Ya think?

before

ritz-big

after

ritz-hole

There was a conference of real estate heavies in Toronto on Wednesday. The shocking conclusion reached by Scotiabank economist Adrienne Warren and Royal LePage CEO Phil Soper, as reported in this Toronto Star headline:

Real estate boom over, experts agree.

Ya think?

This, of course, is why we have a professional media. Well, maybe we used to. I see that CanWest Global is on the ropes and has TV stations for sale nobody wants. This week CTV said it would let two of its television stations in Ontario just die. The CBC asked Ottawa for $60 million more to make up for lost ad revenues (mercifully the feds told the corp to twirl). And in the US, the San Francisco Chronicle was the latest big newspaper to announce its own death.

But back to real estate. Yes, Adrienne and Phil, the boom is not breathing. Once again buyers are drivers. They can ask for, and get, conditions for financing, insurance, home inspections and even the sale of another home. As the faux Spring market arrives, sellers will get still more vexed as the number of competing listings zooms skyward, and prices drop as supply overwhelms demand.

So, if you do not need to sell your house now, don’t. If you’ve been waiting to buy, start sniffing. But be advised you’ll certainly do better in August or September than you will in May or June.

Meanwhile this week there’s a big honking hole in the heart of Vancouver to provide graphic evidence of the housing collapse about to beset that lovely, unaffordable city. The $500-million Ritz-Carlton hotel-condorama downtown has died a death forecast on this blog months ago. The 60-storey soaring glass monument to bad judgment on West Georgia will remain a soggy excavation until somebody fills it in for a parking lot.

The developer is blaming everyone’s favourite villain, ‘worldwide economic turmoil’, for the demise. The real culprits, however, are our old friends Greed and Stupidity, since even they could not convince enough Vanbots to spend between $1.4 million and $28 million for a box in the sky. It’s also a loss for local legendary condo shill Bob Rennie who was marketing the project and will now have to return to feasting on the few first-time homebuyers left washing ashore.

Vancouver, of course, has major problems because of the big pile of rocks which prevents common sense from blowing west. Average house prices have come down by over $125,000, and there’s an equal amount yet to be peeled away. Even then, the city’s housing stock will still be unaffordable to most of the people living there. The trip back, once the 2010 Olympics are over, will take at least a decade.

Meanwhile, shall we start the death watch on the Toronto Ritz-Carlton?

GTA house prices in the first half of February were down a few hundred from the same month last year – which was a disaster because of Toronto’s bone-headed gouging real estate tax. Prices dipped marginally in the last few weeks, and in some areas of the city where the snow has vanished, buyers have been cruising around in small packs. These are the delusionals who now think it’s a great time to buy since the average home price has dipped 18.3% from the peak.

I guess they haven’t heard about the other 18%.

Let’s wait for the headline.

169 comments ↓

#1 JO on 02.25.09 at 8:40 pm

Those guys would face one of two outcomes if they came out with the forecast they really believed in: 1) They would get “re-assigned” to another job…maybe cleaning toilets, of course prompting them to resign, or 2) A press release would be issued by their firms saying they have left the company to pursue other opportunities.

House prices have a long way to go. We are still overvalued on several measures. Methinks a min decline of 30 % in most GTA areas is a given, but a real potential for 40-50 % exists.

Anyone asking RE/bankers for “advice” needs a head shake.

THe ongoing contraction of credit and the resulting squeeze on asset prices is very powerful and should be with us for most of the next 2 yrs at least. The most overleveraged consumer society in history faces the crisis of a lifetime. Home price declines will reflect the scale of the crisis. The prior “boom” (an illusion of debt” will result in a bust that should be roughly equal on the downside.

Caveat Emptor
JO

#2 Some Guy. on 02.25.09 at 9:14 pm

Garth – you mention that by Aug/Sept the RE market in Toronto will continue to erode but how do you feel about the winter and early ’10? Im trying to time my entry into the market and but I’m still holding out for another 20% decrease (fingers crossed). Obviously I don’t expect an uptick of any sort but do you see a flatline at that point or a further deterioration?

#3 newboyo on 02.25.09 at 9:17 pm

The US govt’s stress test asks the banks to figure out the impact of a 20% drop in prices. Is that where we are headed?

#4 Eduardo on 02.25.09 at 9:19 pm

http://www.bloomberg.com/apps/news?pid=20601109&sid=afWw27XA56jM&refer=home

Slightly off-topic but related…

#5 Toronto C9 Renter on 02.25.09 at 9:20 pm

That too bad about the Vancouver Ritz, hope all deposits are reimbursed quickly.

Some of the supertall condo developments here in Toronto will no doubt succumb also

– 1 Bloor won’t start, it will be a parking lot.

– Shangri-la is just a hole, doubt it will become much more.

– Trump is now above ground level so hopefully it will complete. We finally got rid of the unfinished “Bay Adelaide stub” eyesore on that block after 15 years, would be a shame if it is replaced with a “trump stump”

#6 Cendrine on 02.25.09 at 9:24 pm

Vexed? Oh, I’m vexed alright. 10 showings in the last six weeks and no offers. I want to sell this spring and move to take advantage of some work opportunities in my field in another city (lots of work). DH is retired.
Reducing has been a sticky wicket between me, DH and the RE agent. I’m for reduction and they say wait.

Meanwhile, the starter homes seem to be moving right along and nothing in our neighbourhood or across town in our price range is moving. BTW, I have no granite or stainless steel, either.

Just a note from the front lines….

#7 Paul on 02.25.09 at 9:32 pm

Garth, would you make up your mind. We just listed out house recently to try and get our equity out while we still have some. We don’t need to sell but will have to sell in a couple of years.

You have a small window. Jump through it. — Garth

#8 Roger on 02.25.09 at 9:33 pm

Macleans magazine has a brutal article this month discussing the housing downturn. The front cover will be a shocker for those reading it in the lobby of their doctor or dentist. If you want to read the full article click my name.

#9 KJ on 02.25.09 at 9:35 pm

I’ve been watching the Kelowna house prices come down steadily for 12 months, since we first decided we wanted out of Vancouver. Thankfully we have no house to sell. What I am seeing is that houses in certain areas which had listed in the range of $450K to $500K are now being listed at the mid to higher $300’s K AND a lot of these homes are empty. In Vernon the glass plant has closed, and now that is followed by the Pope and Talbot mills in the area, one to close permanently and the other is and wait and see if it will open again. (1500 direct employees laid off) So we will be happy house hunting vultures in Kelowna come September for sure. We wish we could wait longer, because we believe the prices will continue to decrease, but hey, that’s the relocation date. Unless we decide to rent…there ARE a lot more homes for rent in the local papers than there used to be…HMMM.
I was talking to a land developer on the plane on the way home from Calgary, whose sister sold her house for $300 K less ($900K to $600K) in the South Surrey White Rock area just recently. Well everyone has a friend with a bad story these days. In fact, a friend of ours who works for a smaller newspaper of Canwest, just got laid off after 30 years. No only did she lose her job in management but, all of the flyers insertion department (30 people or so)were also laid off as the newspaper delivery depot was moved and the flyer insertion mechanized. And the delivery drivers for bundle drop offs to the carriers take a salary hit too.
As for deflation..I sure don’t see it at the grocery store. Prices climb ever higher, even at Superstore. But ya know, when I was shopping today I was approached by 3 homeless people asking for handouts, that’s never happened to me at that location before. People are not as friendly, shoppers are grim faced, stores seem emptier. Our daughter who is working hard to save for college, had her shifts cut back so drastically at Choices, that she had to go find another job…thankfully, people are still buying clothes. It just has a different feel out there all of a sudden.
On the BNN news this morning we heard that Ruger has no inventory left to sell of small arms and that Smith-Weston’s share value had increased over 50% year over year. Add this to the fact that home safes are sold out or hard to find in stock…what does all this tell you? Its getting scary!

#10 Da HK Kid on 02.25.09 at 9:37 pm

Well we can all forecast an idea of when the housing bottom may occur in the US and subsequent bottom in Canada it is very clear from Bernanke’s speech that all effort-stimulus will be focused back on banks after stress tests are done.

What does this mean, more and more money via the taxpayer and another 1.5 years of dealing with the financial crisis and then the bottom of housing can be realized.

WHY WOULD YOU BUY REAL-ESTATE OF ANY KIND!!!!

1. No bottom in sight
2. What is the return in % and time when it does
3. Will you be able to buy (banks raising the bar)
4. Taxes on house ownership
5. Fair Valuations on property tax will lag 2-3 years behind current value.

What else do you need to know. You can drive around looking a property but honestly that neighbourhood you like may be foreclosed next month or next year.

Stay on the sidelines, work hard at your job, keep positive and stuff as much cash in your pockets now.

Again, you win either way! I’m flush, out of all real estate, no debts and sitting on cash, little bit of gold and 3 months of supplies.

I just negotiated my rent down from $7700 USD/m to $5200 USD/m, and neg. a short renewal in 6 months so I can take it down to $4200/m. That’s 45% off from the high in Sept 2008.

You may ask, wow, this is high rent, but this is my house in Hong Kong and all is relative to regional earnings but just an example of how you can rent instead of buy, negotiate like a demon and stuff the extra in your pocket while the owner takes all the heat!

#11 Smith on 02.25.09 at 9:46 pm

Cendrine,

I’m no expert like our famous friend Garth, but 10 Viewings with no offers?

If you’re serious about selling your house, consider pricing agressively.

#12 Sail1 on 02.25.09 at 9:49 pm

#2 Some Guy.

Why do you want to jump into the market? Just rent for the rest of your life, you may be better off. Didn’t you read the book?

#13 Cendrine on 02.25.09 at 9:59 pm

Pricing aggressively….

Ours is a 4 bed/3 bath bungalow with finished basement priced at 279K, nearest are 4 bed/2 bath at 259K (also no offers), a 4 bed/2 bath at 299K (no offers).

To get a spring sale – 255K? (I’d be happy with 250K).

Opinions?

#14 popeye the sailor man on 02.25.09 at 10:08 pm

I’m still on the front lines of selling our house on South Vancouver Island. The offer was 98% of our new asking price down 15% from our list in Nov 08, but the inspection showed some venting problems in the roof so there is some condensation and some slight mold, quote to deal with problem $3,000. Buyer asked for full amount, then the septic inspection, needed a new distribution box (not uncommon) $400 again I’m paying full amount. Then the Heat pump Inspection, While I was at sea with work, a few earwigs crawled into the contactor and indirectly cause the coil in the compressor to burn out. Nearly killed the deal, but another reduction cured that also, now I’m waiting for the fax to go off tonight with the final conditions to be removed. Final closing date April 1st.

Fax came in; I signed my part and sent it back.

Sold! ………….? Lets hope so.

#15 Investx on 02.25.09 at 10:12 pm

LOL!

Of course the ”boom” is over if the meltdown has started.

#16 North Vancouver Citizen Jr. on 02.25.09 at 10:14 pm

Garth, 1…2…3

1/
See the top picture… the vista that is…that is called “mild climate” salt water or ozone…live here and one can add 10 years to your life.

2/
“”Vancouver, of course, has major problems because of the big pile of rocks which prevents common sense from blowing west. Average house prices have come down by over $125,000.””

…You not referring to the 80%, long established free and clear home owners in Vancouver and Vancouver Island, whom you are desperately trying to get to relocate back to Ontario to bail you guys out.

3/
Many Financial pundits now agree that Vancouver Proper will in fact become the next Financial/Trade/Leisure Capital of North America.

#17 Jim on 02.25.09 at 10:15 pm

Garth,
Vancouver has a long way to go. You can rent a nice two bedroom on the west side for $1500/mo. To buy a similar condo would cost around $450K. At 6% the monthly outlay would be around $2800-$3000- almost double of what it would be to rent. Why would I rush out and buy something that will have constant increases in condo fees, but deteriorates over time?

Jim

#18 Bill Muskoka (NAM) on 02.25.09 at 10:16 pm

Garth, Hmmmmmm..I guess the Eagles song ‘There’s a Hole in The World Tonight’ is applicable in Vancouver as well, eh? ;-)

#19 poorguy on 02.25.09 at 10:26 pm

#12 Sail1

There is nothing wrong with renting for rest of your life.
As a matter of fact ,I am thinking in that direction too.
It provides you the flexibility and relieves you from worrying about market ups and downs.Its a lifestyle.
Dont forget,we were in big dellusion of property boom.
My personal feeling is that we will never see the type
of price appreciation we saw in last couple of years.
That was a bad dream of century.
Good luck!

#20 UBC Frank on 02.25.09 at 10:28 pm

A constant parade of people coming to see your house and nobody making an offer means your price is too high – is that not painfully obvious?

The problem with sellers today is that they still have their heads up in the bubble and refuse to see the facts on the ground. They may as well have their fingers in their ears while yelling “la la la la la!”

Those who don’t get ahead of the curve immediately will be stuck with their properties for years, thanks to their ridiculous notions of what they “think” it’s worth based on last years assessment.

Times have changed, and changed quickly. Either get with it or or let your greed get you left behind.

#21 TS on 02.25.09 at 10:40 pm

The following is a link to more information about the Ritz cancellation referred to in Garth’s posting:

http://finance.sympatico.msn.ca/investing/news/businessnews/article.aspx?cp-documentid=18120865

#22 T.O. Sub on 02.25.09 at 10:40 pm

The Toronto R-C is too far along. It’s beyond the point of no return. Pouring level 22 now. Won’t get canceled.

#23 Kevin on 02.25.09 at 11:21 pm

Cendrine

Drop your price, do everything to get a quick sale and get out while you can.

Worrying about getting an extra 10% at this point is only going to get you in trouble. You need to jump the curve before you ride it all the way to the bottom… in a couple years getting even $240K would seem like a wet dream.

#24 Increasing that 1% on 02.25.09 at 11:23 pm

#14. Popeye the sailor man

Congratulations. Hope it all works out for you and buyer. Can be a nightmare to sell, but I do hope to be in the same boat (he he) soon.

#25 Harold on 02.25.09 at 11:24 pm

Not everyone lives in Vancouver, Calgary or Toronto. In many smaller places prices never rose to insane levels and are not falling by much, maybe 10%. Maybe 8 or 9 million people live in those 3 large cities, the other 24 or 25 million Canadians aren’t freaking out like the doomsayers I see on this blog.

As long as I’ve been alive, cities like Toronto have always been too expensive for my income, and I make a decent living. That’s why I chose to live in a smaller town and for my part am happy that I did.

I know Toronto likes to think the world revolves around it but come on, there’s whole other world out there that doesn’t give a s**t about the place.

#26 Jake on 02.25.09 at 11:40 pm

Congrats #14 Popeye

#27 CS on 02.25.09 at 11:47 pm

We had about 15 showings in a couple of months, not one offer. 2 yr old house, 4 bd/2 bath, laminate throughout, fully fenced 1/2 acre, full length deck, custom wood kitchen cabinets, woodstove – we pulled it off the market after listing for $239,000 for months. House next store has been on for nearly a year – has dropped by increments from $290,000 to $249,000. Had 1 offer of 200,000 that they turned down. If your nearest offer is $259,000, you need to undercut that if you can.

#28 Vankover on 02.25.09 at 11:51 pm

Hi Garth – love the article…the Ritz Carlton disaster in Vancouver turned into a lottery win for those folks who are supposed to be getting their money back….

#29 barb the proofreader on 02.26.09 at 12:01 am

Garth,
Self-sufficiency will be even more important in just a few years.
http://www.winnipegfreepress.com/opinion/westview/oils_not_well_in_canada-40273877.html
“Canada is prohibited from using its oil to supply half its citizens during international shortages. No other country is forbidden from using domestic resources to provide for its own citizens.”

It is insane that Canada does not have a Strategic Oil Reserve and that we have lost control of our resources to a foreign power. What will people in eastern Canada do in an oil crisis?
http://www.progressive-economics.ca/2008/02/06/does-canada-need-a-strategic-petroleum-reserve/
“It is time for Canada to urgently join all other industrial countries in establishing strategic petroleum. It is irresponsible to let Eastern Canadians freeze in the dark.”

Shortages and crisis are inevitable. Going solar, especially in eastern Canada, is a no-brainer now.

#30 G on 02.26.09 at 12:03 am

Good luck Popeye, unlike you, many people won’t bother to reduce their price cause they don’t want to “give it away” and will chase the market down all the way. Take what you can get in this market. Vancouver Island is absolutely tanking. So much for being insulated from the market downturn.

#31 G on 02.26.09 at 12:05 am

Cendrine, reduce to 250k to get it sold and then reduce another 20k a while after that. No point having it hang on the market for months.

#32 CashMan on 02.26.09 at 12:09 am

Slightly off topic…Let’s talk about sanity finally starting to come back to cottage properties in Ontario this year…

There’s a small window of selling opportunity (May-Oct) each year. I would wager spring listings will come early, fast, and furious this year, but most people are still smoking crack when it comes to realistically valuing their properties. And RE agents are particularly greedy arrogant and disillusioned in that market. Like 08, there will be limited sales action, and aggressive pricing will finally kick in after August – driving the cottage market into stage one of a major, multi year fall.

Alot of the cottage property bubble is Boomer fuelled. Now that markets have creamed their RSPs many will be forced to seriously consider liquidating cottages to shore up their balance sheets. Because it’s discretionary, it’s going to be one of the first things to go.

Cottage ownership is the “Canadian Dream”, so many levered in who really have no business owning a second property (try driving the 400 ‘parking lot’ on any given summer weekend). If they face a hit to their income through layoffs, mortgage defaults aren’t too far away, next step: liquidation – annual property tax levies alone assure that outcome.

The median resale price for Muskoka/Haliburton Cottage properties was approximately $255,000 in 2004 Q3, and increased to $375,000 in 2007 Q3, an increase of 47% (Cushman/Wakefield/LePage report). That’s a massive increase – what goes up that fast will surely come down hard.

The prices being asked from 04-08 for hillbilly shacks on weedbed patches of G-Bay ‘waterfront’ were often in the 500K range – like Mr. T, pity the fools who ponied up then -they’re now sitting on a rock worth half that when the smoke finally clears. Some will be unable to sell because water levels have rendered their properties worthless.

1990-1998 saw the last cottage bubble unwind – we’ll see what happens this time….

In the meantime, I’m waiting patiently, cash in hand.

#33 Jeff Smith on 02.26.09 at 12:20 am

Yep! read that one couple of days ago. Pretty scary. Halloween-like, oh wait its only February.

Just read another scary piece. Insurance companies aren’t stable either. The article refers to the US but we know that we are probably only a year or two behind them. So you thought you are protecting your families? eh?

http://articles.moneycentral.msn.com/Investing/CompanyFocus/the-next-big-financial-meltdown.aspx?ref=patrick.net

#8 Roger on 02.25.09 at 9:33 pm

Macleans magazine has a brutal article this month discussing the housing downturn. The front cover will be a shocker for those reading it in the lobby of their doctor or dentist. If you want to read the full article click my name.

#34 Observer on 02.26.09 at 12:46 am

Funny about a local RE that you referenced, B.R. A few months ago Mr Shiller expressed his uneasiness around the housing market, particularly Vancouver. When a local radio station went to their RE expert, B.R., his response was that Shiller didn’t know what he was talking about and pointed to the Ritz as an example of how strong the local market was. I remember thinking, oh the arrogance, Shiller not knowing what he is talking about?

#35 Bailing in B.C. on 02.26.09 at 12:52 am

#14 popeye the sailor man

Classic! Closing on April (Greater) Fools day!

Good luck!

#36 Garthlover on 02.26.09 at 1:29 am

Cendrine said: “To get a spring sale – 255K? (I’d be happy with 250K).

Opinions?……”

MY ADVICE: Honey, you KNOW the cure yourself. If you’d be happy with $250k, THAT SHOULD BE THE ASKING PRICE OF YOUR HOME!

Believe me, if your house is the best-priced on the block, and has the extra bath, etc that you describe, yours should sell first , after you price aggressively and realistically, that is!

Who knows? There are still a few greater fools out there who could well start a bidding war on your home. You could end up with more that you asked for. Try it

#37 ashan on 02.26.09 at 1:32 am

I am not surprised to see developers pulling out of Vancouver; many of these condos are ridiculously overpriced.
Is this the Hotel Georgia development or is that also a stop – build?

#38 AuntySpike on 02.26.09 at 1:37 am

Thanks Garth for outing the Ritz Carlton story! Speaking of gross excess, in Victoria we have local businesses ga-ga over the prospect of a mega-yacht marina in the outer harbour. Many people are sick of the pimping of Victoria, the belief that selling the city to these bloated boaters is an econmic shot in the arm . . . sigh
What are your thoughts on developments as new marinas, conference centres, hotels?

#39 Dan on 02.26.09 at 1:49 am

I like Garth’s Blog, however in 1980 the average price in Vancouver was 125 thousand dollars. What is the average price today?

30 years ago? — Garth

#40 squidly77 on 02.26.09 at 3:54 am

still hoping for a stock market bounce
wanna jump in on the suckers rally..dont
http://www.generationaldynamics.com/cgi-bin/D.PL?xct=gd.e090226#e090226

scared yet..

#41 squidly77 on 02.26.09 at 4:05 am

TSX..4,200
DOW..4,700

#42 Mike (authentic) on 02.26.09 at 5:22 am

Re; “The 60-storey soaring glass monument to bad judgment on West Georgia will remain a soggy excavation until somebody fills it in for a parking lot”

What was there before they tore it down? Was it more useful than a future dirt parking lot?

On the media front lines: Ad revenue for us (and what we hear from other press) is down 50% over last year. Companies are just not spending on ads right now. For me, I’ll take less ad money if they can keep another few workers on the job. But you see what less ad revenue does to newspapers, jobs/companies are lost. It’s amazing how interconnected everything really is.

Garth et al.: If we are 18-24 months behind the USA in RE, do you then see us on the same delay after the US recovers in the future? Or do you think once the US recovers we will have a quick “false” recovery? Humm…

#13 Cendrine “Pricing aggressively….Ours is priced at 279K. (I’d be happy with 250K). Opinions?

Yes, price it at $250k and don’t budge much but work ANY OFFER that comes in, don’t reject a low ball till you work it. SELL it before the other homes drop their price and you’ll be following them down, lead, don’t follow to sell. :)

Quite shocking LOW house sale numbers out of the USA and UK this week.

UK House Prices Drop More than Expected
“sharper than expected fall, down 1.8% m/m and 17.6% y/y. UK Nationwide House Prices Fell Most Since 1991 in February.”
http://www.dailyfx.com/story/market_alerts/fundamental_alert/U_K__House_Prices_Drop_More_1235632101270.html

US house prices fall back to 2003 levels
http://business.timesonline.co.uk/tol/business/economics/article5797716.ece

Mike

#43 popeye the sailor man on 02.26.09 at 6:53 am

The people that committed to buy at the Ritz-Carlton hotel-condorama at the pre completion prices at the peak of the market are now off the hook and should be happy they didn’t end up like Riaz Kassam in the Macleans magazine article (Mar 2nd 2009 page 28). This will save hundreds people from financial ruin. Hopefully they and everyone they know learn from this close call.

#44 Shopping in SK on 02.26.09 at 7:30 am

For good reason, everyone is chatting about BC, AB and ON. My question is re: SK. (I am sure everyone forgets about us and assumes we are frozen in the ice, not to emerge until spring!)

In Saskatoon in the last 3 years, our housing prices have doubled. Just last night, I was informed from a financial advisor that things in SK are perfectly fine in all areas. He acknowledged that the housing market is slightly decreasing, but things would rebound by the fall. A great time to buy. According to him, we are the next big Canadian city.

Many people here believe that at any moment the rest of Canada will come rushing into the minus 30 to buy RE at exceptionally low prices. I think they are forgetting that we don’t have the population, employment, or cheap house prices. There was a reason no one lived here before and our Premier had to advertise in AB that SK had cheap RE! Our wages have not increased. Just our RE prices.

I am skeptical. Any predictions for Saskatoon’s RE market? As per usual we are behind the times. Our Sask-a-boom only started 2-3 years ago. How long will it continue? When will it end? Will the results be worse than most cities because we are so small and cold?

#45 Shopping in SK on 02.26.09 at 7:44 am

ps. Garth, any hopes that you will be coming here?

#46 Toronto C9 Renter on 02.26.09 at 7:48 am

#32 Cashman said: “..1990-1998 saw the last cottage bubble unwind – we’ll see what happens this time….”

Agreed — Ontario cottage country is in for a massive correction. For one thing, prices at the highest end (Rosseau/Joe/Muskoka) is driven by Toronto financial types and we know where their incomes are going!

Having said that, there are still some lesser known but awesome areas where prices are dramatically less — Kingston / Land O’ Lakes, for example.

Personally, my take on cottage finance has always been to approach it as you would a depreciating asset (like a car), rather than an “investment”. i.e., only buy what you can afford, and don’t expect you’ll ever see a return — just enjoy it when you have the time. This mindset has protected me from ever going near the trendy lakes.

Only downside to my philosophy is that, as a result, I don’t have Goldie Hawn & Steve Martin as my cottage neighbors. Guess I’ll just have to live with that!! :)

#47 Jonathan on 02.26.09 at 8:14 am

Too bad for Vancouver. It always hurts when you lose flagship buildings.

I hear alot of condos are reducing the number of levels mid-project since they can’t sell all the units.

There are a few flagship projects in Toronto. Anyone heard word on the Trump tower? At 280m(ish), it would be ashame to lose that one.

#48 Someone on 02.26.09 at 8:29 am

Mike (authentic) “On the media front lines: Ad revenue for us (and what we hear from other press) is down 50% over last year. Companies are just not spending on ads right now.”

Revenues down anywhere from 20 to 50% per paper here.

#49 North Vancouver Citizen Jr. on 02.26.09 at 8:38 am

Factoids…

1/
More North American cars are manufactured in Ontario than in Michigan?……Ontarians, do you think the U.S. will happily continue with this scenario?…..I guess its better to keep on worrying about BC…it makes Ontarians feel better about themselves.

2/
The T R C in Toronto is different than the V R C…because Toronto is the Canadian Centre of the Earth.

3/
“The Caisse de dépôt et placement du Québec” demand a Federal bailout?….Les Quebecois are deservedly supperior to the rest of Canada.

4/
Manhattan inventory now at 11,000 listed homes, condos and coops in manhattan which is almost 3x normal…..inventory actually grew 1200 units over the last 30-days…..sellers are now adding 1500 units per month to listed inventory…..that means…..4 years of inventory if no new listings added.

5/
Bruce Langereis, president of Delta Land Development Ltd., the developer behind the Residences at Georgia, another high-profile office, residential and hotel project destined to rise on West Georgia Street.

That project is being largely internally financed, Mr. Langereis said, with Delta Land committed to the tune of $100-million.

“We are pouring concrete,” Mr. Langereis said, adding that he is balancing revised constructions costs with a planned completion date of 2011 or 2012. “I tell anyone who has doubts to come to the site and see it themselves.”

…Ontarians, open your eyes, Eastern North America’s economy is imploding…get your own house in order, stop worrying about Western Canada…

#50 Bill-Muskoka (NAM) on 02.26.09 at 8:48 am

Gee, anyone wonder (or really care) how ‘The Donald’ is fairing through all this? Wonder what his REAL worth is now? I would guess slightly above worthless using dog crap as a baseline (only because it has fertilizer value), and definitely below worthless as a human being.

Maybe he will jump from one of his monster towers and be a really Big Hit on Broadway, eh?

#51 Might As Well Be Concerned on 02.26.09 at 8:53 am

GM Underfunding of pensions

OK so GM Canada is looking for help because their Canadian pensions are underfunded by about 4-4.5 billion.

but according to this http://www.bloomberg.com/apps/news?pid=20601103&sid=aBldNfJ_zYhI&refer=us

their total pension is undefunded by 12.4 billion.

What the heck? Did they intentionally underfund the Canadian side more because they felt that there was a better chance for the socialist taxpayers to take care of the balance? Whether or not the 4 billion is or is not included in the 12.4, there’s something really fishy here.

These guys are not to be trusted and will create a hole like the Ritz Carlton project for the Canadian taxpayer. Despite the contagion effect of the parts suppliers, this company must be cleansed inside out.

Let them go down.

#52 David Bakody on 02.26.09 at 8:54 am

Off topic (kind-of) My wife has worked elections for years (long hours and no breaks) and a T4 slip just arrived from the province! …… of course we will pay the tax …. she just said that was her last time. And for what it is worth this fine gal was punctual, friendly and most articulate with hand writing and spelling skills beyond reproach.

I received a call yesterday from a ode Navy buddy who sold last year in Vancouver and rented a place on the Sunshine coast . Boys oh boys he is some glad he made his move last year, as you mentioned Garth he said houses have dropped 20% and he said they would drop another 20% . This man is not a computer guy so he gets most of his info from the street and coffee crowd ….. So there you go.

#53 lgre on 02.26.09 at 8:57 am

“This will save hundreds people from financial ruin. Hopefully they and everyone they know learn from this close call.”

Don’t hold your breath, they will go out and buy some other overpriced cubicle in the air.

#54 Makeorbreak on 02.26.09 at 9:03 am

Cendrine, get your house off the market for a while and then re-list at $250.000. You will have the visibility of a new listing thus generating more traffic. My advice would be to take anything you can right now, because months even weeks from now, it might be too late and you will never be able to sell your property. A quick sale would be ideal. Sales with a posession date too far in the future is dangerous because the buyer can change its mind even at the last minute. That happened to a friend of mine. The deal was sealed and when he went to the lawyer’s office, the buyer was not showing up. The lawyer called the buyer and the buyer said he was getting out of the deal. So my friend was told he could sue, but really, who has the means to sue these days?

#55 CalgaryRocks on 02.26.09 at 9:08 am

Macleans magazine has a brutal article this month discussing the housing downturn. The front cover will be a shocker for those reading it in the lobby of their doctor or dentist. If you want to read the full article click my name.

I will buy this issue and archive it next to the one they published in May ’08 that has dire stories of 300$+ oil and predicts the end of air travel. Maybe I’ll read it on the plane on my way to Europe this April. ;)

I love macleans, every month is end of the world month.

#56 wjp on 02.26.09 at 9:14 am

#40…the stock market is usually six months ahead of the economy, this person’s reasoning is faulty as some of the present downturn has already been discounted. It could go further but to base it on what has already been discounted would be disingenious…

#57 Boombust on 02.26.09 at 9:19 am

“The trip back, once the 2010 Olympics are over, will take at least a decade.”

Why on earth would it take Vancouver 10 years to return to “normal”?

It will likely fall further and faster than that.

#58 Dummy on 02.26.09 at 9:21 am

Dear Garth:

I don’t know how to reconcile your figures of Toronto real estate drop of 18.6% with an index drop as of November ’08 of ~3.5% on the Teranet-National bank house price index for TO; http://www.housepriceindex.ca/Default.aspx

Would you care to explain the difference; it appears unlikely to be only a matter of a couple of months.

Toronto high mark: $398,687, April 08. Current, $343,362. Price drop: $55,055 or 13.8% from peak of nine months ago, or 18.3% annualized. The Teranet-NB index is wildly inaccurate. — Garth

#59 Kettle...Pot Calling on 02.26.09 at 9:22 am

I don’t know about you guys but I am appalled that Bakody’s wife has to pay income tax on her earnings. She should get a free ride while the rest of us pay income tax for her. After all, she was punctual. Riot starts at noon, who’s in?

#60 wjp on 02.26.09 at 9:22 am

# 16 & 49…sounds like weeny peeny syndrome!

#61 smwhite on 02.26.09 at 9:30 am

#49 North Vancouver Citizen Jr.

…Ontarians, open your eyes, Eastern North America’s economy is imploding…get your own house in order, stop worrying about Western Canada…

Make sure you use the extra fluffy kitty kleenex to wash away those tears.

Any moron or Ozzie Jurock that thinks you can have the average home price rise to ten times the average family income and be sustainable has been eating paint chips, again.

#62 Jonathan on 02.26.09 at 9:33 am

Some Guy says: “Just rent for the rest of your life, you may be better off. Didn’t you read the book?”

I don’t think that was implied in the book. Garth even mentions that real estate can be a great investment at times, as he has owned many properties.

I think the point was that at current prices in December 2007 it was better to rent than buy. This was a good indication that a market correction was in the works, which would further increase the cost of home ownership through lost equity.

In the long run it is better to own real estate, assuming that the cost of home ownership is competitive with rent. As inflation ticks away at the real size of your monthly payments and your equity builds, your financial position increases. The key is to just not get caught in a market correction, especially if you are a first-time buyer.

#63 crazyguy on 02.26.09 at 9:38 am

I was at a friend’s house last night in Brampton. Young couple with one child. They purchased in 2008 a semi detached that is about 40km from downtown where they work. The price 300K. He was proud that he maged to get a prime minus mortgage and no downpayment deal. He does not want to keep the house for long and is waiting for “equity” to build up so that he can buy a McMansion in the expensive subdivisions.

When I started to talk to him and try to explain why this time it ios different he had this look on his face that said that I was nuts. I explained about the securitization and leverage of the banks, etc… but nothing helped. He is convinced and happy that he got the place for 300K. How can people be so blind. Sometimes I wish I was like them. Ther is no help for these people.

#64 Yes We Can't on 02.26.09 at 9:44 am

If you watch the Dow and the TSX housing prices will follow them. The Dow is down to 1997 prices so soon home prices will follow down to 1997 prices also.

#65 Mike on 02.26.09 at 9:49 am

#32 Cashman… Agreed Cottage real Estate should deflate somewhat. There may be bargains but I can tell you this from personal experience. ANY good deals in Cottage Country USUALLY is picked up by realtors. They see it before it even hits the market. They send it to their friend s or family or buy it themselves.
That also happens here in Toronto. Some stuff sells before the general public even sees it . Wonder why people despise them so much… shady. I spoke to a couple of retired agents yesterday and even they said they had opportunities to buy stuff at decent prices before the public saw the property. They indicated that this sort of thing happens ALL THE TIME. You need to get a realtor who is really in your corner and search the DAILY listings not just put you on a auto send. Try and find one like that… most today , young or old, are busy enough so that a needy buyer is not part of their job description. Best deals are had by yourself.

#66 North Vancouver Citizen Jr. on 02.26.09 at 9:50 am

#49…Part 2…

…and the only B.C. critics from Vancouver, about Vancouver, are pansy a$$ renters.

Read carefully…they are the ones predicting Vancouver RE prices crashing below $0…you will need to pay them to buy RE.

…Pundits and experts are amassing, just read the foreign financial papers…they are unanimous predicting that Vancouver Proper will become the next Financial/Trade/Leisure Capital of North America.

#67 Mike on 02.26.09 at 9:57 am

Harold # 25 Kudos to you for telling it like it is. Toronto is still insanely overpriced for what you are getting. You are correct that we Torontonians think this is the nexus.
Anyone who has been to Europe or a small town in Ontario know that is utter BS. Unless there is an OCEAN in my backyard , assuming you find one with a backyard, then most real estate here in Toronto is MASSIVELY overpriced… This is not Paris, Rome, Venice or the south of Spain or even Dominican, Bahamas, hell any warm place. The thing is by sheer mass of people in one area you have a forward momentum no matter what happens in the world economy. Stay close to the epicentre but not too close.
A realtor I saw last night indicated to me that the spring market here might have a significantly smaller number of homes simply because sellers will not want to be bullied into lower offers. This might happen as spring usually does bring out the whack-jobs who “just love the layout” or “adore the hard wood floor”
They “have to” have this. Last thing you wanna do is be in a buying time with wing nuts like that as your competition.

#68 RS on 02.26.09 at 9:59 am

Huh? So you think prices will drop by another 18% by August 09? I thought it would take longer. I was planning on buying Sept 2010. That way I would have a hefty down payment. What do you think?
Do you think prices will still be coming down then?

Where did I say that was an August target? It’s not. — Garth

#69 Miami Beach Homes on 02.26.09 at 9:59 am

“So, if you do not need to sell your house now, don’t. If you’ve been waiting to buy, start sniffing.”

Very well said and very informative.

#70 RS on 02.26.09 at 10:00 am

oops! i meant Sept 2010!

#71 Jonathan on 02.26.09 at 10:02 am

North Vancouver Citizen Jr.,

Many Canadians perceive Toronto as a world class city. It is. However I’ve met very few people who think it is the center of the earth.

It has one of the best skylines in the world. It’s culture unbeatable (in NA, only Montreal and New York give it a run for its money). Music industry as good as New York’s and London’s. It’s banks the best in the world. Produces more cars than Michigan. 59% of Ontario has a post-secondary education (highest in G7). It certainly is not the end of the world in Toronto.

Besides quit this provincial crap. You live in a country, not a province. Instead of hating other provinces, spend your time telling them what you love about your own. You should make Canadians proud of our country, not separated and ashamed.

#72 MarKoz on 02.26.09 at 10:05 am

I have been waiting years for a correction in the Vancouver market. I am one of the crazy people who thought RE here was over-priced in 2004. Unfortunately, I have noticed an uptick in sales activity relative to new listings over the last 2 – 3 weeks. (A North Vancouver realtor publishes a site with these statistics. Unusually for his profession, he also feels RE here is out of touch with reality and is moving to PEI to escape. His site here: http://www.northshoreproperties.ca/aPage.jsp?aPageId=2 I’m hoping it is just part of a “dead cat bounce” but people here are so obsessed with RE that even slight upward momentum in the market makes me nervous.

#73 dontcallmeshirley on 02.26.09 at 10:10 am

I think average price and transaction count obscures the state of the housing market. Here are the simple sales figures since 2001:

GTA Resale Housing Sales (billions)

2001 17.0
2002 20.6
2003 23.4
2004 26.8
2005 28.8
2006 29.9
2007 35.9
2008 29.0

#74 Sail1 on 02.26.09 at 10:30 am

The banks don’t seem to be doing to badly.

Royal Bank of Canada reported first-quarter profit of $1.05-billion on Thursday, down 15 per cent from a year ago.

The market environment shaved more than $600-million (after tax and lower bonuses are factored in) off of the bottom line at Canada’s biggest bank.

Excluding one-time items, its cash earnings per share amount to $1.18, much higher than analysts were expecting. On Wednesday, Toronto-Dominion Bank surpassed expectations with a profit of $712-million, down 27 per cent from a year ago

http://business.theglobeandmail.com/servlet/story/RTGAM.20090226.wrbc0226/BNStory/Business/home

#75 Yes We Can't on 02.26.09 at 10:42 am

#66 citizen jr.

I agree, you would have to pay me to buy property in Vancouver. Drug infested dump.

#76 OttawaMike on 02.26.09 at 10:49 am

Just sending a dispatch from the US south. We were in Mardi Gras-New Orleans earlier this week and the still Katrina destroyed suburbs are shocking. Split level homes and townhouse complexes lying abandoned and in ruins. We’re talking 1980’s housing stock here.
Now we’re staying in the Ft. Meyers/Naples Fla. prime melt down area.I have never seen the traffic this light in my 30 plus years coming here.The Naples newspaper this morning has a front page headline reporting a 68% decline in housing prices in some of the local areas. Funny thing is there are few bargain hunters shopping for property deals.

#77 Senior Citizen on 02.26.09 at 11:06 am

Garth, If everybody sells their house, how do you think it will affect rental rates in the GTA?

#78 Jeff Smith on 02.26.09 at 11:23 am

Hey man! are you dissing my city Toronto?

#25 Harold on 02.25.09 at 11:24 pm

Not everyone lives in Vancouver, Calgary or Toronto. In many smaller places prices never rose to insane levels and are not falling by much, maybe 10%. Maybe 8 or 9 million people live in those 3 large cities, the other 24 or 25 million Canadians aren’t freaking out like the doomsayers I see on this blog.

As long as I’ve been alive, cities like Toronto have always been too expensive for my income, and I make a decent living. That’s why I chose to live in a smaller town and for my part am happy that I did.

I know Toronto likes to think the world revolves around it but come on, there’s whole other world out there that doesn’t give a s**t about the place.

#79 Dave on 02.26.09 at 11:27 am

Abelson’s current column (Barron’s) shows why housing still has a long way to go… down
http://online.barrons.com/article/SB123517396995937201.html?page=2

#80 smwhite on 02.26.09 at 11:47 am

#62 Jonathan

Housing can be used to protect against inflation, but isn’t the situation we’ve been in on planet earth the past 5 years, still overpriced in 99% of all markets world wide.

Which is why we’re in the predicament we are today…

#81 smwhite on 02.26.09 at 11:50 am

#66 North Vancouver Citizen Jr.

Well said, without a shred of evidence or common sense. Is this the same person that keeps spewing this vomit or do you have a little “club” that gets together and talks crazy shit on a regular basis?

#82 Got A Watch on 02.26.09 at 11:51 am

I’m still laughing at ‘North Vancouver Citizen Jr.’ I noticed he did not respond to my take-down comment of last week, that I posted on 2 consecutive days.

The guy is completely delusional. He comes on Blogs like this one, that tell the plain truth. Then post links to stories about how the global economy is collapsing etc.

From that he concludes everybody else is in serious trouble, but somehow Vancouver will be unaffected. Then goes on a rant about Ontario.

HA HA HA HA HA HA HA HA HA HA HA HA HA HA

is all I can say to that. The notion that somehow Vancouver can escape a global depression is absurd.

As I stated before, Vancouver will be harder hit than many regions that have already sustained much damage. B.C. is 2 years behind the leading edge of the economic curve, which is pointing straight down right now. Ontario is actually riding with the leading edge, the economy has been in decline for 2 years now here. Only real estate has not caught up yet. Give it time.

The higher ‘irrational exuberance’ has pushed real estate values up, the more they will fall. Just like Toronto, but worse in $ value, since Vancouver is falling from a higher peak, and well behind the rest of North America in the economic cycle.

My prediction – The carnage is just starting in Canadian real estate. The market will be declining for around 5 years from whenever it peaked in your region. Then it will be flat like a pancake for several years.

Best time to buy real estate – after 2017 or so. From the declines we have seen already, prices will be at ’97 levels before this decline sees any bottom. Real estate can only think about recovering when unemployment drops, as people get new jobs.

In the mean time, keep posting the kool-aid drinkers view, we need a good laugh in hard times.

#83 blackout on 02.26.09 at 11:51 am

Toronto high mark: $398,687, April 08. Current, $343,362. Price drop: $55,055 or 13.8% from peak of nine months ago, or 18.3% annualized. The Teranet-NB index is wildly inaccurate. — Garth

You’re comparing monthly averages to the HPI. In my opinion the HPI is the most honest indicator of the re market because it’s based on repeat sales (similar to case – shiller).

I disagree. Real estate should be measured by actual monthly sales numbers. The T-NP index is useless. — Garth

#84 Bookrat on 02.26.09 at 11:51 am

To Shopping in SK: click on my name (or search for ‘Saskatoon Real Estate Blog’) for weekly stats and historical trends on RE in Saskatoon specifically. In my experience, the operator of this site is one of those rare birds — an ethical realtor — who doesn’t lie to his clients, posts actual numbers, explains why and when even these numbers might be deceiving, and doesn’t try and blow smoke up your azz about how ‘You’re richer than you think.’ His philosophy seems to match Garth’s pretty well – price price to sell, get out fast, and forget about getting bubble prices.

#85 Jeff Smith on 02.26.09 at 11:53 am

I agree, Toronto’s housing price is way too high. If it stays like this I will never be able to afford a house.

#67 Mike on 02.26.09 at 9:57 am

Harold # 25 Kudos to you for telling it like it is. Toronto is still insanely overpriced for what you are getting. You are correct that we Torontonians think this is the nexus.
Anyone who has been to Europe or a small town in Ontario know that is utter BS. Unless there is an OCEAN in my backyard , assuming you find one with a backyard, then most real estate here in Toronto is MASSIVELY overpriced… This is not Paris, Rome, Venice or the south of Spain or even Dominican, Bahamas, hell any warm place. The thing is by sheer mass of people in one area you have a forward momentum no matter what happens in the world economy. Stay close to the epicentre but not too close.
A realtor I saw last night indicated to me that the spring market here might have a significantly smaller number of homes simply because sellers will not want to be bullied into lower offers. This might happen as spring usually does bring out the whack-jobs who “just love the layout” or “adore the hard wood floor”
They “have to” have this. Last thing you wanna do is be in a buying time with wing nuts like that as your competition.

#86 smwhite on 02.26.09 at 12:00 pm

#71 Jonathan

Well put, anyone can move to BC and smoke the same shit North Van Citizen does, I am a citizen of Canada not Ontario.

North Vancouver citizen sounds like Casey Serin.

http://www.caseypedia.com/wiki/Casey_Serin

Don’t know if many of you followed this fellow’s trials and tribulations in real estate, but it kept me entertained while the USA(and the world including Vancouver) was in denial of the RE bubble…

#87 Rural Rick on 02.26.09 at 12:03 pm

Born and raised in Toronto on the Island and in the East End (Now called Upper Beaches) it was a great place to grow up. Safe, lots of places to mess around doing kid stuff. Lived at Yonge and Wellesley for years as an adult in the 70’s and 80’s great night life, restaurants, music.
Now my favorite view of TO is in my rear view mirror on my way home to the country. You couldn’t give me a house in Toronto.

#88 ralph on 02.26.09 at 12:06 pm

To those sellers that are getting lots of showings and no offers: I suspect most of these people looking at houses are tire kickers or just want to see what they should list their property for. They are using real estate agents to chauffeur them around.

If price is suppose to be such a big issue then why not put in an offer much lower than listed price. Especially if they like the place and are serious about buying.

#89 Got A Watch on 02.26.09 at 12:16 pm

I see hostility towards Toronto in particular and Ontario in general. All I can say is LOL.

I don’t live there myself (rural Ontario) but if you think the economic fate of the largest city in Canada (and the biggest local economy and Province) has nothing to with you…I just laugh at the quality of your delusions.

Half of Canada has been living on the transfer payments coming out of Ontario since the ’70s. If Ontario goes down, Canada goes down.

Resource rich Provinces may have thought they were immune to economic cycles and global fundamentals. So much for belief. Resource prices are likely to stay low for years until the global economy recovers.

This is deflation. All boats are being lowered by the falling tide. Canadians can pull together as a nation, and have hope of survival, or fail independently, one by one.

The simple fact is that for a healthy economy, most regions and sectors have to be on board. We have seen how people from less robust areas will migrate to booming areas, that is a natural response. If there are no regions with economic growth, that is not possible.

Poorer Provinces will be even more reliant on transfer payments in the future, just as the ability of ‘wealthier’ ones to generate the revenues to fund the payments declines.

Though there is much talk about Ontario now receiving transfer payments, that Province actually pays out far more to the Federal Government than it ever receives back. Many, many Billions each year. Really, I am surprised a ‘Bloc Ontario’ has not already arisen, but people in Ontario like being Canadian.

Some people in Toronto may think it is the ‘Center of The Universe’, but they are not hostile to the rest of Canada, and do not complain much about the transfer payment situation. This economic decline will cure most of the ego problem anyway. Most people you will meet on the street in Toronto were not born there, they emigrated there from somewhere else, within and without Canada. Just like Alberta.

Stop whining and pull together, we are all in this leaky boat.

#90 Toronto C9 Renter on 02.26.09 at 12:24 pm

It seems the Dow has been range-bound well below 7500 for the last week, continues today as of noon, i.e. 7300 give or take.

Won’t be surprised to see the 7000 support level breached by end-of-day Friday.

#91 PTDBD on 02.26.09 at 12:29 pm

My budget is doing great!
(my secret? – I use the same accountant as the banks)

Excluding one time items ,(the purchase of my house & car), I am staying in the black.

#92 CM on 02.26.09 at 12:30 pm

#29 Barb the Proofreader:

As you know, of course, the Harpos aren’t really interested in ensuring Canada’s survival.

I believe they said that Canada didn’t need to set up a strategic oil reserve because it was a net exporter of oil. But we’re not Norway, also a net exporter, which sells only its surplus after it’s reserves topped up. And it doesn’t import oil from the middle east, which is where the oil to eastern Canada comes from.

All the tar sands oil goes, unrefined, in pipelines to the U.S. Part of the “firewall around Alberta”, Stevie’s dream for himself and his future.

How goes it out west (from where I’m sitting, anyway, in the middle of this huge country)?
—–
Here’s a look at some of the cheapest dwellings for sale in Canada.

http://cnews.canoe.ca/CNEWS/Features/2009/02/24/8528526.html

$5000 gets you a one-bed non-centrally-heated house in Rouyn-Noranda.

—–
This might not be such a bad idea, though, if Canada becomes a “lifeboat country” in the future. Going north to prevent being run over from the south is going to look pretty wise.

From a blog with links to a broadcast with James Lovelock, the “Gaia Hypothesis” guy, who rang the alarm bells in the 70’s. Nobody was listening, of course:

“Lovelock’s point seemed to be that we should give up on trying to save the planet and the entirety of the human species by reducing greenhouse gas emissions and focus instead on equipping “lifeboat nations” with the necessary infrastructure (schools, roads, houses) to support swarms of climate refugees.

The UK and Canada are lifeboat nations, in case you’re wondering. Probably Siberia too. Basically, anywhere that will be relatively cool and have water in a world that is on average 5°C warmer than it was 100 years ago.”

http://www.newscientist.com/blogs/shortsharpscience/2009/02/lovelock-we-cant-save-humanity.html?DCMP=NLC-nletter&nsref=blog1

Oh, yeah. The human population may go from 6-7B to 1 billion in the next hundred years. You may not benefit, but your grandchildren will sing your praises for leaving them some prime real estate up north.
—–

#93 rory on 02.26.09 at 12:40 pm

N Van Jr …you said:
Pundits and experts are amassing, just read the foreign financial papers…they are unanimous predicting that Vancouver Proper will become the next Financial/Trade/Leisure Capital of North America.

Please just list one pundit, one expert and one foreign financial paper that I can go and lok up …just one …I like the idea about Van but I guess like anything if you say it enough times it will be true …so Mr. PR Jr. Man just a few real sources.

#94 smwhite on 02.26.09 at 12:56 pm

People listing now are listing too late. I issued the sale recommendation seven weeks ago. — Garth

Actually didn’t you do that last spring when this blog started taking shape?

You can talk till your blue in the face, I’ve told those close to me that thought about selling to do it last summer/fall, but they decided to wait for the mythological “Spring RE Dragon” that like Doug Henning, will make all your (RE) problems disappear!

Minus 10% – 15%

Silly humans!

#95 Derrin on 02.26.09 at 12:59 pm

There are people out west that think Canada as a whole is a great place and aren’t throwing jabs at the east. There are many of us.
We live in a great country from east to west or west to east depending where you are at.
Don’t feed the North Van Citizen Jr.

As for real estate I agree with Garth and I think his outlook is realistic on real estate especially on the west coast.
Cheers,

#96 Barb the proofreader on 02.26.09 at 1:06 pm

Garth,
It will be an interesting next few years.
Real Estate values will decline another 20%.
Peak oil will begin to get on the lips of most people, creating and forcing more changes.
There will be unanimous horror as the exponential nature and catalytic growth of ongoing climate disaster unfolds.
In Canada, heads will roll over ‘In & Out’ … as well as all those other hushed Con Games

http://www.nationalnewswatch.com/index.php?option=com_frontpage&Itemid=1

And here’s a brand new twist on Con games… and what a novel approach!! Let’s just say that now we’re being advised in advance that new scandals on are on the horizon..
Huh?!? Is this new tactic of forewarning us, supposed to make us less angry when scams happen?!!
However, there is one caveat — the Cons just haven’t figured out what dumb or crooked things they want to jump into yet — or have they?

http://www.theglobeandmail.com/servlet/story/LAC.20090226.STIMULUS26//TPStory/Front

#97 Barb the proofreader on 02.26.09 at 1:09 pm

A quicker link than “Newswatch” for my above comment is:
http://www.ottawacitizen.com/news/Baird+subpoenaed+testify+Brien+bribery+trial/1329961/story.html

#98 Needing Advice on 02.26.09 at 1:34 pm

I have the opportunity to buy a property in Edmonton for 30% off what it was listed for last year, and about 37% off from where it was during the peak. I’m thinking this is a good long-term deal. Thoughts?

#99 Calgary37 on 02.26.09 at 1:40 pm

Silver as Money

If you are considering using Silver as money, then here is the most recent information on this subject.

http://silverstockreport.com/2009/Phoenix-show.html

http://www.moneyandmarkets.com/the-golden-phoenix-29869

http://www.moneyandmarkets.com/updates-plus-why-china-is-soaring-29888

******
Without using the term “global currency”, the authors lay out a compelling case for having a global currency that could be more useful for facilitating world trade than the current system. This would mean that the American Dollar would no longer be a “reserve currency”.

http://www.gata.org/node/7200 (without charts)

http://www2.nationalreview.com/monetary.html (with charts)

Be Prepared.

#100 Might As Well Be Concerned on 02.26.09 at 1:43 pm

Interesting read not totally related but will impact RE.
http://www.financialsense.com/editorials/quinn/2009/0226.html

#101 Kash is King on 02.26.09 at 1:45 pm

#56 wjp, if the stock market was a leading indicator, and the US recession started in Dec 2007; then going by that logic, the stock market should have cratered in April 2007. It didn’t.

I suspect that old nugget is trotted out in every downturn by the various vested parties in downturns, to stampede folks into buying again for fear of missing out on THE bottom.

#102 robotgirl on 02.26.09 at 1:52 pm

and yet “A $70,000,000 penthouse is waiting for you” http://designyoutrust.com/2009/02/26/do-you-want-to-be-a-real-idiota/

#103 Sail1 on 02.26.09 at 2:15 pm

#49 North Vancouver Citizen Jr.

3/
“The Caisse de dépôt et placement du Québec” demand a Federal bailout?….Les Quebecois are deservedly supperior to the rest of Canada.

They always seem to think so. To bad the rest of Canada can’t have a referendum to separate from Quebec.

#104 Kevin on 02.26.09 at 2:25 pm

#99 Needing Advice

[i]I have the opportunity to buy a property in Edmonton for 30% off what it was listed for last year, and about 37% off from where it was during the peak. I’m thinking this is a good long-term deal. Thoughts?[/i]

If it was done dropping, maybe… but it’s not, there is still a good 20% to go and quite possibly more. And even when we do hit bottom, there will be no substantial bounces for quite some time.

There is a huge glut of entry-level homes already on the market, and another 10,000 coming down the pipeline in various stages of completion. This is going to drag down prices in all categories, but particularly condos… and there is also the factor of all the 20/20 somethings that will be trapped in negative equity for a good 10-15 years (or will just go through foreclosure), in any case, Edmonton is quite likely looking at a lost decade.

#105 Kevin on 02.26.09 at 2:26 pm

^

Sorry, that was supposed to read 20/30 somethings

#106 dd on 02.26.09 at 2:30 pm

#102 Kash is King,

Agreed. You don’t have to buy at the bottom. Direction is most important.

So let the price bang around on the bottom for a while. If housing or the market price goes up a bit … so be it. It is better than paying too much.

#107 dd on 02.26.09 at 2:35 pm

#99 Needing Advice,

Ya … how about if you get another 15% off in 6 months. Wait, there is no rush.

#108 Sail1 on 02.26.09 at 2:36 pm

#99 Needing Advice

There are many factors to consider especially in today’s climate. Ultimately without knowing your financial situation, the answers you are looking for, may only be scenarios, not advice.

Just rent, seems to be the right answer for now.

#109 Jason on 02.26.09 at 2:39 pm

Garth, I agree with Shopping in SK; the populace here could really use a dose of reality. I don’t know if it’s in the cards for you but people in the prairies are in dire need of an external viewpoint!

#110 Bill-Muskoka (NAM) on 02.26.09 at 2:51 pm

Here we have the Good and the Ugly showing the difference between real management and manglement and successful business models versus Fad Models.

The Bad are so many I will not even bother naming them.

Meanwhile Teflon Oddawahaha goes on.

#111 Got A Watch on 02.26.09 at 2:54 pm

I have traveled across Canada (though not recently), and in general I can say most everybody you meet is friendly.

The farther you go from the big cities, the more personable people are. The same is true in most nations. just something about large urban areas.

Canadians are a reserved bunch, in general. Go to any resort and you can spot the Americans and the Canadians. The Americans are usually loud and boisterous, partying hard and enjoying it. The Canadians look like the Americans, but don’t act the way they do.

Of course, there are exceptions to every rule. But that”s what I have seen.

This is a global crisis, pointing the finger at each other will not help anyone.

#112 Got A Watch on 02.26.09 at 3:08 pm

I have no personal axe to grind with Vancouver. It may be a great place to live, but that has little to do with real estate market health and economic cycles. People buy homes when they have a job and can afford the payments. Location and climate help to draw people, but the jobs have to be there too. Prices go up, then fall back down.

I can tell you 2 personal anecdotes:

-spoke to a friend last week who is in Vancouver construction. Joe 6 Pack, he has no internet, does not watch TV. He thinks (based on conversations with co-workers) that Vancouver will recover in a few months and there is nothing to worry about. He does not believe what I tell him about the economy. Maybe he works with North Vancouver Citizen Jr., I don’t know.

-I have relatives who are very wealthy. They moved out of Vancouver to the B.C. interior 5 years ago, as “Vancouver is getting too expensive for us”. When people who have large 9 figures in the bank tell you a place is too expensive, it must be so. It’s not like living there would actually be too expensive for them to afford. They helped a son buy a “starter” home for about $800K in Van, one of the better neighborhoods. If you can call $800K a starter. I guess they are helping them (young couple) with the payments too, I didn’t ask.

What year was the last real estate bust in Vancouver? It must be along while back, most people have either forgotten all about it till recently, or they are too young to remember it at all. One of the reasons why it has been more bubblish and for longer than other places. Real estate always goes up…till it doesn’t.

In Toronto it was ’89-’92, and that one saw recent buyers abandoning homes (jingle mail), prices falling sharply from a high peak, and listings expiring unsold. Only low-end “starter” (condo/townhouse, low priced) were moving at all. I was a Realt(ho)r (TM) in Brampton at the time, it was bad. Don’t condemn me, I was young and stupid.

#113 Jelly on 02.26.09 at 3:10 pm

Eduardo #4,

Because of your link my laptop crashed,

yeah thanks a lot, “Slightly off topic but related!”

WTH?

#114 rory on 02.26.09 at 3:13 pm

# 104 Sail1
You said:
“They always seem to think so. To bad the rest of Canada can’t have a referendum to separate from Quebec.”

You forgot a few words in your reply like – “in a heartbeat” …until the Bloc and the thinking that the Bloc is good for Quebec, Westerners attitudes will not change…IMHO.

Going looking for that $10K property in SK :).

#115 wjp on 02.26.09 at 3:27 pm

#102…I don’t have a cent in the stock market… you probably have a point somewhere but obviously you have no understanding of the market…I will leave you to wallow in your ignornace.

#116 Another Albertan on 02.26.09 at 3:35 pm

News from the streets of Calgary:

In the last while, many of the tier-1 and tier-2 engineering firms for the energy sector have unilaterally rolled back pay anywhere from 10 to 15%.

If you want to keep your job, you accept the rollback. This applies to all employees and any contractor -stragglers still left holding on.

In another tangible rumour, a major oilsands player has told almost 400 of its engineers, most of whom were co-located at the various engineering companies here in Calgary, that they need to choose from a list of opportunities in Fort McMurray. The Fort Mac jobs are now open due to the layoff of many 3rd party contractors. Pick from the list and you’ll be told which ones you qualify for, then work with HR to move your family up there, otherwise you’re out the door.

The bottom line is that there is much unreported pain and upheaval occurring right now.

#117 smwhite on 02.26.09 at 3:42 pm

#104 Sail1

They always seem to think so. To bad the rest of Canada can’t have a referendum to separate from Quebec.

I can’t seem to find ANYWHERE where there is a request for a bailout from the Caisse, just more verbal diarrhea and hate propagation from the Vancouver troll, pissy about his disappearing RE value and non-existent credibility.

Too bad the Caisse hadn’t had a gold bug to help direct, and hedge against that ABCP. If you were open to the fact that RE was overvalued, you very well knew that ABCP was poop and wouldn’t have touched it..

#118 rory on 02.26.09 at 3:53 pm

#114 Jelly …you said:

Eduardo #4,
Because of your link my laptop crashed,
yeah thanks a lot, “Slightly off topic but related!”
WTH?

Like this blog …maybe you should have sold that ‘crap” computer at its peak …as in years ago …I went to the link twice – no problemo homie.

#119 Rhino on 02.26.09 at 4:03 pm

#119 smwhite on 02.26.09 at 3:42 pm

Merci beaucoup! From an ANGLO Quebecois!

Some people dump on others to try and make themselves feel more important. A couple come here, it seems!

#120 61 SM White on 02.26.09 at 4:08 pm

Ontarians, open your eyes, Eastern North America’s economy is imploding…get your own house in order; stop worrying about Western Canada…

It does not matter where you live in Canada there is no escaping the economic turmoil, anarchy and bloodshed that is upon us all. You have limited time to prepare your household and neighbors and most of all plant large vegetable gardens this year. Good luck to you all.

Seedman

#121 Sail1 on 02.26.09 at 4:08 pm

#86 Jeff Smith

I agree, Toronto’s housing price is way too high. If it stays like this I will never be able to afford a house.

What is your reasoning for wanting to purchase a house so badly?

#122 jess on 02.26.09 at 4:12 pm

The Sveriges Riksbank Prize in Economic (swedish bank )

Do you think those guys who won a prize should give the money back since their theories seem to have backfired?
Interesting to that Americans (43) seem to have won this prize more often than other countries.

The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel has been awarded to 62 individuals since 1969. Choose a name and click on it to go to the Laureate’s page.

http://en.wikipedia.org/wiki/List_of_Nobel_laureates_in_Economics

#123 Rhino on 02.26.09 at 4:13 pm

#112 Got A Watch on 02.26.09 at 2:54 pm

“I have traveled across Canada (though not recently), and in general I can say most everybody you meet is friendly.”
(snip)

(SMILE!)

Having traversed the continent several times, for the most part, i must agree…

However, once while bicycling across, my partner and I entered a small town on Northern Superior called “White River”. We rode into town, grimy, sweaty, tired, looking for food in the local grocery store. We had long hair, and the locals apparently decided we were suspicious. They followed us everywhere, frowning, with the obvious message “dirty hippies”, and actually made me leave the store due to my cycling shoes which had small cleats – non damaging but “different”.

My buddy stayed, got food, and we left town asap. Cycling out of town, there was a sign:

“Welcome to White River – COLDEST SPOT IN CANADA”.

While it had a thermometer from some obscure year, we both had a good chuckle – it sure applied!

Some small towns are definitely not too warm to strangers – until you buy ’em a beer and shoot a game of pool at the local bar!

#124 Sail1 on 02.26.09 at 4:13 pm

#119 smwhite

You know ultimately at worst case scenario tax payers will be forced, reluctantly to bail them out.

#125 Barb the proofreader on 02.26.09 at 4:14 pm

#93 CM “How goes it out west”

Hi CM,
Now there’s a house I could afford! In university, I lived in a country woods shack by a stream south of Elora. The 100 year old, petite 2 storey house only got electricity 11 years earlier! It looked a bit like that one in your link. Our only heat came through the carved circles in the floor from the Quebec oven on the main level. Winter mornings were ver-ry chilly till we got downstairs to add some logs.
All’s well here, thanks. No mortgage and no money to lose, and no way I can change anything anyway.
I think I was lucky. I realized a simple hypothesis when I was young, that I’ve lived by for my entire adult life: In practicality, we are no different than rats living in a box. Sooner or later we’re too many, and we start killing each other.
Well, at least that’s what the rat experiments ALWAYS result in..

#126 Skeptic on 02.26.09 at 4:15 pm

#105 Kevin wrote:

that will be trapped in negative equity for a good 10-15 years (or will just go through foreclosure), in any case, Edmonton is quite likely looking at a lost decade.

The recent run-up in Calgary and Edmonton prices was due to high oil prices, wasn’t it? So you’re saying that oil will stay below $70-$80 for the next 10 years? Cause if not, all those new oil projects will drive the prices up again just like they did in the last 3-4 years. What I’m saying is, don’t be so sure to predict what is going to happen in the next 10 years because I can assure you NOBODY here knows what the economy is going to be like even after 4-5 years, let alone 10. Sorry, not even Garth.

#127 Roger on 02.26.09 at 4:24 pm

Many readers are familiar with the Case-Shiller index for residential real estate in the US. National Bank has created a similar Housing Price index for Canada – Teranet – National Bank House Price Indexâ„¢. You can now trade futures contracts based on what you think will happen in Canada.

If you click my name you can watch a BNN video about this subject. The current futures market is predicting a 20% drop in prices in Canada.

Garth – Now you can tell audiences that even the financial markets are predicting the Cdn. RE market will tank. Investors are betting on it!!

#128 Investx on 02.26.09 at 4:29 pm

To North Vancouver Citizen Jr. (formerly “Real Estate Expert” and other aliases):

Careful, your insecurity and resentment of Ontario will make you ill.

If a big and glorious condo was cancelled in Ontario, Garth would write about that too. He can’t help that Vancouver happens to have the Greatest Fools.

#129 Got A Watch on 02.26.09 at 4:44 pm

Sail 1 – The Caisse is a typical Pension Fund these days, the bag-holder of last resort. Nothing exceptional there. I’m sure every big Pension Fund is in similar shape.

I don’t see much to be gained by “separating” by either side. Everybody’s economy would take a hit, and Eastern Canada would probably be hurt the most, being geographically isolated.

Save some money on transfer payments to Quebec, have to pay more to other regions from a lower tax base. Not a big net gain scenario that I can see.

Sure, I wish we could get Quebec to accept reduced transfer payments. Am I willing to break up a great country like Canada over it, no, not at all.

Judging by the last election, the separatists are not enjoying much popularity in Quebec. They have about 35% solid base, and the rest aren’t with them.

We have enough problems on our plates right now. Let’s not make things worse by creating new problems. The right way to reduce transfer payments over time is to get the economy in the receiving regions built up to the point where they don’t need the transfer. That’s not to going to happen in this economy, it will have to wait for better times.

I’ve been to Quebec many times, and enjoyed it. It’s a unique place. Lighten up, not everybody can be or should be the same from coast to coast. It would be a pretty but boring country. We already get accused of being “boring Canadians” enough as it is.

It’s the price of diversity, sometimes your tax dollars flow to cultures you may not be too happy with. But it is just the way it is here in Canada. Why be bitter about it.

#130 Bill-Muskoka (NAM) on 02.26.09 at 4:51 pm

Wal-Mart closing Ontario Sam’s Club stores

This makes good sense as the newer Super Centre stores pretty much duplicate the Sam’s Clubs, and club memberships are not enticing to most.

#131 jrochest on 02.26.09 at 4:52 pm

Shopping in Sask — I second Bookrat’s suggestion that you check out Norm Fisher’s blog, Saskatoon Real Estate Resource Centre. He has great info, and the comments thread is excellent. Several of us here are regulars there.

Saskatoon has an inventory of 1200 units right now, and normal inventory for February is less than half that — between 300 and 500.

#132 go green on 02.26.09 at 4:53 pm

#9 KJ on 02.25.09 at 9:35 pm

I was out at a couple of malls yesterday. Wow, easy to find a spot a metre or 2 from the door. Went to Kent to buy some bath faucets, etc. Couldn’t believe the fab service I rec’d. Spent at least an hour with one sales guy – retired, who knew all about plumbing, electrical, etc. Last summer it was difficult to get the attention of a clerk. Noticed even calls to some of the big box stores are being responded to more quickly. Times have really changed.

#133 Bill-Muskoka (NAM) on 02.26.09 at 4:54 pm

RBC, National, CIBC shareholders get say on pay

All Canada’s big banks are facing say on pay motions put forward from shareholders. The banks opposed the motions but the tide of investor anger over multi-million-dollar pay cheques during the current downturn appears to be overwhelming.

Well, it is about time!!!!

#134 john on 02.26.09 at 5:01 pm

We have been forecasting near depression like levels for quite a while on this blog (myself included) but here are some points to remember:

TSX on October 31, 2008 was apx. 10000
TSX on February 26, 2009 is apx. 8200
(not a huge drop off and certainly less than I expected)

Home Sales have tapered off in some areas but again less than expected. As I previously noted you can argue there has been at a minimum no change in the Woodbridge area.

Having a large circle of friends, not a single person has experienced job loss to date.

Rates on Lines of Credit have dropped resulting in more personal monthly cashflow

Gas prices have dropped considerably resulting in a significant increase in personal monthly cashflow (in my case apx. $300 more in my pocket each month)

Not seeing it to date…I know…it’s early…but having some doubts.

So, go buy something. We’re all behind you. — Garth

#135 vtj on 02.26.09 at 5:18 pm

#130 Got A Watch:

Kudos to you – very well said.

#136 Jeff Smith on 02.26.09 at 5:22 pm

#93 CM on 02.26.09 at 12:30 pm

[… stuffs deleted]

Oh, yeah. The human population may go from 6-7B to 1 billion in the next hundred years. You may not benefit, but your grandchildren will sing your praises for leaving them some prime real estate up north.
—–

Actually it might do the reverse, and human population will start contracting in the next 40 years. The reason I think this will happens is because in the foreseeable future, all nations in the world are on course to become developed countries. What we have seen over the last 100 years is that developed countries produce fewer and fewer babies. In fact not even enough to replace their population i.e. when their parents pass away. Need proof? Look at Europe, Russia, Japan, South Korea, now China. Why do you think Canada needs immigration?? I think the same pattern will play out once the other 3rd world countries become developed nations. I suspect that by 2100, the world’s population will only be 2/3 (two thirds) of what it is now. Countries at that time will compete with each other for not just natural resources (oil/gas etc but also human resources). Its already happened in Canada and places like Italy, even though we don’t admit it.

#137 Bonnie N BC on 02.26.09 at 5:23 pm

Garth,

Interesting how the commercial real estate market has finally caught up with reality in BC. I am quite happy not to be in Vancouver but we will all pay for the Olympics here in BC.

The stupidity of excess is only trumped by the lack of forethought. It should come as no surprise that real estate pricing commercial or residential should reflect the sustainability of the product price to the buyers.

Me, I am thinking 50% will be the bottom in real estate in BC from 2008 prices. BTW, I hope I am so wrong.

#138 Sail1 on 02.26.09 at 5:30 pm

#130 Got A Watch

Judging by the last election, the separatists are not enjoying much popularity in Quebec. They have about 35% solid base, and the rest aren’t with them.

Are you wearing rose colored glasses? Can you not see that Quebec enjoys the benefits of having separatists in Ottawa.

#139 Kevin on 02.26.09 at 5:30 pm

#127 Skeptic

The recent run-up in Calgary and Edmonton prices was due to high oil prices, wasn’t it?

Oil prices were just a part of it… easy credit and rampant speculation in combination with the increased earnings made something of a perfect storm for the bubble.

Even as high as oil prices got, earnings only increased ~30%… housing prices more then doubled on the other hand. Even if oil prices go back up and earnings stay at their boom levels, prices were still due for a big crash. The average SFH is still going for 75K more then earnings justify as affordable.

#140 Derrin on 02.26.09 at 5:38 pm

#135 John
I agree with you. Out west it’s business as usual and if anything people have more money in their pockets because of the deflationary aspect of this contraction as well as LOC that are at 3%. Cheap money makes the wheels turn and yes a few overpriced condos have fallen off the real estate cliff. Life seems rather ordinary. Not depression like at all.
I know of two people that were laid off and it took them less than 10 days to find a suitable position.
I guess Canada has a much better position than most.
In fact lately the weather forecast has been more eratic than the economy….
Cheers,

#141 ACS on 02.26.09 at 5:39 pm

Here is some positive spin from BMO

http://business.theglobeandmail.com/servlet/story/RTGAM.20090226.wporter0226/BNStory/Business/home

#142 Roger on 02.26.09 at 6:01 pm

Shopping in Sask,

Time to get another financial adviser. This one does not know what he is talking about. Prices have been dropping in Saskatoon for months. Click my name for an up-to-date graph from Norm Fishers blog (referenced earlier).

Listings are way up from last January and sales are not keeping pace. Wait till the snow starts to melt and all the spring sellers list their house.

#143 Investx on 02.26.09 at 6:19 pm

Garth wrote:

“Toronto high mark: $398,687, April 08. Current, $343,362. Price drop: $55,055 or 13.8% from peak of nine months ago, or 18.3% annualized. The Teranet-NB index is wildly inaccurate. — Garth”

According to the BNN segment a few days ago, where they discussed this new index, the Teranet is supposed to be more accurate as it takes into account resale (MLS) and new homes, FSBO sales, etc, as it’s based on title registry.

#144 . . . fried egg with spam . . . on 02.26.09 at 6:39 pm

Listen to what Ron Paul has to say re: the economy (just under 3 mins.).

http://www.youtube.com/watch?v=aW2V50AS7K0

The trouble with people like Ron Paul, Garth, Bill Casey, Michael Chong etc., is that they are too honest — telling it like it is, instead of how to spin the msm for their own gain.
——
Although this is a US site, chances are it applies to Cdn. pension funds as well. — http://tinyurl.com/d6mkxv
——
Situation is as close to a depression (without calling it one) in Japan.

Also, Sarkozy said yesterday that the countries which used to be behind The Iron Curtain are on the verge of collapse.

If they go down, it affects the EU and Euro and then the rest of us.

I guess we ain’t seen nuthin’ yet! — http://tinyurl.com/bxnufd

#145 dd on 02.26.09 at 6:41 pm

#140 Kevin,

The run up in house prices was also due to the population explosion we had for about 3 years form 2004 to 2007.

Not so much anymore

#146 dd on 02.26.09 at 6:45 pm

#135 john

“TSX on October 31, 2008 was apx. 10000
TSX on February 26, 2009 is apx. 8200”

The TSX touched almost 15,000 in 2008. So at least a 40% drop.

Home Sales … lets look at home prices
Top of market around 380K in calgary (medium price)
No about 310K.
So at least a 20% decrease.

Smell the coffee John.

#147 Rural Rick on 02.26.09 at 6:59 pm

Some people seem to be have been very well insulated from current events.
Not here in southwestern Ontario. Windsor has the highest unemployment in Canada. Yesterday we lost a TV Station and a factory employing 250 people. That was one day.
Navistar in Chatham at one time huge truck manufacturer is down to about zero. Cami in Ingersoll is idling. Sterling Truck is gone these were mega employers in this region.
You know it really bad when the guy next to you at the Employment Centre puts down Call Centre Supervisor as his previous employment.
Town after town in the Southwest jobs are going down.
This going to take some time to work thru the system.
So don’t worry if your friends are still employed and you are some how insulated from reality.
It will get to around to you soon.
Best start working on a plan.

#148 North Vancouver Citizen Jr. on 02.26.09 at 7:00 pm

Manhattan Condo Buyers Walk Away From $1 Million Down Payments

Here’s another disturbing indicator of a coming cliff-dive in the New York real estate market. Buyers are getting so nervous that they’re leaving huge deposits on the table just so they can get out of new purchases. We’re not talking $100,000 or $200,000 deposits either

NYT: 304 Spring Street, a sleek condominium building in SoHo with stunning Hudson River views, the buyer for the duplex penthouse recently decided he would not go through with the deal and walked away from a $780,000 deposit.

At 1120 Park Avenue, a classic prewar co-op filled with multimillion-dollar apartments, it appears that a buyer forfeited a deposit of as much as $1.1 million.

Real estate agents representing buyers of at least three other multimillion-dollar properties also report clients who knowingly left deposits of more than $1 million or hundreds of thousands of dollars on the table.

…Like I keep saying…Eastern North America is imploding just like Europe.

…There is a Political/Trading Triangle Partnership Forming amongst China/Canada and the West Coast of the U.S….Eastern Canada and the U.S. is toast.

The safest place to live in the Free World is the Pacific Northwest…especially Vancouver, the next Financial/Trade/Leisure Capital of North America.

#149 Cendrine on 02.26.09 at 7:29 pm

#89 ralph on 02.26.09 at 12:06 pm

To those sellers that are getting lots of showings and no offers: I suspect most of these people looking at houses are tire kickers or just want to see what they should list their property for. They are using real estate agents to chauffeur them around.

If price is suppose to be such a big issue then why not put in an offer much lower than listed price. Especially if they like the place and are serious about buying.

Ralph, this occurred to me as well. We have had our share of people looking way over their heads, tire kickers, people looking for decorating ideas (“not enough pillars and niches” – we don’t have pillars and niches!!)? My house is being used as a orientation exercise – what will xxxK dollars buy? You know, I thought the MLS would have weeded out these types but I was wrong.

I suggested to RE agent to encourage any offers and make it known we would be willing to consider and negotiate.

Anyway, I want to thank everyone for their observations and suggestions. Now I need to convince DH that a price drop may be necessary.

#150 Reg on 02.26.09 at 7:40 pm

#134 Bill-Muskoka (NAM)

Bill, they spoke of this very item on the BNN channel this afternoon. There was/is quite a debate on this as the wording of this new policy is such that the recommendation of the shareholders is NOT binding. I don’t think there is any chance in hell that the executives are going to let anyone else but themselves have the final say on their compensation. Not if they can help it, anyways.

#151 Future Expatriate on 02.26.09 at 7:44 pm

Drop your price 50%… your house will sell.

Face it; it will end up there anyway. Maybe lower.

Beat the crowd.

#152 CalgaryRocks on 02.26.09 at 7:52 pm

#105 Kevin wrote:
…
that will be trapped in negative equity for a good 10-15 years (or will just go through foreclosure), in any case, Edmonton is quite likely looking at a lost decade)

A house can get paid off in 15 years and when you sell for a cheap price you can also buy for a cheap price.

Anyways, don’t worry about 15 years from now. With the trillions of paper money being printed 500K will seem pretty cheap 15 years from now. That could be the average yearly wage for a janitor.

#153 dodgedabullit in Alberta on 02.26.09 at 8:02 pm

Greetings: poster 137 [Jeff Smith} You are right about the population decline world wide, but for the wrong reasons. There will be few other new developing nations from now on. Reason, no oil, no water, no food, no western medicine = population die-off. Nigeria has lots of oil, fat lot of good it has done the local population. Saudi Arabia will be exchanging RR and Bmers for camels. Google Dubai real estate crash for example.

#154 David on 02.26.09 at 8:13 pm

Look like the world class condo theme park got thrown under the bus. Hard to lament a project that provided overly expensive properties supported by unsustainable mortgage debt.
The web site is still operating.

http://www.vancouversturn.com/

#155 eddy on 02.26.09 at 8:20 pm

if buyers are walking from million dollar deposits in new york city, every Canadian thinking of buying should hold off and wait for bottom.
this is a warning sign. Harper wont bail you out. swim at your own risk, it is illegal to harass or feed the wildlife.

#156 ncoffee on 02.26.09 at 8:25 pm

So, here’s the deal: having very much enjoyed our autographed copy of After The Crash (thanks Garth), the wife and I have been just getting set up to sell our Calgary SFH in early April. We bought three years ago (25 year mortgage) and even if we drop our price considerably below comparative places in our same area, we should still get some decent coin out of it. IF it sells, of course.

My question is: taking into consideration the following perhaps contradictory remarks from Garth pasted below, besides going through with our plan, what else could we do, but hold onto a place that is pretty much guaranteed to drop in value over the next year or two or et cetera? Sure, we would have been smarter if we’d been selling a year ago, but I’m having trouble seeing a situation where it would be a good idea to not be trying to sell it at this point.

Thanks in advance for any insight!

#7 You have a small window. Jump through it. — Garth

#80 People listing now are listing too late. I issued the sale recommendation seven weeks ago. — Garth

Nothing contradictory there. If you are currently in a property being marketed, you have a very small opportunity to find a buyer before the storm of listings hit. If you’re still thinking about selling, don’t bother. — Garth

#157 Jonathan on 02.26.09 at 9:07 pm

Some people are talking about home prices and sales flatlining. What first time buyers would pay only 10% less for a home than a year ago? These guys must be idiots. First off homes were overpriced a year ago. Second, we are in the middle of the worst global crisis since the great depression. It’s either a dead-squirrel bounce as one person put it, or these Canadians that are buying are as smart with their money as a door knob. Wait until they lose their jobs and their stuck with negative equity.

For arguments sake, let’s say the market correction was over (which it isn’t, but let’s just say). Personally I’d rather pay 10% more in a few years then to buy right now in the middle of this uncertainty. If you want me to buy right now, I want compensation for the risk I’m taking (in the form of a significantly reduced price).

However, in Milton Ontario there are 1565 listings on realtor.ca (plus many more private listings) and I think there were 59 sales last month. What does that make it… 26+ months worth? Prices are only down about 10%.

To me that sounds like a market that has not corrected yet. I’ve done similar calculations for Vancouver Island. Many cities have about 4 years worth of inventory. Demand isn’t going to skyrocket all of a sudden, so I would guess that the correction has barely even started. US real estate peaked in 2006 and it really started to melt in the summer of 2007.

#158 Joren on 02.26.09 at 9:15 pm

Just what the Real Estate market needs…. make it even harder to sell a home

Province Introduces Legislation to Require Home Energy Audits

February 24, 2009 — The provincial government has introduced legislation, Bill 150, the Green Energy Act, which, if passed, would require mandatory home energy audits prior to the sale of a home. This legislation has not yet been passed and is not yet in effect.

Details
Under the proposed Green Energy Act, home owners would be required to provide information regarding the home’s energy efficiency prior to the sale or lease of the property. Energy efficiency information about the property would have to be determined and provided by standardized methods established by the provincial government. The Province has not yet provided information on these details. The legislation, if passed, would allow the provincial government to prescribe:
• what energy efficiency information has to be provided and in what manner;
• the cost of home energy efficiency audits;
• the types of residences that these requirements would apply to; and,
• under what circumstances and at what times these requirements would be effective.

#159 dekethegeek on 02.26.09 at 9:19 pm

#113 Got a Watch.
Interesting observations of two types of Vancouverites. However I think that just about sums up most Canadians under 30 and over 65.
a) Young, oblivious to the financial tsunami, not too worried about the future.
b) Retired, financially ok, but still concerned about the future.
I think the difference can be summed up by the fact that the older person remembered the fiscal meltdown of 1979-1985 in Vancouver/ Canada. Houses in Van. that were selling for $250k in Jan 1982 ( at 18% interest rates) were selling a year later for $125k (at 16% interest).
Yup , nasty times.
Unfortunately too few people remember( or WANT to remember ) the bad times. You have to get burned before it sinks in. Financial scars that last for several years tend to do that. I think an entire generation of people are going to be like our Grandparents that experienced the Depression ( remember them yelling at you to “Turn off that damn light, your wasting electricity!” )
I may be turning into my parents but the kids today will turn into my grandparents. How ironic.
Maybe they’ll learn how to bake bread, or hitch a horse to a wagon.
Ahhh the good old days eh? Road apples and outhouses. Can’t wait.

#160 TomOfMilton on 02.26.09 at 9:48 pm

#59 “…After all, she was punctual. Riot starts at noon, who’s in?”

Well…it looks like it’s you and me against the universe.
When do we attack!!!?

#161 Bill-Muskoka (NAM) on 02.26.09 at 10:10 pm

#151 Reg on 02.26.09 at 7:40 pm

Well, when I was a CEO of a corporation the annual meeting determined if my request for salary was in line with reality. Maybe the stockholders will simply sell their stock to a competitor and stuff it right up the CEO’s arse?

That would a be a very ‘proctical’ means of dealing with the situation, eh?

#162 CAPOFALBERTA on 02.26.09 at 10:12 pm

Here in Edmonton seems that 5% is about how low your offer can go. My realotr knows a bank exe and on there forecloseurs thats about there limit.
Also was looking at 1100 sq ft bungalow—listed 332,900 and they want 315 000—-5.25% thats all there gonna move.

Wait two weeks, and go in lower. Wait two weeks and repeat. — Garth

#163 Bill-Muskoka (NAM) on 02.26.09 at 10:14 pm

Anyways, don’t worry about 15 years from now. With the trillions of paper money being printed 500K will seem pretty cheap 15 years from now. That could be the average yearly wage for a janitor.

#153 CalgaryRocks on 02.26.09 at 7:52 pm

Whoa Man! Like did you just get done with a Cheech Marin sized Doogie? How was B.C.? Good bud it would appear! LMAO!

#164 Bill-Muskoka (NAM) on 02.26.09 at 10:15 pm

#161 TomOfMilton on 02.26.09 at 9:48 pm

Forget all that. Eliminate the Carbon Based Life Forms! Kluto!

#165 Bill-Muskoka (NAM) on 02.26.09 at 10:22 pm

The safest place to live in the Free World is the Pacific Northwest…especially Vancouver, the next Financial/Trade/Leisure Capital of North America.

#149 North Vancouver Citizen Jr. on 02.26.09 at 7:00 pm

Really? How is the Pacific Plate doing these days? Any seismic rumblings? A little resurgence of volcanic activity?

Whatya gonna do when the Plastic Sea reaches your shore from the mid-Pacific? Recycle it all? Sell it all back to China and buy it again?

#166 KenDaBanker on 02.26.09 at 10:24 pm

Garth – am a fan of your posts.
Waiting for the housing market to fall a bit before I decide to invest in my home – I presently rent. I work in a bank and I have been talking around with bankers. I happen to understand the following:
Mortgage companies/banks are discounting the peak prices by 20% and then assume min 10% downpayment before giving out the rest as mortgage loan.
Example: For a house with peak price of $400,000 in mid-2008, banks will assume the price to fall by 20% to $320K and then downpayment 10%. Hence mortgage loan will only be $288K – in other words only 72% of peak prices. You ppl do the maths for the other prices. Banks/mortgages are very conservative now. Credit history is important but 95% financing is becoming a mirage in the desert.

for buyers to get mortgages, be prepared to make a huge down unless the prices are decreased. But sellers are not decreasing – some have decrease by 10% but most are stubborn. Some buyers tried buying even when price is high but then, they don’t get a mortgage.

my view – sellers should reduce their prices to sell and buyers (if any) should bid peak price minus 20% (min).
In the end, buyers will dictate. But when will sellers give in and realise they can’t make huge profits.
Some buyers are buying a HOME.

#167 CAPOFALBERTA on 02.26.09 at 10:33 pm

Wait two weeks, and go in lower. Wait two weeks and repeat. —-GARTH—maybe my problem is I go to low right off the get go and I dont budge. LOL

A realtor friend in VICTORIA expects the market to drop upto 35% and was questiong why I was looking right now

Does anybody in the know epext intrest rates to rise

#168 David Bakody on 02.28.09 at 1:44 pm

For all those who want to know all about gold. This extensive article appears to support what Garth said in nut shell …. ( Gold was/is good … but!)

http://www.telegraph.co.uk/finance/personalfinance/investing/gold/

#169 Dave on 03.02.09 at 1:55 am

someone earlier mentioned that the DOW and TSX have hit lows not seen since 1997- which is correct. That same person suggested that real estate prices will follow. Therefore, prices of real estate will be at 1997 levels.

Can someone please confirm this? Does anyone have any info. linking stock price levels with real estate price levels?

This would be very interesting, however, I’ve never heard something like this before.

thanks in advance