All crap

news

As I drove to a TV taping through the monsoons sweeping across Toronto, I listened to a financial advisor yap into my cell. Twenty-four hours earlier the guy had begged me to come and speak in his city, figuring my visit would attract a crowd of people worried about the economy. That, he’d told me, would be an opportunity for his business.

And I agreed. Worried people pay attention. And a proactive, caring advisor might persuade some of them they’d be better off with an experienced professional rather than trying to figure out the impossible on their own.

But this conversation was going badly. “You’ll be positive, right?” he said. “You’ll stress the opportunities that are coming, and how people should invest, and none of this negative crap that’s in the media. Jeez, it’s all crap. I love the news but I stopped watching this stuff months ago. You’re not going there, right?”

I told him two things. It’s not the media which is now making people fear the future, it’s the two neighbours who have lost their jobs. Second, give your own damn speech.

When I got back to feed the penned squirrels, I punched up my email in the barn and saw that someone had sent me a web site message from a realtor in Peterborough. That’s an Ontario city which, like most, has been hit by plant closures and falling home values.

Said agent Terry: “I feel that the news media has played a large part in this recession and I would recommend that most people need to stop paying so much attention to it. We stopped watching the news in Nov last year ( especially before going to bed) and realized that the sky isn’t falling like they want you to believe. We sleep better, fell better and we find that we are as busy as all get out, when our competition is so distracted by the bad news that they don’t realize how many people still want to buy and sell real estate.”

Just the timely approach you’d like from a real estate professional: Turn it off. Go to bed. Don’t watch the news for four months. Hey, everything you could possibly need to know is on realtor.ca!

Speaking of which, I just toured more houses, this time in the horsey country outside Toronto. The three I saw had two things in common – all had been reduced in price by $100,000, and they’d been on the market in excess of six months. This means there will be more reductions to come, especially when the false Spring market of 2009 sees an explosion of listings.

Also happening (as you know): new numbers showing our country imported more than it exported for the first time in 33 years. This is akin to a family spending more than it earns. And it’s disastrous news for a nation which makes most of its money by digging stuff up and selling it to Americans.

The lesson of my day is that this economic morass we’re in will be stickier and tougher to climb out of the more people are misled. Realtors and financial advisors who blame the media must not be good at their jobs. Strikes me that when folks are worried sick about preserving their capital, a respected advisor would be mobbed with business. It also seems when a grouchy financial terrorist like me is thinking of vultching properties, a good realtor would know why.

The economy’s not getting better. So we have to.

xurbia-banner13

For today’s blog, “Here comes the sun,” go here.

144 comments ↓

#1 TrueGritCalgary on 02.11.09 at 11:18 pm

Remember Dubai?

http://www.nytimes.com/2009/02/12/world/middleeast/12dubai.html?_r=1&hp

#2 ThumbsUp on 02.11.09 at 11:25 pm

Demand for loan & mortgage will go down substantially as more and more people learn why business are laying off people & closing doors, banks will be in trouble when less and less new loans (their blood line of their bottom line) are made.

My belt tightening in my ‘real economy’ –

1. Consolided my bank accounts, closed two bank accounts that require ‘minimum balance’, stuff the cash in the mattress;

2. Closed my cell phone subscription; ($30/month)

3. Switched the landline to another provider – a 50% save; ($25/month)

4. Cancelled my TV subscription, no more ‘wheel of fortune’ for the wife; ($40/month)

5. Switched from Tim Hortons to good old instant coffee; ($60/month)

6. No more ‘once a week eat out’. ($150-200/month)

Total – $300+/month

#3 SJ on 02.11.09 at 11:45 pm

Can someone explain to me if I got my numbers wrong? I can’t seem to convince myself that buying is worse than renting in terms of monthly costs (ignore house value going up or down in this question)?

I’m looking at the Yonge/Finch area in Toronto. $1600 can rent you a 2 bedroom condo which is selling at approx. $300K (that’s before any price negotiation).

Assuming 20% downpayment, 4.3% mortgage for 15 year amortization schedule. This is the number I got for year 1 of the mortgage (worse year in terms of interest/principal ratio):
Mortgage payment: ($1807 x 12) = $21684
Tax: ($300000 x 0.87%) = $2610
Maintenance: ($450 x 12) = $5400
Insurance: $1000
Lost interest if downpayment is saved: ($60k x 3%) = $1800
Subtotal: $32494
Subtract principal amount in mortgage ($973 x 12) = $11676
Total actual cost: $20818

Cost of renting: ($1600 x 12) = $19200

Remember this is before negotiating the purchase price down, and is the first year of the mortgage. Every year you are paying less in interest. After year 15, mortgage is over. It looks like as long as you are aggressively paying it down and don’t do stupid things like 0/40, buying is not so bad?

Of course, there are a number of unknowns that can throw off the above conclusion:
– Interest rate may go up
– House value go down more than $19K a year
– You may lose your job

#4 LuckyLondoner on 02.12.09 at 12:00 am

Could I please generate some discussion on RRSP vehicles?

I need to make a good sized RRSP contribution to reduce 2008 taxable income, and it seems that CDN T-Bill mutual fund with a low MER would be the safest approach. Safer than a GIC? Thoughts and comments anyone?

If so would these be safe if purchased through one of our Chartered Banks or would it be safer to go with an on-line discount broker (though some of those are now owned by Banks)?

Any good independent web resources on this topic?

And I do understand that gold coins stashed in a squirrel nest is not a registered savings plan in CRA’s eyes so I won’t be going there! ;>)

Thanks!

#5 Mark on 02.12.09 at 12:07 am

Good news. More immigration on the way for our system to support more unemployed people! SWEET.

#6 re-aligned on 02.12.09 at 12:08 am

The only thing worse than ignorance is willful ignorance. A pox on both their houses.

#7 Bobby on 02.12.09 at 12:09 am

I’m looking at real estate here on Vancouver Island. Lots of empty condos and houses languishing on the market. Should be a great time to buy this fall.

Last person I will ask for advice is a realtor. Heck, some of them still think prices are rising. They should get out more!

#8 rural route on 02.12.09 at 12:09 am

A recent conversation left me puzzled. Someone in my community I hadn’t seen in quite awhile told me this.

She’d quit watching the news. Because in her opinion, the MEDIA is what’s to blame for this so-called crisis. In fact she didn’t believe there really was a crisis. It’s all blown out of proportion, you’ll see. Twice she said she hated the media and she hated watching or even hearing the news. She had decided to simply carry on as usual, and turn off all news.

That same day I’d talked to another person that was well aware of what was happening, in the world, and in our community. This person told me the job losses, in our area alone, are very real. They knew the facts. They read, they watched the news, they talked about it with others.

So in the same town we have one person losing sleep, trying to figure this all out. And we have another person deliberately oblivous and denying there is even a problem. Both are middle class people with houses and families.

Whether this whole thing goes not too bad, or we go for a big dive, both people are approaching this in completely different ways.

One is losing sleep at night, somewhat distressed, but spending time to understand, so they can take appropriate steps, hoping to lessen the impact this economic crisis will have on their family. The other is carrying on as usual, denying there is even a problem, doing absolutely nothing to prepare, but I would say, quite happy.

I think there are a lot more oblivious but happy Canadians than distressed sleep deprived Canadians, at this point.

Apparently it will take a much bigger shock to jolt the majority of Canadians sit up and take notice.

That’s my take on all of this.

#9 TheComingDepression on 02.12.09 at 12:11 am

These same statements were made by realtors back in the 80’s when it collapsed back then. Nothing new here just another desperate group of people at the end of their line of credit. I can guarantee you will not be seeing them selling within 6 months. The Remax fees will eat them alive..or the heart attack will with the coming depression.

#10 nonplused on 02.12.09 at 12:17 am

Ha ha, that’s funny. If we all just stop watching the news it will all be alright.

Maybe if I stop watching my account balances and ignore any minus signs they will only go up! Wee! I love this new thinking.

I agree that guy was a numbskull. The news is 6 months to a year behind actual events. If they would have been reporting the real news when it happened, they’d have been saying what they are saying now last year. Makes me think the real situation is a lot worse. I wonder what they will be reporting in 12 months?

#11 EW on VI on 02.12.09 at 12:23 am

Awe cripes, forgot the Media!

#12 Coll- zzzz on 02.12.09 at 12:23 am

Trying to get better, but,
This is exhausting.
so tired allready, and, I know it’s only the beginning.

“Much human stress is rooted in anticipation.
We are continually imagining the possible negative consequences of not picking the options we passed up”

– Unknown

“Exposing ourselves to such input-ie: trauma- without respite and without perspective cannot be anything other than a source of chronic stress”

– Unknown

Defense mechanism for some= burying head in sand

#13 Da HK Kid on 02.12.09 at 12:51 am

Garth, another classic! May I submit the following:

Denial is tricky stuff. It has many faces and disguises. Its number one symptom is the denial OF its own existence. It keeps good people in everlasting blindness destroying any chance for healthy change. It will fight viciously for its survival all the way to insanity institutionalization and death. It is not threatened by you trying to beat it by yourself, in fact it welcomes it. The last thing it wants is for you to join with others who are dedicated to destroying it.

I bet any RE agent who knows Garth, and ready to ride with him for a look see is (especially in the North GTA) looking for A/advise and B/to sell a potential listing.

McMansion’s in Unionville listed for $1M, should be a $600K breeze by 2010.

#14 Chris L on 02.12.09 at 12:53 am

It’s funny when people blame the media for creating bad news by reporting bad news. I mean come on! I have finally realized that most people are sheep and just do as their told though, but if I’m forced into being part of the herd, I’d damn well want to know which direction it’s headed!

Give me lemons and I can make lemonade, but give me oranges and I’m in trouble. That’s why I want to know the truth about where we are going and more importantly, why. With this, I can make fruit punch or whatever I choose. If the media hides it all from me, I might as well make my juice blindfolded. What sheep people are for not wanting the truth no matter how hard it is to swallow. WAKE UP! Take control.

I’ve battled for 3 months with local real estate agents and finally Guelph is showing declines. In fact prices are down 4.5% this month and sales down 16% with listings up 30%. I was told things would flat line and Canada was different. Well if I listened to experts, I would have lost my down payment and then more (of course). People are out for themselves, they are profit driven. It’s sad really.

http://www.homesinguelph.ca/cs/web/blogs/guelph_real_estate_blog/archive/2009/02/11/guelph-real-estate-statistics-january-2009-residential.aspx#603

http://www.homesinguelph.ca/cs/web/blogs/guelph_real_estate_blog/archive/2008/11/21/will-it-ever-end.aspx

#15 Jason on 02.12.09 at 12:58 am

Perhaps we need to form a ‘Collapse Party of Canada,’ running a campaign on no bullshit, full transparancy, and crisis mitigation (such as prioritizing and safeguarding food supplies and basic living for all citizens).
Tell Master of Economics Stephen Harper that he doesn’t know squat, Ignatieff that he is a Republican neocon, and Layton that he is a very polite used car salesman that should stay away from government.

#16 Steve on 02.12.09 at 1:04 am

Oh brother, it should not need to be said anymore than what I will type here but what the hell…

1 – If you can’t take the heat….

2 – The truth? You can’t…

Seriously, enough of the cliches. If this guy that wanted you to not be, necessarily negative, but rather realistic then why waste your time, and ours indirectly, to reading his plea to be positive. I do not believe that there are too many people out there that are ready to accept the reality of what is going on.

What is even more astounding is the idea of asking Garth to white wash the situation overall when anyone with even half a brain could simply Google Garth Turner and sooner or later end up at this website and see what has been put to keyboard amd screen the thoughts in his head. Naive does not even begin to describe this pathetic situation.

For someone like this there is a saying in the line of work in the computer/information technology field…PEBKAC. Problem Exists Between Keyboard And Chair. This guy is a serious pebkac.

#17 Jess Valenzuela on 02.12.09 at 1:06 am

wow, that’s one example of Out-of-touch reality. Mayor Miller and most of politicians are so out of touch that they want to increase taxes. Land transfer tax, property tax, water, car, and so on..

Here’s the article from TorontoStar http://www.yourhome.ca/homes/article/585566

Facebook group petition to stop tax hike to already over taxed Torontonians http://www.facebook.com/topic.php?uid=2399458411&topic=7536

#18 Steve in Kitchener on 02.12.09 at 1:16 am

Garth I have to say (as a former financial advisor at a bank) some of these people are so brainwashed that they believe there own bull sh*t. I used to work with these fools, real estate agents, sales people of different mutual fund companies etc… I knew the spiel even before they did their presentations to their clients and us. I have heard it so many times. The thing that shocked me then (and even more so now) is that when I would talk to these guy/gals over lunch/dinner/drinks they really believed that real-estate/stock prices would go up forever. I have a lot of friends in the business and they still don’t think things are going to be that bad. Even after all the bad news and signs ahead they still keep thinking it will all be over in six months. I think it’s going be a long and hard ride. I am sure many people on this blog have a lot of smart friends and family who (still) don’t get it. It’s like the old saying about the frog in the boiling water; buy the time the frog figures out what’s going it’s to late.

Thanks for the daily updates.

#19 nonplused on 02.12.09 at 1:36 am

Another haha, watch this video:

http://www.cnbc.com/id/15840232?video=1021551579

So here is my question: If the SEC couldn’t catch Madoff over 8 years after being led to the water like a horse, how can we assume that the Canadian regulators can catch the bad guys? Keep in mind that in Europe and even the US our markets and financial institutions are considered to be “unregulated”. Canadian banks simply don’t have to report losses until they settle, and Canadian exchanges have little or no oversight (hence the violent opposition to the proposal for national standards). So how do we know how many foxes are in the henhouse?

From watching the tape, I get the impression that the entire top management of the SEC must be on the payroll of the fraudsters. Maybe not the direct payroll, but the old way of doing it. “If you want out of the mid-office, you have to be “helpful” to the front office.

I’m starting to think the whole thing is a fraud.

#20 Mike (authentic) on 02.12.09 at 1:51 am

Garth, I was going to come up with a new term for your topic:

The Ostrich Effect.

Then I googled it and aparently, it already exists!
http://en.wikipedia.org/wiki/Ostrich_effect

“In behavioral finance, the ostrich effect is the avoidance of apparently risky financial situations by pretending they do not exist…which they name the “ostrich effect,” attributing this anomalous behavior to an aversion to receiving information on potential interim losses”

LOL. I couldn’t have said it better myself.

Mike

#21 Da HK Kid on 02.12.09 at 1:59 am

Another waste of time survey and denial of US homeowners trying to push for their own bottom!

http://www.cnbc.com/id/15840232?video=1030967762&play=1

#22 Apocalypse Now on 02.12.09 at 2:20 am

Garth, why don’t you start exposing the bankster fraudsters that run the system that make it near impossible for the middle class person to get ahead? Seems like every few years the rug is pulled out from under the feet of the middle class and they end up further back than where they started. Central banking is a fraud, commercial banking is a fraud, investment banking is a fraud. All these institutions do is bleed the average Joe through their Shylockian usurious compound interest policies. They are serpents and vipers, full of venom and poison and they are the real culprits here not the low level realtors. Going after realtors is like going after the street corner drug pusher rather than the big mob boss that imports the drugs in the first place. Unless the impossible happens and we eliminate central banks, and change usury laws to forbid compound interest all proposed solutions will only further impoverish the middle class. The middle class is history and deservedly so; they were too stupid to value the great freedom and prosperity they once had. The prosperity of fools will destroy them, so wrote a wise king three thousand years ago and those words are more true today than ever before. May the middle class rest in peace!

#23 Happy Renter in North Van on 02.12.09 at 2:24 am

Good for you Garth… I work in the financial industry and the last thing you should become is a schill for the financial industry… you’ve castigated the real estate industry for doing the same… I have no problem telling clients the financial markets are a pile of dung… but I’ve never seen BNS pay a 7% dividend yield in my adult lifetime… as long as they keep up the dividend, I’m getting paid to stay invested…

#24 Anon - GTA on 02.12.09 at 3:44 am

Hey Garth,

Read your book last Feb, and we put off our buying decision.
We watch all news (before going to bed as well), and sleep better ;)

I prefer to read all variations of news, and interpret them myself based on my
understandings.
Would rather be well advised then decide to live a ignorant life living in denial

You are doing a gr8 job. Keep it coming

Cheers…

#25 Cornholio on 02.12.09 at 4:31 am

There is nothing in this world like finding an Ostrich with it’s head in the sand and the joy of giving it a good swift kick in the arse.
Next time Garth kick it harder.

#26 mikef on 02.12.09 at 5:09 am

Feeding squirrels?
If you were in Westmount Que. you’d be beaten and flogged.

On topic,it is not surprising, many self-help gurus like
Dr. Christianne Northrup say the same thing:don’t
watch the news.
Garth Turner Canada’s answer to Peter Schiff

#27 islander on 02.12.09 at 6:09 am

Peterborough Terry might be able to turn off the TV to avoid bad news. He might be able to avoid glancing at the newspaper. He might even be in the Top 15% of realtors at every board who will continue to carve out a healthy (albeit reduced) living selling real estate.

But if he talks to anybody in the trades or anybody on contract, he knows that people are short of work or about to be. In Victoria, we’re predicting the worst year (in number of home sales) in 30 years.

This is not the media’s fault, just like it was not the media’s fault we got into this mess in the first place.

That said, the obsessive-compulsives who think we’re going to Zero transactions are the lunatic fringe. And that’s true even if war between the provinces broke out tomorrow. Unless we eliminate in-migration entirely, families stop having replacement-level numbers of babies, and teenagers never leave home and get married, there will always be some level of demand for housing.

Might it take 16 months to clear inventory if ALL current listings stayed listed. Well, yes. Except that’s not how it works.

The people who have to buy (or feel compelled to buy, same thing) will buy. People who have to sell (or feel compelled to sell, same thing) will sell. They will agree on prices. The market will adjust. All others who are just playing at real estate – the buyers with no money, no job, no income, no borrowing capacity, no appetite for risk, will go away. Sellers who are on fishing expeditions to “see what we can get for our house” will go back to simply living in their houses.

There is value in real estate. You don’t have to own it; you can rent it. But somebody always own it. And somebody is always ready to sell some of it.

#28 Kris Olson on 02.12.09 at 6:32 am

As far as news media goes, the only publication one truly needs to read is the Economist. They offer a balanced viewpoint on current world issues including possible solutions and options, which you do not often find in the Canadian papers. They don’t “scare” you with a host of possible disasters, but they do point out imbalances in the markets and present excellent comparisons of country to country. Besides that, they have excellent sections on arts and culture, which everybody could use a little more exposure to.

I read Canadian newspapers not for the information, but to see how people are reacting to information. The more scared people get, the better deal I hope to make on cash flow positive revenue properties!

#29 Mike (authentic) on 02.12.09 at 6:34 am

BREAKING NEWS

U.S. Foreclosures Top Quarter-Million for 10th Straight Month
Bloomberg news:

U.S. foreclosure filings exceeded 250,000 for the 10th straight month in January as falling prices trapped owners in homes worth less than the mortgage, RealtyTrac Inc. said.

A total of 274,399 properties got a default or auction notice or were seized by banks

The housing market lost an estimated $3.3 trillion in value last year and almost one in six owners owed more than their homes were worth

Home prices have fallen every month since January 2007 and tumbled 18.2 percent in November, according to the S&P/Case- Shiller index of 20 U.S. cities.

One in 466 U.S. housing units received a filing.

Nevada First

Nevada had the highest foreclosure rate of any state as one in 76 housing units received a filing in January. Filings jumped 137 percent from a year earlier to 14,444.

California had the second-highest rate, one in 173 housing units, and the most total filings with 76,761, a 34 percent gain. Arizona had the third-highest rate, one in 182 housing units, while filings rose 62 percent to 14,674, also third-highest.

Florida had the fourth-highest, one in 214 housing units. Filings rose 35 percent to 40,770, the second-highest total. The state’s temporary moratorium caused filings to drop 20 percent from December, RealtyTrac said.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aG4wgV6SHqOI&refer=home

Mike

#30 Sail1 on 02.12.09 at 6:49 am

Garth wrote:

This means there will be more reductions to come, especially when the false Spring market of 2009 sees an explosion of listings.

For the years 2007 & 2008 have not been traditional spring markets in the GTA. New listing are starting to increase but it is clear that agents have not been able to encourage sellers to lower their listing price.

I have a feeling it may be a while, before anyone can start vultching properties at 30% below asking in the GTA.

#31 Rhino on 02.12.09 at 8:07 am

There was an interesting passing comment on the French Radio Canada last night. If I heard correctly, the Caisse are now predicting a decline in real estate purchases for 2009, due to economy contraction in Quebec.

The neatest part? The prediction of a decline in house values only in the range of 5-9%. This because we have been in a stable, and depressed economy for several years now!

Considering that in a good neighbourhood in West Island, a 4 bedroom, 1+1/2 bathroom, finished basement with fireplace, heated garage, 2-storey cottage, on a good sized lot, landscaped, with mature trees goes for $240k-300k, well, I think their predictions are probably pretty good.

Remember, the Montreal area had TWO major migrations due to the separatist referendum, one taking the financial core and head offices to Toronto, and the second with the movement of the remainder of most of the manufacturing.

I picked up my house as described above for only $110k 15 years ago, since it sat vacant for 6 months having been purchased by a company from an employee they wanted to move. It took that long to double in value.

Maybe there are some slight advantages to living in a depressed area, that threatens separation? NOT!!!

#32 Toronto C9 Renter on 02.12.09 at 8:19 am

For me, there’s a difference between staying informed and watching the news.

On financial & RE matters, I can stay informed thru many sources…RGE Monitor, Blogs like these, Monthly stats etc.

Forget CNBC and others like it. They have A.D.D. — “Market will bottom on Wednesday”; “is Britain te new Iceland”; “will there be an Obama rally?”; “Why gold will go to 2000”; blah blah blah. I agree that you’ll sleep better if you ignore news like that!

#33 Bay Street Lawyer on 02.12.09 at 8:20 am

#30 – Sail1

I agree. There will be a lot of sellers who recently got into huge mortages at the top of the market unwilling (or unable) to sell for a loss. So they will keep their prices high. And the media will dutifully report realtors exclaiming “There is no housing downturn! Prices are still high! It’s still a sellers market! C’mon down to our open house before it’s too late!”

Time will tell the tale, though.

#34 Kanata Squirrel on 02.12.09 at 8:21 am

Watching the news is a bad thing – aside from highlights it doesn’t give you the level of details to know the causes and is delayed.

You should take the time and read about what’s really going on on news sites and alternative media.

Example: In Summer 2007, ctvnews.ca (big corporation) had this 5 page article on mortgage backed securities and how this would cause a credit crunch – however weonly started to hear about this on TV last year.

My squirrels in the back woods are looking healthy with us feeding them all winter….

#35 Grantmi on 02.12.09 at 8:42 am

It would be interesting to take a straw poll here to see how many ‘first in the line’ boomers…. were actually looking for their home sale to finish off the end of their retirements.

I checked with my folks.. and thank goodness they are not. It’s paid off.. but they don’t need it to live to the rip age… of feet first out!!

;-)

#36 CJ on 02.12.09 at 8:54 am

hey #3…not sure why anyone hasnt responded, i guess they all think prices are going lower!! Check this out, it might help answer your questions.. http://patrick.net/housing/crash.html. Generally speaking you should only buy in a higher interest rate environment..although we are in strange times when the FED is talking about buying the back of the curve to keep rates low. Plus condo’s are generally lousy investments (nobody lives in a condo long term so it is an investment). Did u account for condo fees? which of course you can’t control.

#37 Bobby on 02.12.09 at 9:00 am

http://www.calgaryherald.com/business/Vacant+condos+create+unease+Calgary+market/1276926/story.html

#38 JO on 02.12.09 at 9:09 am

The FA and Realtor in your comment are typical. They forget that DENIAL is only a river in Egypt, and not a prescription for financial success. As I worked in financial services for years, I am used to pumpers come in and always finding ways to put a positive spin on situations that are clearly negative. I was routinely ignored and teased when I warned close associates of the dangers facing the economy due to the debt spectacle the world was in.

People need to know the truth, not what some Kool-Aid seller tells them to line his/her pockets.
JO

#39 dd on 02.12.09 at 9:16 am

“Realtors and financial advisors who blame the media must not be good at their jobs.”

When things go sideways it is always the media fault. It wasn’t what Richard Nixon did that was the problem, it was that the media found out about it and told the world.

#40 smwhite on 02.12.09 at 9:17 am

If I had listened to the young “advisor” that was provided to me by my bank in 2003, I’d have NOT invested in financial companies, Canadian resources and precious metals funds at that time; seeing the coming housing bubble and inflation.

They’d have had me invest in their own “diversified fund” product or buy a McMansion and stainless steel.

Best to invest in what you know or at least with who you know, some don’t have the luxury of a good advisor that puts clients ahead…

That’s why its even more important to pay attention to news and numbers as they come out.

Banks do not have financial advisors. They have product salespeople. — Garth

#41 Wisconsin observer on 02.12.09 at 9:17 am

Pretty safe to assume that Post#2 is an exaggeration,
or ThumbsUp has gone through some new form of drastic social rehab. As someone who has never owned a cell phone, I can observe with little bias that the zombie masses would never give up that newly grown virtual appendage. I’ll bet Garth(our prince of darkness) would not give up his? But the message of ThumbsUp’s post is an argument for the idea that media does/can have an effect on the economy. ThumbsUp never says he has financial troubles, but he suggests we better hunker down. If all of Canada happened to listen to him, the depression begins tomorrow.

#42 Kash is King on 02.12.09 at 9:18 am

#19 nonplused, it will take seeing captains of industries, from some of our sacred cow companies if guilty, sitting handcuffed in the backseat of a Crown Victoria, for things like diddling with options, cooking-the-books etc (same should apply for politcians that cook the country’s books), before anything resembling trust can be restored here in Canada.

Anyone remember that Canada was the home of Bre-X?

#43 smwhite on 02.12.09 at 9:23 am

#2 ThumbsUp

5. Switched from Tim Hortons to good old instant coffee; ($60/month)

Sacrilege! I will NEVER give up a $1.65 coffee that makes the first 4 hours of my day delightful!

MSM is like the story of the shoe shine boy and him delivering stock tips, by the time MSM picks up a story and dumbs it down for Joe Public, its too late, old news…

#44 Bill-Muskoka (NAM) on 02.12.09 at 9:38 am

#4 LuckyLondoner on 02.12.09 at 12:00 am

Could I please generate some discussion on RRSP vehicles?

Well, as everyone seems to be aware the ‘vehicle’ market is DEAD. However, watch out for the tax laws on RRSP’s.

#45 Bill-Muskoka (NAM) on 02.12.09 at 9:50 am

#3 SJ on 02.11.09 at 11:45 pm

You should consider that when renting you are at the mercy of the landlord who, if they decide to unload the property, when selling does not protect you, the renter, from massive rent increases or the destruction of the property.

The new owner can evict you at will (with notice of a minimum of 30 days) and charge whatever rent they like. You then are SOL and forced to either swallow the new rate or MOVE which costs a lot of money to do plus first and last months rent for 99% of the renteral market. Yeah, that is security and stabilty all rolled into one nice neat TRAP!

On the purchase side you come out ahead in that even if you lose money because the market drops, you still have a place to live and time to recover. If you lose money in the end you could say you saved money because you still got the use of the property as a home. Otherwise you would have lost the money to your landlord, and still not have the ability to secure a place to live.

I expect many landlords are going to unload their ‘investment’ properties like a hot potato because they will have to. They have mortaged themselves years ahead on speculation and the lenders are now saying ‘PAY UP!’ I know that is happening in Barrie, Ontario where ‘speculation’ homes have been the reason for the huge price increases beyond reason.

My daughter lives next door to a house that the landlord (a non-resident GTA investor) used as collateral. He rented the property out and the renters basically destroyed it. The place was worth maybe $220K in new condition, but only $175K in ‘as is’ condition. His debt load on the place was $268K and the bank foreclosed and took the loss. This scenario is not being talked about by the MSM or RE people, but is a major economic reality. All the RE scam artists care about is moving the sale, getting the commission, and turning over more POS’s as fast as possible. They rely on the dreamers and naiive to feed them.

#46 anonymous on 02.12.09 at 9:55 am

#7 Bobby,

I forbid you from buying until at least fall of 2010. There will be no good deals this fall in BC, regardless of how much it falls. It will fall more in 2010.

I just returned, with my time machine, from 2010 and yes, it’s very bad for Canada’s housing market and the Canadian banks. Much better on the US side, but alas our Canadian peso won’t be worth squat.

#47 smwhite on 02.12.09 at 9:55 am

Banks do not have financial advisors. They have product salespeople. — Garth

Thank goodness I learned that before the rip age of thirty and a 400K mortgage.

Looks like the TSX can’t get it up(over 9000) and the DOW has the same market impotence problem (8000 is impenetrable).

New lows coming…

#48 Signal Loss on 02.12.09 at 9:56 am

lulz – someone’s been reading “The Secret”. The secret to calamity, evidently.

I can understand the need to unplug from the constant barrage, get a grip and put things into perspective. Your worldview can become distorted if you spend too much time in the information isolation tank. But eventually you actually have to advert to the situation and make whatever small changes you need to make.

#49 Rhino on 02.12.09 at 10:08 am

#40 smwhite on 02.12.09 at 9:17 am
(snip)
“Banks do not have financial advisors. They have product salespeople. — Garth”

Excellent point Garth.

Last week, while helping my 80 year old auntie with a computer, she lamented that her savings have dropped by at least 25 – 50%. It seems, the “nice young lady” at a local bank recently had her move from GIC to Mutuals since the GIC’s were not growing “fast enough”.

My aunt trusted her, so moved from secure investment appropriate for her age, into something with more risk. She liked seeing her investment “grow”, but now they are worth less than the initial transfers by a significant amount.

I do not know if commissions/bonus are given to these bank employed salespeople, but no doubt, when someone like my widowed aunt, who’s deceased husband took care of everything financial, is given this type of advice, I feel it is almost criminal.

I was perhaps too direct in my comments to her, and now she is stuck, but at least she knows I can help her decide on such things in the future…

#50 Bill-Muskoka (NAM) on 02.12.09 at 10:09 am

#38 JO on 02.12.09 at 9:09 am

Michael Moore would love to hear from you for his new movie ‘Bailout’!

[email protected]

#51 Samantha on 02.12.09 at 10:13 am

“The Great Depression 1929-1939” by Pierre Berton is a lengthy but worthwhile read for anyone who wants to understand the relevance of that era to contemporary times. He provides an excellent account of how politicians, presented with a population suffering unemployment, crop failures, and starvation, among other tribulations, did what they know best – clung to their personal beliefs (no welfare state, got to keep the commies out). Those who were supposed to be in charge (King, Bennett and others), by their actions and lack of action, prolonged and deepened these terrible years.

An interesting example, parliament was prorogued back then in order to dissolve the standing committees, and as a delay tactic. History repeats itself again in fall of 2008 with very interesting timing.

In the Great Depression, milk was dumped and fed to pigs while mothers were alloted a pint of milk for their children. Wheat was dumped while people starved. And, all in the name of commodity pricing. Think it couldn’t happen again? Take a look at our national food reserves and where they stand today.

Consider how we are governed. The Great Depression was more than the stock market crash – it was drought, crop failures, protectionism, and worse, the heinous actions of the people elected to run this country.

Second read, “Towers of Gold, Feet of Clay” by Walter Stewart. Some good basic info for anyone who wants to really understand banks as business. And a nice little business it is: they make tidy profits in good times and in bad, with low taxes a nice perk. How is it that this business is allowed to operate as it does? More important, why do we allow it? Why was there no outcry for regulation years ago?

Which brings me to this: read, educate yourself and prepare. Build some community with others. And really think about what was so horribly wrong with Canadian sensibilities that people suffered and starved for 10 years without a massive revolution and demand for better governance, planning and relief? Only a few tried, and that is perhaps the saddest thing about the Depression.

#52 Bill-Muskoka (NAM) on 02.12.09 at 10:21 am

#32 Toronto C9 Renter on 02.12.09 at 8:19 am

I stopped watching American news when I moved to Canada over a decade ago. My blood pressure dropped 20 points. It is nothing but hyperbole and BS. Hate mongers like Bill O’Reilly, Rush Limbaugh, and the rest of the wack jobs milking the masses using FUD are the real enemy. They are All Crap All The Time!

Jon Stewart and Stephen Colbert are better news sources than CNN unless you are into Thrill of the Overly Long Moment coverage.

Here in Canada we have some good news sources like CBC’s The National, A-Channel for local news, and usually Global National is pretty straight forward, but still another parrot of the usual MSM BS for the most part.

I will not even watch CTV news and Fox is considered the Goebbel’s News Network of the Extreme Far Right.

When I want real news I use the Internet and peruse many sources, that is where the real news is. Al Jazeera has some of the best world news coverage available BTW. The rest are just a bunch of mega-corporate controlled mindless clowns. Max Headroom was their role model.

#53 Bill-Muskoka (NAM) on 02.12.09 at 10:25 am

51 Samantha on 02.12.09 at 10:13 am

That was an excellent and enlightening comment. Thank you. My parents lived through the Great Depression and you brought back to mind some of the stories they told me.

The Dust Bowl of the 30’s was the result of over farming, bad weather, and poor management all in the name of profits. Seems we still haven’t grasped our environmental responsibilities today?

#54 David Bakody on 02.12.09 at 10:28 am

#2 ThumbsUp

I have been taking my own cup for years and when I leave (as I stay for my coffee/green tea)( $1.25 tip included) I rinse it out in their washroom and put it back in my car …. should I forget I simply do it upon entering… to easy. Matter of fact the manger gave me a new one at Christmas with a free coffee to boot to encourage others who often comment.

Salesmen are what they are, we the buyer must drive our own bargains and to-day there is far too much information on the street making our homework easy…. WC Fields said “There’s a sucker born every minute” true then as it is to-day …. the question is are you one?

#55 Cara on 02.12.09 at 10:37 am

Okay, I realize that what I’m going to say may be misunderstood. What I am NOT doing is advocating burying your head in the sand, nor am I blaming the media and saying that all is roses. However, when people watch the news which is all bad, all the time, it affects how they feel and think. The truth is, no matter where you are, or what situation you are in, there IS always an upside. Always. It’s why the earth is still going round the sun.

To a large extent, much of the economy is built on a house of cards, and that house of cards is built on a foundation of human psychology. What the experts can’t formulate a prediction for in this extremely complex crash is “what is going to happen to the populations’ psychology?” And, we need to admit that there IS a huge element of psychology involved in creating a further spiral of recession/depression.

I’m all for being realistic and cutting out unnecessary wasteful spending – if you’re using a credit card you shouldn’t be. However, if we all panic and cut off everything and bunker down this will NOT end.

The greatest opportunities lie hidden within the greatest challenges. The man my husband works for (in one of this man’s many companies) had his start in the recession of the ’80s. He picked up a piece of land for 1/10 of it’s value (vulture anyone?), took the money he’d saved and went out on a limb. He built the only 4 houses that were built in this town during the worst year of the early ’80s recession. Yep, four houses built in the entire town that year, and he built them all. As spec. And he got his start from there. He is now a multi-multi-multi millionaire. One of the wealthiest men in Alberta. Owns/part ownership over 12 companies. But, he didn’t bunker down with a book of squirrel recipes and his shotgun. He looked for the upside in the downside and took what he’d saved and invested it. There’s a lesson there for us, and a study in how to look at things. He’s not a fool, he was cautious and prepared.

Now, he’s doing amazing things (on the sly, he doesn’t advertise it. I just know him personally) in Africa for orphans there, as well as the many charitable things he does in our local town.

Just trying to remind people that this is NOT the end of life as we know it. Maybe it’s the end of foolish “living beyond our means” – and well it should be.

I think there is tremendous opportunity here to finally get back that sense of community that sometimes only great tragedy and hardship are able to impart.

Look for the upside – make it your exercise today.

#56 smwhite on 02.12.09 at 10:40 am

#49 Rhino

When you consider the banks are pushing certain products in their best interest, not the customers, how else do you get your bonu$e$ if your not bilking the likes of your trusting auntie out of their retirement.

Bank has a bottom line, their experts pissed away their capital, now instead of them paying the price, loyal customers are.

#57 Bill-Muskoka (NAM) on 02.12.09 at 10:41 am

#8 rural route on 02.12.09 at 12:09 am

The MSM is not creating the crisis, they are merely accelerating it to sell advertising, which is their real primary business.

This is what they do all the time, turn a bad situation into a perceived crisis du jour. The masses think they have just gotten a genuine Terror Alert level increase, when in fact, the MSM has merely turned away from other news to promote the lastest Hot Topic.

The world and our society is a helluva lot more complex than economics.

Like the old adage teaches ‘Take it all with a grain of salt’, except with modern mass communications a 10 pound block may be more appropriate, togetehr with rubber gloves, a full face air mask, and TyVek suit. It truly is All Crap All The Time.

But even crap has usable content…just ask a Dung Beetle or a fly!

Ask when was the last time you ever heard the MSM offer a solution to any of the problems? EVER?

Ask when was the last time the MSM ever presented a truly balanced view including all the facts on any subject? EVER?

No, the responsibility remains OUR’s to decipher Truth. Always has, and always will be. It is called Critical Thinking.

#58 TorontoBull on 02.12.09 at 10:52 am

@5
this is a really dumb comment. You may want to read a book or two on economic development and the relationships to immigration before making embarrassing statements. I suggest you search for Donald Savoie.

#59 K on 02.12.09 at 10:59 am

If you don’t like Negitive news and want to avoid the media then move to B.C. Denial like pot smoke are in the air Out here things are just great.At least thats what our realitors and government not to mention the media are telling us. With the spin off of the Olympic games and all the money and investment its going to generate you too can live in paradise. Gordon Campbell is already talking about the NEW and rosey economy in 2010. So you might want to buy into this over priced market now. After the games its going to go through the roof………..

#60 PTDBD on 02.12.09 at 11:04 am

The low spark of well-heeled boyz

mortgages, flippers, boots filled with cash and $1M gold certificates – sounds like a good movie plot
Fugitive financier arrested at U.S. border
Associated Press

I don’t know how genuine this supposed confession is, but it is interesting…
http://itulip.com/forums/showthread.php?p=74941

#61 Ally Ally Oxycontin Free on 02.12.09 at 11:26 am

Farmers Face Empty-Nest Syndrome Amid Chicken Housing Crisis

http://online.wsj.com/article/SB123440092979675383.html

#62 Ally Ally Oxycontin Free on 02.12.09 at 11:34 am

WASHINGTON — Chief executives at eight banks and securities firms that have gotten $165 billion in federal aid were barraged by U.S. lawmakers, who showed little patience for a charm offensive aimed at defusing ire over pay and lending.

http://s.wsj.net/public/resources/images/NA-AV854_BANKCE_F_20090211164222.jpg

#63 squidly77 on 02.12.09 at 11:36 am

calgarys busted

Current foreclosure listings are as diverse as the market itself: inner-city condos, old bungalows, three-year old houses in new neighbourhoods, and mil-lion-dollar properties. There are 13 foreclosures in one condo complex alone.
http://www.calgaryherald.com/Homes/Tumbling+home+values+boost+mortgage+defaults+Calgary/1279897/story.html

#64 American Expat & Future Canuck on 02.12.09 at 11:38 am

#3 SJ…Based upon the information that you provided, buying is not a very good deal, unless you are planning/willing to stay there at least a decade or more. With all of the uncertainty in the job and financial markets, personally right now I would just continue to rent, bank the savings and give my family the peace of mind that comes with the knowledge that we can quickly move and adapt as our fortune in life changes… up or down.
Bellow is an excellent NY Times financial calculator that will help you to determine whether it is better to buy or rent. (http://www.nytimes.com/2007/04/10/business/2007_BUYRENT_GRAPHIC.html?_r=3&oref=slogin&oref=slogin&oref=slogin) Be sure to click on the “Buying” button under Advance Settings on the upper right side of web page to enter any condos fees and other carrying/transactional cost that might be appropriate for your situation.

#65 Greg W., Oakville on 02.12.09 at 11:49 am

Hi Garth, FYI

Ron Paul Introduces Legislation to Abolish the Federal Reserve.
http://www.lewrockwell.com/paul/paul504.html?utm_source=mortgagenewsclips+test+list&utm_campaign=fefaaea79d-RSS_EMAIL_CAMPAIGN&utm_medium=email

Before the US House of Representatives, February 4, 2009, introducing the The Federal Reserve Board Abolition Act, H.R. 833.

Madame Speaker, I rise to introduce legislation to restore financial stability to America’s economy by abolishing the Federal Reserve. Since the creation of the Federal Reserve, middle and working-class Americans have been victimized by a boom-and-bust monetary policy. In addition, most Americans have suffered a steadily eroding purchasing power because of the Federal Reserve’s inflationary policies. This represents a real, if hidden, tax imposed on the American people…..(see link above to read the whole thing.)

#66 Another Albertan on 02.12.09 at 11:54 am

The earth revolves around the sun because of physics, not because of shiny happy thoughts.

The global economy is not going to rebound fully (note the word “fully) until all the skeletons in the closet are removed and put to rest. The issue is that there are more and more skeletons being found, whether they be troubled asset pools or downstream derived implications like trade balances. The news is reactionary. People are reactionary. It goes hand-in-hand. Media is PART of the mass psychology, so, by implication, it cannot be subtracted from the equation.

This whole merry-go-round is one enormous feedback control system and all the variables are highly inter-related. It’s going to take a while for things to quiesce into a steady-state.

#67 Simon on 02.12.09 at 12:00 pm

Wow realtor fraud in Canada on the rise….
….at least prosecutable fraud.

So they got caught… too bad so sad……

http://www.reco.on.ca/site.aspx

#68 rural route on 02.12.09 at 12:04 pm

#57 Bill-Muskoka (NAM)

I understand what you’re saying. However I think the biggest problem our country faces is the lack of engagement of Canadians in general when it comes to politics, economics and world affairs.

I’m not hearing much debate amongst ordinary Canadians. People hang around with like minded people. If you see things differently, or openly question the sources of their information or the conclusions they’ve come to, it makes everyone uncomfortable. It’s like a conversation ender. Impolite. Kind of like bringing up religion. So it’s easy for politicians to do the wrong thing, too few are paying attention, and just going with simple explanations.

I think people think more critically if they have personally gone through a crisis. If they’ve been lucky enough to avoid bad times somehow, I think they’re more likely to be complacent. That’s why I think it will take a big jolt before the majority actually realize what’s happening and make our politicians accountable.

#69 Jeff Smith on 02.12.09 at 12:11 pm

Mark, Where are these immigration coming from ? Last I heard immigration has declined due to booming economies in some other developed countries. As for Europeans they probably won’t want to come here, they get better benefits from their system (3 weeks vacation guaranteed etc, compare to 2 weeks here)

#5 Mark on 02.12.09 at 12:07 am

Good news. More immigration on the way for our system to support more unemployed people! SWEET

#70 Larry on 02.12.09 at 12:18 pm

Blaming the media is a pretty lame excuse to swim in the river of denial. I usually like to get different media views on events happening around the world and every news website from Ireland, UK, France and Canada are on the same page when it comes to the economy. The Ostrich can bury it’s head in the sand but everyone can still see it’s ass.

#71 Bill-Muskoka (NAM) on 02.12.09 at 12:20 pm

#67 Simon on 02.12.09 at 12:00 pm

Thanks for that informative link. Now if only the legal profession had a similar webpage for lawyers and paralegals.

#72 ThumbsUp on 02.12.09 at 12:22 pm

#41 Wisconsin observer on 02.12.09 at 9:17 am
You comment is appreciated, I’ll try to be respectful as Garth indicates on top of the comment box.

You said -“If all of Canada happened to listen to him, the depression begins tomorrow.”

Are you suggesting if Canada listens to you, the recovery comes tomorrow?

#73 Marc on 02.12.09 at 12:27 pm

Well since we are bleeding red ink, what is another 200K for an unnecessary by-election. Our M.P. Dawn Black is seriously considering running for MLA in the May election. I have no problem with this oppertunist move, providing she pay for the unneeded by election if she chooses to resign her position after less then 6 months after being elected. When will a M.P. table a motion, requiring M.P.s to foot the bill for any by-elections due to their own oppertunistic moves? We need our politicians under contract, that unless for personal health issues, or to take care of a loved one facing health issues, all other resignations come out of the resigning M.P.s pocket.

#74 Bill-Muskoka (NAM) on 02.12.09 at 12:30 pm

#68 rural route on 02.12.09 at 12:04 pm

I agree. The problem is that the values most people hold to are not the values held by the greedy members of society. Thus, the Ostrich Principle kicks in. Likewise, people have too many things they must monitor in their own lives and the crooked politicians rely on that.

I am still a BIG Supporter of the use of Madame Guillotine as a ‘lesson’ for those who think violating the public trust is to their personal advantage. I said it before, and I will keep in saying it ‘There should be a Guillotine at both Oddawahaha’s Parliament Hill and Queen’s Park to serve as a reminder to those who ‘serve’ the people.’ Let us also place one at the Law Society’s HQ as well.

What say we import Madoff and make an example of him for the financial communty? Heck, we can sell tickets and TV broadcast rights and payoff our national debt much faster. Then there is Thain and his office reno project while the company lost their arse and the people’s money, and the other bozos on Wall and Bay Street, not mention bankers, politicians.

I think it will be far more watched than Leaf’s fiasco’s or the NFL? :-)

Look at the viewship that watched Sodumb Insane get his just due?

Talk about a Growth Industry?

#75 Shawn on 02.12.09 at 12:31 pm

Cara that is great insight and a more logical approach to dealing with a weaker economic outlook.

The best advice I have ever received in 10 years in business was from my first manager in 1998, when our organization was in flux and restructuring its staff, he said: “…be patient, keep your head down, do your job, and remember that change brings opportunity”.

On a lighter note most of us Canadian and American citizens are overweight, use the tightening of spending as an opportunity to eat less, lose weight and get fit. Recent studies indicate that calorie reduced diets have lengthened longevity in rodents. Do we need to eat three protien rich squares meals a day …I doubt it.

#76 Bill-Muskoka (NAM) on 02.12.09 at 12:33 pm

#70 Larry on 02.12.09 at 12:18 pm
The Ostrich can bury it’s head in the sand but everyone can still see it’s ass.

Unless everyone else is an Ostrich, then they see nothing. ;-)

#77 Toronto C9 Renter on 02.12.09 at 12:35 pm

to #51 Samantha, re: the Great Depression

I also read Pierre Berton’s book and found it interesting

My own family’s story — during the Depression my lat e Grandfather who was in his 40’s at the time was a Dentist in Hamilton Ontario. Under normal circumstances a lucrative profession.

For a period in the 30’s, he was fixing teeth for nothing. He would recieve worthless IOU’s, home baked pies, heartfelt thanks etc. Anything but cash.

My Grandmother’s advice to my Father at the time — “whatever you do when you grow up, don’t be a dentist or you’ll be broke like us!”

Sorry folks guess this doesnt have anything to do with real estate — oops

#78 houston on 02.12.09 at 12:37 pm

Hi Garth,

Thank you for making me aware of what has been an is and going to happen.

I am a parent who has invested in real estate. My main source of income is from my rentals. One in Sechelt with a mortgage of 215,00 and another in Squamish for 500,000. My own house is paid for .. worth 450,000 now all by doing well in the real estate in the past 6 yrs. yrs. I have not debts but my rental mortgages

I knew in my heart 2 yrs ago that I should of sold but people around me told me market was still going to go up especially the realtors. I admit I was greedy.
I thought my rentals was giving me an income and it didn’t matter .

Today, I realise I hate being a landlord. Tenants thinking they are just paying off my mortgage etc.. not realising all the other expenses attached to a house like you have pointed out.

If you see on Craigslist some tenants are leaving nasty comments on the rental markets how rent is going down and now the over supply of them on the market. They have no idea if a person bought a house for 400,000 that to make any money on it the landlord should be collecting $4,000 in rent.
I wonder how many people actually pay$4,000 in rent maybe $1,800.

My 4 plex is worth 700,000 now with a interest only mortgage of 500,000 and my 23yr prime -.9 left on sechelt mortgage 215,000 worth 285,000.

After mortgage payments, insurance, taxes , maintence I come ahead of $1,500 per month if every tenant pays me.

I realise I have no assets but real estate and believe I need to diversify my portfolio. Should I sell these income generating properties especially when market is going down or wait for it to get better yrs yrs later .

If I sell off I would have almost $300,000 what should I do with it. Maybe it might even be $200,000 if I can’t get a it sold for the appraised value. Should I sell my house even if I don’t have a mortgage and go rent?
Living near whistler and seeing for myself what is happening with the housing industry I see constructions projects being canceld, empty condos, lay offs etc.. I always wondered how could people afford these properties and expect to get a return??I see listing have dropped and sales starting to move but at a reduced rate. Recent Investors holding on and renting out for the Olympics but at what about the carrying cost before and after. It doesn’t make sense to me.

I would appreciate your thoughts for people like myself who got in at the right time that has a cash flow and rely on the rental markets as their bread and butter. Say goodbye to the investments before I have nothing???

#79 Bill-Muskoka (NAM) on 02.12.09 at 12:42 pm

#60 PTDBD on 02.12.09 at 11:04 am

That made me SMILE!

Thanks

#80 Greg on 02.12.09 at 12:45 pm

“Foreclosures push US home prices to 5-year low.”

Prices of existing U.S. single-family homes dropped a record 12.4 percent in the fourth quarter from a year earlier to the lowest level since 2003, the National Association of Realtors said on Thursday.

The NAR said distressed sales, which includes foreclosures, accounted for 45 percent of transactions in that quarter, dragging down the national median price of existing single-family homes to $180,100…

http://news.yahoo.com/s/nm/20090212/bs_nm/us_usa_economy_housing

#81 Makeorbreak on 02.12.09 at 12:55 pm

Garth, I finished reading After the crash and I intend to put in practice most of your recommendations.

Regarding stockpiling, you mention twice in the book that canned tuna must be ‘in oil’. Is there a reason for that? I have a large reserve of canned tuna ‘in water’. What’s the difference between the 2? Perhaps ‘oil’ tuna has a longer shelf life? Thanks and congratulations on your very interesting book.

#82 JET on 02.12.09 at 1:09 pm

#3 SJ,

You can’t ignore the possibility of price declines. You have to look at what happens if you rent for a couple of years while prices drop, put your downpayment in an interest bearing account, and then buy when prices are lower.

See this for an analysis:
http://sites.google.com/site/torontorealestatecharts/buy-now-or-later

#83 rick in Surrey on 02.12.09 at 1:22 pm

Ahh yes, the good old Canadian “Osterich Mentality”. If we bury our heads in the sand, the problems of our world disappear. It amazes me how detatched most Canadians are from reality these days. We point blame at our politicians, bankers, media, etc when the blame should land squarely on our own shoulders! It’s not “their fault”, it is our own fault for not taking interest in matters around us before they blow up into huge catastrophes. I am sure most on this blog have been sharing the news with their friends and family. I am equally sure that they have encountered resistance to the idea that the problem is really as big as it is. Most people when informed of a massive problem go into panic mode and shut down their ability to fathom/cope. Therefore, it is much easier for them to live their day to day life by denying the existance of such a problem. Who here has not heard someone say, “The problem is too big for me to fix” or “One person can’t make a difference”. Individually, that may have some element of truth. However, people need to figure out how they can be part of the solution collectively. As NASA said to their team during the Apollo 13 crisis “Work the problem people!”
Demand change from our system by getting involved in the system. One voice speaking can cause a slight ripple, a group roaring can bring a sunami of change.

#84 Bill-Muskoka (NAM) on 02.12.09 at 1:26 pm

O.T. but interesting.

CHP Cracks Down On Casino Buses

Boy could the OPP do the same here with the convoy of Casino Rama buses going back and forth better than GO Trains ever would.

Spell that REVENUE for Ontario folks!

#85 Jelly on 02.12.09 at 1:28 pm

Da HK Kid,

WTH! Houses in Unionville are ridiculously expensive compared to other parts of Ontario.
Why are they so expensive there?
I know it is close to Toronto, but why else?

#86 Wisconsin observer on 02.12.09 at 1:40 pm

#72 ThumbsUp
All I know is that “fear breeds more fear”, and the suggestion that any media plays no part in the collective mood of a nation is certainly interesting. How can Garth rail on those who comment “everything will be OK”, as if those comments might influence consumers to continue to foolishly consume, and yet say his negative comments in no way affect the actions of the consumer?
I read this blog everyday, and I agree with most of what Garth says(except global warming, as I go through 2 winters in a row that remind me of the 60’s)
I don’t know how this gets fixed, but is shutting down any better than burying your head?

#87 PTDBD on 02.12.09 at 1:54 pm

There’s a good reason for not keeping up with the news.

If you follow it every day, it eats into your soul and spirit for the scope and depth of current theft verge on the unbelievable.

If this volume of CRAP is bubbling to the top, you have to wonder what horror lurks in the silt at the bottom.

#88 HJD on 02.12.09 at 2:20 pm

Why is it that real estate prices in Halifax and a few other Eastern Canadian cities are holding steady? If this fact is correct, why are these regions insulated from the global meltdown? Do these stable prices suggest Canada itself is somewhat insulated, compared with the US?

#89 Vancouver_Renter on 02.12.09 at 2:45 pm

#40 wrote:

“I do not know if commissions/bonus are given to these bank employed salespeople, but no doubt, when someone like my widowed aunt, who’s deceased husband took care of everything financial, is given this type of advice, I feel it is almost criminal.”

—-

I know someone who is a big shot “Senior Investment Executive” for one of the big banks working in a tower downtown Vancouver. At a party we attended, he had a few drinks and then started to laugh and ramble on that “Oh yeah, I spent my day phoning clients to move them into our select group of funds. We tell them it’s to improve their portfolio performance but it’s all bullsh*t. It comes down from the top to do this because we make more money in commissions and bonuses! Ha ha haa!”

I know a few people who hold their investments with him. One guy commented to me once, “He’s not making me any money. My portfolio is down, year after year…”

However, this “Senior Investment Executive” lives in a beautiful house in the best neighborhood, has a vacation house down south, drives exotic cars, and seems to be away on holidays 4 months of the year. He lives a Hollywood lifestyle. I know, through the grape vine, that he earns a fortune.

The whole investment sector makes my stomach turn. They don’t add any value to the economy. They don’t create businesses, design products, or produce things. They simply take your deck of cards, reshuffle them, and then help them selves to a percentage.

In Fisher’s book, “Ten Roads to Riches” the author claims that, statistically, one of the BEST ways to become reliably wealthy is to pursue a career of handling other peoples’ money. I wish I had known this when I was younger (although I like to think I’d actually earn my money by serving my clients rather than robbing them).

#90 Bill-Muskoka (NAM) on 02.12.09 at 3:18 pm

Michael Moore is making anew flic called ‘Bailout’, but I suggest calling it ‘Fraudandhype 9-11′, eh?

#91 wjp on 02.12.09 at 3:41 pm

Bailouts will only add to the National Debt, the only persons who should be eligible are the unemployed. Do not for one moment think that governments can create demand, those who are bitten by recession become very careful with their spending. So unless we want to see a repeat of the present situation, I would suggest we get used to an economic reset and allow the markets to dictate the resolution, this right after we prosecute those responsible for fraud and misrepresentation.

#92 Jartann on 02.12.09 at 3:41 pm

The most important points Garth has been making, which are that too many Canadians (and others) have had too much of their equity in real estate, and that real estate is over priced relative to incomes are valid. The bubble has burst in most places. I have been telling people for years that the only way to have “affordable” housing is for the price of everyone’s home to go down. Try selling that concept on the political campaign trail. So, politicians have sold the snake oil that there can be two rails of housing- “market” and “affordable” (or social housing as it is now called). Demographics alone are against the hypothesis that the price of real estate would continue to inflate indefinitely.

And, it is true that this is a very serious worldwide recession. Much of the blame for this must rest with politicians who wanted to achieve political and social objectives and who were prepared to corrupt the market place to achieve them. As for the news media, they have contributed to the worsening of this-but then most media companies are in financial trouble and have been for years. Viewed from the perspective of someone in the media, this is the end of life on earth as we have known it.

However, once Garth starts straying too far from commenting on the real estate market crash and its impact on the economy in general, he gets into a little trouble.

For example, in reporting the trade deficit as being the equivalent of spending more than you earn, this is just not accurate. Individuals, corporations, etc trade, not entire countries. The mere presence of a trade surplus does not translate into prosperity, any more than a deficit proves that we are in a depression. A trade deficit is not the same as a financial deficit. The USA had a trade surplus for 9 of the 10 years of the great Depression.

I have been listening to doom and gloom prophecies for most of my life, and I have survived all the disasters widely predicted by “experts”. The reason of course is that the predicted disaster was never really going to happen. Global cooling, global warming, mass starvation, London under water, all supplies of natural resources exhausted, the list is almost endless. We are in the 10th year of the widely predicted 12 years of worldwide chaos due to the Y2K problem.

All things must pass and this will too. The next few years will be a little tougher than most people are accustomed to. Massive changes in the economy are taking place, and it will take some time to adapt to them. There will be winners and losers as there always are. Many people are struggling right now, but it is a deception to take anecdotes about neighbors being out of work and extrapolate that to represent the entire economy. Our biggest risk comes from interventionist government policies-such as those being promoted by “The One”, “The Messiah”, Pres. Obama. He is a demagogue, and such people are fine when they are on the upswing, and very dangerous when things turn bad for them.

People need to be alert, stay informed and avoid debt as much as they can-or repay their debts as soon as they can.

#93 smwhite on 02.12.09 at 3:42 pm

#88 HJD

Yes, its insulated (and different) and will never go down except for…

the mass infusion of American investors and western Canadian investors into cottages and second homes. Wait till they start trying to sell, or worse, foreclose.

I was amazed at the amount of cottages/second homes for sale last summer when I was back east. Why you would think the Maritimes of all places, with the highest unemployment in the country, will hold steady is nothing more than wishful thinking.

Its just not as sexy or exciting to see 10% drop off a 200K bungalow as it is too see 10% drop off a 600K particle board semi in Calgary…

#94 nonplused on 02.12.09 at 4:08 pm

Michael Moore, ever the objective film maker, thinks he’s on to something:

http://www.michaelmoore.com/words/message/index.php?id=245

I don’t usually agree with him on much but I certainly share his sentiment that this “bailout of the rich” happening in the US (&Canada) must be stopped. It’s preposterous.

http://www.michaelmoore.com/words/message/index.php?messageDate=2008-10-01

#95 CalgaryRocks on 02.12.09 at 4:19 pm

#82 Jet

I read through the sheet quickly but it seems that you forgot to add the monthly utilities that a renter also pays which would be included in the 400 condo fees.

Also account for the fact that the op amortization rate was 15 years, renter would pay an extra 2 years after buyer was finished.

Also, unlikely that taxes would come down 2 years from now but if they do, they will come down for the buyer also, not just the renter.

My head is spinning.

#96 Jimster on 02.12.09 at 4:24 pm

#78 houston

Sell your house and rent. Move into 4 plex.

#97 Jartann on 02.12.09 at 4:27 pm

As usual, Michael Moore is full of nonsense.

Who exactly is getting bailed out? For example, if money is being used to prop up the auto makers, who benefits? The workers, primarily, and others who do business with the companies (including local governments). The shareholders being bailed out? Not happening-they have lost their dough.

People like Moore blather on about regulations being eliminated, but cannot name one. For example, on Bush II’s watch, the Sarbanes Oxley accounting reform was implemented-a massive regulation of the economy. Yet, this crash happened anyway, despite hundreds of billions of private sector dough being spent on the Sarbox nonsense, the loss of some of the best and most ethical executive talent, and the destruction of the US IPO market. The “deregulation” is a fairy tale for the uninformed. Anyone who thinks a set of regulations can offer total protection is an idiot (which explains why Michael Moore accepts this nonsense). The EU is very heavily regulated too, and in some respects they are in worse shape.

Moore twists reality to “prove” the points he wants to make. He has reached the conclusion, and spends his time locating “facts” to support the conclusion. This is, by coincidence, the way the UN IPCC handles “global warming” or “climate change” or by its true name: “bollocks on stilts”.

#98 john on 02.12.09 at 4:32 pm

At approximately 3:00pm Wall Street started to like what they were hearing????

#99 Sail1 on 02.12.09 at 4:41 pm

#78 houston

Houston, don’t be to hasty, seems like you are getting positive cash flow. What makes you thing you can generate those returns monthly with any other investment vehicle? Put up with the headaches of being a landlord until better times, if you need the monthly income. I hear worst from people who were heavily invested in the stock market. They are so frustrated RE seems like a viable less volatile option.

#100 MikeB on 02.12.09 at 4:50 pm

Hey THUMBS UP #2 Good you got rid of your cable.. highway robbers BUT a little know fact about tv in canada is that you can get TREMENDOUS HD and SD signals through the air right now using the DTV or ATSC transmission system. The states are heading there in a few days or maybe even right now . BUT Toronto signals are all DTV NOW. You can get some 15 channels including some from Buffalo. ALL pristine quality modest compression and watch the hockey games in HD without paying ROGERS a penny. All you need is either a set top box with an hd ready tv OR
any new plasma or LCD will have the ATSC tuner built in. You need an antenna that you can attach to your chinmey and away you go. Sorry not a real estate story but maybe an xurbia one.

#101 EW on 02.12.09 at 5:00 pm

@ SJ #3

I’ve live in a nicer area south of you. I’m paying about $ 840 for a large 1 bedroom (condos are often much smaller) & I get to use my BBQ too. It was $ 400 when I moved in back in ’92.

That’s roughly $10,200 for the year taxes included.

That includes:

– Parking, property taxes, appliances & fixtures, grounds keep (snow removal, grass cutting..), hot water, cold water, heating, maintanance (and they are really good at that), same-floor storage locker, and pretty much everything.

It doesn’t include:

– Content insurance (optional), electricity, cable, internet and telephone.

Yonge & Finch isn’t as nice an area so I wouldn’t be paying more than this.

I don’t see the reason I would be into any R/E at those prices. I also don’t see how buying is better than renting in our case.

#102 Nebbio on 02.12.09 at 5:02 pm

Here is a great clip of Nourial Roubini of NYU (who predicted this mess). What a pleasure it is to see a commentator who will not be swayed by the nonsense being foisted on them by the interviewer. Things are bad and they are going to get worse.

http://www.clipsyndicate.com/publish/video/833380/inside_look_how_long_will_the_recession_last?wpid=0

#103 JET on 02.12.09 at 5:20 pm

#93 CalgaryRocks,

Thanks for pointing that out. However, a couple of points:

– many condo leases include utilities
– I’ve only assumed a 15% decrease in prices

Nonetheless, no problem – even if I included the utilitiles of say $100/mo. for the rental period in the buy-later scenario, kept the property tax the same as the buy-now scenario, and changed the amortization period to 15, the buy-later scenario is still ahead a bit.

Also, at the end of the 5 year period, the buy-later scenario owes about 32.5k less.

Have a look at the changes – I’ve also included a link to download the spreadsheet:

http://sites.google.com/site/torontorealestatecharts/buy-now-or-later

I think the point is you can’t rule out the impact of price declines, when comparing whether to rent or buy now. There are a lot of assumptions that affect the final calculation and therefore, decision. Anyways, hope the spreadsheet will help some to come to their own conclusions in a more rigorous manner.

#104 Arizona Parker on 02.12.09 at 5:39 pm

#103 JET

The New-York Times has an interactive chart you might find interesting

Is It Better to Buy or Rent?
http://www.nytimes.com/2007/04/10/business/2007_BUYRENT_GRAPHIC.html

#105 Cara on 02.12.09 at 5:47 pm

Jartann, great replies like yours make reading all these comments worthwhile. Thank you for taking the time.

#106 Marc on 02.12.09 at 5:56 pm

#100 MikeB on 02.12.09 at 4:50 pm

And while you are stealing your satellite signals, when grocery shopping, stick some choclate bars in your pocket, and don’t pay for those like the tv you are watching for free. Stealing is theft, whether it is a satellite signal, money from a bank, items from stores, it is all the same in my opinion.

#107 JET on 02.12.09 at 5:57 pm

Sorry, in my last post the the buy-later scenario owes 20.4k less (not 32.5k). Still, not bad.

#108 Curious on 02.12.09 at 6:08 pm

Garth (or anyone),

Could you please tell me why we didn’t just divide all the money used for the bailout and divide it between every taxpayer or Canadian and just send them a no-strings attached cheque?

Seems to me this would be about a substantial amount of money that would let the spenders spend and the savers save, while helping others get out of debt. Would this not, in effect, stumulate spending, ease credit by injecting cash into banks and getting bad debt off the books while creating jobs??

Thanks for your thoughts.

#109 MikeB on 02.12.09 at 6:11 pm

Not sure what Jartann #92 is smoking but it can’t be legal.
Dude.. the great depression was solved by the second world war. Dude… biggest car manufacturer in the world on the brink of bankruptcy… Dude first time in 33 years a trade deficit in Canada.. Dude…unemployement in US and Canada at staggering levels in spite of it being a lagging indicator…..Dude stay out of debt but your government is putting you in debt without your say so… Dude the media is reporting but a fraction of what is happening.
See the 3000 person lineup in Florida for 35 firefighter jobs.. Never saw that on ABC CBS or CBC CTV only on the internet. While most do not want to be predicting armageddon they are at least suggesting be prepared. No one wants to be the doom sayer .

If you are thinking this will all blow over then you should do some serious research into the impact of the actions our world politicians are taking. Trillions of dollars that will need to be repaid by our children and so on. How is that something to be optimistic about.

No need to be a black hole but surely you don’t want to come across as cheech and chong taking a little spending spree. This will get ugly and it will be painful to most people except perhaps the super rich.

#110 North Vancouver Citizen Jr. on 02.12.09 at 6:18 pm

#78 Houston

…Adopt me or rewrite your last will and testament…

my name is spelt…North Vancouver Citizen Jr.

#111 JET on 02.12.09 at 6:29 pm

#104 Arizona Parker,

Interesting link – thanks! I’ve bookmarked it.

The tool shows that it takes a long time for buying to be better than renting if prices declined year after year, and it takes a shorter time for buying to be better if prices increased year after year. No surprise. I do think that buying is eventually better than renting, but when to buy makes a big difference (and the tool doesn’t seem to be designed for that).

It does appear though that now is not the time to buy in Canada (or more specifically, Toronto), unless there is a very compelling problem (usually family or personal) that is solved after buying.

#112 SJ on 02.12.09 at 6:31 pm

#103 JET on 02.12.09 at 5:20 pm:
I’m not trying to ignore possibility of price drops, but rather separate the cash-flow / cost calculation from price prediction. Cost in buy vs rent can be clearly calculated, but price I can only guess.

From my own calculation, as well as yours if we ignore price drops, I can see that the carrying cost of a paid-off property is about $9-10K per year (tax, insurance, condo fees). The same unit can be rented for $1600 per month, or $19,200 per year. Saving from owning is approx. $9-10K per year.

So if you believe the unit will drop more than that per year (I fully believe so for the next year or two), renting is a better choice and vice versa if price drops less than $10K a year, buying is still better.

Thoughts?

#113 SJ on 02.12.09 at 6:37 pm

#101 EW on 02.12.09 at 5:00 pm

Can you enlighten me on how you got those prices and what exactly are you living in?

I just looked on mls and there’s a total of ten 1 bedroom rentals in the entire GTA that are <$1000, and I wouldn’t call those areas better than Yonge/Finch…

Are we talking about condos or a bedroom in somebody’s basement?

#114 David on 02.12.09 at 6:49 pm

Agent Terry thinks staying uninformed about and oblivious to financial matters provides peace of mind. That the real estate bull market wound up goring the real economy is now beyond doubt. Bankers lending billions of dollars for overpriced homes in a non existent housing market is not the problem. Knowledge is power and ignorance is bliss and people like that gladly choose the latter. People getting pink slips en masse at work do not need media reports to know how bad things are. Folks retiring this year will not need much more than a quick look at their statements to realise how bad things are. Those looking for full time employment will not need to stay glued to BNN to figure out that jobs are hard to come by these days.
Our economy is now a pile of smoldering ashes and the people with all those matches like realtors should not go around blaming the media for committing arson.

#115 Vancouver_Renter on 02.12.09 at 6:59 pm

#106 Marc…

Go do your homework before you make accusations. Commercial TV broadcasts off-air are free to view. We’re thinking of canceling our cable TV and setting up an antenna to save money as well. No theft is involved.

#116 Trekie2 on 02.12.09 at 7:14 pm

#106 Marc, he is not stealing..these are free OTA transmitions you can receive with a standard rooftop HD antenna you can buy at any electronics store….he didn’t say dish as in satellite. You may want to re-read his post before accusing someone of stealing.

#117 Ralph on 02.12.09 at 7:19 pm

There was a man who lived by the side of the road and sold hot dogs.

He was hard of hearing so he had no radio. He had trouble with his eyes so he read no newspapers. But he sold good hot dogs.

He put up signs on the highway, stood on the side of the road and cried, “Buy a hot dog, mister?” People bought. He increased his meat and bun orders. He bought a bigger stove to take care of his trade.

He finally got his son home from college to help him out. But then something happened. His son said, “Father, haven’t you been listening to the radio? Reading the newspapers? “There’s a big depression. The European situation is terrible. The domestic situation is worse.”

The father thought, “My son’s been to college, he reads the papers and he listens to the radio, and he ought to know.” He cut down on his meat and bun orders, took down his advertising signs, and no longer bothered to stand out on the highway to sell his hot dogs.

His hot dog sales fell almost overnight. “You’re right, son” the father said to the boy. “We certainly are in the middle of a great depression.”

Thanks for elevating our debate. — Garth

#118 Jmack on 02.12.09 at 7:22 pm

Andersonwalk.ca . advertised as 150K off original starting at 590K , to live in the Wilds of Surrey…..or as they call it. (South Surrey).

#119 donny on 02.12.09 at 7:42 pm

SJ;

Leaving out payments on principal doesn’t make sense. Remember you might have invested that money; if you’re renting, you don’t owe it to anybody. There’s also the possibility that you might make something on that principal elsewhere. Listen to me; there’s very little chance that you’ll make any money out of buying yourself a condo to live in any time soon. And rent can go down. Deflationary depressions are funny that way;) And don’t forget to pay your real estate agent and lawyer. I’m depressing myself here; I actually have a house I’m part owner of that’s about to go on the market in Mississauga. I’m not sure I’d be willing to make an offer anyone might accept, any time this year, if I was on the buying end.

#120 Jason on 02.12.09 at 8:02 pm

Global Climate Change is very real, and very much a threat. Only dogmatic fundamentalists (much like the religious nuts who dont believe in evolution) are the only ones to oppose this; while (again like evolution) the overwhelming majority of scientists come down on one side of the debate.

#121 donny on 02.12.09 at 8:18 pm

Samantha

A couple months ago they were destroying grapes in Niagara. Farmers couldn’t get their subsidies unless they released the glut on the market. We haven’t learned a damn thing since last time around. Not a damn thing.

#122 ThumbsUp on 02.12.09 at 8:42 pm

#100 MikeB on 02.12.09 at 4:50 pm
Thanks for the tip on ‘Over the Air’, will get one for sure.

#117 Ralph on 02.12.09 at 7:19 pm
interesting story.
But I think the end would’ve been more convincing if it reads:

… the father did not listen to his son and took out a loan and bought another bigger stove in anticipation of better sales that never came…

1 month later, the bank took away his stove…

Cheers.

#123 Rural Rick on 02.12.09 at 8:53 pm

30 years ago when the real estate market was much different we were told ” the difference between owning and renting was the down payment”.
An oversimplification perhaps but there is a lot to said for the ability to take a crowbar to that wall that had been bugging you at 3am in the morning rather than waiting around for the landlord to fix the john.
Having said that do not invest in a deprecating asset. Wait. 3x income.

#124 Bottoms_Up on 02.12.09 at 8:58 pm

It’s the right time to buy when real estate is increasing in value.

It’s the right time to buy when real estate is decreasing in value.

One of these statements doesn’t make sense.

#125 squidly77 on 02.12.09 at 9:49 pm

calgary home prices down $92,871
edm home prices now down $73,339

calgary homes deflating $5,136/mo
edm homes now deflating $3,651/mo
both cities are now crashing hard

Revulsion to debt is being shared by all market participants. Buyers don’t want to take it on even at relatively low interest rates, and sellers are tired of making payments.

In a market that is deflating, serious sellers get in front of the price declines and set their prices lower than their competitors. The alternative is to get overwhelmed by the competition, or run out of equity and let the bank foreclose.

http://www.canadian-housing-price-charts.235.ca/

#126 TheComingDepression on 02.12.09 at 10:08 pm

Not sure if anyone is following this guys riddles over the last few days. He is getting 100,000 hits a day. Some are stating riots tomorrow at 4. Bizarre (http://www.enterprisecorruption.com/) but many sites are trying to guess what is going to happen tomorrow or the next few days-Google “reinhardt’s riddles”

#127 JET on 02.12.09 at 10:09 pm

#112 SJ,

Let me ask you this: if you had 300k to buy that condo outright now so that you could save some rent, would you do it, knowing that the price will be lower next year and the year after? Or, would you put that money somewhere earning say 3% ($750 month) that could be put towards rent for a couple years.

Don’t get me wrong – I’m an owner since 1995; my modest house is paid off for a few years, I do enjoy the freedom of ownership and my costs are lower than renting a similar property, but if you ask me, I personally wouldn’t thinking of buying something right now, unless there was a very compelling reason.

#128 EW on 02.12.09 at 10:41 pm

To: #113, SJ:

Neither. We’re in an apartment. It was about $ 400/month ($4,800 /yr) when we first moved in back in 1992, I pay about $840 now ($10,080). The closest subway stop is York Mills.

Just wait, as R/E will go down a-lot. IMO, condos will head to UNDER 2.5 times the (falling!!) medium income (under $150,000 easy).

Same thing is happening California (5th largest economy in the world), RE is alreday down about 54 % (medium for California), some places close to 80%. Since they won’t bottom until around 2012 some estimates pout it at a 90% haircut by the time it’s all over (houses in CA to around $70,000). That is how bad it is. lol, but we all know the weather in places like San Diego isn’t as nice as here in sunny, Toronto.

Toronto will return to below the trend – BELOW 2.5 times medium income. Last time (1989-1995) SFH’s here went down about 30% and condos down about 50%…but it was no where near as bad as now. Give it a few more years and don’t go catching any falling knives. Wait for the blood in the streets and remember once it hits bottom it’s not going up anytime soon.

Be patient. I went through this in Asia too. Waited for R/E to bottom & the financial crises to hit it’s peak then bought (we have a house there and about 1000 acres, paid cash which we saved renting here in Toronto).

Like in many past bubble-bursts prices will go much lower than anyones imagines it can. The time to buy in Canada won’t be until around 2014. When everyone tell’s you it’s the worst possible investment you can make then have a look at it.

Remember we’re only about 15 % into this..wait for the other bubbles to bust (some much larger) like: commercial R/E (much more leveraged), Option-ARMS, Near/Prime/Jumbos, pension funds, bonds and so on.

#129 CalgaryRocks on 02.12.09 at 10:45 pm

Leaving out payments on principal doesn’t make sense. Remember you might have invested that money;

Please don’t ‘invest’ your house money, unless you are either ready to take a 40%+ loss on your capital, don’t like sleeping at night or know what you are doing (ie. you have insider info, haha).

I know my wive wouldn’t be impressed if I lost half the house money in the stock market, while I have her renting.

#130 jartann on 02.12.09 at 11:25 pm

Mike B #109

Anyone who uses the term “dude” is a little challenged anyway. Look, anyone can find plenty of people out of work right now. No one is denying that.

What is interesting is that, on this website and many others, people are quoting statistics about house sales, house prices, etc. and these are a pretty good indicator that real estate markets in most places are in the tank. This supports the gloom and doom point of view.

Then, when people quote stats that show unemployment rates, etc., the very same people say: hold on now, we can’t believe these statistics because they don’t tell the whole story. Just like the realtors who say the real estate statistics don’t tell the whole story.

A you tube video of 30 guys looking for work as firemen is not evidence, it is an anecdote. Running around saying that it is the apocolypse is just as ridiculous as saying all is well.

I agree that governments are borrowing for all the wrong reasons. I agree that stimulus packages are a waste of money and the Obamarama in the USA will be a disaster. I agree that people should be getting out of debt and should stay liquid. I would have said that 5 years ago.

Now, DUDE, you repeat the economic ignorance of “trade deficit” because you seem to think that “Canada” trades with country X, and Y, and unless we sell them more than we buy, we are doomed. What evidence is there of this silly notion? None. To keep it simple-I have an enormous trade deficit with my grocery store. I buy plenty from them, they buy nothing from me. Now, I could change grocery stores but this would continue. The only way to correct this is to stop buying groceries completely-which we can all agree is a very short term solution. So, why would these grocery stores keep selling to me if I am running up a big trade deficit with them. Because, you see, I pay for the groceries. I have a trade deficit and a capital surplus. Canada does not “borrow” money to pay for the trade deficit-it is truly appalling the level of economic ignorance that passes for analysis in the mainstream media.

Many of the poorest countries have trade surpluses. Why? The people there are so poor they can’t buy anything. And, to repeat, during the great depression that so many who visit this website insist is coming again, the US had a trade surplus for 9 of the 10 years of the depression. You can sell everything you have and starve to death, but die with a smile on your face telling the world that we all died with a trade surplus.

All things do pass. I am not suggesting that all is well, but too many people who have bought into the gloom and doom hysteria have become so convinced of this that anyone who attempts to suggest otherwise is written off as a naive polyanna. A little balance, a little perspective, will do more to understand what is happening and how we might adapt than running around whining that the sky is about to fall.

#131 Coho on 02.13.09 at 12:32 am

#108, Curious wrote:

“Garth (or anyone),

Could you please tell me why we didn’t just divide all the money used for the bailout and divide it between every taxpayer or Canadian and just send them a no-strings attached cheque?

Seems to me this would be about a substantial amount of money that would let the spenders spend and the savers save, while helping others get out of debt. Would this not, in effect, stumulate spending, ease credit by injecting cash into banks and getting bad debt off the books while creating jobs??”

Thanks for your thoughts.
____________________________________________
Curious,

You propose a well intentioned stategy, but our leaders pushing the bailout by order of the elite do not have good intentions (for average Joe’s) in mind. The bailout is for the benefit of the very rich and in particular, the banks.

The goal of the elite is make things worse for the people. Then as falling home prices (prices reset to 1990 levels) and rising unemployment cause many to be foreclosed on, the banks will buy up peoples’ assets (houses etc,) at the “new price”. However, the people will still be on the hook for most if not all of their repayment obligations at the old inflated price.

Welcome all to a future with no end of debt in sight, brought to you by the ruling elite by way of their puppet governments.

#132 Dan in Victoria on 02.13.09 at 12:42 am

#126 coming depression, Yeah been following it but man its hard to figure out.He pretty much got Monday,especially the 7 ate 9 riddle.We’ll see.Have a small construction related business here in Victoria its like someone turned the switch off on the phone,exactly like 1981.Talking to some of my younger colleges,they think it’ll be back flat out in six months,don’t think so, i’ve seen this story a few times.

#133 islander on 02.13.09 at 5:50 am

Jason the Zealot wrote “Global Climate Change is very real, and very much a threat. Only dogmatic fundamentalists…oppose this; while …the overwhelming majority of scientists come down on one side of the debate.

Overwhelming majority??? You’ve petitioned the world’s scientists? There’s nothing so foolish as a zealot. You and Garth (sorry Garth, but I’m with you on the economy but agin you in the global warming gobblebygook) like to think 150 pseudo-scientists signing a global warming petition represents world consensus. Our data goes back 150 years. The earth has been around, what, 6 billion years? If you believe in global warming you might as well belive in virgin births and miracles. You are, in short, a tool.

#134 Kash is King on 02.13.09 at 6:54 am

Here’s a tip for those switching from cable to antenna reception for HDTV, that falls under the Xurbia theme.

It’s a how-to video on Youtube…. haven’t built one yet myself because our indoor/outdoor antenna already picks up HiDef.

Coat Hanger HDTV Antenna!

http://www.youtube.com/watch?v=EWQhlmJTMzw

#135 Curious on 02.13.09 at 2:11 pm

#131 Coho

Thanks for your reply.

I am a young Canadian ready to invest for the first time. I always looked forword to the time I could finally buy my own condo in DT Vancouver. Bad timing.

I suppose it’s idealistic, but if that is the only thing holding a plan back that would save the economy, real estate and benifit EVERY Canadian why are we tolerating it? The middle class, I presume, far out numbers the wealthy/bankers/polititions ect…

Figured there had to be some complex reason why this very simple plan would not work. I never dreamed it couldn’t work in a democrocy. If this is how it really is, the we have bigger problems then a potential depression.

#136 ralph on 02.13.09 at 2:46 pm

Thumbsup wrote:

“#117 Ralph on 02.12.09 at 7:19 pm
interesting story.
But I think the end would’ve been more convincing if it reads:

… the father did not listen to his son and took out a loan and bought another bigger stove in anticipation of better sales that never came…

1 month later, the bank took away his stove…

Cheers.”

Alternatively, he could have set money aside from hot dog sales to have payed cash for a bigger stove or at least enough to make a fifty percent down payment.

Besides, he did not buy a bigger stove in anticipation of more sales but to meet existing demand.

Don’t be so negative.

cheers!

#137 john on 02.13.09 at 7:31 pm

Sorry for the change in topic but it would sure be nice to start a fund to help this guy out and make Harper and his pack of puppies accountable……….>>>>>>>Cadman biographer says he could sue Tories for reputation damages
1 hour, 16 minutes ago
By Alexander Panetta, The Canadian Press

OTTAWA – A journalist who recorded an infamous interview with Stephen Harper says he could sue members of the Conservative government over their repeated claims that he doctored the tape.

But facing a Tory party with deep pockets, Tom Zytaruk says he would need a lawyer willing to work for free on a defamation suit. He reacted with dismay Friday after hearing that the Conservatives had once again accused him of manipulating the tape – a charge they have levelled repeatedly over the last year.
The prime minister himself has made the accusation, both inside and outside the House of Commons.

#138 TS on 02.13.09 at 11:43 pm

The Bush administration was advised about the looming financial crisis long before it happened…and chose to ignore the warning signs.

http://www.columbiamissourian.com/stories/2008/12/01/analysis-looming-financial-crisis-was-ignored-bush-administration/

http://www.ajr.org/Article.asp?id=4668

#139 TS on 02.13.09 at 11:51 pm

137 john on 02.13.09 at 7:31 pm

John, it has been reported that Harper dropped his $3.5 million lawsuit because “he was going to lose”. All of this points to the issue being little else than more political bullying from Harper.

http://www.ctv.ca/servlet/ArticleNews/story/CTVNews/20090206/cadman_suit_090206/20090206?hub=Politics

http://www.theglobeandmail.com/servlet/story/RTGAM.20090206.wPOLcadman0206/BNStory/politics/home

#140 TS on 02.13.09 at 11:59 pm

CEO’s of leading global companies see slow, 3 year turnaround from current recession:

http://www.current.com.au/2009/01/28/article/SUNXMUTXOX.html

#141 TS on 02.14.09 at 12:08 am

Some ideas from Conrad Black on how to deal with the recession… he has lots of time to think about such things….

http://network.nationalpost.com/np/blogs/fullcomment/archive/2009/02/07/conrad-black-some-radical-proposals-for-recessionary-times.aspx

#142 TS on 02.14.09 at 12:09 am

Some tips on how to “recession proof” your business:

http://www.morebusiness.com/8-ways-recession-proof-business

#143 Mongrelpuppy on 02.14.09 at 9:15 pm

My sympathies folks..but tuff it out..think outside the box, think eco-technic..collapse1981-2; I was a field project supervisor in Surrey, BC..on prefab industrial commercial projects with a full year of projects on the board. Jul 81, the whole company went into mothballs along with all the unfinished projects. the boss engineer drives out to see me at 7AM just as i was cranking up the do-list..handed me a pile of layoff notices, mine was at the bottom of the pile. he was most polite, a gentleman and after the numb reality set in i had to agree. all the big money was panicking, at the prime rate, stopped cold it did. I panicked..house, wife, mortgage, the full catastrophe. wife was in Maui with the kids at a summer cottage. she was smart..she stayed there.
i hit the phone after i had handed out good news to everybody ..found a job with a company that had just landed a oil patch contract and i was the only guy out of three thousand that had actually ever been to SE Asia and knew were the country was.
short story..that empire also went down like a house of cards in slow motion over 6 months. quite fascinating in retrospect. i’m an old jungle warrior. i’ve seen worse. and as melodramatic.
home in Washington State went from 150M down to below the 57M mortgage. the bank took that. the market investments, a few stocks collapsed.. the rest i gave to the missus. My Vancouver employer went bankrupt, I was on the edge of a jungle in a Brunei oil patch job based out of Singapore partner..3 months of wages..about 10G disappeared into the international corporate matrix. I’d saved my perdiems by living native and that covered my ticket back. i got some tools and a few clothes out of the house. my neighbors retrieved the large library before the bank snapped the balance.
hmmm..from mansion, resort cottage, fast car, big job to two suitcases. interesting experience.
got drunk and stoned for a month on the mountain slopes of mount Baker and went back to work. started again from scratch at 40. maybe not as rich but a heck of a lot more practical.
the old paradigm is busted folks..i expect the species will prove the smarts to fix it.

#144 Mongrelpuppy on 02.14.09 at 10:00 pm

sorry..me again..intriguing discussion..i’m taken by 51, Samantha and 55, Cara, both mention community..truly the bottom line for each of us..
but the scale of our mutual predicament will give us great incentive to resolve that one.
finding the community scale investment language will be part of that i expect.
can i suggest Bill Bonner’s post on the Daily Reckoning..some folks will remember his “Empire of Debt” book from 2005..i like the part in his book where the citizens of the Americas find out that their wars for peace and freedom are financed by third world pittance wages. a charming Twain like cynicism..
http://www.dailyreckoning.co.uk/economic-forecasts/bankers-fast-one-24545.html