Market update


Just as the apologists for the country’s biggest housing bubble were backpedalling on Monday. A reporter for the Vancouver Sun was trying to make me combust.

“Are you positive about anything?” he asked, showing typical journalistic objectivity. Then, “What if you’re wrong? What if people take action based on your statements?”

The questions belied the great trouble most people have believing a few simple truths. Like, this is the worst economic mess we’ve all been in for a very long time. Like, real estate will lead the destruction of personal wealth in Canada. Like, there is no recovery on the horizon. Like, government stimulus programs will fail. And, like, the people who need ragging on are those telling consumers they should be spending and buying, when we all need to be saving and hiding.

Just a week ago, the chief economist of the BC Real Estate Association was forecasting a shallow recession and a robust recovery, led by a visit to Abbotsford by Elvis. Now he says sales will drop by 9% in 2009 and prices decline by 13%. Says Cameron Muir: “The global financial crisis and worldwide recession will continue to take their toll on the B.C. economy this year.”

So, should investors have believed him a week ago, or believe him now? Actually, the correct answer is: Never. Economist Muir, I suspect, knows this depressing recession will likely shave a third off the inflated and unaffordable price of homes in his province, as it will in the GTA by the time things stabilize. But, being a paid shill for the industry, he’d have a hard time saying so.

That point I tried to make to the Sun reporter, who will likely finish me off in print in the morning. It’s not the rogue financial authors warning people to attack debt, prepare for the unknown, downsize and seize control of their lives who pose the problem. It’s those who – regardless of the economy or the dangers – push consumers to consume.

Contrary to realtor belief, a 10% or 20% price reduction does not constitute a buying opportunity when there’s another 30% bomb waiting to explode. The fact is Canadians allowed real estate values to inflate through herd buying. Then they rolled over as their government relaxed mortgage standards, turning the market into a blaze. Now they’re paying the price. Everybody’s equity is ablaze, and the destruction will continue for another year, perhaps much longer. I may be trashed for raising the alarm, but the real scrutiny must on those still throwing gas on the fire.

So, a professional sadness of mine is the apparent whoring of the Canadian media.

A year ago, as I related in my recent book, the real estate editor of a major newspaper who gave “Greater Fool” a full-page review (critical, but interesting) told me months later that was the kiss of death. After advertisers complained, he ended up on the overnight layout desk. The new real estate editor writes about funky paint colours and throw cushions.

But the sponsors left anyway. They smelled the smoke.

Tuesday’s delusions:

You can see what I mean by going here. And here. And here.


For today’s blog, ‘Bad Day,’ go here.


#1 Justin on 02.02.09 at 8:43 pm

They smelled the smoke alright. That smoke was grade ‘A’ BC bud because that’s the only thing that would put them in such a stupor in order to believe their own hype.

#2 Market update on 02.02.09 at 9:12 pm

[…] Random Feed wrote an interesting post today onHere’s a quick excerptJust as the apologists for the country’s biggest housing bubble were backpedalling on Monday. A reporter for the Vancouver Sun was trying to make me combust.“Are you positive about anything?” he asked, showing typical journalistic objectivity. Then, “What if you’re wrong? What if people take action based on your statements?”The questions belied the great trouble most people have believing a few simple truths. Like, this is the worst economic mess we’ve all been in for a very long time. Like, rea […]

#3 Keith in Calgary on 02.02.09 at 9:22 pm

The mainstream print media is one of the core components of “the real estate industrial complex”……..they are utilized to manufacture implicit consent amongst consumers, for a hefty fee disguised as “ad revenue”……..when in fact the term “journalistic integrity” is conspicously absent from all of their pages.

Even now, as the RE world smolders and crumbles beneath us, their editors sanction the printing of what can best be described as drug induced diatribe telling everyone remaining (the consumers who have not yet spent their money) to “give them selves a shake as everything is allright here”…..

ROLF…….one day I’ll have to use something else to line my birdcage besides newspaper, as they will not be around anymore…..and I for one will not shed a tear.

#4 ThumbsUp on 02.02.09 at 9:24 pm

“Are you positive about anything?” he asked,

Here are some of my ‘positive’ –
1) I’m positive housing price is going down, way down.

2) I’m positive with 0/40 a history, RE will NEVER be bubbly/unaffordable as 2006-2008

3) I’m positive Japan has shown us what’s ahead.

4) I’m positive I will not invest for the sake of fear/speculation(read inflation), I’d rather invest in hope.

No more games.

#5 Sondra on 02.02.09 at 9:34 pm

Realtors who tell it like it is, get a really hard time from the Realtors who wear rose coloured glasses, and horse head blinders. The public is confused with the conflicting information, and they want to believe their house is worth more than it is. I have heard most of Cameron Muirs economic forcasts when he was with CMHC and now with BCREA. I always left the room with the same word on my mind,…………….REALLY?

#6 kitchener1 on 02.02.09 at 9:43 pm

It takes a big person to admit they made mistake buying into the biggest real estate bubble ever. I think thats why a lot of people have a hard time grasping that their own personal vehicle of wealth will lose value.

Same story with the stock market, the average joe stock picker/trader will lament over their bad stock pick will a pro will just chalk it up as a bad day and order a double scotch at the local watering hole.

For those that brought houses/condos in the last two years, that single investment will hold them down like a boat anchor over the next 3-5 years.

Eastern Canada from Quebec onwards to Nfld will be the only places that are not totally devasted but the coming RE crash.

#7 Nick Papageorgio on 02.02.09 at 9:44 pm

Garth, I hope there are realtors that go to your seminars and really listen, I hope there are some that still want to have some credibility.

#8 Rural Rick on 02.02.09 at 9:53 pm

Been doing some reading on the 1930 Depression. The folks who lived through it said very little was printed in the papers about it because everybody knew how bad it was and advertisers would pull their ads if stories weren’t upbeat. So the papers of that time had very little bad news printed unless you read between the lines.

#9 HalifaxFamily on 02.02.09 at 10:02 pm

What is your Halifax location going to be?

#10 Guy on 02.02.09 at 10:20 pm

Speculators and over-optimistic folks got us into this mess, for sure. Excessive pessimism and crying wolf may actually make the situation much worse than would be otherwise; over-reacting goes both ways.

I’m all for taking rose-coloured glasses off, but let’s keep criticism to a reasonable level. Hoarding and boarding up may be good personal advice, but what matters is what should be done for the collective good. I’d love to hear something concrete about that.

#11 Jon B on 02.02.09 at 10:22 pm

A few weeks ago Garth, you told me this blog isn’t about you (in addition to saying I was the greatest fool…but I’m willing to let that one slide). It would seem to me that it’s very much about real estate, the state of the economy and as today’s post demonstrates; about you, your opinions and the way the press reports on your opinions. Nothing wrong with that. I enjoy a balance of opinion; you’re on one side, while others with a more positive outlook are on the other.
With so much at stake for so many during this recession, a diet of balanced opinion combined with factual data can only be considered healthy.
See you tomorrow night in Surrey.

#12 Torquemada on 02.02.09 at 10:26 pm

It saddens me that so few people have the ability to reason for themselves.

Very few can distinguish fact from opinion.

Very few can distinguish argument from assertation.

Very few can tell the difference between news, opinion, and advertising.

So few people ask “Cui bono?” or “Who benefits?” when presented with an opinion.

If there are people who are going to lose a fortune because they listen to the real estate boards, to hell with them. Let them be fleeced by realtors. If we saved these people money they’d only give it away to telemarketers and Nigerian princes anyway. At least giving money to realtors stimulates the economy by increasing sales of Lexuses, Rolexes, and shiny business cards.

Garth, I know you are on a Quixotic quest to educate people and make a bit of money for yourself (nothing wrong with the latter). I bid you well. But you are tilting at some very ignorant windmills.

#13 M I K E on 02.02.09 at 10:33 pm

This is according to the president of the Durham Region Association of Realtors.
“The drop in sales in December is very typical at this time of year. People have different priorities over the holidays,” Ms. Dawson said. “We are confident that we will continue to have a more balanced market in 2009.”

I think they called this pump and dump in the stock market if I’m not mistaken. What do you call it for real estate.

Article here:

#14 Million Dollar Fixer Upper on 02.02.09 at 10:45 pm

My brother lives in Vancouver, bought in a nice neighbourhood in 1998 and paid $360,000 for a very nice 50’s bungalow. He and his wife both make 6 figures and have enjoyed raising their kids in their house. The house was assessed at over $800,000 last year when I gave him a copy of Greater Fool. He thought I was crazy for believing the information in your book but will be fine either way the market continues to go.

My brother-in-law used a sizable inheritance to buy a million dollar fixer upper near Cambie and 20th half way thru 2007. In 2005 it sold to the previous owners at $595,000. I also gave him a copy of Greater Fool before they sold their 1 bedroom condo in a very nice neighbourhood and added the inheritance to make up the just over $1,000,000 asking price for the house. He also didn’t agree with your book. It is different in Vancouver they said.

Thanks for spreading your message and having the thick skin to take the criticism it draws from those that earn their living spreading lies.

#15 Investx on 02.02.09 at 10:54 pm

“A year ago, as I related in my recent book, the real estate editor of a major newspaper who gave “Greater Fool” a full-page review (critical, but interesting) told me months later that was the kiss of death. After advertisers complained, he ended up on the overnight layout desk. The new real estate editor writes about funky paint colours and throw cushions.”

Wow. Amazing. So there we have it.

If people doubt that the media lies and manipulates, there’s some proof right there.

Advertising revenue is in control.

It’s no wonder the real estate industry is developing such a scummy reputation.

Thanks Garth!

#16 ACS on 02.02.09 at 11:07 pm

Prices slashed over the weekend on this 44 townhome complex in Abbotsford. Just six units sold all the rest are available.

Check here for details on complex:

Check here for price information.

#17 nonplused on 02.02.09 at 11:08 pm

Funny you should mention your realtor editor loosing his job for reviewing your book.

I have noticed the last couple of weeks, the local free community newspaper (rural area, mostly acreages and working ranches), which used to seem to be supported entirely by real estate offices and auto dealers, is now almost devoid of advertisement save the businesses for hire section. Even though most of the content is not paid, I don’t know how long they can continue to publish on a zero advertisement business model.

So your editor friend probably will be grateful for having a layout job. The new real estate editor will be canned soon as the section is phased out to save on printing costs. What we want to happen to us is not always the best thing that can happen to us! Look at Garth! Voted out, but now a financial celebrity and part of the environmentally friendly energy movement! At least the second part is respectable business, even if not all the bugs are worked out yet (there is a scalability problem and it’s expensive. By scalability I mean there isn’t a good way to start with $2000 and actually back off the utility by whatever your system can produce. You gotta go whole hog. The smaller systems are all designed to be off grid or backup systems. But hey, technology evolves. Perhaps small scale grid tie systems are coming soon. The “iPod of wind” offers an example of progress, although at $8000 it isn’t exactly a starter system.)

#18 Third Chimp on 02.02.09 at 11:18 pm

If RE hucksters can make predictions then so can I. Governments will continue to throw your money at the financial system. The loss of jobs and decline in consumer activity will continue regardless, with deflation of wealth as the backdrop. Governments will pause briefly, then throw even bigger gobs of money at the financial system to prevent its immediate collapse. This will be their only plan. At some point, people will grow frustrated with the fact that they are hurting, and they’ll realize that the government’s plan does nothing for them. It will dawn on people the govt has no idea of the seriousness “on the ground”, and is perfectly willing to keep playing these money games endlessly, saying “we’re working on it”. That’s when the first Canadian riots will start. Let’s check back in six months and see how I’m doing !

#19 Jan on 02.02.09 at 11:21 pm

Gee Garth, you need to calm down. I am a long time lurker of your blog, a huge fan, have cheered you on throughout your journey in the last few years. But, I was born and lived almost exclusively in B.C. (one year in T.O. – loved it by the way but marriage made me return) and when I read your sarcastic remarks about B.C. real estate and the people who own it You got my back up. This is not how you win friends upon entering new territory. As my very savy businessman father used to lament – another ‘Wise Man from the East’. A lot of realestate in B.C. absolutely unique and unless the entire world is reduced back to hunters and gathers it is always going to be worth more than subdivisions in Burlington. I suggest you do a bike trip up and down Vancouver Island. You won’t want to go back…

#20 Garthlover on 02.02.09 at 11:21 pm

Garth, I re-read this:

Aside from you being the greatest prophet since #@$&, the other thing in that article that jumped out at me was the statement that Canada was the ONLY G7 COUNTRY NOT RUNNING A DEFICIT.

10 months later…….?

#21 Steve on 02.02.09 at 11:26 pm

The pushing of consumers into debt by the media sounds a lot like Jeffrey J. Brown, aka westtexas @ idea of the “Iron Triangle”.

“Meanwhile, over on the other two legs of the Iron Triangle, the auto, housing and finance group is focused on selling and financing the next auto and house, and the media group just wants to sell advertising to the auto, housing and finance group. The media group is only too happy to pass on the “Party On Dude” message to consumers.

To some extent, what we are seeing across the board, from large sectors of the energy industry to the auto/housing/finance industry, media and beyond, is the “Enron Effect,” i.e., many people know that we have huge problems ahead, but their paychecks are dependent on the status quo.”

#22 Investx on 02.02.09 at 11:31 pm

On the previous series of comments, someone recommended financial expert (manager, author, blogger) Danielle Park, who I’m finding interesting. Here’s a video of her. At around 5:50, she talks about the CMHC and 0/40 mortgages.

#23 EJ on 02.02.09 at 11:37 pm

“What if you’re wrong?”

Does he ask that same question of the industry shills who write the RE pumper pieces in the newspapers? I’ll bet he doesn’t.

#24 jose on 02.02.09 at 11:45 pm

Garth, do you think this deflationary recession will be followed by hyper-inflation as a result of all the money being printed right now? if so, should I be buying gold?

#25 Apocalypse Now on 02.02.09 at 11:58 pm

The Depression of 2008 – ?

The day of reckoning for the whole world comes while the world sleep walks to its doom. Wakey wakey people; this ain’t about the RE crash any longer; that news is so yesterday! Read between the lines of what Garth and a lot more wise people in the know are telling you. Why do you think Garth, now of all time started the Xurbia site? Have we not have had recessions before, he didn’t do that back then, did he? The answer is that this time there will be no recovery. This is not a normal recession or even a depression, this is something new, for which a new term will have to be coined, or perhaps an old word will suffice; that word is ‘apocalypse’ and it is here and now. Get ready before it’s too late!

#26 jesse on 02.03.09 at 12:04 am

Garth: what if you’re wrong? The correct answer to that is, “What if I’m right? What if I’m even half right?”

#27 dd on 02.03.09 at 12:16 am

“The new real estate editor writes about funky paint colours and throw cushions”

That is what you will find in the Calgary Herald Home section every and each Saturday. If the current situation if not pleasent … let talk about the “deals” in ____. The mag never talks about THE issue.

#28 $froma$ia on 02.03.09 at 12:26 am

Actually Garth , the picture you have of the burning house may be something that desperate home owners in negative home equity may try to do to collect insurance and get out of their homes nooses!!!!

#29 Golden Duck on 02.03.09 at 12:28 am

Good Evening Garth,

I have read the books already. Thanks for the front-page autograph, it was indeed a nice surprise!

Do you have any information about leaving Canada with bullion bound for Holland/Germany, and eventually coming back after the… recesion/war/etc? Is there going to be any problem (in or out – legally, custom or tax that would prevent me to do so?)
I was thinking to have 5000 CAD$ in 1, 1/2, 1/4 ounce coins and 20000 $US in 2 bars.

I spoke with some folks at work, and they do not understand the refinancing risk (e.g. bank not refinance the mortgage balance 5 years from mortgage start), they think is unlikely, never heard or imagine how this can really happen. Can you give a practical example from your experience?

Thank you

#30 islander on 02.03.09 at 12:32 am

Newspapers are dead. The Bargain Finder took their general classifieds. Trader Publications took their vehicle ads. Canadian retailers started dying and taking their national ad buys with them. The Internet is eating everybody for lunch. All that was remained were the car dealers and home builders. And the Depression is going to take care of them.
When it’s all over, some largish Canadian cities will be without a daily newspaper.

#31 Mini-Garth on 02.03.09 at 12:55 am

It’s also interesting to note that at least until a couple years ago, Garth’s column was featured in the Kelowna Capital News. Then one day it stopped appearing.

#32 TheComingDepression on 02.03.09 at 1:05 am

The realtors are in a desperate situation. This is identical behavior that happened in the US before the collapse. The stupid media, especially in Vancouver, own condos. Their relatives parents brothers sisters and friends own them ..The last thing they want to hear is “My condo is going to get cut in half”. So they write the hype. They lie cheat and misinform the public, just like the realtors do. Soon they will all be unemployed anyway.

#33 Jeremy on 02.03.09 at 1:07 am

I live in a rental in Fairfield neighborhood of Victoria. This duplex is valued at 758000 as of last July, I wouldn’t pay 250000 for this house. My fiance and I make 140000 combined and we can’t afford a house and raise a family comfortably on that salary here, whats up with that.

#34 Happy Renter in North Van on 02.03.09 at 1:20 am

Garth, you shouldn’t be so surprised about the whoring of the Canadian media… he who pays the piper calls the tune… The Real Estate industry pays big bucks for people to parrot the incessant cry… “Now’s a great time to buy…”

There’s a great Wall Street Journal article from January 12, 2009, featuring David Lereah, the National Association of Realtor’s disgraced former Chief Economist…

“Mr. Lereah, who says he left NAR voluntarily, says he was pressured by executives to issue optimistic forecasts — then was left to shoulder the blame when things went sour. “I was there for seven years doing everything they wanted me to”, he said”

If they do that to their own people, imagine what they’ll do to newpapers in which they buy advertising…

#35 Happy Renter in North Van on 02.03.09 at 1:21 am

Just in case you’d like to read the article in entirety…

#36 George Roman on 02.03.09 at 1:25 am

We had been waiting a long time to buy our first house in Calgary and started looking seriously in November when we found out my wife is pregnant. She is feeling a strong urge to settle down and we would like to own. The problem is the prices remain high despite all the job losses and negative headlines. We have actually written a couple of offers, but sellers seem to refuse to lower their asking price by more than $10,000.

I know this is not the best time to buy, but given our circumstances, surely over 5-10 year time horizons we aren’t shooting ourselves in the foot we buy now are we?

#37 KINGDOM COME on 02.03.09 at 1:28 am

Hi Mr. Turner

Your article is impeccable. When I first landed in April 2008 to Canada from S.E. Asia, the first book I look for to buy was, ‘”Greater Fool”. I got all the answers I wanted to know why Canada housing prices were going up so high so fast over the last few years. Will buy your new book later, currently am overseas. It takes great deal of courage to speak up like you do without fear or favor. You are a role model.

Bankers control the world and countries. People behind newspapers, Real Estate associations and politicians kowtow and basically are control by Banks/Bankers including the low income individuals. Perhaps, this website which has an article named ” Billions to the banker, Debt to the people” will draw some light.


Thank you very much for sharing your invaluable knowledge and experiences.

#38 No Fool.... on 02.03.09 at 1:46 am

It’s Calgary’s Mario T that should be taking basket weaving courses and throw pillow critiquing, cuz that guy is shill 101. Garth, I’ve always known that the media is biased in both politics (domestic and international) and social issues, but how on earth can reporting be biased on a topic like economics? This boggles my mind. As you’ve stated, we’re talking facts here.

Next thing you know, we’ll be pushing creationism and trashing evolution and Darwin.

This stuff isn’t criminal, but it should be.

#39 kc on 02.03.09 at 2:28 am

Garth, while you are on this side of the world, you might want to grab a Vancouver Sun to frame next year.

The glow is really coming off our bubble fast.

B.C. house prices to plummet 13 per cent: forecast

Province’s real estate association predicts ‘a bit more shallow recession’ behind the drop

full story:

#40 kc on 02.03.09 at 2:43 am

Cendrine on 02.01.09 at 11:05 pm BTW I’ve been meaning to ask you which blogs, columns or analysts do you trust and read regularly? Why do you trust them? Do you subscribe to the Global Economic Anticipation Bulletin?

I would be interested to know what others following this blog are reading also.

sorry i missed this one yesterday, this is a sight I read daily to see what is new. (they can be a bit gold bugish and a bit technical) however, they have over 250 contributors, all the names you have mentioned plus some deep essays. they seem to be on top of most aspects of all markets. If it is worthy they seem to have it posted:

Welcome to The Market Oracle
The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

We present in-depth analysis from over 250 experienced analysts on a range of views of the probable direction of the financial markets. Thus enabling our readers to arrive at an informed opinion on future market direction.

#41 David on 02.03.09 at 3:13 am

The term stimulus package is now being referred to as quantitative easing. The government no longer knows how the magnitude of the deflationary cycle and going into more debt will make the financial cancer more bearable, at least according to official thinking.
The housing bubble was not some benign nodule.
I read some reports that the current financial collapse has destroyed some $40 trillion of wealth US globally and virtually wiped out most of the capital asset growth from the past 25 years. Talk of a robust recovery for certain local markets next year sounds implausible.
The graphic of the flaming McMansion is apropos.

#42 confused and a little crazed on 02.03.09 at 3:22 am

Jan post # 18

Have you been to seattle or how about Oregon. They have more of a diversified industry …equally nice if not better . Better salaries and their housing prices are still lower than Van.

correct if I wrong but I did n’t a Hastings Van east type style in either city… of course I could have missed it

But isn’t Van east the poorist in the most expensive area in North America.

Van is nice but best place in the world?…uh uh

#43 patriotz on 02.03.09 at 4:16 am

Jan B:
“A lot of realestate in B.C. absolutely unique and unless the entire world is reduced back to hunters and gathers it is always going to be worth more than subdivisions in Burlington. I suggest you do a bike trip up and down Vancouver Island. You won’t want to go back…”

It’s different here! Everyone want to live here! It’s the Best Place on Earth® ! It must be true because the license plates say so!

Just what jobs are there left on Vancouver Island except building houses? How can people move and buy there if it’s more expensive than their present place of residence?

Lay off the Koolaid.

#44 Jim Tuba on 02.03.09 at 5:33 am

#45 Mike (authentic) on 02.03.09 at 6:34 am

George Roman on 02.03.09 at 1:25 am …Calgary … know this is not the best time to buy, but given our circumstances, surely over 5-10 year time horizons we aren’t shooting ourselves in the foot we buy now are we?”

Something to have a think on…

In the NEP Alberta RE crash of the early 80s, if you purchased at the peek of the boom then it would take 21 years to earn back what you paid for it.


#46 Mike (authentic) on 02.03.09 at 6:57 am

I have been thinking about “Why to sellers/buyers do not understand that prices have dropped and will drop further” and here are some thoughts on that…

1. People are told RE is an investment by Realtor(s). But Realtor(s) disassociate RISK with the investment.

2. People have trouble “losing” money and acknowledging that fact they indeed have lost money.

3. Homes are priced in Virtual dollars; you never actually “see” how much cash it takes to buy one. If someone laid out $250,000 in bills, you would be shocks how much it actually is physically.

4. The Media is still spinning rose-colored-glass news, although it is starting to print more truth as pro-RE advertising decreases.


#47 cms on 02.03.09 at 7:55 am

You know what we need to get this housing market moving? Some sort of planned obsolescence built into homes, so people are forced to buy a new one every couple of years. It works for everything else we consume (and has kept us afloat for the past 20 year), why wouldn’t it work for real estate?

#48 Chris in England on 02.03.09 at 7:55 am

Some news today.

“Car sales in the UK fell 21.2% in December, compared with the same month the previous year.”

And the response of Ford and Vauxhall is to announce a 4.7% increase in the price of their cars in the UK!


This of course is after being bailed out by taxpayers’ money. Excuse me while I rush out and buy one of each.

#49 David Bakody on 02.03.09 at 7:59 am

Ladies and gentlemen …… ” What goes up …. comes down” everything single person would can read and write knows the line well …. but when all signs point to their world coming down ….. they will not believe it. Rather than seek the truth …… they bash those who dare print the facts in hopes they are spared. Then when reality sets in ….. (Now this is fact) They are the first to scream ” Why were we not told ! it’s the media’s fault” ….. and the killer ” I want compensation” …… one thing about older age ….. we have seen it time and time again and these people never get the message ….. and when they get to pearly gates they are still complaining. ….. and heaven is full of their own kind and the compliant counter runs 24/7 in an endless line I am sure.

#50 I think its starting to happen on 02.03.09 at 8:26 am

So we got 2 calls (and emails) from 2 different realtors at 10pm last night (let them go straight to voicemail), within 5 minutes of each other.
These were both realtors that we had met during different open houses over the last month.
They were both letting us know of an MLS listing which had just expired, and that the sellers were going to “either take it off the market” or either consider a low-ball offer. The sellers had already reduced their price $50K since originally listing.

Smelled of desperation (both the realtors and the seller) and its not even spring yet!
Wait until the market is flooded with the spring listings…

This is for GTA, btw.

#51 Bill-Muskoka (N.A.M.) on 02.03.09 at 8:29 am


Disney/Pixar has a new movie coming out called ‘UP’ and features the cute little house rising on hundreds of balloons that was in the opening of ‘Wall e’.

I think Disney may be making another reality statement with ‘UP’ because it represents exactly how the RE industry has portrayed reality. ‘Wall e’ certainly portrayed our societal attitudes about CONSUME, CONSUME, CONSUME, and the result was quite accurate.

Funny how it takes a cartoon animation company to tell the TRUTH about how totally FUBAR’d things are.

Your assessment of the whoring MSM is right on the mark. If they had any shame they would have felt it a long time ago. There are too many egomaniacs and not enough honesty is what has driven this entire mess.

#52 Reg on 02.03.09 at 8:34 am

I just picked up a copy of February’s RESALE – Homes & Condo. The first thing I read was an article from the Editor. It is titled, “The real estate market – It’s all good.” Written by Lisa Chin Quee.

In the 2nd paragraph, she states, “Although we are not the United States, we are somewhat affected by what happens in their economy.” Ya think?!

She goes on to say, “Having said that, our real estate industry will be be affected in the way it has been in the US….” Apparently we have more checks and balances to protect us.

The article mentions that it is still possible to have a “quick sale” with proper preparation.

The article ends with, “It’s February 2009 – so far so good. Actually it’s great. It’s a buyer’s market, which means a great house reasonably priced. Remember, you don’t want to experience the coulda, woulda, shoulda! Here’s to building “real” wealth!”

Unbelievable. This editor has drank the kool-aid. How immoral is it to lead potential buyers on like this. The real estate industry will soon become the replacements for used car salespeople.

Funny, she doesn’t mention that if you wait up to another year, you will get a much better price. Or if you buy now, your house (investment/equity) will be less in about a year (or less) than what you paid for it.

#53 Reg on 02.03.09 at 8:36 am

Sorry…in my prior post, I left out a word. Old brain not working the way it should.

I wrote… She goes on to say, “Having said that, our real estate industry will be be affected in the way it has been in the US….” Apparently we have more checks and balances to protect us.

But I should have wrote…She goes on to say, “Having said that, our real estate industry will (NOT) be be affected in the way it has been in the US….” Apparently we have more checks and balances to protect us.

#54 Bill-Muskoka (N.A.M.) on 02.03.09 at 8:39 am

A friendly reminder. About a year of so ago I posted about checking the Land Registry Office (in Ontario) to see what additions have been made to indebtedness on a home.

If you take the time you will see what the place actually sold for originally, and recently, and how much credit card debt has been added by the seller.

You are buying a house and its recapturable value does not include their credit card debts added as second or third mortgages. Be a wise buyer, not a fool. Take the time to check.

If you are rushing to buy and let emotions control your spending you will find the emotions of reality to be far harder than the momentary joy of the moment. Do not be rushed by anyone, take your time, assess your true needs, and have a plan firmly in mind that includes all costs, not merely the monthly mortgage amount.

Add taxes, insurance, maintenance, utilities, heating/cooling, food, pleasure, clothing, transporation, etc. because otherwise you will be a slave to a house, not its actual owner.

I would love to be able to call these things common sense, but there is damn little of it around these days.

#55 Alex on 02.03.09 at 8:51 am

to #35 George Roman

I have a kid and am renting – we are entering the great depression era and buying now is a financial suicide.

#56 Gord In Vancouver on 02.03.09 at 9:03 am

Just as the apologists for the country’s biggest housing bubble were backpedalling on Monday. A reporter for the Vancouver Sun was trying to make me combust.

“Are you positive about anything?” he asked, showing typical journalistic objectivity. Then, “What if you’re wrong? What if people take action based on your statements?”

If people listen to Garth, they’ll be better prepared for the worst case scenario – DUHHHHH !!!!

#57 J.B. on 02.03.09 at 9:09 am

Did anyone notice that the Toronto Star had four separate ‘survival type’ articles on Saturday? One by Thomas Walkom about the coming depression, one about wind-up radios, another about how to survive during a power failure, and a fourth about how to convert your fireplace to wood-burning. That’s pretty extreme for the Star. Also, an ad in the real estate section for new homes that had the price crossed out and ‘make an offer’ written over top.

#58 Keith in Calgary on 02.03.09 at 9:12 am

George Roman……

You are here because you think you are shooting your self in the foot…….well, in fact, you are going to be blowing your head off.

My spouse also had her “nesting phase” occur right after we got married, and I was able to talk her out of it….I had to actually outright refuse to buy RE and told her that it was not going to happen until things got back to normal, and I said if she didn’t like it, she could divorce me, I was not going to be a party to ruining our finances for the sake of some incorrectly perceived “stability and grounding”………so, you should be able to as well.

The RE supported media pushes this angle waaaay to much (look at the “but honey, Susan said” ads from Century 21 on Youtube to name just one example).

Now for all the women who read here, save any sexist dribble attacking me for someone else, this is merely a fact of life exploited by those who sel RE, and not an attack on your species. We men go ga ga over things wih tires, so blaze away if you are so inclined.

#59 smwhite on 02.03.09 at 9:13 am

“Are you positive about anything?” he asked, showing typical journalistic objectivity. Then, “What if you’re wrong? What if people take action based on your statements?”

Better question? What if your right? How well positioned is everyone that participated in the real estate orgy?

The “Sun” is a small step up from the National Enquirer, anyone taking their financial tidbits from that paper deserves a kick in the crotch.

#19 Garthlover

Yeah we were, but how are you going to play with the big kids like USA and England if your not mimicking what they’re doing. It ALMOST looks like Canada had to come out with the 40 year mortgage because we didn’t have a serious housing bubble in 2006, yet, despite some froth in some areas, if well enough had have been left alone, who knows, wouldn’t solve the entire economic issue with $40 oil and 0% demand for autos… but then again, how else could you convince the public to go billions into the hole without a good portion of the public on the noose.

Smells like tuna?

#60 CJ on 02.03.09 at 9:23 am

very interesting read…

#61 dd on 02.03.09 at 9:30 am

#35 George Roman:

“we found out my wife is pregnant. She is feeling a strong urge to settle down”

You are smart if you can rent for a while. Yes rent, kids, yard. Settle down … but rent.

No one know how far Calgary prices will drop, however, given income and affordability a medium price house should be in the $250K range. Really.

At least wait until the summer … lots of houses will come to the market in the spring and not sell. Prices WILL drop.

#62 Got A Watch on 02.03.09 at 9:43 am

George Roman – If you buy a house in Calgary this year, or next – you will be shooting yourself in both feet with a double-barreled shotgun.

I posted this yesterday: I read a long-term study of real estate markets last year sometime. They found that the AVERAGE length of the decline phase (how long prices were falling) was about 4 to 4 1/2 years.

This bust is built on the biggest credit bubble in history. So I would fully expect homes will decline for about 5 years from the peak. Or more.

If Calgary peaked in late 2007, then I would not even think of buying a home there until 2013. And at that point, there is no hurry.

The next boom will not come for many years, if ever (depending on demographics etc). There will be a period of about 4-5 years after prices stop falling where they will be flat – a serious buyers market.

So if you want to miss all that – rent till 2018. Then buy that dream home you always wanted, for about 50-60% off of today’s price.

I am not in Calgary, but I have lived through previous real estate busts, and I used to be a RealtWhore(tm). An industry that I have total contempt for, btw.

If you want to hear the truth, it is a concept unknown to realtors , and that they cannot provide.

#63 Mike (authentic) on 02.03.09 at 9:50 am

Just on CNBC, the 2008 housing report (when it hits google news, can someone find a link?)

1 in 3 houses sold were force closed by the banks in 2008.

US Home owners lost $3.3 Trillion of worth owning a home in 2008.

1 in 4 homes were foreclosers

Home ownership % drops to 2001 levels

NAR introduces new “Affordability Index” which, surprisingly says “It’s a great time to buy!”


#64 I was a Greater Fool on 02.03.09 at 9:51 am

I sold my house in the Beaches in Toronto in 1992 and then bought a house near Innisfill by Lake Simcoe for $245,000.

A year later I had to sell for personal reasons. I tried to sell it myself. The market had softened so I asked $225,000. An offer soon came in for $199,000 but I refused it. Remember this was NOT the era of 19% mortgages.

It took me 12 months to sell the house. My neighbor eventually bought it for… $165,000.

I never financially recovered from that debacle.

Oh, #28 Golden Duck, your question:

“I spoke with some folks at work, and they do not understand the refinancing risk (e.g. bank not refinance the mortgage balance 5 years from mortgage start), they think is unlikely, never heard or imagine how this can really happen. Can you give a practical example from your experience?

Thank you

Banks do NOT have to loan you money when your mortage comes due. What if at renewal you have a lower-paying job and your house is worth less? This did happen to my parents in Toronto in the 1960’s, and it is happening all over the USA right now, and will happen in Canada in 12 months. Already I know of people who bought with 5% down last year so they are already in negative equity territory. Do you really think the bank will re-lend once their mortgage obligation is over? They are risk adverse so I doubt it.

Hold on we’re in for a wild ride.


#65 Straw Bale Guy on 02.03.09 at 10:04 am

The media is half of the problem. I worked at a major daily in Calgary for less than a year before I needed a career change to save my soul.

I’ve been trying to leave a comment on the Herald article “Time to give yourself a shake”

After submitting my comments I received the following,
“Thank you for your comment.
It will appear on the site
after it has been approved by an editor. ”

I don’t expect my comments to appear online any time soon.

#66 North Vancouver Citizen on 02.03.09 at 10:07 am

Garth will be proven correct…

“”The Earth’s surplus population is long overdue for a culling. A nuclear holocaust will be a blessing for the survivors. We can start anew, hopefully avoiding past errors. Imagine a world without such festering social sores as New York, Washington D.C., Detroit, Moscow, Rome, Peking, Toronto or any of the other great pestholes harboring the majority of the world’s parasites and bureaucrats. In light of all this, to survive, you must move about a hundred miles from any major target area.

…As Rome and the rest of the world of her day degenerated and collapsed, giving way to a centuries long dark age, so may our present system. Whether our survivors revert to barbarism depends on those of us who can preserve the best of our culture and knowledge. This includes our technology, science,machinery and the chemicals and other raw materials needed to start over.
Those who invest in gold, silver, gems, paintings and antiques will make no contribution to the future. They have been led to believe by “survival investment counselors” that the ignorant peasantry will flock to them with their chickens and tomatoes to trade for slivers of gold, not to mention the honor of basking in their glorious presence.””

INVESTMENT IN SURVIVAL by Kurt Saxon (c) 1980

Is this a world without you? — Garth

#67 Frank-MTL on 02.03.09 at 10:09 am

Garth, hang in there, despite the abuse you will receive. Many people can’t deal with bad news or reality for that matter. Eternal optimists are the most dangerous folks , who often behave like an ostriche with his head in the sand. Perfect example: the throngs of so called financial advisers who lost the hard earned savings of their clients despite all the warning signals of an impending global banking crisis since 2007. Garth , I would like your opinion on the Montreal real estate market, seems to be less of a bubble than many other cities in Canada, not that I intend to buy any time soon. I read your book Greater Fool last summer, thanks for the public service.

#68 Da HK Kid on 02.03.09 at 10:29 am

Got a Watch #61, you are preaching to the converted on these potential time lines. I am of the same mind set which I posted on the previous thread.

Mike post #62, dont forget the shadow inventory that Fanny and Freddie are sitting on which you dont hear about as its waiting for a good time to re-list these when inventories of listed decrease. CA down about 50% in value across the board with 21 months inventory without the shadow released.

All Option A and Alt A loans are maturing right now for the next 2 years which if 70% default which appears they will, we are in for another $1T+ similar to Sub Prime flushing through now.

#69 No Fool.... on 02.03.09 at 10:37 am

Wow, Mario spoke the gawdawful truth for once:

Has the editor at the Herald changed?

Good riddance.

#70 Another Albertan on 02.03.09 at 10:38 am

Somehow, after reading The Lament of Garth Turner, I don’t believe he’s looking for a hug.


Try me. — Garth

#71 Da HK Kid on 02.03.09 at 10:42 am

Btw, here’s the skinny on the HK RE market. Q3 08 reported 2,200 Foreclosures while Q4 reported 11,000.

Let me put it into perspective, my home at peak Feb 08 sold for $2.9M USD. The bubble carried this home to asking around $3.4M USD. Asking with no takers today $2.2M USD!

During SARS in 2003 this home could be had for $1.3M. If the correction is what I think it is and we are at about 30% down now, then another 25% is coming in 2009 then we could get back to SARS levels.

Singapore market down 12% already, forecasting another 20-30% this year, 10-12% for 2010.

Both markets already declared recession with stock index’s down 60%.

40% of the global wealth has already been destroyed, not a one market will be spared.

#72 Mortgage Renewal on 02.03.09 at 10:44 am

#63 said, “Already I know of people who bought with 5% down last year so they are already in negative equity territory. Do you really think the bank will re-lend once their mortgage obligation is over? They are risk adverse so I doubt it.”

I don’t see why the bank wouldn’t make that loan.

If those people bought with 5% down, then they have CMHC insurance. The bank assumes no risk — CMHC does. And the bank gets guaranteed profits.

The people at risk of not being renewed are those who were responsible enough to save a substantial down payment before making their purchase.

Please correct me if I’m wrong .

#73 Bulls eye on 02.03.09 at 10:46 am

– Keith in Calgary

Good Remarks, My wife and I have agreed to a shiny Trailer. So in essence we get the house on wheels. Can be used in the winter – I think this will come handy at some point don’t know when or how – just my gut feeling.

#74 wellwell on 02.03.09 at 10:52 am


You inspired me to add the following definition to the online ‘urban dictionary’:

despereal estate

(n.) property with negative equity in a declining real estate market

“There is so much despereal estate in this neighborhood. Behind every ‘for sale’ sign is a mortgage debt greater than the value of the house itself.”

#75 a renter on 02.03.09 at 10:58 am

To #65,

Are you becoming unhinged? What does this have to do with Real Estate? (both questions rhetorical no answer required) Here in Toronto, we have a nice spot for you, on the street corner at Yonge & Dundas. Just bring a sandwich board with your message scrawled on it

To #65 No Fool..

Interesting Calgary stats in the article. We’re awaiting the Toronto RE Board stats shortly and I expect they’ll be similar, in fact perhaps worse on the sales decline

#76 Tony on 02.03.09 at 11:24 am

Garth said “…the people who need ragging on are those telling consumers they should be spending and buying, when we all need to be saving and hiding.”

That must be music to the ears of somebody working in a factory producing widgets for $16 per hour. Ya, just take your money and hide. Let’s just kill off the remaining jobs that are left. Let’s kill off whatever economic activity we can. Let’s all just hide our way into a depression. For such a smart guy, that’s a pretty dumb comment to make – and typical of the fear that you’re propagating these days.

It’s not the unfortunate fellow who’s already lost his or her job that I fear will shut their spending down. For this person will obviously be in survival mode until he/she can re-establish their income. It’s the other 40% (conservative estimate) of the work force that will retain their job and not really have reason to fear the downturn in the economy – that are at stake here. These are the people who always spent their money sensibly (within their means), and never let debt get the upper hand on them. Why should they stop spending and hide? For them, your advice is short-sighted; and if enough people hear your drivel and act on it – of course we’re going to slide into a depression. Last I heard, money has to actually change hands for an economy to work. Perhaps, they should consider preserving their head space – and shut down their spending when it comes to buying your book.

This blog is about real estate, not widgets. Additionally, I have said here clearly that people who have money and need to buy things should go ahead and do so. Those who need to use credit to buy, should not. Like it or not, deflation is here. The time has long since passed for government to heed my advice. The smart money waits. — Garth

#77 squidly77 on 02.03.09 at 11:37 am

love your government..

Down payment assistance provided to 23 households in the City of St. Thomas

ST. THOMAS, ON, Feb. 2 /CNW/ – The Government of Canada and the
Government of Ontario today announced more than $149,625 in funding to 23 low
and moderate-income households in the City of St. Thomas and County of Elgin
under the Homeownership component of the Canada-Ontario Affordable Housing

“The Government of Canada is committed to making affordable housing
available in Ontario and across Canada for those who need it most,” said MP

should we laugh or cry..

#78 squidly77 on 02.03.09 at 11:39 am

whoops..heres the link

#79 BC Guy on 02.03.09 at 11:49 am

Good morning,
“Re: #28 Golden Duck,
I spoke with some folks at work, and they do not understand the refinancing risk (e.g. bank not refinance the mortgage balance 5 years from mortgage start), they think is unlikely, never heard or imagine how this can really happen. Can you give a practical example from your experience?”

I have experienced it in the 90’s recession. The house I purchased in Courtice Ontario dropped from 195,000 to 134,500. The hefty down payment( 25% ) was gone and the bank wanted another 30K to refinance.

Needless to say, I was hurt financially. On another note, I was employed as an analyst at the time. I called for a down turn but never anticipated a 30% drop in the market.

For the BC nay sayers…my estimate for the market drop (and yes I forecasted the drop in BC real estate in the 90’s. I sold my BC real estate at the time and kept my profits.) I see a drop of 33-37% for the lower mainland 2-3 years. We are looking at a long slow train wreck.

Regards to all…

#80 charliegosurf on 02.03.09 at 11:52 am

the apocalyptik session

the surf’s up
the storm is slowly movin in
the herd is wondering

da wolf is wounded
da exhaust pipes are fuelin an in-shore
da waves are curlin up

this i know
this i believe
this it is

seize the day before it’s too late, da big one will level thing in a KARMA fashion kinda way,lol, be scared, you know it’s coming to get yur greedy human a$$, dontyu!lol

#81 patriotz on 02.03.09 at 11:55 am

“Do you really think the bank will re-lend once their mortgage obligation is over?”

Yes. The CMHC insurance is good for the entire amortization period of the loan. Which would the bank prefer – keeping those mortgage payments coming, or getting stuck with a house in a declining RE market?

#82 Sondra on 02.03.09 at 12:03 pm

#63 & 71
Mortgage Renewal

Some credit unions have sold off their mortgage portfolio’s. Some credit unions do not have the liquidity to renew the existing mortgages that were taken out with them. I have clients that are getting calls from their lenders telling them they won’t be able to renew their mortgage with them.

Some lenders are telling their mortgage brokers that the applicants are “in a declining business” and they don’t want the mortgage application. Those business are car industry, construction, home inspectors, anything connected to real estate.

Some lenders are now changing their in house rules to a minimum of 30% down or they must pay for CMHC insurance. I’ve been told this in house change is mainly for condos at this time.

Many, many current home owners with mortgages that have been taken out in the last 5 years are in serious trouble, but they don’t know it,……………yet.

We are now having deals that are firm and binding, deposit paid and the buyer walking away instead of completing. The last time this happened at this rate in BC was the 1980-81 crash. The law books are full of Nelson Scalbania rulings. The buyers will still have to pay.

#83 charliegosurf on 02.03.09 at 12:15 pm


heres da dumb $lave propaganda

even better econonomik lesson, nono means dumb in canadien slang,lol

the Desertification of Canada’s last true wilderness for the sake of corporations, politicians and real estate retards,

and to finish the set in style, a recipe for success, beware of 10mil sweedish gummies nucknuck players…. beware of powertrippers, wanabees. and most of all,

remember when the east coast was a rainforest with giant trees…, yu cant coz yu forgot already if you brushed your teeth this morn..lolthey slashed it off long ago, enjoy the west coast today,lol coz their busy redneckinit for china’s and zion benefits.

carpediem and try to remember what really matters.. air, water and love(KIDS)

#84 squidly77 on 02.03.09 at 12:16 pm

CAW worried GM may pull out of Canada

scared yet..

#85 POL-CAN on 02.03.09 at 12:16 pm


I think it is time for a post on how to deal with funny business by agents in the GTA area.

Perhaps an outline of how to go about filing a formal complaint with a governing body and how to stay on them to make sure the matter is investigated properly and resolved?

Kind of like your “How to be a vulture” post.

The reason I ask is that this phantom offer business is something a few of your readers have run into and posted about. In light of the current market conditions this practice is even more idiotic then before and has to be eliminated.


#86 Dwane on 02.03.09 at 12:24 pm

The property market is effected most by economics 101 which is the supply and demand curve. At the moment IMO the prices will fall and can ONLY change course after the ecomomy stabalizes and improves. Any information coming from a real estate board is information only … there opinions should be voided as they have a vested interest in any transaction. To predict a drop of 1,2,3 or whatever percent in pure speculation on there part. It all comes back to supply and demand. A shrinking economy will shrink the demand side. If the economy does pick up … then their is the double dip recession fears, so IMO prices could easily come off 60-70 % of their peaks. Keep an open mind and ignore the real estate professionals as they only want to drum up transactions fees … they could care less what a propery sells for.

#87 613 Happy where I am on 02.03.09 at 12:27 pm

(sung to “Blowin’ in the wind”)

How many times must a realtor lie
Before we all buy off the web….

And how many power outages must there be
Before we all buy the Generac

And how many days with empty grocery shelves
Until we say “Garth’s right!!!”

The Answer, my friend, is blowin’ in the wind
The Answer is blowin’ in the wind

#88 Marie on 02.03.09 at 12:27 pm

Saxon grew up during the Great Depression and is one the of fathers of Survivalism. He has lot of know how on how to make it through difficult time. But he is quite the Loonie and hold many dubious affiliations, including some Nazi groups.

While it is easy to blame the media and politicians instead of taking responsability, I do believe they have no choice but to tell the public what they want to hear. Unless people experience hardship first hand, they prefer shooting the messenger rather than be told they need to seriously change their lifestyle.

This, I think, is a balanced article by mainstream media.

#89 vulture says 50% by spring on 02.03.09 at 12:31 pm

Just thought that I would mention that in B.C. for $60.00 you can get a print out of liens and uncumberances from the Land Titles Office in New Westminster if you have the Legal Address of the property. This will give you the value of mortages 1st 2nd 3rd on the property…. it will show places with negitive equity… mortage lien on property… more than asking price for property…
This will give you great amunition in making an low ball offer on a property.
Vulture says 50% by spring

#90 O'Ryan on 02.03.09 at 12:33 pm

I listened to Garth’s interview on a local radio program here in Kelowna yesterday. He asserted that people should not have the majority of their wealth tied up in any one asset,including real estate. Good grief,here in Kelowna,that’s all most folks have but I believe they think Garth could not be talking to ‘them!’
I wanted to call and thank Garth for putting the idea of selling my house last spring. It’s now worth about $100,000 less. Instead of maintaining that behemoth house and yard,I spend my time shuffling $$$ between banks, order to qualify for CDIC
Oh my,rent is coming down here! This morning,I looked through some internet classified rental-there are lots that are reducing rent and giving away free months.

I hope to say hello and thanks in person tomorrow night in Kelowna.

#91 Got A Watch on 02.03.09 at 12:45 pm

I remember reading a real estate book in the ’80s where they always stressed homes should sell for a price based on 3 X the average family income of the area.

So the mythical average 3 bdrm bungalow on the average lot in an average location in the city should sell for that much, in a perfect world on a sunny day.

Adjust your neighborhood, location and income levels accordingly.

Waterfront always holds it’s value better than other property, but ‘across the street from the water’ does not. Homes in the more demand or wealthy areas will always cost more. A home on a nice lot should sell for more than a poorly sited one. Etc.

If you apply this simple math, you can see most regions are wildly over-priced even now. A lot of vertical under those prices, down from nose-bleed altitudes.

And then there is the fact that we have too many large single family homes for the “executive” market, and way too few that are affordable for most citizens.

I see vast new sub-divisions, where the large over-priced homes could become the rooming houses of the future. The outer suburbs may become crime ridden, as that is where the cheap housing will be.

#92 betamax on 02.03.09 at 12:47 pm

Jan B: “A lot of realestate in B.C. absolutely unique and…it is always going to be worth more than subdivisions in Burlington.”

Most BC RE isn’t unique, and though some will always be worth more than Burlington, none of it is worth twice what it was worth in 2001. There was always a premium for waterfront, but prices today are in bubble territory.

#93 Worried in Oshawa on 02.03.09 at 12:51 pm

Hey Garth:
I’m a long time reader but never posted. Just wanted to thank you for your straight forward plain language pull no punches approach….with that ever so slightly sarcastic humour:) Before I read After the Boom I didn’t even have a clear understanding of what a RRSP was. I went out, got a financial planner, opened up a self directed RSP and now have a tidy little sum put away. Well, a little less tidy than a few months ago but more than I would have had if I didn’t do it to begin with. On your advice I went variable on my first mortgage and saved alot of money that way too. I’ve just finished After the Crash,thanks for the soon to be priceless signed copy, and although I prefer to remain optimistic I opt for the motto ‘trust God but row for shore’. Besides, here in Oshawa the outcome for us rests pretty much on what happens with GM. Don’t have a whole lot of available cash, not without locking in losses, but plan to start accumulating some and keeping it in the safe I’m about to buy. I think the tax refund this year is going to buy a generator. Keep it up Garth. You help alot of people and I for one appreciate the crap you take in order to keep the rest of us informed. Next stop, Canadian Tire!

#94 Keith in Calgary on 02.03.09 at 1:05 pm

Bulls eye….

You should have bought an RV. Best of both worlds….as you cannot drive a trailer.

#95 go green on 02.03.09 at 1:15 pm

This blog is about real estate, not widgets. Additionally, I have said here clearly that people who have money and need to buy things should go ahead and do so. Those who need to use credit to buy, should not. Like it or not, deflation is here. The time has long since passed for government to heed my advice. The smart money waits. — Garth

I’m slow and as a Libra am indecisive. Constantly weighing one option against another. I’m also very fussy. I’ve a half basement full of bathroom fixtures for 2 bathrooms. All paid for with CASH. One bathroom (in basement) is an extension of a laundry room & an enlargement of a guestroom. Will contact a contractor this week and get a quote. Husband will do part of the work. Not doing this for investment purposes, but because its needed. We like where we live, have great neighbours, and live in a great neighbourhood. Many say one should not have an emotional attachment to their home & neighbourhood. I disagree. We’ve been in our current house for about 18+ years, have great friends on the street. You can crawl across the street :-) (not drive) after a night out with friends. We all can knock on each other’s door and share a drink, call for an impromtu pizza or just share with others whats available in one’s fridge. People have to stop thinking that homes are strickly an investment & more as communities where people care about one another.

BTW, we bought our house – a simple, but well built split entry (not what we wanted) for $118. about 18+ years ago, 70X200 ft. lot (cause I wanted to garden). My husband has made many renovations. Its now assessed at $227. Not much of an increase since we bought it, but our municipality doesn’t know what renos we did. (Helps to keep our taxes down.) We put 25% down and paid the mtg. off in 7 years. SO very glad we did considering what’s occuring now.

Our invesments have lost but we didn’t panic. If we live long enough, I think the market will rebound. If not, our inheriters will. In the meantime, we’ll survive as we are mostly prepared and grew up in families ‘where the motto was ‘waste not want not’.

#96 greyhound on 02.03.09 at 1:27 pm

#35 George Roman:

My family and I have been renting in Calgary for the last 2 years and will definitely continue to do so for at least another year – my wife had the same thoughts during her pregnacies – but now she is very happy we continued to rent.

If you need to, rent a bigger/nicer place (if space is an issue – thats what we did when the kids came – still FAR cheaper then owning the equivalent house (our rent is probably 1/2 of what the mortgage payment would be)) – and settle down for awhile. You will definitely NOT miss the buyers market (its not going anywhere for awhile).

Good luck reasoning with your pregnant wife :) – just kidding of course.

#97 FP on 02.03.09 at 1:31 pm

Credit card delinquencies jump

TORONTO — Canadian credit card issuers saw a sudden upward jolt in delinquencies late last year and they are getting tougher to avoid writedowns like those that have afflicted the U.S. financial system, Deloitte consultants report.

It notes that “with Canadian consumers increasing their debt-to-disposable-income ratios to more than 130 per cent, a rate currently higher than that of the U.S., Canadian issuers face new risks.”


It could never happen here. Canadians are different!

#98 Internal Exile on 02.03.09 at 1:38 pm

Don’t worry. No one with half a brain takes the Vancouver Sun seriously. It’s been the worst of the worst for banging the Real Estate drum here in Vancouver while gorging at the trough of juicy full page condo ads. If there is anyone who still gets their information about real estate from the Sun, they are beyond hope.

I think the 30% drop is conservative. I know it’s an average, but here in Kitsilano people who seem reasonably sane in most other respects are convinced they should be handed close to 2 million dollars for their glorified tar paper shacks in a town with no industry, a hefty organized crime presence, no culture (unless you consider a luge run culture) and epic corruption.

If you’re expecting BC to wake up (especially spokeswhore Muir), I’m afraid you’re going to be bitterly disappointed. Don’t waste your time here.

#99 go green on 02.03.09 at 1:59 pm

I well recall the 80’s. My sis & I each had an apt., 2 floors between us, in a downtown apt. across from Citadell Inn in Hfx. I also had to pay for underground parking. We finally decided that we should move, share an apt to save $$$ for a downpayment on a place of our own. We stayed there for 6 mos. & bought a 3 level condo nearby. A great deal space wise. We both married on the same day about 2 years later. My sis & her husband bought a place down the street. My husband and I stayed in the condo for 2 years and renovated it. We sold it for 20+K later. During that time a neighbour moved to TO and was renting ‘almost the exact same town house’ that was going for 4 X what his and ours were worth. I dpn’t thing we in the M’times will see the drastic RE fluctuations that the rest of Canada will. We’re resiliant and will survive, even tho most of Canada likes to put us down I guess I doubly qualify as I and my family are from Quebec :-).

#100 North Vancouver Citizen on 02.03.09 at 2:02 pm

#83 Squidly

A GM pullout is potentially very bad news for Ontario.

…Someone should electric cars there.

#101 dd on 02.03.09 at 2:02 pm

From Victora MLS “There were only 247 sales through the board’s MLS system last month — the lowest January figure in 18 years — compared with 464 in January 2008 and the average price of a single-family home dropped to $526,148, down from $606,449 at the same time last year. The median price in January was $475,000, down from $530,200 last year.”

WOW … there must be a lot of hungery real estates this month.

#102 dd on 02.03.09 at 2:08 pm

#65 North Vancouver Citizen

”The Earth’s surplus population is long overdue for a culling.”

Some of your light reading material?

#103 Shifty on 02.03.09 at 2:14 pm

I was talking to a realtor the other day who has been in the business for 3 decades. We talked about what to expect of the current market. He stated, based upon past recessions, to expect a slow decline in housing prices for the next 6 years before bottom and a 6 to 7 year increase before prices reach current highs. He was relating to the 1980 recession which apparently took 10 years to stabilize the market. His position is that this recession could potentially be much worse than the 1980 recession.

#104 go green on 02.03.09 at 2:25 pm

OT – Got a meter parking ticket on Friday (1st in 18 yrs -$20 if paid within 7 days). Called last Sunday & again today to pay it via Visa. Technical details I was told & today that I never reinstated it. Guess, I hadn’t. Hadn’t used it since Oct. 08. Pay everything by debit. At the same time decreased my allowance from 9K to 5K. They used to up it all the time.

Years ago when one of my bros bought my Mom’s place the Bank’s said that, as he had credit in several banks, tho never used, they did not want to give him a mtg. The banks said that once they gave him a mtg. he could potentially charge up to his limit on other credit cards. Never mind that they didn’t look into his credit history.

Gee, how times have changed. My bro got his mtg. paid it off within a few years, bought precious metals, etc. I guess the banks liked lending to people with
0/40 mtgs. Anyone with half a brain knew this would turn out BAD.

#105 The Tallyman on 02.03.09 at 2:26 pm

Honest Realtors should break ranks from their lying scheming RE boards and create a new service.

Something like RFEDS
(Realtors For Ethical Delivery of Service)

#106 BC Guy on 02.03.09 at 2:30 pm

Re: #81 Sondra post

Disclosure – I am in the RE business.

I have seen the same thing. Last year, 3rd qtr, I had clients who were looking to refinance obtained an approval but wanted more…wanted to refi all their debt into the mortgage.

I had this couple for clients in my other business for the past 6 years.

I had advised them to reconsider and look at other options (ie. relook at their spending, pay down debt, etc.) given the potential downturn of the market. I related my experience in these matters.

Well, they went to a local CU and convinced a 2nd mortgage lender to get the money.

My estimate is that they are 25K under water at this point. I don’t know the contract length. I can only hope that they took a 5 year contract and they have relooked at their personal budgets.

Mortgages with 20% in the last couple of years are going to be at risk in the next 2-3 years.

I have also received calls from people who have visited my web site asking how do I get out of my condo deal. I can also attest to the key word searches on my web logs “walk away mortgage bc”.

Interesting times…

Regards to all.

#107 Zoronqueen on 02.03.09 at 2:32 pm

Hello all,

We are still in rainy Vancouver. I will try to go to Garth’s talk in Surrey as it’s registration is full.

After reading Garth’s book, I decided that we “must sell” as I am in the 2nd catagory.

Here is the feedback my husband is getting as to why we shouldn’t sell:
1) Prices will rebound after a year
2) Nobody sells below city assessment
3) We can still be accidental rental property
4) We will lose 100K from last year price

Although I’m no “expert”. I see that golbal economics, mass thinking, immigration and government play a role in real estate values in Canada.

#108 North Vancouver Citizen on 02.03.09 at 2:34 pm

(I predicted this)

INCOME TAX Revolt Coming in the U.S.

Tuesday, February 3. 2009
Posted by Karl Denninger in Politics at 12:13

Obama: Enough Of This Crap

This is FOUR people who you’ve appointed that can’t pay their damn taxes, including your Treasury Secretary?

The latest is that Daschle has withdrawn, of course.


I’ll tell you what would be change. Since it appears that a huge percentage of the current and former Congressional delegation has cheated on its taxes – after all, what are the odds you only picked the tax cheats, if you want me to believe in your idea of CHANGE you will immediately order all member of Congress in both Houses to undergo full IRS audits all the way back to the Statute of Limitations (three years), along with all of their staff.

You and I know know it won’t happen, but I’ll tell you what – I keep hearing people say they’re going to file absolute crap this year. Utter garbage. “The Dog ate my Schedule C.”

If The American People do this, Mr. President, government funding will collapse. The IRS can’t possibly audit everyone and we all know it.

Your administration is dangerously close to creating a full-on tax revolt among Americans. You would not believe how often I have heard this among people both online and off in the last couple of weeks. The anger, especially when the people who are cheating are folks like Daschle and Geithner, is VISCERAL – these are the people who both wrote the tax code and were involved in the bailouts and handouts which you expect we the people – ordinary Americans – to pay for.

Here is what Daschle said previously:

“Make no mistake, tax cheaters cheat us all, and the IRS should enforce our laws to the letter. ” Sen. Tom Daschle, Congressional Record, May 7, 1998, p. S4507.

But you, Mr. President, expect Americans to file truthful tax returns and pay their taxes as due?


#109 North Vancouver Citizen on 02.03.09 at 2:37 pm

Safest places to live is in the Pacific Northwest

Oregon/Washington and BC

#110 JOHN on 02.03.09 at 2:46 pm

Hey Garth,

Can you expalin to me what is going on with the Edmonton RE market. It seems that we are stabilizing, no doom and gloom here.

#111 BC Guy on 02.03.09 at 2:51 pm

Last post of the date but I thought it was important to the discussion.

Canadians debt is 130% to US 120% details here…

So much for it can’t happen in Canada.

Regards to all

#112 Zoronqueen on 02.03.09 at 2:55 pm


Did you see this?

Blames the boomers for the real estate unaffordability…. Pretty simplistic view but has some interesting points….

#113 Barb the proofreader on 02.03.09 at 2:56 pm

#84 POL-CAN wrote:
“Garth… I think it is time for a post on how to deal with funny business by agents in the GTA area. Perhaps an outline of how to go about filing a formal complaint with a governing body and how to stay on them to make sure the matter is investigated properly and resolved? … this phantom offer business is something a few of your readers have run into and posted about.
In light of the current market conditions this practice is even more idiotic then before and has to be eliminated.”

I agree with Pol-Can.
How (and who) can tougher rules be set up to prevent Phantom Offers?
Homes are the biggest purchase, biggest investment, and most emotional spending in our lives — at a time when normal people become susceptible to stress and scare tactics — that’s when people need maximum protection.. ALL offers should be registered — we need proof, or a trail of evidence, to discourage the ease with which Phantom Offers occur. Then the agents who do this might be deterred when it always leads back to them, and they find themselves sued, charged, fined, or jailed.

“The Phantom Offer” happened to friends in April 2007. It can never be proven, but it was obvious.

They had been in no rush to buy a larger home, but one ticked several boxes.
Suddenly “two or three other offers — despite the home being on the market for months” — caused them to panic and increase the offer to their max, and change their conditions — the same rushed scenario and pressure tactics that I found at this link.
D’ya think they were duped?

My suggestion:

At the very least — to avoid the phantom offer trap, people should ask for a copy of “the other offer” by registered mail to their lawyer, to be kept sealed, in their lawyer’s office as part of the transaction until completed. Would that work?

#114 Zoronqueen on 02.03.09 at 2:56 pm


Did you see this?

Blames the boomers for the real estate bust…. Pretty simplistic view but got some points….

#115 dekethegeek on 02.03.09 at 3:24 pm

A friend of mine 20 years ago got into the “Vancouver” media scene as a researcher for a local newspaper. When he raised the flag about some financial shenanigans involving a former premier and the multimillionaire investor trying to open a pub in south van( fake neighborhood referendum, signatures forged, lies, etc. The researcher lived in the neighborhood and didnt recall ANY referendum so his research wasnt too difficult!)
Anyway. When he approached a reporter with the story the editor killed it because they would lose too much Government advertising.
Who says “Propaganda is Dead” ? Goebbels is dead, not propaganda.
The reporters are whores, sleeping with the highest bidder. Believe 25% of what you read.

#116 kc on 02.03.09 at 3:27 pm

A couple days back I said that greater concerns revolve around repayment of debt and deficit spending. Today’s John Mualdin’s “out side the box” takes a hard look at the growing (un-talked about) problems in Europes banking sector and the troubles with Euro countries.

Debt repayment and deficit spending has to be financed from somewhere. Today we are talking TRILLIONS like we are tossing pennies out car windows as we drive throu the seedier parts of towns.

Here is what people need to start paying attention to.

“A third problem facing Europe is the sheer scale of the banking crisis. Although this is not just a European problem, European countries are probably worse off than the US because a larger part of European debt has to be financed externally. As you can see from chart 1, more than $2 trillion of European and U.S. bank debt needs to be re-financed before the end of next year. Unless there is a material improvement in market conditions, re-financing at such a massive scale is simply not doable.”

Another major problem is how do governments pay down deficit spending? Taxation. With more and more unemployed people adding to the Governments lines, it becomes harder to fathom where the money comes from.

We have heard that going into debt is what got us into this mess in the first place, and now OUR country is entering that slope again. I remember a time in poland (not that i was there) when they (the govt) turned down all electricity during nights, held people accountable in their households to controll all resources to CUT all COSTS to pay down their deficits (gov). What we need to think about isn’t our consumption (personal) what we need to concentrate more on is our wasteful Government’s spending.


#117 Don Bool on 02.03.09 at 3:37 pm

Waterfront Property

I wonder how waterfront will be effected. There has always been the opinion that in a downturn waterfront will keep it,s value. The reasoning is your catering to wealthy individuals who can write a check for what ever they desire. I,m sure this is true to a certain extent but i would think they didn,t become wealty with this approach.
My buddy has a beautifull house on waterfront acreage on the islands. He got in touch with the local realtor and asked what the market value of his place is and if this downturn will affect him to any extent. The answer was she could find a buyer instantly,well above the assesed value.
Just what is a rational opinion of waterfront property values going forward?

#118 JET on 02.03.09 at 3:38 pm

“He said one reason sales dropped so sharply is that sellers and realtors alike are having a difficult time getting used to what is generally described as a buyers’ market.”

Just to paraphrase – that whole sentence can be summed as follows:


#119 kc on 02.03.09 at 3:50 pm

garth, and others may want to read this:

How dangerous is online banking?

further points to why Garth gave the fellow with 500K on line account that look…..

#120 D Griffiths on 02.03.09 at 3:58 pm

Well Garth, even here in London Ontario, the power of delusional thinking rages on.
Here’s the link:

Talk about spin!!

#121 John Byrgoyne on 02.03.09 at 4:03 pm

I would to nominate the Saskatoon Star Phoenix for having the shortest skirt, the highest pumps, and the cheapest prices going. Only today it was trumpeting a house price increase for January (based on a sample size of 213 properties and the January 2008 price). This most unfortunate rag does nothing but print real estate industry puff pieces.

#122 Colin on 02.03.09 at 4:21 pm

Breaking news from the Calgary Sun:

Let’s stay positive out there people!

#123 Bill-Muskoka (N.A.M.) on 02.03.09 at 4:41 pm

Ah, so the Harper Cons are up to their usual tricks I see.

MP Bill Casey accused of theft and embezzlement

And people expect these miscreants to run our country?

#124 Carole AB on 02.03.09 at 4:42 pm

Has anyone listened to this Stephen Jarislowsky interview? He is an 80 something billionaire investor speaking on what he calls a balance sheet recession/depression… his advice: “quit your frivolous spending now, or prepare to embrace poverty, a depression is worse than any war”

As for RE tried to sell our house Feb 2008 been there, done that not happening…. Friend here in Edmonton lowered her price in Dec. $90,000 and sold however. I expect prices to go to dare I say 2003 levels what we paid for it?…Pre Bush era prices?? – below?

#125 Steve on 02.03.09 at 4:44 pm

I love this one:
“What if you’re wrong? What if people take action based on your statements?”

Come on, that’s akin to me telling someone that their house is on fire, then they turn around and blame me, for setting the fire.

They give you a lot of credit Garth, next you’ll be accused of driving the prices down so you can go in and scoop up the properties with 30 cents on the dollar…

#126 Ally Ally Oxycontin Free on 02.03.09 at 4:51 pm

Johnson Controls venture to supply Ford hybrid batteries

#127 Darryl on 02.03.09 at 4:53 pm

Don’t quit your day job 613. A glass in the room shattered as I read your song :) :)

#128 Darryl on 02.03.09 at 4:56 pm

#86 I mean.

#129 Erasmus on 02.03.09 at 5:06 pm

So is this what is in store in the Canadian market?

#130 Carole AB on 02.03.09 at 5:06 pm

See #87

You have to listen a few minutes before Stephen comes on but it is worth the time since he lived in the great depression.

#131 MikeB on 02.03.09 at 5:16 pm

Re POL-CAN, Andrew in Toronto and Sail 1 (previous blogs)
I think it is fair to say that you three guys have put some solid ideas about what you have witnessed in the Toronto Market. Hats off to POL-CAN and Andrew , Sail1
The house you were referring to that sold for a couple hundred over asking… was from what my agent told me a mold infested grow op house that in its prime was a beautiful victorian. They bought this and got into a 12 person bidding war which tells me that they are just not savvy buyers. Nothing in the market right now is properly priced in my opinion. Alot of stuff has been taken off the market. The ones who have to sell will need to capitulate with what the buyers are willing to pay. My agent has indicated the central Toronto market is “tight” meaning not much on there . She indicated that some stuff is selling quite briskly. My take… these are novice buyers who will take the low interest rate mortgage guarantee while they can as some buyers will be SOL in a few months as credit re tightens. Why?
Ford/GM numbers today are off the charts bad.. Disney numbers … beyond horrendous. To say the worst is behind us is just idiotic.
We will get a good idea in a couple weeks of where house prices in Toronto will go. As we all know … there is no shortage of greater fools out there willing to gamble on housing rebounding this year. Will that happen?? Not on your life…

I also agree whole heartedly with POL-Can about how people think Toronto , quite mistakenly, is some sort of world class city. I , too, have travelled and can tell you Toronto is quite nice but just not there yet and pricing is still way beyond what the market can tolerate.

#132 Bonnie N BC on 02.03.09 at 5:38 pm

This is way off topic but Garth seriously – I will try and bring it back to relevance…

Bill Casey MP Independent (former Conservative) has been smeared with a 30k “theft and embezzlement” charge from the Conservative Party of Canada to the RCMP.

This is the classiest guy in Parliament.

So the segue to real estate is anyone can lie and get misinformation out to the MSM and leak the lie in the press. Don’t tell the truth just say what people want to hear – a vendetta of real estate brokers to buyers who are reluctant.

Then there’s that other vendetta – politicos who only do pay back because they can’t help themselves.

Government vs. Realtors – same thing except the latter has sharper suits.

Bill is my friend and he defines an honourable man. May his accusers have Musquodoboit crabs in their shorts. — Garth

#133 Alberta Ed on 02.03.09 at 5:38 pm

Looks like Mario at the Herald is still drinking CREB kool-aid.

#134 john on 02.03.09 at 6:41 pm

MP Bill Casey accused of theft and embezzlement

—- I hope he sues the Conservative party and everyone involved for everything they have! Harper has a method to every slimey move he makes–first time in the History of the RCMP harper appoints a civilian…. Harper himself is on tape in front of a witness admitting he was aware of an attempt to bribe a member of parliament to overthrow the goverment (whats more serious than that?)….the RCMP did not see the need to pursue a criminal investigation….pretty much tells anyone whose pocket the new RCMP commisioners pocket is in…….”when Harper breaks the law its not illegal”…………………………….these are the people that are managing our tax dollars be prepared the worst is yet to come.

#135 Jelly on 02.03.09 at 7:50 pm

Barb the proofreader,

ABSOLUTELY multiple phantom offers go on ALL the time. When I think about how every friend that has purchased real estate in the last 10 years, EVERY ONE had “multiple offers” on it. (including all of my real estate offers) Guess how many of those people backed out of the deal? None! It is a technique that works,
people naturally try to grasp something that may slip out of your fingers, regardless of the price-not very wise…
I find all of these competing offers very hard to believe, one of them was in Canmore (just a few months ago) and supposedly there were bidding wars? I don’t think so. This is just a ploy by realtors to make you panic and over bid. Rarely do people ask which office (which realtor) the competing bid is coming from-which you are totally in your rights to do so. If the realtor stammers in any way, ask that as part of the condition, you see the actual offer to purchase, with names and all OR hang up and tell them you will not do business with a liar. Just wait and see if you get the call back, that your “low” offer was now accepted because of some made up excuse about the other buyers backing out.
Here is my advice, do an experiment and low ball houses, do NOT get emotionally attached as even better deals will come along! See what percentage of the supposed deals have other offers on it, you would be suprised.
Buyers, you can have a lot of fun with this as realtors are hungry right now and WILL easily lie to you!
I am a realtor, just never went so far as to get dirty like that, only the top selling realtors do that regularly.
Happy Hunting!
Low ball until you get the house at the price you want
(even if it takes a year or two)
There is an old Scottish expression I have always liked,
“That which is for you will never go by you”
It is so true, in love and real estate!

#136 Jelly on 02.03.09 at 8:04 pm

Barb the proofreader,

Additionally, regarding your link in your post, good article, yes you would think it would be easy enough to make realtors accountable for making up competing offers as it IS illegal. As mentioned in the article, the broker would just need to keep copies of all competing offers that potential buyers could witness and realtors could easily be found out to be liars. They would then be under review and have this in their file, and get fined.
It is very disappointing that the president of Ontario RE (I believe?) said she has never found a problem with it.
That is a bald faced lie, I do not care which market you work in, a person in her position would know how it makes people overpay and do something they would regret.
Bottom line, She would say that wouldn’t she? It benefits her board because it just hikes up real estate prices continuously and makes people believe the hype.
She is just being selfish and does not care that a family may have to pay many thousands more than they have to because of lies.
She gets paid plenty, so she obviously has no ethics.
Such corruption, everywhere, it is sickening,
and we think Canada has low corruption?
We hear about it whenever parlimentary buddies get pissed off with each other and throw their own to the wolves. Such a joke that our Prime Minister was “aware” of theft and fraud, admitted to this and is still in power polluting our country and sabotaging the potential that our country has.
Those in power can do whatever the hell they want to,
because we allow them to…

#137 Mike B on 02.03.09 at 8:51 pm

I would like some insights from fellow posters about their current view of real estate in Toronto proper. Any signs of life or bits of idiotic enthusiasm.?

#138 Reg on 02.03.09 at 9:14 pm

#99 North Vancouver Resident…

A GM pullout would not only be very bad for Ontario, but very bad for Canada. Regardless of what Mr. Obama is saying about not wanting a trade war etc., when the chips are down, the U.S. will become extremely protectionist. Hang on, as this could be a nasty, nasty ride.

BTW – If anyone hasn’t read Garth’s latest book, I highly recommend you do so. I’ve taken heed and have put in place many of the suggestions Garth mentions in order to help protect myself and my family…just in case. If not needed, great. If the proverbial poop hits the fan, at least I’ve got a chance.

#139 OntarioHouse on 02.03.09 at 9:15 pm

#130 MikeB
I wonder if the 24/7 house porn channels have anything to do with it.
I watched a show recently where a young couple with a 70,000 down payment was granted a mortgage of over 500,000. Discusting. How do these people sleep at night? From the outside these people might look like they’re rich since they’re buying expensive homes. But in reality its all heavily borrowed money. Fools like these drove up real estate prices.

#140 905er & Spouse on 02.03.09 at 10:13 pm

Re #9 Guy

“Hoarding and boarding up may be good personal advice, but what matters is what should be done for the collective good.”

I don’t believe it is ever good advice to tell someone to overextend themselves on credit for the “collective good”….make sure you have a consistent cash flow is good personal advice and is good for the long term “collective good”.

#141 Roial1 on 02.03.09 at 10:35 pm

Bill is my friend and he defines an honourable man. May his accusers have Musquodoboit crabs in their shorts. — Garth

And lots of them.

The scary part of this is the RCMP head office connection.

Read the speech to parliament by Bill.

Garth, thank you for the inscription in my book.

He did NOT make me take off my shirt!

#142 nonplused on 02.03.09 at 11:16 pm

Back to the inflation deflation thing:

I came across an older but interesting article by Antal Feteke that explained some workings of the Federal Reserve system I didn’t understand.

My take-aways were:

– The Fed cannot print Federal Reserve Notes (cash) because they have to back it with capital first. They do have a bunch of printed up money sitting there ($250B) but they can’t release it until it has been capitalized.
– They capitalize the money mostly with t-bills, although they can still use gold at $41/ounce but this is never done anymore because they can’t get gold at $41/ounce
– With t-bills now at a premium, they can’t really capitalize the money with t-bills either
– The other source of money as we know it is “electronic”. The Fed can “print up” this in unlimited amounts through the fractional reserve banking system.
– But in order for this to work, the banking system has to work!
– The banking system is falling apart due to bad debts, impairing money creation.

He makes a rather stark prediction: Eventually “cash you can fold”, and even possible t-bills, might transact at a large premium to electronic money. To paraphrase, you might have thousands of dollars in the bank but no cash in your wallet and no way to use your debit card because none of the banks will accept each other’s credit.

I know it sounds far fetched, but here are 2 experiments I came upon by accident personally.

Go in to your local branch (mine was the main branch downtown of a major bank) and try to withdraw $5000 cash. They actually have to go check if they even have that much on hand! It’s all electronic nowadays. They offered me a bank draft instead.

Or go to another bank you don’t currently do business with (other than ING) and try and deposit a large sum of money (anything over $10,000 will set the trip). (In my case I was doing the CIDC insurance thingy). You’ll discover something about the money laundering laws amongst other things. They assume straight away that if you’ve got that kind of money in need of an account your grow op just came in. Bankers don’t figure on panicky people like me trying to make sure all my cash is covered by CIDC. Why would they? Canada has a sound banking system, remember? REMEMBER???

So, I am a new deflation convert. There can be no inflation until banks and debt stop imploding. Or they change the laws on cash.

It could be that’s what the stimulus is really about. Who cares what we spend it on, the central banks need access to more t-bills! (With no premium.)

#143 nonplused on 02.03.09 at 11:27 pm

As to the safety of Canadian Banks:

The main reason we haven’t seen a debacle here on the order of the US version is that loan defaults have remained relatively low. But I understand credit card defaults are way up already and recovery rates are down. With all the job loses, can mortgages be far behind? For most mortgages those defaults flow through to CMHC, but how long before they do the Freddie/Fannie square dance? And GE Capital is backing a bunch of them now too. What happens if they go under?

I don’t profess to understand the whole thing or even most of it, but my guess is that a few termites on the surface means that there are a lot of termites in the structure.

#144 Jon B on 02.03.09 at 11:49 pm

Garth, I very much enjoyed your presentation tonight. Thank you.

#145 Apocalypse Now on 02.03.09 at 11:56 pm

Why can’t reporters draw the same logical conclusions that readers of blogs such as this one can? To find the answer to that question let’s look at who owns the media. Ain’t one commoner among the sorry bunch that owns media worldwide. The purpose of media is to keep the commoners sedated lest they wake up and turn on the bloodsucker banksters and royalty that keeps them enslaved their entire lives. Same things goes on in colleges and universities; they exist to indoctrinate people to be good worker bees not critical thinkers. Politicians are liars, professors and teachers are liars, popes are liars, priests are liars, doctors are liars, lawyers – well let’s not even talk about lawyers. RE agents are only small fish in this whole damn system that is based on lies. Just shut up and pay your taxes and don’t ever dare to question authority…it is your patriotic duty to believe the government, after all they are all benevolent wolves looking out for your own best interest which is why you have to pay compound interest, and taxes, and surtaxes (taxes on taxes), and user fees, and license fees, and property taxes, and GST, and PST and GST on PST and PST on GST and, and, and…. pay damnit pay, pay, pay, pay….

But never question who collects it all, and more importantly who spends it all?

The f….ing world deserves what’s coming to it! Save yourself if you can!

#146 timbo on 02.04.09 at 12:45 am

CTV news story tonite. One half hour to inform the nation on the headline news of the day. “Poutine to be outlawed at Quebec hockey games”. Enough said.

#147 Sondra on 02.04.09 at 1:40 am


Just like government, You get the Realtor you deserve.
There are good Realtors out there, if you seek one, you shall find one.

In this market it’s the one with the “unpopular” news.

#148 Barb the proofreader on 02.04.09 at 2:50 am

#94 go green, re: “Many say one should not have an emotional attachment to their home & neighbourhood. I disagree.”

Hi go green, hope things are well.
I agree with you, I think a real “home” is a priceless investment. We were just renting this house, but we loved the neighbourhood, and when we had a chance in ’90 we scrambled to buy, and put every available penny for ten years to pay it off. It’s modest, but we don’t need much.
Most of our neighbours had been original owners since 1950, most became our friends (luckily, the 90 year olds on either side of us are still around, still fun.) Sigh, we’ve seen many come and go, (it is Calgary after all,) but last minute get-togethers are still the norm in this neighbourhood, and even those who’ve moved elsewhere remain our best friends. They wish aloud they hadn’t moved, and say there is no spirit of community way out in their millionaire ghetto.
If someone thinks they shouldn’t get attached to their home & neighbourhood, they’re either in a bad one, or they deserve to be. I’d say they’re part of the problem.

#149 East of Eden on 02.04.09 at 8:14 am

Easy credit can be a best friend or worst enemy. I shudder when I read that we should spend our way out of this recession and that efforts should be made to stimulate consumer spending. Irresponsible consumer spending is partly to blame for the current situation. How many people overextended themselves by buying more house than they needed? How many overextended themselves by purchasing cars with bells and whistles? The list goes on and on.

In my early thirties, I had to borrow $600 for about two weeks to make an RRSP deadline between pay days. I found that I had no credit rating because I had never previously borrowed money. I had always paid off my credit card before the due date and had never paid a cent in interest. I had a heck of a time obtaining a loan and was NOT allowed to pay it back in 2 weeks but rather was forced to pay it over 6 months. I figured that I was a good risk since I had managed my money well enough to avoid any debt whatsoever. I used my credit card and paid one month’s interest and after that, I had a credit rating.

My first credit card was a Shell card with a $100 limit. It took 6 months of steady employment after graduation to obtain my Master Charge and Chargex cards. Today, students are offered a multitude of credit cards while they are in school. And we wonder why we have a huge collective debt load.

Today, I use my PC Mastercard for points toward groceries. I manage it as I would manage my cash – I set a limit and I pay it a few days before the due date. I pay no interest, I collect points, and I carry no debt. I purchased my home in 1999 and when my mortgage comes up for renewal on April 1, I will pay it off. Ten years to pay off the mortgage of $110k on a salary which is presently $52k. How? By managing my money and resigning myself to having no uneccessary toys. I have not done a thing to my house other than paint the interior and plant a garden. Every spare dime went on the mortgage and in a couple of months, I’ll be free. I also put down 25% on my house and I paid for all upgrades with cash – practical upgrades like the central vac (good for resale) and an electric garage door opener.

I have to wonder, also, why people are selling their homes when they don’t need so to do and then complaining about the value they have lost. I bought my home to stay in my home. I have no plans to move until my arthritis reaches the stage when stairs are no longer an option. Like Go Green, this is my home and where I intend to stay. I have good neighbours and I like the area. Why would I move? I don’t need a fancy new home and I don’t need to have the latest gadgets. I’m quite content here. In reality, my home is a bit too large for my liking but…my lawyer showed me the stats on the sales of my model and advised me to purchase my model because of its popularity in case I need to sell it. So, that’s what I did. And…he was correct. My model outsells the other models by a large margin so it was a wise decision. People need to think before they overextend themselves financially.

#150 East of Eden on 02.04.09 at 8:23 am

OntarioHouse: it’s called ‘genteel poverty’. When I was a teen, we had a neighbour – a widow – whose lawn I cut. She was always bragging about how her late husband had always bought ‘the best’ no matter the cost. Her daughter married well, financially, and was living in the top area of Winnipeg – she bragged about that, too. One day, when I had had enough of her bragging and sideways criticisms about my mother (who is not showy or ostentious) that I looked her in the eye and asked her if the band-aid which she was using to hold her sandal strap together was ‘the best’ band-aid that money could buy. Needless to say, she got somebody else to cut her grass after that.

She bragged and bragged but, in reality, she was barely able to survive in her house and it was her son in-law who was helping to support her. I knew this because I knew her granddaughter.

We also had neighbours who were incredibly showy and snotty and who looked down upon our family. One weeknight, their daughter was at our place for supper (she and my sister were friends) and my mom served a roast chicken. My sister’s friend was astounded that we ate so well during the week – they ate bologna (it was cheap back then) and hot dogs during the week so that they could have a roast chicken or beef on Sunday. Genteel poverty – showiness with nothing in back. Empty rooms in the house, nothing in the refrigerator but lost of showy crap on the outside.

Frankly, I’d rather have a full fridge than a showy exterior.

#151 a renter on 02.04.09 at 8:23 am

to #136 Mike B…

To answer your question, where I am in C9 Toronto RE is completely dead. Same 8 or 9 detached homes still on the market since roughly last Sept or earlier. Most have dropped prices, many by over 200k. Some are still listed on their agents sites, but no longer on MLS.

In my opinion this is not the time to jump back. Sellers still seem content to “wait it out”. Perhaps by summer we’ll start to see some real desperation out there, and some truly motivated sellers / buying opportunities

#152 Bill-Muskoka (N.A.M.) on 02.04.09 at 10:00 am

#147 Barb the proofreader on 02.04.09 at 2:50 am

Precisely the reason our neighborhoods have gone to Hell over the years. People love money more than each other.

The byproduct of materialistic, unethical, anti-social brainlessness created by the MSM and marketeers promoting FUD. All due to a lack of financial regulations, labour laws, and social programs and conscience by narcissistic Conservatives, and wacko extremist Liberals (aka Dippers).

While it is nice we have equity in our HOME, I cannot convert that into cash readily unless we sell or go into debt borrowing against it, which is no gain whatsoever.

Therefore, it is our HOME, not our ‘investment’. We LIVE here! Our friends live next door, and we genuinely care about one another as human beings. We have a community that is functional, not a bunch of isolated strangers.

#153 Kestral on 02.04.09 at 10:07 am

To Re #9 Guy

Whenever anyone has told another to do something for the “collective good”, that means they’re about to be screwed.

No thanks, you can take your “collective good” elsewhere, I want no part of your attempts to take from others what is not yours.

#154 Kestral on 02.04.09 at 10:09 am

To Re #9 Guy

Whenever anyone has told another to do something for the “collective good”, that means the person being told is about to be screwed.

No thanks, you can take your “collective good” elsewhere, I want no part of your attempts to take from others what is not yours.

#155 Future Expatriate on 02.04.09 at 12:22 pm

Lying about phantom offers is highly illegal, and realtors who get caught doing so can lose their licenses.

It’s up to the public to report them though. And that’s the only way it’s going to stop, because they all feel they have to do it to compete “because everyone else is doing it.”

#156 Bill-Muskoka (N.A.M.) on 02.04.09 at 12:33 pm

#153 Kestral on 02.04.09 at 10:09 am

Then never, ever ask or expect for anyone to help you, especially the government, or services supplied by the taxpayers for the ‘collective good.’ Fix everything, including your own road yourself.

Never call 911, just do it yourself. No ambulance, fire, or police services need be wasted on you. Having a heart attack. Well, too bad for you Mr. Island in the Fog.

BTW, Canada is derived from the word Kanata which means village.

#157 Kestral on 02.04.09 at 5:18 pm

#155 Bill-Muskoka (N.A.M.)

I pay my taxes just like everyone else. The original purpose of government was only to protect peoples’ rights, not become a nanny for every charitable program out there without taxpayer permission. I donate to charity, but that’s because I chose to, but to be forced to pay rising taxes to fund programs I did not chose is what part of what got us into this economic mess in the first place.