The subprime press


RE horror is Page One news this weekend. An omen?

Six years ago I was met a big guy in a loud suit on Bay Street who founded an itsy little mortgage enterprise. The company specialized in making loans to anyone with a pulse. Technically, they were known as “B” and “C” borrowers, but in reality the clients were folks everyone else had turned down because they had the credit rating of a golden retriever.

Interestingly, my intro to this man was made by a senior vice-president in charge of mortgage landing at one of the Big Five banks. I soon learned the two of them worked closely together, with the bank channelling a big volume of business his way – loans they wouldn’t make in their own name, but helped facilitate and took a cut of.

In the US, these loans were called subprime. Here it was just routine business. In fact, until recently our big banks all ran mortgage brokerage operations of their own, “white labelling” mortgages through independent mortgage shops and grocery stores, so that virtually anyone who wanted money got it. In addition, “innovations” were made to help speed loan approvals, like dumping physical property appraisals in favour of a postal code check. That meant nobody ever actually looked at what they were financing.

Well, as you might imagine, the guy in the loud suit got rich and took his little company public and lots of people invested in it. Then when the credit crisis hit last autumn, he folded like a house of cards, and the company went down in flames. Many people lost much money. But I heard he did okay.

I was reminded of this on the weekend as I picked up my Globe and Mail and saw an expose on Canada’s subprime mortgages, complete with outrage at the number of foreclosures now popping up around the country. A good piece. Just six years too late.

Meanwhile few reporters have yet to understand the role of the 0/40 loans that also constituted Canadian subprime equivalents, and which had the official sanction of the Government of Canada. Within a year and a half of 40-year amortizations and zero-down payments becoming eligible for mortgage insurance (which protects the lender, not the borrower), they accounted for over 60% of all new mortgages. Simply put, this meant people without money could buy houses. And they did. In droves.

Today (as I detailed in a recent piece on Milton, Ontario), there are thousands of young couples who bought homes with no equity, based on their employment income only. Sadly, the world has changed. Declining home values mean many are sliding into negative equity. And with Canada shedding jobs at a far faster pace than the US (Friday’s numbers were appalling), lots of folks find they cannot make payments, have no savings and can’t sell their homes since they owe more than they own.

Maybe we need a few investigative pieces on that. The politicians who dreamed this up – deregulating the Canadian mortgage market at the precise moment it would do the most damage – have some ‘splaining to do.

Anyway, then I bought the Toronto Star. Front page stories on how the real estate meltdown has creamed investors, speculators, developers and dewy-eyed young buyers.

Hmmm. Page one in the MSM.

Does that mean it’s over?



#1 JoeCalgary on 03.14.09 at 6:08 pm

What happened to the $20 billion cash injection the Bank of Canada gave the banks on Oct. 3, 2008?

Where did the money come from, and where did it go? Taxpayers’ money into a black hole?

#2 Herb on 03.14.09 at 6:20 pm

Over? Hardly – it means that the elephant in the room has gotten too big to ignore and is getting restless.

#3 ThumbsUp on 03.14.09 at 6:39 pm

….Within a year and a half of 40-year amortizations and zero-down payments becoming eligible for mortgage insurance (which protects the lender, not the borrower),…


CMHC insures those mortgages by collecting insurance premium from the borrowers, why do we taxpayers have to take the losses? unless CMHC is a Ponzi scheme!

#4 dekethegeek on 03.14.09 at 6:42 pm

And this is the beginning of Canada’s RE meltdown? Ozzie Jurock will NEVER admit the sky isnt falling.

#5 BC Guy on 03.14.09 at 6:58 pm

Questionable article. I agree there are more foreclosures in the Vancouver market but a a subprime meltdown…I don’t think so.

If prices become depressed then I think you will see an impact on refi applications but my opinion of the premise of the G&M article is less then favorable.

Regards to all

#6 Da HK Kid on 03.14.09 at 6:58 pm

As long as there are any mortgage bubbles bursting and deflation is all around us, housing will continue to tumble.

I have mentioned this many times but will do it again, just as the sub prime mess unfolded, it sucked in the 0/40 mortgages and as it gained strength, it sucked in the 5/40, 0/30, 5/30 etc as home values continued to drop.

Today, as values continue to fall you see Option Arm and Alt A mortgages (speculator teaser rates) at 3% come due at 8% worth over $1T USD as the second phase lasting another 12-18 months.

As housing will continue to devalue, you will see many unusual delinquencies as job losses now mounting quickly will even swallow up the healthy 15/85 – 25/75 owners.

This matched with Baby Boomers trying to subsidize mortgages via their hammered 401K’s.

One stage simply seems to feed the next and government intervention will only prolong this downtrend.

When you have this level of downward devaluation of homes, deflation digging it’s heels in everyday and an alarming unemployment pace, how can you accurately predict a recovery.

Return to 2003 avg. housing values? 2002, 2001, 2000, 1999 where is the end? And even if so who will be left standing, who will be left loaning? What will the pace of the recovery be? Will housing be exactly that, a HOME where you live with your family with no real investment or leverage!

My father claims this could take us back to life in the late 50’s early 60’s! Normal size 3brdm home, one car, one income families.

Btw, he and my mother, immigrants to Canada right before the depression, had less than nothing growing up in Hamilton & Guelph, who finally bought a house in the 905 for $12,000 in 1954 for cash (in their mid+30’s), which they still live in and at the peak $650K may be worth $400K when this is all over, are alive and doing so much better than they expected.

Let’s look forward for potential corrections that bring us back to living life, if we can remember what that meant!

I’m sure we will, and maybe Garth will offer up one of his new RE acquisitions (when the time is right) for a house warming. All Pot-Luck dishes must be home made, ingredients must come from your local farmer and/or your own back yard.

#7 ThumbsUp on 03.14.09 at 7:01 pm

Hmmm. Page one in the MSM.

Does that mean it’s over?

‘No down payment No problem’, ‘Rent to own’ are still everywhere. The Canadian version is still in the making!

#8 rory on 03.14.09 at 7:07 pm

Things that make you go hmmm … and things that disappoint a little (just a little actually)…from the G&M article.

“In the end, no one raised a single question about the prospect of 40-year or zero-down mortgages. The bill sailed through the committee – including a vote of support from Mr. Turner.

“At the end of the day I sadly acquiesced,” he said, adding that he regrets voting the way he did. “At the time it was politically difficult.”

More hmmm…sheeple indeed we all are at some time in our lives … live, learn, and then raise a little hell.

Assuming this post is a good lead in to your nex book.

I was the only one to raise the issue and cause hearings to be held. I blogged about it. I called in the media. I lobbied my colleagues. Nobody budged. Sorry, pal, but I did not commit suicide over it. — Garth

#9 Keith in Calgary on 03.14.09 at 7:10 pm

The politicians will say that “they never saw it coming”…….

The banker will say that “it was a normal fee based business transaction”…….

The “Real Estate Industrial Complex” will say that “we didn’t force the buyer to sign on the dotted line”…….

The mainstream media will say that “our advertisers only allow us to write positive faith based economic articles designed to enhance their bottom line, thereby increasing our own at the same time”………errrrr…….no they won’t say that, but that was what they were doing.

All four of these parties were culpable in the great housing crash of 2008-2015………and yes Virginia, there was subprime in Canada……tons of it.

#10 Marc on 03.14.09 at 7:12 pm

Guy in loud suit? I never knew Grapes was in the mortgage lending business. Speaking of Grapes, I gotta run, he is on in a few minutes.

#11 jess on 03.14.09 at 7:40 pm

… media concentration easy to spin.

but i remember walter steward miss that cranky guy. I loved his books

#12 Jeff Smith on 03.14.09 at 7:42 pm

Let me guess… This article!

#13 Rick on 03.14.09 at 8:03 pm

Would any reader in Edmonton know anything about UMC Financial Management. I’m just wondering it this Edmonton-based mortgage broker is similar to outfits mentioned in the above blog post and the Globe and Mail article??

#14 Gord In Vancouver on 03.14.09 at 8:37 pm

Does that mean it’s over?


Did George W. Bush have a 90% job approval rating?

#15 eddy on 03.14.09 at 9:10 pm

Thumbs up wrote: why do we taxpayers have to take the losses? unless CMHC is a Ponzi scheme

Insuring loans to people who are very light on cash reminds me of a credit default swap. I don’t think government should be the banker in this casino.

#16 double mike on 03.14.09 at 9:11 pm

Garth, why are you badmouthing a Golden Retriever? Sure poor animal has more sense than you imply! ;)

And BTW, Canada does not have “prime” mortgages in US sense. Everything over here is one or another shade of ARM. US consumer would’ve gone nuts from this kind of terms. And yet, they are much worse down there with their much better mortgage market term-wise. When is our turn to return to historical normality?

#17 Kevin on 03.14.09 at 9:35 pm

The loud suit sounds like Ivan Wahl, Chairman and CEO of Exceed Mortgage Co.


Ivan S. Wahl
Chairman and Chief Executive Officer

Mr. Wahl has approximately 30 years of experience in the residential mortgage business and has played a leading role in the development of the Canadian mortgage broker channel and the mortgage-backed securitization industry in Canada. He founded FirstLine Trust Company in 1985 and served as its Chairman and Chief Executive Officer, later selling it to Canadian Imperial Bank of Commerce, where it was renamed CIBC Mortgages Inc. From 1995 to 2001, he was Vice-Chairman and Director of CIBC Mortgages Inc. Mr. Wahl holds a Masters of Business Administration from York University and attended Harvard Business School – Owners & Presidents Management Course (OPM). Mr. Wahl was also the recipient of the Ernst & Young Financial Services Entrepreneur of the Year award for 2005.

#18 David Bakody on 03.14.09 at 9:40 pm

As mentioned each and every day more people learn the hard and cold facts about Harper and Flaherty’s plan to boost business with little no leadership or financial skills ….. but they sure know how to plan attack adds and lie with a straight face. “Canada’s Economy is as strong as the Canadian Shield” and if y’all believe the new line of “We were last in and will be the first out” or “it will short and mild” give your head a shake ….. but fear not there are still many in MSM still on their hands and knees waiting for the King to say rise and ask the question we sent you and your name will be submitted for an upcoming Senate Appointment!

My questions to these MSM sheep is: What did the taxpayers of Canada do to deserve for y’all to turn your back on the truth and a blind eye to investigative journalism?

#19 Too Old Bob$ on 03.14.09 at 9:55 pm

“Simply put, this meant people without money could buy houses. And they did. In droves.”

Once apon a time there were a whole bunch of cows (people). Some machine came along and gave out Grain. These cows liked the Grain and started eating it, because it was good. They would eat as much as they could. Kinda got out of hand, because they kept consuming it and took more than they needed. So the machines had to control the amount they got. All the machines wanted was some Milk (money ).The cows didn’t know why they liked it, they couldn’t care less why, all they knew was, that it was good and wanted more of it. It seemed kinda weird to the cows, all the machine had to do was hold out a bucket of Grain and they would come running, trample over each other if they had to, almost like an addiction. Pretty soon other machines caught on and got into the game. The cows loved it, because there was Grain everywhere for the taken and all they had to do was give Milk. Simple, in fact the cows thought they were smarter than the machines. Well eventually the cost for the Grain went up and the cows couldn’t keep up because their Milk started to decline or go sour. To make a long story short; the machines got fed up with the cows and quit giving them Grain. The cows protested and said no more Milk for you. The machines said fine and shot the cows.
WOW! what a bad dream I had. :(

#20 $fromA$ia on 03.14.09 at 10:07 pm


Recently I was considering buying shares in the big banks for the 6%-10% return dividend.

Actually this thread you wrote re-enforces my initial thought of holding off.

I think the big five banks are going to cut their dividend eventually cutting their stock values probably 1/3-1/2.

The big five have been comming out with these prefered shares recently and I heard a rumor that the big five are using it to pay out their dividends. WOW. Sounds like water going into a bucket thats got a leak.

Any thoughts on the stability of the BIG FIVE to hold their dividends?

Garth,Do I have a good hunch?

#21 ts harpoon on 03.14.09 at 10:08 pm

Who can blame them?

The house buying-and-selling orgy was set off by our government which worked its way through a lending system where mortgage rates fell to historical supernatural lows.

Those federal policies added to a further decay of lending practices. So, in a post 9/11 world that inspired a nesting mania (yes, Canucks too) coupled with the allure of domesticity goddesses like Martha Stewart, who can really blame wealth-hungry Canadians for entering a zone of hallucinated wealth accumulation with those “approved” incentives?

With the endless supply of cheap oil to build the banal pop-up subdivisions with their McMansions with the lawyer-foyers, who really gave thought to the viability of the suburban sprawl fiesta? After all, wasn’t the RE market supposed to replace the manufacturing economy?

Are we not entitled to the raptures of non-stop growth, recreational shopping, and central air conditioning? Who could resist those luxuries? Garth?

#22 daystar on 03.14.09 at 10:29 pm

Appalling jobless numbers are right. Another 110,900 full time jobs lost last month. Good thing Febuary only had 28 days!

#23 john m on 03.14.09 at 10:44 pm

Great post Garth.I can’t express how angry it makes me when i remember how you voiced your objections to the governments approval of the subprime mortgages and no one had the foresight to listen….well here we are. Curiously our leadership takes no blame and is dishing out billions in bailouts to news worthy failing enterprise while laid off workers face long waits to get their UI. The propaganda being spewed by our government has as much credibility as a not guilty plea by Bernie Madoff.

#24 Basil Fawlty on 03.14.09 at 10:44 pm

“Does that mean it’s over?” Good luck Amigo, this snowball is just picking up speed. Jobs are being shed like a knife through butter. The largest financial institutions in the US and UK are walking Zombies. Countries such as Iceland, Ireland, the UK, NZ and most of Eastern Europe are at or approaching severe financial stress. The military in Canada, the US and UK are all planning for civic unrest. The average person is just waking up to the fact that that big finance and governments, pulled the financial rug out from under their feet. Many people are already destitute and the job losses are excelerating . We are just approaching the beginning of the end. The money printing to come has barely kicked in yet, but will as foreigners quit propping up the financial basket case immediatly to our south. The trillions in bailouts so far have been to keep the massive +$500T derivatives beast from imploding. Thats why they won’t say where the money went, because it went to all the counter parties to the derivative insurance contracts, many of them offshore. This is a financial crisis which is worldwide, systemic and totally unprecedented. Nobody knows when or where this will be settled.

#25 Mike B on 03.14.09 at 10:59 pm

Da HK kid 6 is correct about alt a and option arms being the next wave HOWEVER the US are a clever bunch and appear to be heading this off at the pass. Talk about suspending mark to market accounting ,thereby making the toxic banks appear solvent, is surfacing. The Americans love to change the rules in the middle of the game. Hey the two insolvent banks flauted this week that they made profits… Of course prior to any of those pesky write down thingamagitters. Silly accountants.

#26 JoeCalgary on 03.14.09 at 11:06 pm

“International Monetary Funds’ growing pessimism about the potential for recovery in 2010”

“trade will decline by the most in 80 years, the World Bank said this week”

“IMF Bailout Pool May More Than Double” (to $500 billion) “loan requests from Pakistan to Hungary”

#27 Kim on 03.14.09 at 11:07 pm

“I was the only one to raise the issue and cause hearings to be held. I blogged about it. I called in the media. I lobbied my colleagues. Nobody budged. Sorry, pal, but I did not commit suicide over it. — Garth”

It’s 100% true that garth was the only one. I happened to catch Garth on c-span and he had to agree to change the language inorder to have the proposed hearings. He really had to fight tooth and nail.

#28 kc on 03.14.09 at 11:20 pm

I linked to this article last post, in case you missed it… it is worth the read how our Canadian Gov. let in AIG and the big US bankers, brokers to push the 0/40. When Garth was a member of Harper’s team he actually had the balls to stand up to this crap and question the whole process, however, he was pretty much forced into agreeing with the scam for the cons were over the barrel to let it pass…. in other words, they KNEW perfectly well what they were doing and today they say “we have NO subprime in Canada”…. BAAAAHHHH goes the sheep. Garth, you could have been booted for far less then what you stood up for.

Rory used a bit of this to bash Garth on #8

Special investigation: How high-risk mortgages crept north

The untold story of how elements of the first Conservative budget in 2006 encouraged big U.S. players such as AIG to make a push into Canada, creating our version of subprime mortgages

Friday, December 12, 2008

#29 bumbum on 03.14.09 at 11:22 pm

let me get this straight about US sub-prime…

if i’m a US citizen and have 100k in the bank making interest or investments and still go out to buy a house with 0% down at 600k few years back but the current market value is 350k, i could just walk away and not owe the mortgage lender anything?

#30 ottawa.cynic on 03.14.09 at 11:31 pm

The fed releases its triennial survey of consumer finances for the 2004-2007 period. Does not fully capture the collapse of the housing markets, however does offer up some interesting data.

#31 kc on 03.14.09 at 11:35 pm

46 dd

from last post, I agree let people just live in the houses… want to see something really scary? just do a youtube search on tent city …. usa… things are looking ugly there

#32 dd on 03.14.09 at 11:56 pm

“Simply put, this meant people without money could buy houses. And they did. In droves”

Yes, and that is why this downturn will take a while to iron out. Lots of house and no money for anything else.
House rich, money poor.

#33 Chincy on 03.14.09 at 11:57 pm

Isn’t it obvious to everyone? This R.E. and credit implosion, derivatives leverage and the wiping out of all this wealth was all planned and executed by Obama’s new bosses.
Garth, here’s a question for you, you does Obama and quite frnakly Harper work for? And don’t say the people.

#34 dd on 03.14.09 at 11:59 pm

Wow … Again, thanks Garth for your timely book about a year of two ago. It was enough to point the direction to sell my own house in mid 2008.

#35 Tom on 03.15.09 at 12:09 am

Times have changed.Ethics are knowing the difference between right and wrong. Intergrity is practicing right behaviour. Unfortunately competition starts to be successful with the practice of non ethics. Pressure mounts and competitors must follow. It is unfortunate but most people fall for the sales pitch and think that real estate is an investment. It is first their home. If they put a sizeable down payment down then enjoy their home in the long run they should be ok.

#36 Taxpayer like you on 03.15.09 at 12:18 am

6 HK kid said:

“Today, as values continue to fall you see Option Arm
and Alt A mortgages (speculator teaser rates) at 3%
come due at 8% worth over $1T USD as the second
phase lasting another 12-18 months.”

How do you see this playing out? I mean, if I am a lender, what do I have to gain by foreclosing, as opposed to re-negotiating the term at a lower rate? Sure, if youre underwater, they will walk, but if there are 2-3 million foreclosures, there is no way to get the money back as prices will be driven down further.

How about forming a toxic bank in Canada? It looks like we’re on the hook for it anyway via deposit, mortgage
insurance and BOC. Why not have this toxic bank repo
these when the time comes, then auction them off over
time to recoup some of the losses? We could all be
reluctant landlords!

Lets start the ball rolling on some solutions here instead of doom n gloomin it day in day out…..

#37 Nebbio on 03.15.09 at 12:31 am

Spring is just arond the corner Garth. The truth will be told in the next few weeks. I have a hunch you will be right.

#38 . . . fried eggs and spam . . . on 03.15.09 at 12:44 am

“Does that mean it’s over?”

Not exactly. Ask the question again, around 2025 or so when a bunch of boomers will be enjoying the afterlife or pushing up the daisies, so the feds. have less to pay out on CPP / OAS / GIS (if they still exist).

“Many people lost much money. But I heard he did okay.”

Now where did I hear that before? Haahhhh! The IT flip flop / two-faced lie / scandal.
BTW, trade figures don’t look particularly ravishing for the Excited States.

#39 Dave99 on 03.15.09 at 12:49 am

I’m a cynic like the rest of you here

However, thus far the CMHC has been hugely profitable. When all is said and done, that may change. But until that time I don’t think we have any cause to start wailing about “why should we innocent taxpayers pay this bill”

#40 Jay Currie on 03.15.09 at 2:52 am

Plenty of willing lenders to service the market. They will be having the proverbial haircuts in the months to come.

Garth, you did what you could in Parliament but with MPs having been rendered entirely irrelevant that was not so very much. good for you for trying.

There will be lots of foreclosures and lots of people selling out at less than they paid for the place. If you buy at the top of a market that happens.

The real question is how many people lose their jobs and their incomes. No income, no mortgage payment, foreclosure follows.

Renting looks smart for the moment.

#41 lgre on 03.15.09 at 2:57 am

10k+ forclosures is more then enough to put a pretty big dent into the BC/Alberta RE market. I’m not sure why some people on this blog are still in denial. The population in the U.S is 10 times of Canada..lets not forget that. All it takes is one house to sell for very cheap on your street and yours will be worth no more.

#42 gold bug on 03.15.09 at 5:09 am

Keith in Calgary reminds us, “the ‘Real Estate Industrial Complex’ will say that ‘we didn’t force the buyer to sign on the dotted line,’ and then asserts for the 1000th time that the RE industry is nonetheless “culpable in the great housing crash….”

First part is true. Nobody forced any buyers to do anything. To suggest otherwise is to deny free will.

The second part is nonsense. Salespeople do not cause bubbles, buyers do. The only culpable party in the RE bubble is buyers.

#43 Lana on 03.15.09 at 6:39 am

And then there is Flaherty at the G20 Summit telling everyone they should fix their banks to be more like Canadian banks.

#44 OttawaMike on 03.15.09 at 7:49 am

This new product is surely a sign of the impending apocalypse:
It’s so far only available in the UK.

#45 Punky on 03.15.09 at 8:21 am

Thanks for all your insite Garth, I have been reading your site here since last Aug and sitting on the sidelines as everyone calculates how far this once in a hundred year event takes us.

Here is my simple calculation…were back to the 1997 level here FAST…and quite possibly lower! Your banker will be calulating your new mortgage at about 32% GDS or 40% TDS. Take the Avg combined income and you can figure out the rest. I could be wrong but I believe the avg for the GTA should be aroung $ 68,000. or so.

Add in wage reductions…right here on this post, Auto workers…if they have a job…Da Lewenza are you listening…your wages are coming down or there is no wages period. Now a $ 12.oo-$ 15.00 per hrs looking really good. Now calulate the Mortgage on will tell you where its all going.

We may even get back to where Dad goes to work and Mom stays home to raise the family, and maybe even single Mom’s have a chance to make it on there own.

Keep up the honest work Garth! Your a Gem!!

#46 on 03.15.09 at 8:30 am

Check this out.

The new Depression.

#47 molson cdn on 03.15.09 at 8:35 am

the 40 year mortgage was an opportunit y for everyone–especially the new home owner.
the lenders loved it–they all made $$$$.

its really an exciting time–lets see how the house of cards fall, and in which direction!
bravo garth

#48 Bill-Muskoka (NAM) on 03.15.09 at 9:05 am

For all who plan on renting here is a, little reality check lesson to consider! LOL


A businessman met a beautiful girl and agreed to spend
the night with her for $500. They did their thing, and, before he left, he told her that he did not have any cash with him, but he would have his secretary write a cheque and mail it to her, calling the payment ‘RENT FOR APARTMENT.’

On the way to the office, he regretted what he had done, realizing that the whole event had not been worth the price. So he had his secretary send a cheque for $250 and enclose the following typed note:

‘Dear Madam:
Enclosed find a cheque for $250 for rent of your apartment. I am not sending the amount agreed upon,
because when I rented the place, I was under the
impression that:

#1 – it had never been occupied;

#2 – there was plenty of heat; and

#3 – it was small enough to make me feel cosy and at home.

However, I found out that:
#1 – it had been previously occupied,

#2 – there wasn’t any heat, and

#3 – it was entirely too large.’

Upon receipt of the note, the girl immediately returned the cheque for $250 with the following note:

‘ Dear Sir:
#1 – I cannot understand how you could expect a
beautiful apartment to remain unoccupied indefinitely.

#2 – As for the heat, there is plenty of it, if you
know how to turn it on.

#3 – Regarding the space, the apartment is indeed of
regular size, but if you don’t have enough furniture
to fill it, please do not blame the management.

So, Please send the rent in full or we will be forced
to contact your present landlady.’

#49 Kettle...Pot Calling on 03.15.09 at 9:11 am

“bumbum” – depends on the state. There are 12-15 “non-recourse” states where you can just walk away and the house becomes the lender’s problem.

However, why would someone with 100K in the bank fall into the subprime category? Those who received subprime loans were people with records of failing to pay their bills on time and with few assets/low income. The hypothetical person you are talking about could still have received a 0-down mortgage, but would likely be considered a prime borrower.

#50 dd on 03.15.09 at 10:19 am

#42 gold bug

“the ‘Real Estate Industrial Complex’ will say that ‘we didn’t force the buyer to sign on the dotted line”

True, but some people should never own homes. Should a person making $40k a year be able to purchase a $400k year home with no money down? No. But it happened.

#51 Go Green on 03.15.09 at 10:20 am

For those who posted on Garth’s previous blog, I wonder how our friend, Lisa the farmer, now feels about those 0/40 mortgages. Probably still in denial mode and was a cheerleader when Stevie continued to blame liberal policies for creating all this mess at the Manning Institute for Building Democracy last Thursday!

#52 dd on 03.15.09 at 10:27 am

#49 Kettle…Pot Calling

“However, why would someone with 100K in the bank fall into the subprime category? Those who received subprime loans were people with records of failing to pay their bills on time and with few assets/low income.”

U sure? It could be a person that has mortgaged up everything and still have money in the bank. A person with no skin in the game. Leveraged out the ying yang?
However, it is just not subprime. Now the trouble is spreading to prime – lots of people not working now.

#53 Joe Realtor on 03.15.09 at 10:30 am

Even the CMHC is living in a technicolor house of haze.

I went to a presentation they were giving last week and they claimed that 40 year mortgages made up .2 or .3% of mortgages.

Then they said:
-condos will remain in demand in the GTA because SFH are so expensive
-they anticipate a 4.1% drop in sale prices this year
-and 1.4% in prices next year (2010)

Then they go on to say that we should be pricing homes at 2006 levels (which kind of blows their 4.1% figure out of the water)

You know, I’m all for being optimistic and not contributing to the cycle of doom, but these guys (and gals) are out to lunch.

#54 dd on 03.15.09 at 10:31 am

#3 ThumbsUp

“CMHC insures those mortgages by collecting insurance premium from the borrowers, why do we taxpayers have to take the losses? unless CMHC is a Ponzi scheme!”

You ever heard about a insurance company going bankrupt because the unthinkable happened? The unthinkable is a lot of people not being able to pay the mortgage!

#55 ThumbsUp on 03.15.09 at 10:39 am

#15 eddy
Insuring loans to people who are very light on cash reminds me of a credit default swap.

It is absolutely CDS, only exception being the premium is paid for by the borrowers instead of the lenders (banks).

#39 Dave99
“However, thus far the CMHC has been hugely profitable”

Profitable? maybe, everyone in the RE business has had a good profit over the years. AIG was profitalbe not too long ago. Sound like you know the balance sheet of CMHC, I’m curious about it, don’t tell me it’s confidential.

CMHC insures the mortgages by collecting premium paid for by the borrowers, while the coverage and payout go to the banks, it encourages the bank reckless lending practice, while consumers pay for the bubbled price inflated by themselves!

Here is a link that documents the $75billion transaction through CMHC –

#56 dd on 03.15.09 at 10:45 am

Carney hedges economic rebound prediction

“The Bank of Canada seems to have ditched its prediction for a made-in-Canada economic rebound next year…Bank of Canada Governor Mark Carney hinted strongly that his last forecast for 3.8 per cent growth in 2010 is no longer valid. “Clearly the risks are breaking to the downside,” he said, referring to the string of grim Canadian and international growth data in recent weeks.

Come on Carney. Stand up and make a prediction on the facts. Herd mentality…oh everyone else says it is bad so it must be bad?

#57 bobs your uncle on 03.15.09 at 10:55 am

#36…..Canadas “Toxic Bank” is called CMHC and it’s shareholders are the taxpayers!

Why is CMHC underwriting duplexes and fourplexes? It’s to protect our banks from speculators.

#58 kc on 03.15.09 at 11:42 am

this was piggy-backed from FP … Garth care to comment on this one?? It is saying that even with the fall of rrsp’s and “investments” public sector workers will not be taking any hits on retirement as the regular joe gets to pick up the tabs…. PIGS AT THE TROUGH…..

At the end of 2007, according to Statistics Canada, Canadians had accumulated $1.8-trillion in retirement savings. Estimates of the losses since then range from 20% for public sector pension plans to 50% for RRSPs riding the markets. Worse, 70% of the total assets in employer sponsored pension plans belong to 20% of Canadian workers, all members of cushy public sector pension plans. Guess who is on the hook for losses in those plans? Ante up tax payer.

“Experts predict that by the time the dust clears these luxurious plans will be facing 2008 losses of about 20%. The good news for members of these plans is that the vast majority promise a defined benefit, meaning that retirement income levels are guaranteed by the employer — the government — who is thus at least partly on the hook for any losses.

That is not good news for the remaining 75% to 80% of Canadian workers employed in the private sector. As tax payers, they are the ones who will ultimately pay the bill.”

#59 Bobby G on 03.15.09 at 11:42 am

The Puppet Masters

#60 vantown on 03.15.09 at 11:57 am

It may be a blip, but the Vancouver market seems to be defying the odds right now. Sales and prices are up. What on earth is going on?

#61 ThumbsUp on 03.15.09 at 12:22 pm

more on CMHC insured mortgages
Insurable Risks:
1) The insurer must be able to charge a premium high enough to cover not only claims expenses, but also to cover the insurer’s expenses. In other words, the risk cannot be catastrophic, or so large that no insurer could hope to pay for the loss.

2) The nature of the loss must be definite and financially measurable. That is, there should not be room for argument as to whether or not payment is due, nor as to what amount the payment should be.

3) The loss should be random in nature, else the insured may engage in adverse selection (antiselection).

The business CMHC is in is questionable and fraudulent:
– Is the nature of the loss definite and financially measurable?

– Is it legal that the payout be paid preemptively before the loss is incurred? ($75billion)

– Is the default risk loss random? what if the banks manipulate interest rate and the house price all goes down and they get paid upfront? adverse selection anybody?

Insurable Risks
Adverse selection

#62 $fromA$ia on 03.15.09 at 12:32 pm


C’mon Garth, what do your buddies at the bank say?

#63 confused and a little crazed on 03.15.09 at 1:11 pm

60 # vaantown.

it’s the insane interest rate.

Could you believe RBC is offering 0.4 % GIC…wow what a deal. has any one seen such a low interest rate sav ing accts range from 1.75- 2. o % ….sick. beyond stupid.
do people believe it won’t go back up?

#64 JoJo on 03.15.09 at 1:14 pm

From March 16-to April 24/09 will see again
the worst Stock Market Crash ever. RE sales in GTA will be terrible in April/May 2009. After that Torontians will see that something is wrong about their asking prices.
Just in January and February 2009, Canada had lost over 220,000 full time jobs (most of those in Ontario).
When we can compared with US job losses than our loss is double more than US. (Population ratio 1:10)
Welcome to Canadian Depression 2009-2011.
TSX index to end of 2009 will be about 4500 points and DJIA index will be about 3800 points.
RE prices in Canada will plunged about 15% in 2009 and 15% in 2010.

#65 asp on 03.15.09 at 1:24 pm

#50 dd re: $400K mortgage on $40K per year.

That would not be a mortgage through one of the big banks, nor would it be insured by CMHC. Someone with a salary of $40K only qualified for a $175K mortgage.

#66 Herb on 03.15.09 at 1:29 pm


thanx for your reminder of the link at #55. I am sure that Flaherty’s statement is absolutely true. You just have to interpret what he said: The Canadian banking system in fact is as solid as the Canadian Shield – the swampy bits thereof.

It does beggar the imagination that the Harper Government still is getting away with its propagaganda about our banks. Perhaps Garth’s Sheeple will enlighten us on the eagerness of the electorate to believe lies.

#67 rory on 03.15.09 at 1:34 pm

#58 kc

Hey KC …I have commented on this in the past about the commoners liability for public service pensions with the intent that it was a storm brewing.

I would also agree that the gov’t does not want to grapple with this issue and could be a potential election item for CUPE and the other unions. Slippery slope indeed if the gov’t has to raise taxes to cover the under funding with no changes to any plans as the rest of us are hung out with no alternatives.

The gov’t is going to try real hard to keep this one under the radar but hopefully the blog world (MSM??) will make this a larger issue that forces the politicians to deal with this in a way that is appropriate for ALL Canadians.

IMO, this issue may be the “last straw” if we see two new classes of people and the economy going nowhere – public service employee’s with fully funded untouched benefits pensions and the rest of us that are paying for them.

#68 Taxpayer like you on 03.15.09 at 2:06 pm

In response to 57 Uncle Bob

Yes I realize that we’re on the hook for it. But How does it all work? If a property has a mortgage in name of
Lender A, and the mortgage is purchased by Lender B (in
this case bank of Canada) then what entity actually owns
any repo-ed property? All CMHC does is insure the
mortgage right? So is CMHC now insuring the BOC or are they off the hook? All coming from the same trough, the
taxpayers of course, but we meed some openness on the
mechanics ie accountability.

In the meantime we just assume the $75B is gone, but hopefully we get something back over time.

Why are Canadian banks the strongest? Because they already got their bailout!

#69 EcoInsurgent on 03.15.09 at 2:28 pm

Until I came to live in Canada I had never heard of a loan for which you had a 25 or 30 year amortisation but still had to re-apply for the loan every couple of years and pay the going rate in interest. If affordable housing and fairly stable housing prices are of importance to society, then why can we not legislate the return of the stable mortgage, where you sign up at a price you can afford, and that becomes your repayment for the full term of the mortgage? None of this re-applying every few years rubbish. It addresses one of the major variables that is causing massive pain in the subprime debacle.

On this same thought, a mortgage broker linked to one of the very large Canadian banks recently told me that there was enormous bloodshed coming to the Canadian housing and mortgage markets. He said that banks will NOT be allowing people to “renew” mortgages where they are in negative equity and that the banks intend to require people to pay the outstanding difference between the new valuations on homes and the outstanding mortgage before they can get their mortgage renewed.

When will this happen? Once it becomes common knowledge that house prices are falling, banks will announce that they cannot afford to carry the risk, and to “keep Canadian banking solvent” they will announce one by one in short time that they will require valuations on homes subject to mortgage renewals.

#70 JoeCalgary on 03.15.09 at 3:05 pm

“”very real probability” that Britain will be bankrupted”

#71 Zoronqueen on 03.15.09 at 3:08 pm

Ever heard of leaky condos and how their insurance company when bankrupt?

Too Old Bob$ #19
That story is sounding too much like conspiracy theorist. Alex Jones predicts that there will be a pandemic virus to wipe out some of the population? Do you agree?

Bill #48

fried eggs and spam #38
Did you read Garth’s book. There will be no retirement for some and Those 70+ are going to be competing with those teenagers for “do you want fries with that meal” jobs.

Who pays Harper and Obama’s salary? From what I have read and understood. Some contribute the corruption to bankers involvement, to elite involment? Who pays for their campaign contributions? What do they do to keep elected or is in their personal benefits?

#72 Calgary37 on 03.15.09 at 3:13 pm

Media Weekend

A variety of news items have been published this weekend that discuss the CBC and other media in Canada.

How should we pay for what we want or need?

Here are some interesting articles:

In my earlier posting about the CBC I said:

“I have a comprehensive plan to restructure the CBC in a way that would make it one of the most watched television networks in Canada at the end of 3 years.”

Since I would like to generate some serious interest from an unknown decision maker, I should correct this to read “at the end of 18 months”.

I was being too conservative. By the end of 15 months, my revised programming schedules would be in place and the Canadian viewers would have a full range of new and revised content to choose from. Hopefully, I would have a package of 4 or 5 TV channels to choose from. Shift workers will definitely benefit from my programming concepts.

Furthermore, the competition from Global-TV and CTV seems to be on the wane, so that would tend to make it even easier to attract new viewers.

Since the CBC is already being funded for the most part by taxpayers, this is one area where the Canadian public can make an attempt to improve the CBC situation so that we get more bang for the buck. Let your MP know what you desire.

Good Luck.

Power to the People. Let the Revolution Begin.

#73 Rob on 03.15.09 at 3:41 pm


In fact, YOY sales in Vancouver are significantly lower (Feb 45%, March tracking about 30%); and prices are down 15%- over 20% and counting for downtown condos (craigslist has Woodward’s suites advertised for 500sq. ft.- didn’t they originally sell from 700 to 1000?). Out of province sales are plummeting: they only make up about 5% of total sales, of which 60% are from Alberta- and how are they doing? And, another 20,000 some odd new units coming on line this year- GVRD average pop. growth is about 32k (B.C. gov data) per year (that was during the real estate bubble), therefore, Van only requires about 13k new residences a year.

All this before 50,000 job losses in the last two months, with the least affordable (relative to incomes) real estate in the world. If you lost your job on a construction site, would you continue to rent a one bedroom apartment in Van. for $1,200, or would you move back to where you came from and have enough money to live on your $1,500 a month UI check? As such, rents are down about 15% in the downtown core, creating a moving target for the return on capitol ratio. Just walk around, and look at the plethora of for rent signs, or go for a drive one night and check out how many lights are on in all the new buildings. Unfortunately, CMHC data does not include individually owned rental accommodations in its calculation of vacancy rates (how convenient) which has the effect of grossly underestimating the true vacancy rate- hear about the ghost buildings in Richmond that are less than 50% occupied?

Misrepresented data and statistics (what, there is no seasonal effect on sales?) is what happens when you have 9,000 real estate agents chasing 2,000 sales (or less) a month- I would love to know how many real estate professionals are currently adding to their personal portfolio at these once in a lifetime prices?

Sorry, people the jig is up- that is: after you talk your over leveraged brother-in-law into putting that second mortgage on his house so he can pick up that can’t lose condo and rent it out at approximately 60% of the carrying cost.

#74 David Bakody on 03.15.09 at 3:41 pm

Was out and about on this beautiful Spring like day and stopped into a open house that was in nice location. The veteran agent told me homes in the area are now selling at assessment prices, ones priced above are much harder to sell. As these type of home are the move in and go to the movie type they are in demand. New homes that require all that yard work ($$$$) are not moving.

#75 PTDBD on 03.15.09 at 3:52 pm

Is it over?

I see a majority of analysts and “experts” saying that this the the bottom.
Their reasoning? – ” Everyone is scared and bearish so it must be a bottom.” I guess they don’t listen to each other.

Personally, I don’t know. This may turn into an extended rally if enough cheerleeding and money pumping is done. When things drop 50%, somebody has to buy them and then these specialists of disaster have to get at least their money back.

When referring to “Big Money”, most people think of the multi-billionaire individuals like Buffet. This is not the Big Money. Instead, consider the billions controlled by mutual fund managers, banks, and Investment/Trading houses. This is what can move and swoop in unison like the birds of the air, to place their computerized bets in highly leveraged, specialized instruments. Each morning before the markets open, “futures” trading signposts flash the direction. For a time, the bet leverage of the Big Money can overwhelm the Fundementals.

After Black Monday of 1987, the market had a remarkable bouceback of 196 points during the first hour of the next day’s trading. (In % terms, that was huge back then) Market psychology? Hardly. How was it accomplished?…..

Chapter 9 Pg 168 Black Monday by Tim Metz

#76 vantown on 03.15.09 at 4:10 pm

EcoInsurgent, when I was young (I grew up in Canada) all mortgages were locked in for the full term. My parents’ was. I don’t know why (maybe greed from the banks?) or when (was it during the 1982 period of astronomical interest rates?) this changed.

#77 vantown on 03.15.09 at 4:19 pm

Rob, you write “YOY sales in Vancouver are significantly lower (Feb 45%, March tracking about 30%).” It’s perhaps not a completely positive trend, but it is an “improvement” (if that’s the way you look at these things). And I’m seeing multiple offers and sales at or above list prices, for the properties I am interesting in buying (someday). Don’t get me wrong, I want things to tank so I can buy. But I don’t see this happening right at the moment.

“Prices are down 15%- over 20% and counting for downtown condos (craigslist has Woodward’s suites advertised for 500sq. ft.- didn’t they originally sell from 700 to 1000?).” I believe that most thinking people came the conclusion that Woodward’s, in the heart of the worst neighbourhood in the country, was doomed even if things continued at their previous frenetic pace.

And we’re still a long, long, LONG way from anything approaching “affordable” in this city. Found a report a couple of months back that put Vancouver’s ratio of median home price to median income in fall 2008 at 8.1. New York City was 7.0! I don’t get it.

#78 kc on 03.15.09 at 4:27 pm

67 rory

sorry to have missed your post on this issue. you are correct in asumption of they will try and let it slip under the radar as long as possible, however, we need to ask ourselves… when does this criminal behavour end?? I do remember way back garth stated he gives his pension to charity, but i will bet many of the blood suckers who rely so heavily on canadian taxpayer money DON’T…. just add it to the bill, and call it the cost of doing business…..

#79 Foreign Investor on 03.15.09 at 4:27 pm

Jo Jo – #64,

Very interesting predictions.

I don’t disagree…but….what is the basis and the source of your predictions?

#80 PTDBD on 03.15.09 at 4:33 pm

“This toxic carrion rot is stinking up the Banks. We have to dispose of it.”

Tiny Tim says he has a plan. He knows of certain buzzards who could easily feast on the garbage, and become fatter in the process. Unfortunately, even the buzzards have become afraid of the toxicity. To ease their fears and grease their gullets, the taxpayer will fund their leverage to offer a backstop insurance guarantee against loss.

Sweet deal, for the bottom feeding buzzards.

#81 Gord In Vancouver on 03.15.09 at 4:41 pm

#73 Rob

Sad but true.

#82 David on 03.15.09 at 5:15 pm

A whole shadow mortgage broker industry grew quite large with little comment or notice. The industry catered to clients who could not obtain conventional mortgages. It was the real estate and banking interests who had a dirty little secret about financing bubble home prices with no equity. Pretty late in the day for the mainstream media to do a post mortem on what went wrong with housing.

#83 Grumpydawgs on 03.15.09 at 5:25 pm

“Is it over”, you ask? The answer is ” It hasn’t even started”. In the attached article is a maturity chart showing that the bulk of the most vicious sup-prime category loans are yet to mature. These are the Alt-A and Option Arm mortgages of which are the ‘intrest only’, and ‘choose a payment’ teasers which were most prevalent at the very peak of the bubble because no one could afford a standard mortgage and it was the time when the riskiest and least qualified were sucked into the market due to greed and the constant barrage of proganda which roared that ” buy now or be priced out forever’ and real estate prices will go up forever’ swill.

The wave is just starting to crest and will be at it’s peak over the 2011 and 2012 timeframe which is when the bulk of the re-sets are coming due. Good luck to anyone who thinks it’s over.

#84 Bill-Muskoka (NAM) on 03.15.09 at 6:00 pm

#76 vantown on 03.15.09 at 4:10 pm

I grew up in the States and a full term mortgage was the norm there as well, with 23-30 years being the normal term, but at about 8% as the norm.

This Five Year renewal is a crock of CRAP fostered by the financial industry. No wonder people think their ‘home’ is an ‘investment’ What a lot of Dumb Asses. Also, no wonder the banks feel ‘apprehensive’ because they no longer have locked in mortgages on which to look to the future.

At least we know Spring is coming as I cans ee al the birds madly humping in glee! Pretty much like the RE market in some areas!

Hear the first Canada Geese back yesterday annoucing loudly ‘I’m Back!!!’, and the ground foragers are out and ransaking the feeders.

Today was ‘Clean out the car Day’ and I got all the rocks, gravel, road salt, and YUCK cleaned out nice and spiffy! I even put out the bird feeders full for the little vagrants. Windows open to let in the fresh air as well.

#85 jess on 03.15.09 at 6:00 pm

…but people …it’s the laws attraction !

and in order to retain the smartiest to lead and staff the A.I.G. businesses …but, em how is this so since citi,aig, etc are now being operated principally on behalf of American taxpayers ? Are those laws of attraction flawed along with the contracts that provide the juicy bonuses.

#86 Go Green on 03.15.09 at 6:04 pm

#74 David Bakody on 03.15.09 at 3:41 pm
Was out and about on this beautiful Spring like day and stopped into a open house that was in nice location. The veteran agent told me homes in the area are now selling at assessment prices, ones priced above are much harder to sell. As these type of home are the move in and go to the movie type they are in demand. New homes that require all that yard work ($$$$) are not moving.

Hi David – Re yard work. We live in the same municipality, IIRC. When we bought our current house (18+ yrs ago) it was because I had an overwhelming passion to garden. The neighbourhood was great, but the house was not what we wanted. But it was situated on a good sized lot. Before we made any modifications to the house, we spent at least $10-15K outside – 6 big tandem truckloads of rocks removed, (typical here) all kinds of soil ,etc. brought in. I had my veggie garden and all of my flower gardens. I bought plants/seeds from all over Canada, US and even specialty delphiniums from Aussieland. My basement was set up early each spring with different kinds of hanging lights to grow my seeds. My world revolved around gardening, saving and sharing seeds with others around the world. I knew every latin & common name of plants that I grew. I regretted that I had not become a horticulturist. How life changes. Now I’ve removed most of my wonderful flower gardens and have replaced them with various types of shrubs. I can no longer attend to my beloved plants because of back problems. Life goes on. I know I’m reminiscing. Just feeling slightly sad. Hopefully my DH will not get to upset this year with me when I want to visit some of the gardens of the chateaux in the Loire valley this summer.

#87 vantown on 03.15.09 at 6:10 pm

#83 Grumpydawgs

The mortgage resets chart is from the U.S. What does it look like in Canada?

#88 Sail1 on 03.15.09 at 6:18 pm

Hard to believe, subprime or not, there is still plenty of real estate being sold out there. Media has not sent a clear enough message, especially to first time buyers. There are many evident traps out there to entice anyone on the fence.

#89 ThumbsUp on 03.15.09 at 6:31 pm

#66 Herb

Thanks Herb, I’m looking forward to Garth’s ‘Sheeple’

#90 linda on 03.15.09 at 6:32 pm

Good information and assessment of Black Monday, PTDBD. When things need to happen, they damn well happen! Someday the Piper will need pay though. Until then, what a show this is. A tragedy.

#91 . . . fried eggs and spam . . . on 03.15.09 at 6:56 pm

#70 JoeCalgary at 3:05 pm — In keeping with your post (there are now ten applicants for every UK job vacancy), the following links from around the world.
#64 JoJo at 1:14 pm — Fair timeline. The politicos are simply pulling a whole pile of wool over our collective eyes, and hoping all this Ex-Lax stuff just goes away, but life don’t work like that.We have to live with this garbage now.
#71 Zoronqueen at 3:08 pm — Noted. I guess the US Fed which is privately run — could be the unknowns, those behind the Fed — has something to do with this, but it’s become way out of hand now, and that’s one of the problems with Fiat currencies.

A year or more ago, when Garth had his old political blog going, I posted links on that which alluded to the present fiscal takedown.

At that time, foreclosures in the US were happening, but we kept smug about it, all the while saying, “It can’t happen here.”

Clearly, someone obviously KNEW well in advance this situation was going to happen, but no one could have envisaged the enormity — and the speed — with which it is happening now.

That is why JoJo’s posts are somewhat accurate, as all this is accelerating way beyond our understanding.
Now that AIG has been further bailed out, it is giving top execs. bonuses. If only American sheeple had any inkling of where there dough was going, there would be riots in the streets.

Hmmmm. Guess there will be Greece- and Latvia-style riots soon enough.

#92 David Bakody on 03.15.09 at 7:17 pm

#86 Go Green on 03.15.09 at 6:04 pm

Times have changed and we ode cats at least have the memories of feeling life (good soil) in our hands. It seems like yesterday when my father first told me: “Feel that soil David it’s sandy loom” and all that dark black earth I spend hours ranking in ….. even to-day when I rake and get on my hands and knees to remove small stones from my flower beds a good warm feeling comes to me. So what is most important is we had it, as Garth as mentioned 80% or more of what we have to buy comes from outside Canada. Both you and I know it does not tast the same and our fine grand ode gals know they can not put this “Stuff” up and put it away in fruit cellars (basement are now rec rooms and extra bedrooms for people who never come) , hell this generation does not even know what a fruit cellar is. The good news is should government smarten up and help our farmers there is still good land available ( it will take 5-6 years to prepare the soild). There are still enough fine people willing to teach a new generation how to feed themselves. Unfortunately I said government and there in lies the problem (WTO). Thanks for reminding me of seeds, I cry every time I pick up a tomato in the grocery store …. I lived on toasted tomato sandwiches when I was young ” One slice of a “Big Red” covered the whole slice of toast …. and tasted so good just had to have another. My mother use to send me to her garden to get veggies for super with instructions on which ones to pick. Here in Nova Scotia a trip to the beutiful Annapolis Valley will bring all this back for one or two meals. Thanks again.

#93 Mike B on 03.15.09 at 7:20 pm

A birds eye view here. In Toronto Real Estate is selling but mostly to dummies and anxious first timers. We saw a house in great area of the city very close to post road area. Good sized lot… Older couple with a pool sized lot and ancient kitchen , small rooms, windows below grade … Old wiring and tired bathrooms . They paid less than 10 k for the house 30 yrs ago and are still asking 790k .
some sellers are just so greedy and unrealistic . Stats from guava. ca indicate relists and tons of price drops but also a drop of inventory. Perhaps the blogmaster of guava can give us some insights into the future

#94 Go Green on 03.15.09 at 7:39 pm

PS to my previous post. I had always wanted to visit Monet’s gardens. Finally, one year we were about 50k from his gardens. (My SIL’s father died & she had to put his house up for sale & so we stayed there.) My DH relented & we went to Monet’s village. But – it was a Monday and it was closed, like so many places in France. Just my luck. There was a big truck filled with garden cuttings outside of the stone walls. I got DH to hoist me on top of those clippings so that I could at least get a look & a couple of photos inside his garden. Unfortunately, I was not there at the height of the garden’s beauty.:-(

#95 jess on 03.15.09 at 7:46 pm

exploiting tax regulations and the laws of different countries
the creation of temporary trading entities, offshore companies, currency swaps and money transfers.

three day circular events and voila

and round and round and round in the circle game
price wars?

#96 Too Old Bob$ on 03.15.09 at 7:48 pm

“#71 Zoronqueen on 03.15.09 at 3:08 pm.
That story is sounding too much like conspiracy theorist. Alex Jones predicts that there will be a pandemic virus to wipe out some of the population? Do you agree?”

Hmm! wasn’t suppose to be a conspiracy story, just an example of behaviour. Never heard of Alex Jones or the prediction mentioned, but we know that there are viruses already that wipe out people. Depends on what it was and how many got done in. I wouldn’t worry about the virus problem, we have vehicles that do the same thing everyday, yet life goes on.

“#74 David Bakody on 03.15.09 at 3:41 pm. As these type of home are the move in and go to the movie type they are in demand. New homes that require all that yard work ($$$$) are not moving.”

This probably due to the fact, that people can’t afford to fix the yard, no time, or just don’t care to do it. I find that people that plan on staying there for the long term and not just flip it, will put more effort into their yard. I think in time you will see the majority of people go back to the yard for entertaining, socializing and just pride of ownership. Nothing beats sitting in a yard, listening to the birds, drink some wine, have a barbecue and smell the flowers. Bill-Muskoka (NAM) seems to know what I mean.

#97 Gord In Vancouver on 03.15.09 at 7:58 pm

#88 Sail1

Hard to believe, subprime or not, there is still plenty of real estate being sold out there. Media has not sent a clear enough message, especially to first time buyers. There are many evident traps out there to entice anyone on the fence.


Gotta link?

#98 Rob on 03.15.09 at 7:58 pm


Sorry, I hope you didn’t think my rant was directed toward you:) – should have worded it differently.

Nevertheless, you are right: there is a relative increase in activity compared to earlier in the year and last fall. And, I’m sure some properties you have looked have received multiple offers- might be because you are looking at quality properties that are reasonably priced(compared to the wish prices many are listed at)? I would assume 10% less than assessment?

Furthermore, I can empathize with your frustration that prices don’t seem to be coming down as much as one would think. I bought down a couple of years ago- admittedly too early; not smart enough to guess the top or bottom, I only understand when assets are selling at, above or below their intrinsic value.

All that being said, infinite and continuous real estate appreciation is a fundamental zeitgeist in Vancouver, whereas, real estate bubbles are a relatively recent occurrence in other jurisdictions. As a result, I wouldn’t be surprised if the psychology in this town didn’t turn bearish until it actually made sense to buy dirt. People tend to assimilate new information (manipulate the information to match their beliefs) as opposed to accomodating it (change their beliefs to be consistent with the information), particularly, when so much is riding on them being right-is there been any other way to make money here?

My plan is to stay patient, remember that if the average Van condo goes down only %5 (I believe most are predicting significantly larger drops) this year, you would save you approximately $17,000 plus the $1,000 a month saved in living expenses- 30k or so in one year not bad. Just, do the math at the end of every month, and remember everyone’s friends and relatives are telling them now is the time.


#99 Basil Fawlty on 03.15.09 at 8:29 pm

The Bank of Canada hints at money creation out of thin air. Well actually they called it quantitative easing, but since this term was recently made up out of thin air, it’s best to stick with a definition that all those about to get fleeced clearly understand.
Maybe it is time to buy real estate before our currency reaches it’s intrinsic value, which is zero.

#100 Bill-Muskoka (NAM) on 03.15.09 at 9:41 pm

#96 Too Old Bob$ on 03.15.09 at 7:48 pm

Yes, we do think alike. It would be nice to sit and sip a few fine fingers together!

Now, about those folks who don’t have the time to tend their yard. Gguess what they do? Yeah, they buy a ‘cottage’ and then madly rush away from their souless concrete jungle on the weekend (where the Condo Fee is still ticking away) to ‘Get Away From It All!’

We watch them every decent weekend bumper to bumper Northbound on Friday, and doing the same in reverse on Sunday! They call that relaxing? More Exlaxing in my opinion! LOL

#101 Bill-Muskoka (NAM) on 03.15.09 at 9:45 pm

#99 Basil Fawlty on 03.15.09 at 8:29 pm

They all talk in BS Buzzwords IMHO! Monty Python would be challenged to top them!

George Carlin, rest his soul, would be having the Top of his Game today with these mouthpieces and their trickster phaseology!

And to think how upset the Guardians of Democracy and Decency got over the ‘ForbiddenSeven Words’? They are nothing compared to the lieing BS these Flim-Flam Artists spew daily.

#102 Bill-Muskoka (NAM) on 03.15.09 at 10:20 pm

#92 David Bakody on 03.15.09 at 7:17 pm

Ah, yes, the feel of good sandy loam soil. I am anything but an avid gardener (although good at it when I take the time away from running my business and all the myriad of time consumming things I get myself into, (sports are NOT one of them), but my wife loves doing it, and that makes me very happy because we both enjoy the results.

I recall going to my Uncle and Aunt’s farm in Kansas as a young lad. We got up about 0430 hrs, walked out to the bathroom (those are called a Privy, but no council because it was a single holer), then stopping at the hen house to gather the fresh eggs still warm from the hens, back into the house for a breakfast that would choke most people, then out to work, and I mean WORK!

Then in for lunch (another feast), back out to WORK, and back in for supper (aka Dinner), real conversation, tales from people’s real lives, and then to the shower, and off to bed.

Being pretty much a lifelong Techy type I cherish those memories like precious gold. Oh, and they had a Collie that was the most loving dog and just a riot to watch.

My cousins and I would get together and it was what is known as a real FAMILY!

Then it was back to home and a different life, but that part has always been with me. Unfortunately, my allergies would have destroyed me had I chosen that career path. Hayfever (severe back then requiring a shot every other day) and farming are not very compatible!

I still can smell the fresh corn, picking it right off the stalk and eating it raw. It was so sweet it was like candy! But that was back home in the Midwest.

I also remember the mean old farmer who tricked me and a friend into eating ‘red’ carrots. Carrots my arse, they were Red Peppers, the REALLY HOT kind. We must have drunk three gallons of water that day trying to quench the fire! LOL Wow, I haven’t thought of that experience in decades. Guess the Old Neurons are still interconnected? ;-)

Also remember picking the Concord Grapes, Rhubarb, and tart cherries from our backyard garden and tree. Then my mom and I would make preserves and jellies in the little Kraft Sandwich Spread (Olive/Pimento was my favourite) glass jars and seal them with melted paraffin.

What happened to those innocent days? Oh yeah, right, MONEY became the new God of society and Madison Avenue taught the world that BUYING was the THING we must all do. We have lost a wonderful age. :-(

#103 marcus aurelius on 03.15.09 at 10:21 pm

Nice to see the blog return to the issue of real estate bubbles, rather than arcane nutbar disquisitions on survivalism and the usual drivel from bipolar goldbugs off their meds…


Historically low mortgage rates (but the ‘spread’ is still insane, per earlier comments on the 0.4% flexible GIC rate) entice morons who still have jobs (dual income professionals, for example) to buy in a moribund Toronto market….


what happens when governments overheat the printing presses – as is going on massively in the US tonight?

Rates RISE – and when rates rise, people who just made their nut overpaying for today’s crapcan infill, get killed – even if they don’t get laid off.

2010-11 will be the start of the US Depression in earnest (just as 1929 was no guide to the horrors of 1931-32).

Nothing that the so-called ‘journalists’ tell you is true. You want truth? Watch Jon Stewart.

#104 dd on 03.16.09 at 8:17 am

#65 asp

“That would not be a mortgage through one of the big banks, nor would it be insured by CMHC. Someone with a salary of $40K only qualified for a $175K mortgage”

I didn’t say it was. CMHC and their 5% down policies will do the trick however.

#105 Bill-Muskoka (NAM) on 03.16.09 at 12:51 pm

#103 marcus aurelius on 03.15.09 at 10:21 pm

Stewart tells it like we, those who bother to think, know it is. He is far more reliable than the Talking Heads, especially CNBC and Fox.

Stewart presents more truth with satire than the MSM presents with pages of their BS! When he gets serious he is the Tallest in the room, especially when he shredded Jim Cramer last week. Man, that was classic!

#106 Andy T on 03.16.09 at 1:59 pm

I just wondering if there is a report from CMHC about the percentage of 0/40 mortgage and the percentage of different kind of mortage 0/30, 5/30 etc. So that consumer have better picture of our Canadian version sub-prime mortgage crisis. I believe that is the best guest we can make.

This data is not made public. — Garth

#107 Future Expatriate on 03.16.09 at 2:31 pm

#103- There will be no med in the world that will awake you from the Kool-aid you’ve been drinking regarding paper markets vs. gold.

#108 MarcFromOttawa on 03.16.09 at 5:37 pm


It’s not just buyers that are responsible for the RE bubble. The federal reserve lowered the overnight rate to negative real numbers after the stock bubble crash in 2000/2001. They are the ones who extended credit, and as I’m sure you know, every credit bubble in history has resulted in a recession.

On top of that, government intervention in the markets, through FANNIE MAE/FREDDIE MAC, guaranteed loans made by the banks which they would never have made in the first place if they could not sell them to these agencies.

I agree with you that alot of people had a hand in this, including irresponsible buyers.

#109 Peter on 03.17.09 at 6:57 pm

No matter how we say about how bad the economy was, these mainstream ethnic media (radio (sponsored or non-sponsored radio shows within the broadcast times, many hosts has made pumped up comments everyday), newspaper, television) already PUMPING the market by telling people take advantage of the low interest rate, forget today, pour the money back into houses and keep mentioning house is investment tool that you will win big on….I know many people in this ethnic group has a LARGE tendency of investing in houses, condos (many are flippers) and that has brought our housing market heated like hotcakes for the past few years…Thats why they keep pumping the market again !!! I seriously opposed what they are doing and I feel bad for those people who took their advice…