remind me of the mortgage specialist I saw a few days ago. He told my fiancee and I with a straight face that this is the best time to buy “ever”. He also told us he would be willing to lend us a mortgage upwards of $500,000 for a couple that earns $120,000/yr. We are both young, but thanks to this blog not stupid. This is the advice that has friends of ours getting into their houses with no chance at saving a dollar and losing equity immediately. He also suggested a 35yr arm, and said that we can double up payments anytime so that if we miss payments because of Christmas or whatever then it will be deducted from that balance. Why would I miss payments if he was telling me that I am basically in a great financial situation. The entire meeting rubbed me the wrong way. I want to say thanks to all of you who post. Your opinions and Garth’s knowledge have given me the confidence to not except that bs. Thanks again.

p.s. My fiancee wants a house, but I’m trying to get her to rent….We’ll see how that goes!

#84 Wealthy Renter on 01.26.09 at 5:12 pm

This is the ‘hot’ message received right now via internet!
—————————-
“Buy Toronto Real Estate Now!!
—————————-

Well by golly, I think we have us a real estate pumper here. An anonymous realtor and self proclaimed economics expert has just told me that I should go out and buy a home. I am convinced of the error of ways. I don’t want to miss this “stagnant market.” because I obviously too stupid read that home sales have fallen 56% in the city when compared to last January. Buy, buy, buy, I must buy, buy, buy. With doublespeak such as stagnant market, your handle at this site should be “Orwell,” and not the concatenation of some dwem economists.

NEWFLASH: sales have fallen off a cliff in Toronto and the GTA. Sales are not stagnant.

And why the veil of secrecy? An “expert” of your obvious credentials should introduce yourself to this forum. This forum needs the equivalent of a PaulB or AgentWill (who contribute to various Vancouver blogs.) Their honesty probably does not garner them many awards at real estate conferences.

I understand that time must be tough for realtors. Ironically, we are in a position to purchase a home in west Toronto…perhaps as early as the fall. However, we won’t pay today’s prices. If the prices don’t go down, so be it. The sun will still rise tomorrow.

The sales of single homes in my little area of Etobicoke are down to double digits. Inventory has never been higher (in the neighbourhood we want to live in) since we have been Toronto (4 years.) The spring inventory hasn’t hit the market yet.

A little bit of honesty goes a long way with sceptical people.

I guess fundamentals like like the fact that a po

#85 john on 01.26.09 at 5:16 pm

Quite interesting…..the throne speech today and the NEW budget we can expect…..hmmmmmmmm quite a turn around by the Harper government….can you imagine if the last budget (smoke screen) had been passed??? I think we owe the opposition and “coalition” a big hand of thanks! And a much bigger hand of thanks if they vote no-confidence in a government that simply an’t be trusted. As the topic of this post “trust” entails trust in the powers that be to do the right thing are good for the markets,our economy,real estate and our future. “if it looks like a duck,quacks like a duck,and walks like a duck–it most likely is a duck” and will never be the bird of hope,trust and hope are essential for any form of recovery!

#86 BB (Vancouver) on 01.26.09 at 5:21 pm

Just a question: When is it a good time to move up in the market? I am looking for a bigger home to raise my family in. I plan on staying there 15-20 years. I think RE is overpriced but so is the house I am selling. I bought 8 years ago and have some good equity-even after slump. When does it make sense to move up?

#87 wishtorent on 01.26.09 at 5:47 pm

sorry about the double post!

#88 Bulls eye on 01.26.09 at 6:06 pm

#81 wish to rent

This is not the time to be with a me, myself and I girl ( I want a house). Protect yourself grow some ba!!s. If she wants it that bad then put it under her name only. As I’ve mentioned… You can save together but not go into debt together. A divorce won’t fix your credit. Always take care of yourself. All the best!
Cheers.

#89 David Bakody on 01.26.09 at 6:23 pm

#84 BB (Vancouver) on 01.26.09 at 5:21 pm

Well Sir/Madame ….. some times less is more …. I was raised in a small two bedroom home in a family of five and did quite well I raised my family in a modest bungalow in a family of four …. both nice lots albeit my Waterdown home was VLA land with room to play and more. Both my girls went to university and stayed at home and are on their own now and this house seems too big at times . I replaced the front and side windows and doors for under 4K and a new roof for under 3K ….. less is more savings ( both mothers stayed home except for some part time work0…. kids do not mind and there was always money for some special treats as was the case in my day …. oh how I remember those days trips for homemade ice cream in Bronte and dipping a line in Bronte Creek and pulling out a speckled trout or two. In any rate choose wisely.

#90 One Of A Kind on 01.26.09 at 6:30 pm

I think its all about fear, people still eat and burn gas . Life will go on and we will recover,it is not over folks just correcting and life will go on. Great time to buy stocks and invest thank god for the fear factor I should do well for my RRSP.

#91 North Vancouver Citizen on 01.26.09 at 6:36 pm

#85 wishtorent

Your fiance wants/must have/needs/ a home huh?

…sorry, you can’t win under any circumstance.

Just ask any guy on this blog who went thru what you are going thru.

…She will bankrupt you…

good luck

lol

#92 rory on 01.26.09 at 6:41 pm

#83 John

I sure hope we do not get what you wish for …all parties, all economists do not know what to do (opps isn’t Harper an economist)…they are guessing …everyone is guessing …all Harper and gang are doing is being forced to follow the world wide pack. Maybe a little contraian thinking wouldn’t hurt…spending is not the right way out (my opinion) but the “Coalition” doesn’t have a clue either …trust me they don’t …the big bad H or the other 3 – LID (we will call them the 3 LID’s) …hahaha…my guess is the Big I will snuff out Little L’s (Layton) dreams of a cabinet post & Garth’s #2 list wins – you gotta read the book for that one.

#93 dd on 01.26.09 at 6:46 pm

#67 marx_engels,

You says this is the best time to “move up.” How about all the baby boomers trying to “move down.” Would this not depress pricies even more? How about the investment condos just starting to be dumped on the market. Shouldn’t we wait … shouldn’t we wait until the unemployment picture is even worse to pick up a home?

#94 dd on 01.26.09 at 6:48 pm

#84 BB (Vancouver),

Sell house now, bank money, rent .. yes rent, wait. Vancouver prices have a long way to fall.

#95 dd on 01.26.09 at 6:50 pm

#80 BB on 01.26.09

When you can live on one pay cheque and bank the other. That is when it will be affortable to buy a house.

#96 OntarioHouse on 01.26.09 at 6:58 pm

December numbers are finally posted on the Oakville Milton Real estate board website. Oakville home prices are down 23.8% year over year. (I knew something was wrong since it took them so long to post!)

#97 Another Albertan on 01.26.09 at 6:58 pm

It’s my understanding that in many emerging countries there was decidedly lower use of fertilizer this last crop season (“our winter equals their summer” and such…). This was principally due to pricing schedules for fuel and crop enhancer such as potash (don’t assume that because prices have dropped precipitously that these are the same prices paid 9 or 12 months ago for 2008Q4 delivery of supply). I have little knowledge of modern farming methods or in the futures markets for food products, so I welcome correction.

If this turns into lower yields at harvest and if there are weather disruptions (drought, prolonged winter = shorter growing season, etc), prices in food commodities could become very volatile very quickly.

As for inflation in general, there has already been foreshadowing that the central banks in the west will extract liquidity from the monetary system forceably and with pain to ensure that inflation does not take off out of control. The US Fed as well as the Deutsche Bundesbank are deathly afraid of the consequences of an inflationary environment. There were public comments made by KC Fed chief Thomas Hoenig this past December about the necessity for the Fed to develop plans to extract liquidity. This concept has also been touched upon by a number of credible market watchers, both in public and private publications.

Don’t get me wrong… I expect monetary officials to be late to react and there to be run-ups in various aspects of economies out there. What I would suggest is that we are in a time where volatility will start to reign supreme. Many people may hit a “puke point” because things become so stressful and topsy-turvy. The ride may simply been too rough for some to handle.

As for oil, until I see crude’s derivative products of heating oil and RBOB get stronger and stay at higher pricing on a sustained basis because of demand, crude’s recent pricing may only be due to paper barrels changing hands. Don’t forget that the US Strategic Petroleum Reserve was one of the largest marginal buyers of oil in the past few years. The SPR is full. If the US economy looks to be in trouble on its kickstart programs because of energy inflation, don’t think for a second that the new president won’t consider selling stock to keep energy cheap for his ailing economy.

Alberta’s income is principally from natural gas. Natty has been under extreme pressure because of over-supply from the US, even through the long periods of cold temperatures in the past 6 weeks.

Everyone else’s mileage may vary on the analysis of the same topics…

#98 North Vancouver Citizen on 01.26.09 at 7:02 pm

Sell your properties and rent an apartment instead.

…1 bdrms from $3,000.00 per month

…3 bdrms from $5,000.00 per month

and how much does Real Estate cost in say…Sydney Australia, Singapore, Hong Kong or Tokyo?

…Still gonna tell me Vancouver is overpriced?

#99 Da HK Kid on 01.26.09 at 7:17 pm

BB VAN,

Quite simply it is all based on the percentage drop you will see through 2009 and into 2010. Vancouver along with most major cities in Canada will see a reduction of another 20-30% avg. on current values (reduced 20-30%).

My advice is sell now, rent now! Take equity now, protect that equity for when that $650K house you wanted to trade upto in the peak which is now $500K will be $400K end of 2009 or less end 2009.

You will be one of the very few that had! Remember, rentals will be much less expensive as well and deflation will continue through 2009. Your low rental may be less than your P+I+T on your current home so pocket that against any losses on selling your home today.

Quite simple actually!

#100 lgre on 01.26.09 at 7:31 pm

“This market is different. I don’t see the market staying the way it is for years to come as in past recessions. Previous real estate recessions had elements in it which we do not have. Higher interest rates, higher unemployment and higher inflation to name a few. This market is different. What we have is a stagnant market which will remain this way for perhaps several months in 2009, but will come out of it strong in 2010. When the market turns around, prices will increase, and mortgage interest rates will increase. This slower market will be short lived”

Wow, we still have these dummies out there cheering on the ‘ we are different” card! nothing is different, in fact we are in far worse shape then we were back in 89. Our biggest trading partner is on the verge of bankruptcy and you think that things will get better. Put down RE For Dummies and pick up After The Crash and you may learn a little as to why house prices will decline further.

#101 TS on 01.26.09 at 8:38 pm

Given some of the macro changes we are seeing in North America (and the globe) it may be useful to anticipate where the housing market is going and what kinds of accomodations will be in demand in the future.

First, four huge trends for the future….

1) Aging demographics as the baby boomers start to retire in droves, and younger people have fewer children, with many opting for none at all.

2) The age of fossil fuels is coming to a rapid end – world oil production hit its peak earlier this decade exactly where Hubbert’s Curve model predicted it would i.e. about 85 million barrels a day. Absolute best case scenarios call for oil to be gone by 2100, a better bet is somewhere about 2050. Until that time we will go through dramatic energy spikes as we experienced in 2007/2008. The ‘low’ point of the cycles will be hit at increasingly higher levels, and economic recoveries will be shorter and shorter, with longer periods of economic recession inbetween (just like we are currently experiencing).

3) Governments will dramatically escalate the pursuit of renewable energy production i.e. solar, wind and geothermal to get off the oil spike shock cycle. Governments will become more interventionist when it comes to energy and the environment. There will be increased legislation in terms of vehicle fuel economy – with fuels used dictated by government policy. Government legislation will directly control home design, construction and power source/consumption.

4) World climate change will generate a higher incidence of severe storms.

Looking at these trends it is easy to see the following happening with housing in Canada:

1) Homes will become much smaller, compact and energy efficient. The typical oversized 4 to 5 bedroom home in the suburbs will plummet in value.

2) New subdivisions will be required to be energy contributors to the public grid, i.e. the subdivision will have its own renewable energy generation through a combination of solar, wind and geo-thermal and will be required to generate more power than the subdivision will consume. Massive national campaigns to retrofit older homes will be pursued by governments.

3) Traditional ‘box’ design homes will be deemed too weak and energy inefficient and will disappear. They will be replaced with more efficient and robust designs that will be able to withstand the increase in severe weather. Look for a dramatic increase in the use of geodesic dome design.

4) Homes will generate their own electricity for automobile power. Look for major advances in capacitor technology that will make current battery use obsolete. The other leading fuel for consumer automobiles will be compressed air with back up electric. The last vehicles to use fossil fuels will be transport trucks. Gasoline powered vehicles will be forbidden by law.

5) Kitchens will become small and super efficient. Gone will be the days of huge, stainless steel appliances; and will be replaced with small, energy efficient appliances designed to serve a family of 1-3.

6) Water conservation will be a top priority and all new homes will be mandated to have rain capture and cistern capability. Bathtubs and home spas will be reserved for the very rich.

7) The backyard pool will be a footnote in history and will be banned as too wasteful in terms of energy and water use. Homeowners will opt for natural ponds in their backyards, fed through their water collection system and powered by onsite solar and wind. These ponds will double as old fashioned ‘swimming holes’.

8) The most desirable locations will no longer be waterfront or open acreages as these areas will be prone to storm surge damage and wind damage. Homeowners will view south facing hillsides and slopes as premium locations since they will be able to dramatically cut their power consumption by building their homes into the hillsides and capturing the maximum amount of the sun’s energy by facing south. Building on hillsides will also help with water runoff capture.

9) Watch for a dramatic increase in small, energy efficient personal greenhouses that will be incorporated in basic home design. These will allow homeowners to cultivate their own vegetables year round.

What are other people seeing in the future?

#102 john on 01.26.09 at 8:42 pm

#90 rory on 01.26.09 at 6:41 pm #83 John

I sure hope we do not get what you wish for …
well rory everyone to their own but personally id always bet on a potential winner to a confirmed loser :-)

#103 go green on 01.26.09 at 8:48 pm

93 dd on 01.26.09 at 6:50 pm #80 BB on 01.26.09

When you can live on one pay cheque and bank the other. That is when it will be affortable to buy a house.

dd – I don’t know much about RE as a house to us was a home rather than an investment, per se. When we bought our current home, we had been approved for a much larger mtg. We based our purchase price on one of us potentially losing our job. We had a 25% downpayment. As it turned out my husband did lose his job about a year or so later. On our dime, he retrainted, but at least he received EI during that year. We had an old DOS pgm to calculate mtg payments/interest. We had also negotiated a very flexible mtg. We paid our mtg off in 7 years. We sacrificed in some areas, but never did without. We’ve always believed in living not only within our means, but putting some money aside for a rainy day.

#104 $froma$ia on 01.26.09 at 10:57 pm

North Vancouver,

Properties in China have plunged.

I think you should get a book on Japan’s economic crisis and what it did to help it’s problem…. BTW there still not out of it and house dropped 50% there back in the nineties.

I really think that your probably a baby boomer that bought his home for $16,000.

#105 patriotz on 01.26.09 at 11:11 pm

The CPI is held down by dubious means these days. Such as excluding the cost of housing.

Housing is not a consumer good. It is capital stock. You don’t have to buy a house to have a place to live, as opposed to say buying food which you need to eat. The cost of having a place to live is the market rent.

#106 Charles on 01.26.09 at 11:20 pm

#23 $froma$ia on 01.26.09 at 2:03 am

______

If everyone thought like you, there wouldn’t be any problems today.

#107 Roial1 on 01.26.09 at 11:38 pm

84 BB (Vancouver) on 01.26.09 at 5:21 pm

Just a question: When is it a good time to move up in the market? I am looking for a bigger home to raise my family in. I plan on staying there 15-20 years. I think RE is overpriced but so is the house I am selling. I bought 8 years ago and have some good equity-even after slump. When does it make sense to move up?

This from the Comox Valley.

A simple and safe answer is DO NOTHING for at least 1.5 years. Save against your down payment and laugh your way to the Bank when it is time to buy.
with the shaky economy and prices looking to dive. WAIT!
I am preparing for the worst and so should you.
If it does not happen then you have saved much more toward your new digs.
If it does happen then you will be a WHOLE lot safer.

Read Garth’s book then decide for yourself.

There, I’ve had my say. My wife who is educated in Switzerland has read the book and agrees that Garth’s pound of preparedness, makes good sense.

Even if nothing happens.

#108 Another Albertan on 01.26.09 at 11:41 pm

99 – The point wasn’t addressed on why the use of carbon-fueled vehicles would be curtailed by government. The simple answer is that the last vehicles to use fossil fuels will be military. I don’t see fighter jets and missiles running on fryer grease.

“What do you mean we can’t launch a counter-attack against the scuds because there’s calamari and tater tots clogging the fuel intake?!?”

or

“We can’t evacuate because the Humvee is still charging and the insurgents just cut the power!”

If we are indeed that close to running out of oil, some very nasty wars are going to break out and suddenly Garth’s “preparation list” looks pretty good when you’re facing total dystopia.

#109 TheFirstRick on 01.27.09 at 12:33 am

#71 Dale on 01.26.09 at 3:17 pm #46 The First Dick on 01.26.09 at 10:46 am

Try running a small business and survive off singular jobs. Then get back to us, OK?

——
Why are you being such a sarcastic dickhead?

These weren’t small businesses, and they are actually marketing themselves as being in the “business” of doing “singular” jobs. Home Depot for one. Actually they said they’d come and never showed.

=========

Hey, personally I’ve never had the problem(s) you describe. Ever consider that YOU are the dickhead?? LOL If you knew what you where talking about you would realize that HD uses nothing but small independent contractors requiring nothing more than a WCB number.

#110 nonplused on 01.27.09 at 12:34 am

#88 One Of A Kind

Actually, people who have just lost their job and been foreclosed on tend to eat food from the food bank and buy a lot less gas.

Side note: Great idea for those Exurbians who are stockpiling canned food and such: It’s a good idea to rotate your stock prior to expiry. If you have too much to use the food bank could really use your help right now. Take the stuff you can’t use there and replace it. That way you can be prepared and help out all at the same time! From what I hear the need is very high right now, and the $hit hasn’t even hit the fan yet (although it’s close).

We live in interesting times. I personally expect more deflation, which isn’t really deflation it’s more of a collapse of all the unpayable debts in the system, and then a great inflation as it becomes clear that production has collapsed but all the money the government produced over the years is still there. But the deflation debt collapse first and it could take some time.

Yikes!

(Oh and the inflation won’t bring up house prices for a long time. They were already in a bubble, so they can’t be subject to inflation until the bubble is righted. Plus when your cost of food, clothing, transportation, health care, education, pet food, cell phone service, satellite TV, hot tub chemicals, and energy goes up you have to cut somewhere. Of all these things, only energy has come down and I suspect it has something to do with “punishing Russia for Georgia”. That came straight from Cheney himself. How long can they keep it up? Did they even do it? Don’t know. But Saudi Arabia is right pissed with both the oil price and the Gaza thing, and are saying so in the public domain. Something is coming…)

#85 wishtorent

Sign a prenup, let her buy the house in her name, and waive all rights to the asset along with her waiving all rights to you being encumbered by the loan (don’t cosign either or that won’t work). You’ll have to pay her rent, but I bet she is a little less gun-ho.

It will probably mean no marriage but it also means one less divorce.

#95 Another Albertan

I hear the greater concern is crops not being planted in the northern hemisphere because farmers can’t get credit to buy seed, fuel, and fertilizer. Now do we see why the Fed is panicking?????

#96 North Vancouver Citizen

Still cheaper than buying. Especially when the price of the property is falling by $5000 per month. Plus you can get out when you loose your job. Get your head out of your own predicament.

#111 Toronto Market Watcher on 01.27.09 at 12:40 am

#67 marx_engels
I’d be interested to know the source of your “hot” message received via internet. Thanks!

#112 JOLM on 01.27.09 at 1:46 am

Lay offs create panic and sluggish
Currency rotation . If wealthy companies
lay off staff . It may in turn harm there
own there neighbors, friends, amily, Country,
Church,low crime rates, hospitals and there own real estate values .Taxes may go up to cover more
loses and the beat goes on. When you lay off people your own wealth may suffer .
Think Squirrel jambalaya ration may get
popular on the cooking channels and
may be the meal for that special
occasion .

#113 $froma$ia on 01.27.09 at 10:36 am

#104, thanks Charles

#114 Andrew toronto on 01.27.09 at 10:48 am

Analysts: Bank bailout … try trillions
Analysts say the cost of bailing out U.S. banks could reach several trillion dollars if the government moves to relieve banks of toxic assets.

“The amount of working capital you’d expect the government to take into this would be around $3 trillion to $4 trillion,” said Simon Johnson, a senior fellow at the Peterson Institute for International Economics, Fortune reported Tuesday.

Johnson, a former chief economist at the International Monetary Fund, said the first round of bailout funds — roughly half the $700 billion financial rescue package passed in October — has left banks without enough of a cushion and that toxic assets are still weighing them down.

Paul Miller at FBR Capital estimated the bailout would cost at least $1 trillion for the nation’s eight largest banks alone.

U.S. banks are still struggling. The KBW Bank Index has fallen 35 percent this month after dropping 50 percent in 2008.

“The big banks are a hope trade right now,” Johnson said

#115 Straw Bale Home Builder on 01.27.09 at 11:28 am

Chances of sustained deflation hitting Canadian economy are remote: Carney

By The Canadian Press

HALIFAX, N.S. – The governor of the Bank of Canada says there’s only a remote possibility sustained deflation will take hold of the Canadian economy.

Mark Carney, speaking today to a business audience in Halifax, says he expects inflation to be below zero for the second and third quarters of this year before returning to two per cent in 2011. He says there’s nothing to be worried about if this deflationary trend holds for a brief time.

But Carney says greater risks arise from a sustained fall in prices – something that happened in Japan the 1990s, which he described as a decade of “missed economic opportunity.”

With the Consumer Price Index recently dropping below zero in the United States, Carney says concerns about deflation have increased.

Still, Carney says the possibility that sustained deflation could hit Canada remains remote because the country’s economy remains resilient with a strong banking system, flexible labour and capital markets, and an independent monetary policy.
————

How can we trust this?

There’s no way our banking system can be “strong” unless it is completely cut off from the global economy – but it’s not.

“Flexible labour and capital markets” – what does this mean? Can anyone enlighten me? He’s obviously speaking but he’s not saying anything.

“independant monetary policy” – give me a break… we live in a global economy and anyone who tries to be “independent” is a fool. Self-reliance is good but independence is impossible unless you can accept a third world standard of living.

#116 Just a Girl on 01.27.09 at 5:42 pm

#99 TS – great post! Good common sense insights. The smart folks will be the early adapters, both in housing ‘vision’ and lifestyle behaviours. The ones with their heads in the sand will be in for a rude awakening I’m afraid. Living an energy efficient lifestyle will not be an option in future … for individuals, businesses, or governments. The New World of Energy is coming, and it is going to require a huge shift in thinking, and change in personal priorities. Consumption management is the next big fossil fuel :)

#117 jacka55 on 01.27.09 at 10:23 pm

#110:

If I read your post out loud, one thing becomes clear: you are a moron.