When I started this blog a year ago, it was inconceivable the front pages of the Van papers would look like this. Nor could the CBC’s National have imagined devoting a big hunk of their show to collapsing house prices in Toronto or Ontario’s emerging rust belt.
In fact, 12 months back the real estate industry was forecasting higher sales and higher prices. My warning that what was infecting the US would invade Canada was dismissed by bank economists, academics and politicians as crap.
Alas, Canada is not immune. Recession (or worse) has come here. We are now unable to live within our means. The real estate disease has spread, as it did in the States, to consumer spending, banks, corporate profits and jobs. And worse lies ahead. You could see that easily in three unrelated but telling pieces of news in the last few hours:
* Former Bank of Canada boss David Dodge saying the bad times will not soon end and Canada will be a debtor nation for years to come.
* Merrill Lynch Canada enfant terrible David Wolf saying the economy is shrinking now at the rate of 9.1% – just shy of depression status.
* The US Fed creating another $1 trillion which it says will be used to buy up bonds. This money will not even be printed, just created digitally.
So, each day brings more proof my concerns were valid. Those who ignored my warnings – which included legions of misled new home buyers – are now paying the price. And they’ve only just started. Negative equity, powers of sale and personal bankruptcies will be touching Canadians on every street in every town and city before this year is through.
Now, a year later, I am looking a year ahead. While I still believe there is a 20% chance we’ll fall off a cliff and relive aspects of the 1930s, those odds have not increased. My conclusion is there will not be a depression, as much as that saddens the anarchists, bullion bunnies, survivalists and fiat fanatics who populate this blog.
Why do I believe this? Here are a few of the reasons:
* Almost half of Americans now expect a depression. Always bet against public opinion.
* For a collapse to occur, we’d have needed a bank crisis by now. But no major banks will fail.
* The pace of job loss is unprecedented and uncontrolled, and cannot be sustained. Companies are panicking and dumping employees in acts of cowardice which will soon diminish.
* Some massive corporate failures are imminent, and will signal that we are closer than ever to the bottom.
* Personal bankruptcies and negative equity will explode this summer and autumn, prompting a second federal budget, tax relief and bailouts
* Governments will spend whatever it takes, borrowing massive wealth from the future disregarding how the Boomers and their kids, whose greed got us into this mess, are screwing their offspring.
* Interest rates will continue to race to zero and stay there. Suckers will borrow. The media will report it. Fools will follow.
So, no depression. The GDP will likely be rising marginally a year from now, but that does not mean ugly days will be passing. Far from it. Recession in the real economy – where we work, buy houses and shop – will last for several years. Real estate prices will be lower at Christmas than they are now, will stabilize in 2010, and then flatline for years after that. Jobs will start to reappear by next Spring, but they will come back in dozens after being lost in hundreds and thousands. Many people in their forties and fifties who lost work in 2009 will never work again.
Most significantly, however, is the certainty that what governments are doing to stave off depression will only cause another problem of equal size in the future. And, no, I am not talking about hyper-inflation in a year or two because of the new American trillions. Instead, we are guaranteeing a future of higher taxes, debt-shackled governments, a far less competitive North America and the end of the US empire.
Capitalism’s cooked. This is now a government-run society. Irony of irony – free enterprise has moved East.
Don’t know about you, but I’m happy with my solar panels, seeds and cash. Oh yeah, and my new acres.
Ontario to pay for your rooftop solar. Details, here.
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153 comments ↓
If you thought the front page of the Vancouver Sun was shocking today you should have seen the Province! Click my name to see the front page on foreclosures in BC.
At least you can afford new acres and solar panels
Of course, based on the fee you pay to come here. — Garth
Still huge denial in Edmonton. I think Alberta will be hit hardest of all.
You stated ‘always bet against public opinion’. My experience over many years is that these things are SELF FULFILLING PROPHECIES. When the market starts talking about a downturn, then we see it not after. I pay attention to public opinion because when something is rumoured to happen, it generally does.
I am not a sophisitcated person but the rumour mill has served me well, and helped me get out of the market before these downturns happened. I own my home, and got out of mutual funds two years ago. I am secure for the moment.
My investment advisor (who I believe some of the time), says a lot of fear mongerers are secretly playing the market to take advantage of the market for themselves. Didn’t you just buy some real estate Garth? I’ve noticed an easing of your claims.
What does that mean? That I am using this blog to influence the national economy for my own gains? How did you ever out me? — Garth
“as much as that saddens the anarchists, bullion bunnies, survivalists and fiat fanatics who populate this blog.”
READ MY LIPS “This is not a recession or depression, it is a CORRECTION”
Yes a correction. Everything is out of control. Prices on Wages, Houses, Vehicles, Boats, RV’s, Bonuses and everything else are too high. Let the deflationary period begin.
BTW! this was quoted by someone who works for ATB Financial.
I’ve been reading garth’s websites since 2004 and enjoyed them immensely. agree with most of the viewpoints.
but for the life of me cant understand whats happening in my neck of the woods – mississauga.
a broker has been sending me listings on condos priced under 250k from the mls since july 08. instead of prices going down, its up by 18%. seems like whats going down is only houses priced above 400k.
according to tonites (18/3/09) cbc national segment on toronto, first timers are whipping up a frenzy in gta and my broker says the same too. so despite the media & garth, people are flocking to this market as prices are down 9%.
whats the beef on the condos in this price range in gta.
I have solar panel envy.
Ok, so :
1) No depression, No Inflation
2) The government is going to bailout everyone
3) Interest rate will remain at 0%, and it’s all going to come from the gov borrowing from abroad (I assume…)
3) Taxes will be higher in the future (logically)
4) Unemployment will skyrocket
5) House prices will drop and then flatline…
For prices to flatline would imply that they would have reached a realistic market value (in relation with the average wage), wouldn’t it? Otherwise how can it flatline if nobody can afford a home and nobody expect prices to rise?
Also borrowing massive wealth from the future, implies that someone is going to be willing to lend it to us… Otherwise we’ll have to resort to printing money….
Garth said “…the Boomers and their kids, whose greed
got us into this mess, are screwing their offspring.”
I usually come out swingin’ on the “boomer bashin'” like I had something to do with this just because I was born in a particular year. I have to keep reminding Garth that
he is a front-end boomer. But he’s really old now and is allowed to forget.
Ground rules for insulting people – religion, sex, sex preference, hockey team, politics are all fair game because we have the ability, or in the case of a leafs fan, can at least try to change these. Race and age are “no
goes” because I cant change my DOB. Rats.
But its nice to know he has broadened his base by
insulting basically everyone of working age……and maybe theres some truth in that……
For what it is worth, and Garth, I am with you as always- why have you left not mentioned energy scarcity?
I guess I belong to the “survivalist” category. I subscribe to the “end of cheap oil” theory with all of the borrowed I.E.A. fundamentals at my disposal. I can quote Matt Simmons, Colin Campbell and Kenneth Deffeyes.
The end of cheap oil means EVERYTHING to an economy.
Lastly, I am a card carrying member of the “road to nowhere” club. The clubs’ membership requirements are those who contribute to urban sprawl. We get paid for our role in the greatest misallocation of resources man has ever known.
I wonder where the next resource war will start…
Andy #5 – I agree.
The area I have kept my pulse on is Weston Downs in Woodbridge and there has been no downward slide or correction..infact I would argue a slight increase. Assuming Garth’s projections are close a house currently priced at $729,000 in Weston Downs should be something like $699,000 by Xmas and then remain stable for years. What a bargain???
I figure that with the depreciating price of homes, the big whopping deposit on my 1st home … I will be better off buying one of your solar panels and bump up my mortgage (paying it off very aggressively) $20 K and getting off grid than paying Heat/Hydro … and have no control.
Doing this will be much cheaper than paying rent right now.
I had a great chat with a retired businessman who ran a number of very successful enterprises, even through the downturn in the 80s.
I asked “How long did it take from the time that you, as a business owner, started seeing cracks in the economy to the time that you figure the regular guy on the street fully understood the situation?”
“It was about 12 to 15 months from the time that we knew something was happening until the average person started to ‘get it’. It wasn’t until there were multiple For Sale signs on any given street AND MacCosham moving vans showing up to empty out their or their neighbours’ houses that I believe people really started to understand. The carnage had to be sitting right in their lap before they really took notice.”
Everyone else’s mileage in this environment may vary.
“For a collapse to occur, we’d have needed a bank crisis by now. But no major banks will fail.”
This is an interesting point, since it is true that no major banks have failed. However, how do we reconcile the fact that many of the worlds largest banks are insolvent and being held up by unprecedented massive government bailouts. In addition, the bailout funds are coming from borrowed or printed money. So technically one can say these banks will not fail, but to say they are failures is an understatement.
It is estimated that 45% of the planets financial net worth has been lost in this financial crisis. Garth is right “there will be no depression”, as this looks like systemic collapse.
People go home and log in to their bank account from their computer, there, my money, digitally solid!
No run on the banks.
Bernanke can forget about taking credit for avoiding a depression (what’s depression anyways?).
Blessing? only time will tell.
I truly and honestly hope you are right about that no-depression prognostication.
Two army buddies of mine from the 90’s. When I met them, I was just back from the war and they had missed it. They “got lucky” in 2004 and their unit did a tour in Iraq. I tried to warn them that this wasnt a boy scout jamboree but was something they should take seriously. They didnt listen, because if I could make it, so could they. Before the war, both were stable and reliable friends.
Now, one is a chronic gambler, booze hound, and always on the verge of bankrupcy…while the other is a rageaholic one fender bender away from a 3 state shooting spree and has indeed declared bankrupcy. Both have become insufferable because they spend too much time in their own heads.
I have not reached my particual perspective in an arbitrary fashion. It has come from the school of hard knocks. I dont lay down the truth in order to get a rise out of people, I do it because I hope they will either heed the advice or at the least be able to connect the dots via the 20/20 of hindsight.
Also, such fine articles seem a bit hollow without at least a passing swipe a blaming America for all the woes. Get with the program!
Reading Andy at #5 I am reminded of this blog’s title.
uh…This is where the survivalists will shop:http://www.time.com/time/specials/packages/article/0,28804,1884779_1884782_1884768,00.html
We always say: ” Behind an extremist, there’s always an opportunist”
Garth you should have been working for the Ministry of Truth: Alas, Canada is not immune. Recession (or worse) has come here. Q. What’s worse than a recession? A. A Depression silly! So in one part of your diatribe you say we are experiencing something worse than a recession, and implicitly if not explicitly suggest that it is a depression. You quote statistics that suggest that we are on the brink of a depression based on shrinking economic activity yet a couple of paragraphs down you say there will be no depression! Last year I saw you on TV claiming that the housing market would start recovering in 2009 – wrong! And you will be wrong again in 2010, and in 2011, and in 2012…
The depression is not coming; its already here and it will be gathering steam throughout the next decade. If governments really wanted to fix the economic crisis there would have been no economic crisis in the first place. Your cockamamie reasons for trying to convince us that there will be no depression are laughable at best. By fall all the MSM talking heads will bring the D word out of the closet except it will not just be a word; there will real people suffering real trouble and turmoil while you do your flip flops. I think your blog has outlived its usefulness; pack it up already!
Garth,
What is the official definition of a depresssion? What you describe sure as hell sounds like a depression.
andy: according to tonites (18/3/09) cbc national segment on toronto, first timers are whipping up a frenzy in gta and my broker says the same too. so despite the media & garth, people are flocking to this market as prices are down 9%.
—————————————–
I’ve observed the same. Toronto/GTA is not experiencing what the US started experiencing a couple years ago.
I know I’ve donated to your cause in the past and even bought a couple of your books. I’m just saying that there are an awful lot of people that are caught up in this mess through no fault of their own, with no hope of making ends meet. Never mind having acres of their own. Sitting around with little or no work and not likely to find any and watching our government throw billions of dollars at the ones that started this whole mess to begin with.
invest a hour: http://www.financialsense.com/Experts/roundtable/2008/1213.html
Give a listen:
http://www.financialsense.com/Experts/roundtable/2008/1213.html
I have been a fan of Garth since I read his comment in Real Estate News about 5 years ago, which was very interesting and useful, and am glad to find this blog recently.
Now I see some people say the prices of houses over 400k will decrease by 20% or whatever, while the prices of entry level houses won’t change so much.
Would it be possible, in a year or so, that houses in mid 400s will go down but the houses in mid 300s won’t change so much? Does this mean the price difference between nicer/bigger homes and entry level/smaller houses shrink?
In fact, we own a house in Toronto with market value approx.370k. We want to move to a bigger house (about 200sqf), probably in Oakville, as we want a parking, backyard, living room all family can sit together, bathroom where we don’t knock over toothbrushes by the window into the trush box below due to too narrow space, a place to briefly escape from loudly playing kids, among others we want to live in a quiet and safe area. The houses we think nice are now priced at around 450k. In theory, would it be possible that the price of our house won’t change so much and the price of the houses we are looking for will decrease? Obviously we don’t want to increase debt in this period when my husband’s job security is uncertain and my freelance workload is much less than before. If we sell the house and buy a satisfactory house now, we need 80k (plus RE comm.), but a year later or so, maybe we need less money to do the same thing?
For your information, we bought the current house at 340k (over 40k asking due to the stupid bidding war) in 2004. We paid 220k for down payment. Mortgage balance is about 90k now. We have no other debt and household income is around 100k. I have 50k cash to pay for the gap between the selling price and the buying price. However, for now, I want to keep it for emergency funds and deflation according to Garth’s guidance.
Garth,
Now that the US is actively buying bonds (and is likely to continue in order to fund the deficits) how is this in your mind not the equivalent to printing money leading to inflation whether or not the physical paper is going around in circles in the economy. It is still m0 money somewhere which means it will catch fire eventually. I would have thought it would be impossible to refute inflation/currency devaluation in the face of QE.
“For a collapse to occur, we’d have needed a bank crisis by now. ”
Were you deliberately parroting Harper’s tripe “if we were going to have a recession, we’d have had it by now”?
I wouldn’t say we have avoided a banking crisis yet. Won’t the big US banks still need another massive injection of capital that will need to be voted on? If so, after the AIG fiasco and the rising public anger over bailout nation, is the political will still there to vote “yes” for another trillion or two?
Andy, anyone buying now HAS BEEN influenced by the media or low interest rates.
Garth, I read you loud and clear on this point.
People, when interest rates begin to rise so may real estate but dont count on it anytime soon.
Employment, GDP, House Prices, Wages and anything will clear asset value is dropping off a cliff.
I am in Asia, and doing okay but to be even more careful I’m moving to Kuala Lumpur Malaysia where the cost of living is 30% of that in Hong Kong and likely even better as it supports itself with the important things domestically.
If you find yourself in the baby boomin’ years, and want to cash out because good ole’ Canada is going to screw you for what you have left (time & taxes), Google “Malaysia my second home”, and take the edge off.
If we don’t dream of a better tomorrow, who will…?
Monetization of the US debt:
http://business.theglobeandmail.com/servlet/story/RTGAM.20090318.wfed0318/BNStory/Business/home
I’m not an economist, but I think that this is not a good sign. From what I’ve read, monetization results in the end of a currency. If the US is no longer the world’s reserve currency and they no longer have any factories, guess what? World Vision will be sending out pamphlets with a choice to sponsor a child from Zimbabwe, Bolivia, or the United States.
i found the answer to the question i posted in #5. The “Holy Crap” entry by garth a couple of days ago which i hadnt read b4 posting here sums it up.
boy, there’s still a lot of irrational exuberance out there. or else there’s supremely confident people with umpteen skills knowing how to make moolah left rite & centre.
well the boc isnt helping either with these low rates either.
Here’s a link to the Province subprime article:
http://www.theprovince.com/Business/Subprime+mess+comes+home/1400373/story.html
Let’s all hope that the Pirillos get the break that they deserve. Let’s all hope that real estate speculators get EXACTLY what they deserve.
“Many people in the forties and fifties who lost work in 2009 will never work again.”
That’s not a depression? Why are you engaging in semantics? Are you worried that when you run for office again your opponent will accuse you (and find fertile ground among the febrile minds of voters) of fomenting a depression?
“Depression” is just a word whose definition changes anyway. It’s like the fiat true-believers who criticize the hyper-inflationists because they get hung up on defining “hyper inflation.” Forget definitions, the Rule of 72 tells us 12% inflation cuts our purchasing power in half in 6 years. That’s the blink of an eye.
Wealth is being destroyed at an alarming rate. Call it Happy Days, I don’t care.
I love the idea of “Always bet against public opinion.”
I wonder, though, how much momentum the public opinion will garner to influence herd mentality. Would be interested to hear what others think.
Average price in Calgary is up $7,000 this month. New listings waaaay down.
I have to respectfully disagree with you Garth, but that’s as long as it’s done respectfully right? :)
“Merrill Lynch Canada enfant terrible David Wolf saying the economy is shrinking now at the rate of 9.1% – just shy of depression status” and “20% chance we’ll fall off a cliff and relive aspects of the 1930s”
If we are 9.1% out of 10% there, that would mean we are 91% of the way already to a depression. Just .9% shy. You could walk there it’s so close! But you say just a 20% chance? Unless you mean to go the last 9% is 80% unlikely.
Sadly, unlike yourself, I don’t believe we hit the bottom yet in Canada (or even the US, although the US is closer). I’m a believer in the Kondratieff Cycle and it’s been pretty right in the last 350 years. The Winter cycle is what we are in now and we haven’t “checked all the boxes” yet to get out of it. So far, it’s reading like a Garth Turner book (accurate). The last things before hit bottom are:
– Despair
– Outright deflation
– Virtually no credit
– Lowest interest rates
– Gold peek, Stock Market bottom, Bond rush
– Economic “Depression”
How many have occured today?
“Instead, we are guaranteeing a future of higher taxes”
So much for putting “cheap-tax rate” money into RRSP’s to “save on taxes” in the future.
Pretty shocking the front pages! 1800 homes foreclosed and talk of Canadian “High-risk” subprime mortgages! I thought the media said subprime wasn’t in Canada?!
Mike
When the US Treasury starts purchasing bonds, that amounts to direct injection of cash, as opposed to offsetting toxic assets. This is the start of inflation, as the money can trickle into the economy and bypass the banking system layer.
Until now, the printed cash was used to offset toxic assets, but going forward, it’s going to bypass this and flow directly to the economy.
I would argue that this is inflation – the increase of money supply into the economy. Once our deflationist attitudes are finished with, this money will then gain velocity and stir inflation.
Our next generation, as a whole, is going to suffer the consequences of our actions – I agree on that. We’re going to teach our kids to steward their finances carefully, unlike what they see in the media.
Addendum AIG Bonuses
It appears this may be smoke and mirrors to hide the real story, there was guest from Forbes Group on CNN who said this and mentioned the $Billions that AIG paid out to Germany and other financial institutions that should not have been paid! …. all that AIG had to do was guarantee they had the funds in hand ….. “THEN THE CAMERA WENT BLANK” hello MSM? are your lights turned on! Ladies and Gentlemen please do not ever forget big insurance money effects all customers world wide!
Andy # 5…
People have to live somewhere are are likely to look for the cheapest housing available…first time buyers are likely to look at the same area…downsizers are likely to look in the same area…the relatively cheaper condo and homes are unlikely to dive in value, these properties still have an element of demand attached o them, those $400,000 and above will decline in value. The locations with the higher escalation in property values over the past 5 years are likely to see the deepest decline. Hence from west to east, largest decline to smallest decline in general. There will always be pockets of exceptions!
Off to Tim’s perhaps my long time words of 2015 and the new world order’s 40-20-20-20 are looking more front page stuff than many thought was just plain ode bunk. Now the the people must rise up and demand government down size ….. fat chance of that eh?
Garth —
What is your best guesstimate as to how many years deflation will be with us?
Thanks
Nobody can tell you that with certainty, but I expect two years of consumer price deflation. — Garth
Garth,
what are your thoughts on if oil picks up? and when construction starts, will that be enough to pull Alberta or maybe even Canada out of the recession? There are plans for rapid expansion of Canada’s pipeline systems and oil sands upgrader’s?
Right now the rates haven’t come down for the people as bad as they have for the companies. But again it was the companies raping the oil developer which cause them to stop a lot of construction.
Right now work is all who you know and not what you know.
Many people in their forties and fifties who lost work in 2009 will never work again.
_____________________________________
Doesn’t our country have a labor shortage?
People in their 50’s and 60’s who will never work again have already taken huge hits on their pension plans. They might not have much choice but to keep working until they are 80 simply not to outlive their money.
Canada becoming a debtor nation has its own perils. Indebtedness might mean a risk premium associated with the possibility of default. That would mean higher interest rates, not much different than the fat yields of 1980’s junk bonds. Canada most likely would never default on its debts, but as a debtor nation, think of credit impaired. Debt and risk will be repriced in the markets. The results may not be pleasant. Unsustainable house prices produced a bubble that was too good to last. The fact that the pointy heads missed the rampant asset inflation is no surprise.
Darn those baby boomers for kiting ABCP and CDSs! They should have been satisfied with their chipboard palaces, McJobs and 0/40 mortgages.
Blame the victims, Garth, but don’t forget that they will have to pay the piper downstream too – and hardly called the tune.
First stage of recovery is acceptance, dude. We are the inflation generation. — Garth
Does anyone from Calgary know a builder by the name of Excel?? Any feed back on their construction history, etc.? Thanks.
Hey Barb re solar power envy-me too! I like your idea Gold Bug, call it Happy Days!
Garth writes: * For a collapse to occur, we’d have needed a bank crisis by now. But no major banks will fail.
What the hell do you call the last year? Garth, what would you call pouring Trillions into the world banks anything less than a crisis? And is it the end? No, it’s not. Obama is hitting another wave or bailouts, are as European banks.
Also, tax receipts will be much worse next year than this year. Wait until the individual states cannot make their budgets.
Also, wait until Saudi Arabia, Iran, Russia etc. can’t make their budgets.
Garth, you’ve been hanging around the PM and Carney too much.
I said no major banks will fail. And that is a fact. — Garth
On tonight’s CBC The National (March 19th)
Vancouver’s Real Estate
“The reality of Vancouver’s stalled real estate market has set in. Many sellers are tempering their lofty expectations and dropping their prices. But there could be a silver lining to this cloudy forecast – and it’s the first-time homebuyer. We follow two first-time buyers as they maneuver the market in search of the perfect deal.”
http://www.cbc.ca/national/blog/video/politicseconomy/vancouvers_real_estate.html
“#35 David Dodge
“Average price in Calgary is up $7,000 this month. New listings waaaay down.”
There are probably so few sales that one multi million dollar sale could put the average price up. Very misleading number.
#43 Gord In Vancouver
“Many people in their forties and fifties who lost work in 2009 will never work again. Doesn’t our country have a labor shortage?”
In some parts of the country for specific skills. It is not a one size fits all.
Right off this mornings TD’s TSX report.
“Investors are eagerly awaiting the latest in a string of reports on how the struggling economy is faring. Statistics Canada released the country’s latest inflation figures which show that prices rose last month.”
So we are still waiting for deflation to finish in two years Garth?
Do any predictions of inflation include the cost of fuel and food? You know CPI doesnt include these, might scew predictions and hurry inflation in other sectors excluding housing.
“First stage of recovery is acceptance …”
Agreed, Garth. But I don’t see the manipulators of The Great God Marketplace accepting anything except bailouts and bonuses.
Capitalism isn’t “cooked”; it’s merely maintaining a low profile after a nearly-fatal binge of greed.
Garth –What is your best guesstimate as to how many years deflation will be with us? … but I expect two years of consumer price deflation.”
How about oil prices? For deflation presist don’t energy prices have to stay low. Do you think oil could be headed back to $30? There were estimates of even $25 barrel 3 months ago. What the heck happened here?
My question is why the Dion Liberal government was so incompetent in bringing David Dodges warnings to Parliament and the public in 2006 and 2007. If you Google News “David Dodge CMHC” you’ll find half a dozen articles that have David Dodge on record.
Even the Senate Finance Committee failed the public terribly being unable to answer to Flaherty and his “Nobody” comment…
Regardless I’m questioning whom the real conservative party is in Canada? Looks like Ralph Goodale, David Dodge, Don Drummond and wee little Garthy T, have done a better job being “Conservative”.
Harper better be careful whom he’s throwing stones at, real conservatives, not just the partisan zombies are watching.
http://www.theglobeandmail.com/servlet/story/RTGAM.20090319.wharpereconomy19/BNStory/politics/home
He said Canadians have to retain hope. The Tory Party’s rivals are not helping by “attacking the economy” with pessimistic talk, the Prime Minister said. “That is what the opposition offers and I won’t go there.”
Darn right you won’t go there, cause you’ll get a ideological thumping credit/debt boy.
http://www.theglobeandmail.com/servlet/story/RTGAM.20060714.wdodgecmch0714/BNStory/Business/home
http://www.theglobeandmail.com/servlet/story/RTGAM.20060713.wbankofcanada0713/BNStory/Business/home
http://www.theglobeandmail.com/servlet/story/LAC.20060715.RCMHC15/TPStory/Business
http://www.theglobeandmail.com/servlet/story/LAC.20070926.RDODGE26/TPStory/Business
http://www.cbc.ca/money/story/2006/10/30/cmhc.html
I see Obama is following Gideon Gono’s lead to economic recovery. Gideon Gono is the Zimbabwe [Rhodesia] economics minister.
Good news is in! Smells like inflation!
http://www.statcan.gc.ca/subjects-sujets/cpi-ipc/cpi-ipc-eng.pdf
Food up 7.3% from Feb 2008 to Feb 2009…
Shelter, smokes and booze, clothing, health care, all up around 2% – 2.5%.
For an environment where everyone is screaming deflation, sounds like its just our personal ATMs(Homes) that are deflating and over valued stock, oh yeah assets….
Asset deflation continues, guess the good news is that if you are unemployed, and can’t afford your overpriced mortgage, you can always sell and to buy that food stuff and buy a minivan to live in…
The US creating new money to keep interest rates low so consumers can go and buy stuff is like giving the alcoholic a bottomless gift card to the LCBO. It was this debt based society that got the US in trouble in the first place so lets pile on more debt. What this tells me is that things are very bad and could get worse if they don’t act.
As a result of this action by the FED oil prices have risen to 50 bucks a barrel. Some food prices have risen as well and really this all makes sense because as a result of vast amounts of money comes inflation even if it is tame for now. Time to buy those oil bull ETFs.
Keep in mind the FED loves this because , being private bankers, they see the long term gain, an indebted world paying them forever. Even if you are not in debt they will win because all the bailouts will come back to haunt all taxpayers worldwide. Best to move to some far off warm country and pay no taxes. I wish.
“No Banks will fail.” sayeth The Garth
THE FED will fail sayeth ChickenLittle’sYoungerBrother
I said no major bank will fail. — Garth
‘a broker has been sending me listings on condos priced under 250k from the mls since july 08. instead of prices going down, its up by 18%. seems like whats going down is only houses priced above 400k’
you better buy asap, or you will be priced out forever..hurry!
CBC The National (March 17)
Cut Rate Condos:
http://www.cbc.ca/national/blog/video/politicseconomy/cut_rate_condos.html
It does not matter a fiddler’s dam when we come out of this depression ….. what does matter is: Many more people start and continue to pay down debt and save wisely and when they are comfortable again as they will be (and they will continue to feel better and more secure) they spend wisely. My dear Mother told me once: David it takes a long time to save money so take a long time spending it! Back from Tim’s and it appears some people are now helping out their children, these type of stats do not make front page news and there spending falsely inflates the GDP #’s. So set aside all that jazz and look at your life and get a plan to become secure, mentally, physically and your spirit will grow. Me, I am doing just that and so far so good.
Seems Jon Stewart has rattled the Powers That Still want To Be?
Stewart’s cheap shot at business media
Well, Richard Cohen, of the Washington Post, may have access to the presses to spread his opinion, but the commenters have access to rebutt his opinion and HAVE!
* Merrill Lynch Canada enfant terrible David Wolf saying the economy is shrinking now at the rate of 9.1% – just shy of depression status.”
The economy could contract 10% over two or three years and still be regarded as a depression. The term depression isn’t technically defined, but generally and loosely accepted as a 10% reduction in GDP from peak to trough.
Having said that GDP is just a miserable indicator of economic growth. We should really stop relying on government biased economic tools and start using indicators that provide real information. Gross National Income has been highlighted recently as a more efficient tool.
I think I am with Garth right now. Given the current information I don’t think we are going to have a depression. Banks are still lending, deposits at banks are rising and the social nets such as EI are there. You can’t deny that those factors will create a bottom to consumer confidence in Canada. A bottom triggers optimism.
Of course companies and countries are sure to default in the coming months. The US treasury will start playing its money supply. Asia continues to sink. If optimism returns to Canada and our confidence rises, then we could be in for quite a shock if market turmoil picks up again. Optimism can be our greatest strength. It can also be our greatest weakness if it can be taken away.
#15 Glen
Thanks for the advice Glen, there are people out there that can learn from others experiences…and Thanks to you as well Garth!
#62 David Bakody on 03.19.09 at 9:33 am
I use another value assessment principle ‘How many hours of my life, at my net rate of pay, will I have to give to possess, i.e., own, use, enjoy, something?’ Now that is a value everyone can relate to. I ask this question ‘Am I willing to surrendered this amount of my life time to this person or company?’
Funny, how that turns everything into a basic slavery, albeit Bond Servant, perspective, eh?
What could I do with that time otherwise? Am I willing to allow someone else to have control over my life to obtain momentary satisfaction or is the thing a true need?
Some people on this blog are expecting a 50% drop in Ontario have something coming. I hear Woodbridge mentioned often here..firts off, houses in woodbridge are owned by alot of wealthy ‘old fashion’ europeans with alot of money in the bank..yes they have big houses and because they are frugal in living they also have alot of money to boot. (I know some personnaly) . If you want a house in Woodbridge, you will buy high,,thats just fact. Mississauga, some areas are expensive and some not..look around and you may find something.
I agree with everything you say except two comments.
1. ‘Many people in their forties and fifties who lost work in 2009 will never work again.’
I am assuming by many you mean a large percentage of people in there 40/50s will never work again? They have 15 years till they retire, why would you think things won’t improve in that time? This is just a very scary comment for someone in that age range that has lost their job and I think it isn’t justified. Most but of course not all people who lost work will find work in the future.
‘Real estate prices will be lower at Christmas than they are now, will stabilize in 2010’
Predicting when the house prices will stabilize is just rolling the dice in my opinion. People have been predicting the bottom of the housing market in the states for the last 2 years almost, with no bottom in sight. Also didn’t the last bubble in Canada take four years to correct? Why do you think this one will only take 2? Some markets in Canada haven’t even begun seriously (Regine, Ottawa, Montreal) to feel the housing correction, are you suggesting these markets will stop falling next year?
Everything else you opine on I believe has a very good chance of happening though.
I find it’s not so much about what Garth says, its about how little he comments to thought provoking questions.
Sorry Garth.
I’m not your mom. — Garth
Bernanke has gone phase three of the inflation stimulus plan. Monetizing the debt.
If monetizing the debt fails and inflation doesn’t occur you will have stagflation like Japan.
If it starts inflation and you don’t react soon enough to stop the inflation you end up like the Weimar Republic of Germany or Zimbabwe.
Interesting take on the US housing market bottom:
“There will almost certainly be two distinct bottoms for housing: the first will be single-family housing starts, new home sales, and residential investment, and the second will be for house prices. These bottoms could happen years apart! As noted yesterday, it is way too early to try to call the bottom in prices. House prices will almost certainly fall for some time.”
And the graphic:
http://3.bp.blogspot.com/_pMscxxELHEg/ScFO7LpbNXI/AAAAAAAAE0o/QYCiZHtsSAA/s1600-h/HousingTwoBottoms.jpg
Kudos to that wise poster last week who all but guaranteed the quick rise in the oil price above $50. He/She was exceptionally confident and authoritative. Well done!
May we have more please?
Garth what world are you in?
Today:
“Technically, the U.S. is already bankrupt because it has a debt that is almost four times the size of its economy, says Puru Saxena, CEO of Puru Saxena Wealth Management. He tells CNBC’s Amanda Drury & Sri Jegarajah that the U.S. is at risk of hyperinflation.”
Heres today AGAIN:
http://www.vancouversun.com/Business/Canadian+inflation+rate+rises+cent+February/1405332/story.html
Care for some cyanide? — Garth
Thank you Garth for providing us with what, I suspect, will amount to a watershed moment for this blog. Much to your credit, you have been clear and unequivocal, and, no doubt, quite accurate as far your presuppositions will allow. It’s no easy matter, sniffing out and tuning out presuppositions. Therefore, I respectfully beg to differ. I hope I’m wrong, but the demise of near absolute WASP hegemony in the world since 1764, is not happening in a vacuum. IMO, there could quite conceivably be actions and reactions world wide which may unsettle life even on your “acres.†I believe I laid out the rational which explains our differing views in my comment #53 Flounder Digest on 03.13.09 at 10:26 am “THE PROGNOSTICATOR’S ARTâ€
But thank you for your far seeing vision. It’s accurate enough to provide a solid working hypothesis for the coming year. Your grasp of the immediate givens of the situation is far superior to anything I know either from research or first hand.
When a mainstream economist from Merrill-Lynch estimates 9.1% decline in GDP, I’d say it is a lock that a 10% decline will happen – they always underestimate these types of statistics.
He probably sees more like -15% down, but massaged his numbers to come in under 10%. Would anyone be surprised.
A 10% decline in GDP in 1 year IS A DEPRESSION. Period. 9.1% sure feels like it, right now, just from my ‘heard on the streets’ grapevine. Everyone is losing their job, or getting cut back hours, or taking a pay cut, or a combination. Except Government employees, of course, the last bubble.
So anyone who rushes out to buy real-estate now is “The Greater Fool”. There are NO bargains, if the prices continue to drop, and they will.
#50 dd
“There are probably so few sales that one multi million dollar sale could put the average price up. Very misleading number.”
The one big sale for $2.72 million on 984 sales puts the average price up $2300. So, it’s still up by almost $5,000.
The Calgary median price is up $4500. Median is not affected by one large sale.
What’s more interesting is that condo avg and median prices are also up. Condos were supposed to crash…and crash hard.
#50 dd
“There are probably so few sales that one multi million dollar sale could put the average price up. Very misleading number.”
The one big sale for $2.72 million on 984 sales puts the average price up $2300. So, it’s still up by almost $5,000.
The Calgary median price is up $4500. Median is not affected by one large sale.
What’s more interesting is that condo avg and median prices are also up. Condos were supposed to crash…and crash hard.
lgre on 03.19.09 at 10:07 am Some people on this blog are expecting a 50% drop in Ontario have something coming. I hear Woodbridge mentioned often here..firts off, houses in woodbridge are owned by alot of wealthy ‘old fashion’ europeans with alot of money in the bank..yes they have big houses and because they are frugal in living they also have alot of money to boot. (I know some personnaly) . If you want a house in Woodbridge, you will buy high,,thats just fact. Mississauga, some areas are expensive and some not..look around and you may find something.
LOL. Woodbridge the land of second mortgages so everyone can drive a new bmw woodbridge? Yes some have cash but the vast MAJORITY are living a lie a huge lie. Wife works at a dealership in woodbridge and can tell you stories of the broke and broker families in woodbridge. LOL Igre you are so screwed if you own in woodbridge. BTW the smart families with cash already SOLD and left woodbridge for maple. Woodbridge is going to be the next st.clair dump.
We may have different countries, but we share many lending companies that had unsafe lending practices. I hope Canada gets out of this recession soon, though it looks like yours is just beginning.
David Bakody, it’s good to hear from your view-point bro’. We’ve been of the ‘less is more’ philosophy for many years. The best part is when it comes by choice. Do you do much gardening? I love to explore that world but we’re happily renting in a large complex (that is dog-friendly!) so that’s limited here. I live in a mid-size city with people from every walk of life in this complex. Seniors and young families and new Canadians- I learn from them all. Here too. Have a good one!
#36 Mike (authentic) – Good summary. I agree on most points.
Except on gold, of course. LOL.
I have to send Ben a thank-you card, he has been ‘bery bery good to me’.
Stock market bottom is far off yet, Government interventions not-withstanding. The only way the stock markets stay afloat is if the Fed/BOC start buying shares directly, which is a distinct possibility. But then everyone sells to them, and buyers flee, and the stock prices ultimately fall to new lows. We are seeing this in the Bond market, look at UK gilts.
Precious metals will ride high for a few years yet. Always volatile, but currency devaluation will put a rising floor under them. The average length of a commodity Bull is 15-17 years, according to Jim Rogers, so the time to exit gold will be around 2016 or so, maybe. If we get inflation out of all this eventually, then gold will still be, err, golden.
Kodratiev Spring will come, the seasons turn. I estimate it at about 2018-2020, more or less. If you consider we entered Winter in 2001, which I do, at the bursting of the dot.bomb bubble. The stock market will bottom and turn a couple years in advance, roughly. That will be the time for buy’n’hold DRIP on blue chips.
These are all my best rough guesses, no one can claim to know for certain. These are uncharted waters. You do the best you can with what you have.
Are we heading for the worst sales crash in the GTA’s History?
First quarter sales for the GTA were a rout, and in many ways, it looks to be as bad as the “great crash†of 1989/1990.
Any talk of a “frenzy” in the market is a joke. 2007 was frenzy. Things could improve beyond the March data, but nothing in the numbers bears this out.
March is one of busiest months, and sales are down 20% compared to March 2008. Prices outside of Toronto are down 7%, and prices are more resilient in the Metro area – down less than 5%. TREB March 2009 Sales in March 2008 (when we were buried in snow) fell 22% from March 2007. I guess the weather was too nice this year, so buyers didn’t shop? No mention was made of inventory in this report.
Please consider that any comparisons of 2009 and 2008 are not comparing the GTA to its market peak in 2007. Absolute sales fell 20% in the GTA from 2008 to 2007. (74,552 compared to 93,193)
With that said, comparing Q1 2009 to Q1 2008, sales in the GTA are down 34%. 14273 (mid march 08) to 9355 (mid march 09.) A massive shave in sales and a small decline in prices must equal much smaller profits for realty firms and smaller salaries for realtors.
1989/1990.
GTA realtors often mention that the crash of the early 1990s could never happen again. But the actual numbers of that time are comparable to today. Home sales in the GTA fell 31% (38960 to 26779) between 1990 and 1989 and average prices fell by 7% that year.
It should be noted that in 1991, sales immediately went back up to 1989 levels after the crash of 1990, but prices continued to plummet for years, presumably due to the state of the economy.
Comparing raw sales numbers, real estate is not doing very well in GTA. The headwinds that Garth speaks of in his post should not do much to ameliorate the situation. There were 8762 sales in the GTA last April. I wonder if how close we will get to that number?
Even if YOY sales decline 20% from 2008, back to back years of 20% declines must sting for many in the industry.
TO get the historical TREB data I am using, click here and go to the bottom.
Sorry, bad HTML with the bold tags which caused dead link to the March TREB numbers.
TREB March 2009
Garth, Can you get Got A Watch to write the forward to your next book or maybe put him on staff at the blog to fact check. This guys got his fingers on the pulse. You had the depressionistas flocking here first. Hate to see you lose them. After all you built that ark.
46 prairie gopher on 03.19.09 at 8:33 am Does anyone from Calgary know a builder by the name of Excel?? Any feed back on their construction history, etc.? Thanks.”
Excel was a low end SFH builder who built starter homes in areas like Evergreen, Saddleridge and Bridlewood. I’m sure other areas as well.
Are they in trouble?
Mike
Garth, from the last blog what do you think about having home inspection conditions on offers?
Also, wondering if you read and or subscribe to Alvin and Heidi Toffler theories re: their books?
(1) Useful. (2) Useless. — Garth
Garth,
Just to clarify, when you say:
“For a collapse to occur, we’d have needed a bank crisis by now. But no major banks will fail.”
Are you then implying that *Canadian banks* are safe and sound stores for our money?
If so, would a cash reserve at home still be needed/recommended?
Our banks will not fail. But that’s not the only threat. Those who live on debit and credit take a big chance. — Garth
A great article about how the City of Calgary needs to fill in the Holes left in land that were supposed to be multi-unit residential and commercial properties in just a few square blocks near the downtown core (Belt Line Area).
Article: Calgary Herald
Nine Sites w/ GAPING Holes:
1. Astoria–9th Street And 10Th Avenue S. W.
2. Oslo–12th Street And 11Th Avenue S. W.
3. Strategic On 4Th –2004 4Th Street S. W.
4. Gateway Midtown–517 10Th Ave. S. W.
5. Sky Tower–201 10Th Ave. S. W.
6. Manchester Station — 5320 2Nd St. S. W.
7. Haras–1215 5Th St. S. W.
8. Grand Park–101 29Th Ave. N. E.
9. Grand Riviera–1505 23Rd Ave. S. W.
#46 prairie gopher, Excel Homes has been around for about 20 years. They started off building starter homes in communities like Taradale and Martindale in the Northeast. I almost bought a house from them in 1998, but the sales guy was a jerk and I took my business elsewhere. They are still for the most part an entry level builder both in price and quality.
OK Garth…….I’ll bite……..
* Almost half of Americans now expect a depression. Always bet against public opinion.
Well…….to flip that around, the other half think we won’t have a depression. So why not bet against them instead ?
* For a collapse to occur, we’d have needed a bank crisis by now. But no major banks will fail.
Well……the BofC and our government has pumped $125 billion into the banks, as well as introduced special accounts (TFSA’s) designed to bring cash into the banks. We are always behind the US………wait for it.
* The pace of job loss is unprecedented and uncontrolled, and cannot be sustained. Companies are panicking and dumping employees in acts of cowardice which will soon diminish.
Who says it cannot be sustained ?…..the US had a another huge month of first time unemployment recepients this month (646,000 worth)…..their unemployment is at record highs not seen in decades and shows no signs of stopping. We are different because ?
* Some massive corporate failures are imminent, and will signal that we are closer than ever to the bottom.
No, they signal that the storm has finally arrived…….when the corporate failures stop, we are at a bottom.
* Personal bankruptcies and negative equity will explode this summer and autumn, prompting a second federal budget, tax relief and bailouts.
Which will push us over the cliff. Bailouts are not working in their present form…..the bailout money is being wasted on companies instead of being given to consumers.
* Governments will spend whatever it takes, borrowing massive wealth from the future disregarding how the Boomers and their kids, whose greed got us into this mess, are screwing their offspring.
Which will enable and sustain the depression.
* Interest rates will continue to race to zero and stay there. Suckers will borrow. The media will report it. Fools will follow.
Massive rate increases are inevitable as the FED, and soon the BofC, create money out of thin air to pay for these programs and to buy back their own securities. Confidence is lost……rates go up.
#10- Keep in mind that the new subway is coming the Vaughan and areas such as Weston Downs will continue to have demand since it is very close to the Vaughan city centre subway stop.
There are a few old listings in that area right now, why not be a vulture and try to get a deal in woodbridge?
Tony,
Maple – Garbage dumps, apartments, no high-end homes, temples
Woodbridge – Million dollar homes (National Estates, Weston Downs etc.)
Maple is to Woodbridge what Brampton is to Mississauga. A consolation prize. Always will be.
What kinda seeds you got there boy?
I’m not your mom. — Garth
You’ve inherited this family Garth, do we call you Godfather?
Ok, I get it. We WILL have a Depression, and as a matter of fact, already are in one; just no one will ever admit it is one, it won’t be called one except by people the MSM will call “wingnuts”, and therein will lie the truth.
Wow the Ministry of Information really has everything sewn up quite nicely following Orwell’s lead to the last detail.
From The Province artcile mentioned above:
“They bought their five-bedroom house five years ago for $114,000, but Pirillo owes Accredited Home Lenders, a U.S.-based subprime lender, $140,000 after borrowing against their house equity.
Their mortgage called for interest payments of 8.25 per cent, but when it came to renew recently, the company wouldn’t renew at any price because the bottom had fallen out of the housing market.”
WTF? I didn’t know that the lender could refuse to renew. I wonder how often this happens.
#32 andy
Exactly, this is a large part of the problem with rates being way to low to stimulate proper growth of wealth, and not growth of debt instead. People are chasing any kind of scheme they can to grow savings, whether it be for retirement or a rainy day.
Some of our politicians have gotten lazy and instead of doing the proper work and research to implement sustainable growth, they’ve lost their imagination and just say [email protected] it, lets drop rates to put a mass smile on the face of the herd, and when they get called on it, throw their hands up in the air and blame it on the bogey man, or the previous party.
Haven’t read the comments. Talked to a sis today. Her girlfriend’s Mom died not too long ago. She & her DH spent about 6 weeks painting her Mom’s house, clearing it out, doing some minor renos, etc. until basement got flooded – crack in the wall and had to have it repaired along with stairs leading to the basement. Wood is like a sponge. Put it on the market with an RE and had 3 offers within a week. Couple who bid the highest ($20K above asking) were turned down by 3 mtg. cos. They accepted the 2nd highest and its been sold. Both she and my sis were amazed at the price she got. Its in Greenfield park, on the south shore of Mtl. My sis & her friend both agree where her Mom lived is not the nicest of areas. The house was probably 35-40 YO and not worth even the asking price. Seems like there are lots of Greater Fools out there. Wonder if they cashed in 25K of their RRSP.
BTW, not all boomers caused this fiasco. Some of us were prudent & spent within our means. From what I’ve seen on HGTV it was mostly the younger generation that didn’t. Maybe Garth and others are blaming the boomers for giving everything to the younger generations & not instilling in them that money does not grow on trees.
lgre on 03.19.09 at 10:07 am Some people on this blog are expecting a 50% drop in Ontario have something coming. I hear Woodbridge mentioned often here..firts off, houses in woodbridge are owned by alot of wealthy ‘old fashion’ europeans with alot of money in the bank..yes they have big houses and because they are frugal in living they also have alot of money to boot. (I know some personnaly) . If you want a house in Woodbridge, you will buy high,,thats just fact. Mississauga, some areas are expensive and some not..look around and you may find something.
Yeah, sure :). Woodbridge, Toronto/GTA and Canada of course will be the only places in the world that will escape the housing crash. Keep repeating that until you feel better…
Garth,
Would you please elaborate on your thinking regarding this comment you made today, also any hope?
“Many people in their forties and fifties who lost work in 2009 will never work again.â€
#78 David Dodge
“What’s more interesting is that condo avg and median prices are also up. Condos were supposed to crash…and crash hard.”
It doesn’t add up. Calgary firms are still laying people off, very low natural gas prices (Calgary is built on NG), and there is awash of listings on the market and soon more to come. Maybe people think that the recession is already over. This is a month blip.
Off topic… but relating to past strings…
speaking of eating squirrel….
“New Market for Invasive Species
The above photo may not look too appetising, but I have friends in the UK who won a blind bake-off in their local pub with Gray Squirrel Pasty . (OK – no jokes about English food please!) But it seems my friends may not be alone. According to the Guardian, more and more folks in the UK are getting a taste for invasive species as the ultimate in ethical meat. It’s free range, natural, and you are helping to restore balance in native ecosystems.
http://www.treehugger.com/files/2009/03/eating-aliens-invasive-species.php
(NOTE: Grey squirrel an invasive species in UK. From Canada, I think…)
Garth,
What is the official definition of a depresssion? What you describe sure as hell sounds like a depression from another post but I am curious as well. Also, what do you think is happening to have the TSX climbing every day for the past week? It is good news but the reasoning behind it?
#73 PTDBD
“Kudos to that wise poster last week who all but guaranteed the quick rise in the oil price above $50. He/She was exceptionally confident and authoritative. Well done!”
It doesn’t seem to be based on supply. Is it all US dollar related. I see inventories in the states are the highest since mid 2007.
agflation /stagdeflation huh?
let us hope a major volcano event doesn’t disrupt the sunshine in the west we wouldn’t want those weather derivatives to blow.
#80 Miami Beach condos on 03.19.09 at 10:59 am
Yep, just talking to one of sisters and told her about our own subprime mortgages thanks to our laissez faire PM & Finance Minister, both of which love to go on the world stage & take credit for our banking system. Just think if they had been in power in the late 90’s.
#91 Go Green on 03.19.09 at 1:33 pm
“Its in Greenfield park, on the south shore of Mtl. ”
Wow! You really DO know the area, eh? Ever heard of Otterburn? ‘Dems my roots girl!
Greenfield Park is possibly one of the first “bedroom communities” to service Montreal on the South Shore. Very stable area, working class mostly, mature trees, very reasonable house prices, so I am not at all surprised it sold. There is not likely a lot of houses up for sale in that area. A lovely spot, “just close enough”, but keeping a small town feeling yet all the necessary services. Close to agricultural area, provincial park, and small mountains for hiking.
No, I am not getting paid to promote the area!
Remember, Montreal has for all intents and purposes been a depressed area for more than a 2 decades now. We already suffered the loss of manufacturing, head offices, and support business due to 2 referendum on separation.
However, with the loss of business aircraft market, and other airlines not buying Bombardier aircraft, this area will take a hit, as Pratt & Whitney have announced layoffs in the area. Other support will follow with job losses. More damage to the manufacturing sector. So sad…
#99 Go Green
There is a good chance that entry level buyers, today, that cashed in $25K in RRSP are really cashing in $35K of RRSP unless they were sitting entirely in GICs in fall of 2008.
The majority of equities(especially commodities) will easily out perform the housing ATM over the next 5 years, but it looks like some have gotten to the point that can’t hold “it” (it being their desire for their “own” home) in anymore.
I read your xurbia post regarding solar panels. That is a great deal.
@dd – Sorry, I don’t have an answer as to why oil has spurted. Personally, I don’t try to assign any reason for a price change. From experience, I’ve found madness and frustration follows if you try to apply logical reasoning and statistics. Especially now that currency and debt sands have become super-saturated.
Insiders and the connected and the legislators, of course, would have a better handle on the movements.
I just try to surf in the wake of their Yachts and follow the peaks and troughs of the waves, cackle madly at the insanity and specialize in doggerel.
here’s an oldie but a goodie:
A bearded financier of academic veneer,
Strolled arm-in-arm with his companion…
a Carney by name,
schooled in the Confidence Game.
“Just watchâ€, said Bernanke, waving his magic hankie,
I’ve learned prestidigitation and obscufication,
to achieve everlasting levitationâ€.
The Mark looked at him askance,
and clutched on tighter to his hands,
As he and his companion, fell into the bottomless canyon.
On the way down,
Bernanke laughed like a manic clown.
Happy to be in hyper-inflation…
Never facing the full gravity of the situation.
Totally OT – Just went down to the family room and was about to enter the bathroom/laundry room and what did I see but a 2″, excluding the tail. mouse or rat. Believe its dead as it did not move. We did have one or the other and had put down some poison, in the family room & in the back basement. I just spent this am vacuuming and cleaning the bathroom this am and removed the poison as it hadn’t been touched. The poison is in little pellets. This little being has dark hair. Is it a rat? I thought little mice had light coloured hair. At least those that I’ve seen.
Well, I left it there for my husband to dispose of. We put various kinds of bird seed out daily so that might attract them. I know they can squeeze into the tiniest of holes.
Pardon my OT question. I don’t mind picking up worms, salamanders, etc., but rats or mice are a no, no.
This is why we have men. — Garth
“It doesn’t seem to be based on supply. Is it all US dollar related. I see inventories in the states are the highest since mid 2007.”
Same reason gold lifted by $65 an ounce today.
I’m not related to George. Nor did i pay him. LOL.
Thx for the endorsement though.
“Capitalism’s cooked. This is now a government-run society. Irony of irony – free enterprise has moved East. – Garth”
Hardly. Last time I looked India was a semi-socialist state with rampant corruption, sure they will make progress but it will take a far better effort than that to dislodge the US. Have you noticed that the “surplus” countries have been even more affected than the US by this crisis?
Do I need to explain ‘irony’? — Garth
Garth your losing credibility all over the place ( in Bold), :
Calyon metals analyst Robin Bhar said while the weaker dollar was benefiting all commodities, it was the longer-term implications of the Fed’s move for inflation that was largely driving gold higher.
“This will boost the amount of dollars in the system, it will boost money supply, and it will boost inflationary expectations down the road,” he said.
“The Fed is the last bastion of central banks, and when they decide to go down this route of quantitative easing, that really does make a statement,” he said.
Gold has long been seen as a key inflation hedge.
Wow, a pro-gold sentiment from a metals analyst. Now that’s credibility. — Garth
IMO everyone is in both thought and talk overload. Yes there will be a depression and it will sting our arses more than the last one did No matter how big the bailouts are or how low the intrest rates drop. The SIMPLE rule to remember is …. No jobs + No income + huge consumer debt =No economic recovery. The fluctuation in RE prices are a result of people coming to terms with reality. The fools who are holding out for top dollar to pay off bad debt are going to lose. The realists who don’t listen to realitor and banker spin and are now selling at a realistic price are going to win.RE prices will flatline and I believe very soon we will see prices drop. My guess is at least 50% .Take a closer look at whats been going on in B.C. Once the Olympic games hype is over the province is going to look a bit like Flordia.I don’t even want to think about what will happen in the other provinces. Not a pretty sight. So if you are thinking of buying RE and can afford to do so you might just want to wait a bit longer. If you are thinking of selling and downsizing get real and get busy. The goons in Ottawa arn’t going to save us. As for Barrack O. he is doing the best he can in a very ugly situation. I like him . Will he save us from this mess? I think not.
“. . . of higher taxes, debt-shackled governments, a far less competitive North America and the end of the US empire. Capitalism’s cooked. This is now a government-run society. Irony of irony – free enterprise has moved East.” . . . [in combination with]
#82 Got A Watch at 11:06 am — “Stock market bottom is far off yet, Government interventions not-withstanding. . . .” . . . #91 Keith in Calgary at 12:31 pm — and — #102 dd at 1:39 pm — “It doesn’t add up.” . . .
Good posts, and credit where credit is due.
All I do is take a few words from each para. which stand out for me. For instance,
“. . . of higher taxes, debt-shackled governments, . . . This is now a government-run society.”
By forcing countries to take on higher deficits and debt loads, which are then passed on to taxpayers, the NWO has managed to put its’ feet into our lives here and now — unwittingly, we are now part of the ‘herd mentality’, a.k.a. sheeple.
Baa-a-a-a-! Roast lamb and mint jelly, anyone?!
“. . . Government interventions . . . It doesn’t add up.” . . .
Absolutely. Nothing will ever add up the more govt. interventions occur, which now happen more and more frequently.
As far as moving East (into Europe, eastern Europe, Japan and China), don’t bother. They are sinking as fast, if not faster, than we are.
#89 The Beltline. Pay top price to live next to homeless shelters and crack whores. Convenient if you enjoy crack whores but not so much if you like to walk after dark without getting puked on (and that would be the best case scenario).
I find that for a red-neck city we certainly do pamper our boozers at the expense of everybody else.
Wealthy Renter, watch your negative spin factor buddy.
Y-on-Y numbers are:
2009 2008 Y-on-Y-pct
================================
January 2670 5075 -47.4%
February 4120 6015 -31.5%
mid-March 2565 3183 -19.4%
Toronto prices are also rising month-to-month. They are not back to 2008 levels yet, but they are gaining and fast..
In recent times, March average prices are lower than February, higher than January. As it goes, March 2009 prices are tracing higher than January AND February.
Whatever the realtors are doing, it’s working. Again…
dd #102
“This is a month blip.”
Well, how about a two-month blip(does two months make it a trend already??)
Calgary condo median prices were also up in Feb, about $7,000(3%).
#3 Day Trader…..I think Alberta will be hit the hardest. …B.C. is sinking faster than the Titanic. Only one lifeboat left. We call that boat the Olympics. Once its been launched…..Well we all know the rest of the story.
Vancouver vacancy rate jumps 7.3%.He he he.
http://www.vancouversun.com/business/real-estate/Vancouver+office+vacancy+rate+jumps+cent/1406283/story.html
[…] READ MORE OF WHAT THE GREAT GARTH HAS TO SAY! […]
In your ‘no deppresion because scenario’ you say no babks have failed. In fact many have failed and the rest are on life support via nationalization by the government. Argue of course, but it’s a chicken if it squawks no matter how you dress it up.
Job losses are in fact accelerating. The recent revision in US unemployment shows that we are in fact as perdicted on track to lose 1 million jobs in March. It is not cowardice it is a lack of buisness. Building auto’s for ex: to park in fields is not sustainable. The number of job losses is on par with the projected number of foreclosure and in fact as many as new cars coming off the line for no net gain. More jobs lost guaranteed, fewr sales, more foreclosures, an ungly but factual trinity.
Look for hyper inflation to be called by every other name as commodity prices increase incrementally with the division of the currency. My prediction, gold at $2000 in ’09 and a loaf of bread at the cost of your average minimum wage. Oil and gas will again appreciate rapidly at any hint of demand and cause a spike that makes the last one look like just another day in the park. Miners and Industry are being starved out of buisness and supply has diminished to a great degree. Bringing that shut in supply back to the market will take a long time.
Oil and many other commodities are currently trading below the cost of production. The de facto devaluation of the currency will not force producers to perpetually operate at a loss as it the case at this time.
Attempting to pay the Arabs with devalued dollars is only going to cause the Arabs to ask for more dollars for the same unit of product. that’s inflation. But we’ll have hyper inflation before this is over and that will cause the economy on Main Street to defer recovery for an extended period of time while the supply/demand price stand off exists..
Hyper inflation is already on it’s way. The hedonics measurements the government try’s to fool you with still can’t disguise the fact that real prices are going up fast
http://www.vancouversun.com/Business/Food+housing+costs+drive+inflation/1405332/story.html
Rising food prices have nothing to do with monetary supply or hyper-inflation. — Garth
#108 Rhino on 03.19.09 at 1:55 pm
#91 Go Green on 03.19.09 at 1:33 pm
“Its in Greenfield park, on the south shore of Mtl. â€
Wow! You really DO know the area, eh? Ever heard of Otterburn? ‘Dems my roots girl!
…..
Yes, one of my sisters, lives in Otterburn Park. What street did you live on? We were there this past Xmas. She’s spent most of her married life there, other than 4+ years in Atlanta. We grew on the island of Mtl., except for a couple of years in the Laurentians. Lived on Nun’s Island in the very early years of its development with my 2 sisters (until a fire forced us out), on Berry St and finally on the top of Ridgewood.
……….
Greenfield Park is possibly one of the first “bedroom communities†to service Montreal on the South Shore. Very stable area, working class mostly, mature trees, very reasonable house prices, so I am not at all surprised it sold. There is not likely a lot of houses up for sale in that area. A lovely spot, “just close enoughâ€, but keeping a small town feeling yet all the necessary services. Close to agricultural area, provincial park, and small mountains for hiking.
No, I am not getting paid to promote the area!
…………
:-) Apparently Rhino, the house was not in the nicest area of Greenfield Park. I think my sis said it was near one of the major highways – lots of noise. I believe it sold for $279. I haven’t lived in Mtl. since ’76 and have a hard time picturing Greenfield Park in my mind now. Even though we go back 1/2 yr. its usually to Otterburn or Laval to visit with family on both sides. Sometimes its out to Tarrace Vaudreuil to visit friends.
……….
Remember, Montreal has for all intents and purposes been a depressed area for more than a 2 decades now. We already suffered the loss of manufacturing, head offices, and support business due to 2 referendum on separation.
…………..
That’s why we left in 76. Most of our friends left to go west – TO or BC. I went on vac to VA in ’75 to visit a few friends, thinking I might move there. But, I heard lots of horror stories about the weather, felt cut of by the mountains, etc. We had family ties here & it was closer to my elderly parents in Mtl.
….
However, with the loss of business aircraft market, and other airlines not buying Bombardier aircraft, this area will take a hit, as Pratt & Whitney have announced layoffs in the area. Other support will follow with job losses. More damage to the manufacturing sector. So sad…
……
My sis in Otterburn park lost her job in Jan. – 12 hours short of collecting EI. Never applied for or rec’d a cheque in her life. She’s 59. And her husband is lucky to get a few days work a month & they still owe $40K on their mtg. which is due for renewal next fall.
I know you’ve had some hard times too Rhino & I wish you all the best.
I refuse to give up
http://www.simmonsco-intl.com/files/Pioneer%20Oil%20Producers%20Society.pdf
#3 Day Trader on 03.18.09 at 10:32 pm
Still huge denial in Edmonton. I think Alberta will be hit hardest of all.
just wondering why you think this?
Some people on this blog are expecting a 50% drop in Ontario have something coming. I hear Woodbridge mentioned often here..firts off, houses in woodbridge are owned by alot of wealthy ‘old fashion’ europeans with alot of money in the bank..yes they have big houses and because they are frugal in living they also have alot of money to boot. (I know some personnaly) . If you want a house in Woodbridge, you will buy high,,thats just fact.
————————————
wealthy old fashioned people in woodbridge?? lol….you’re not familiar with the culture there are ya? the last ten years its been about keeping up with the joneses! its a debt-riddled community filled with the sons and daughters of the hard-working, thrifty Italians that grew up on St. Clair.
Please don’t confuse the two. The amount of debt in Woodbridge is huge…an embarrasement to how their parents raised them many years ago.
the guardian uk has been gagged! and just when it was getting interesting about tax avoidance schemes …who is the leak i mean whistleblower
#82 Got A Watch on 03.19.09 at 11:06 am #36 Mike (authentic) – Good summary. I agree on most points.
Except on gold, of course. LOL.”
Thanks! I think we believe in the same cycles from the sounds of it. And you made some really good points as well there in your post.
I’m all in 1yr GICs Cash, no RE, no gold and no stocks. Just waiting on the sidelines in a safe, very liquidable position. Gold is indeed “golden” IF we get hyper-inflation, which I donno if that will happen. Gold is doing really weird things right now, from $1050 down to $840, up to $940 in a week, it’s all over the map. That (to me) signals speculation and a bubble (currently). I think you have to hold physical gold (not paper gold). But where to put it? And if anyone knew you had $100k+ in gold under your mattress or buried in your backyard…
Food is good, power is good, water is good, shelter is good. Garth is right there. Gold is good too, up to a point, then when everyone is starving no one will give up food/water for gold. But it is a store of value IF you can be on the right side of it for buy/selling. Then you are juggling USD vs CDN, coversion rate costs and gold prices. Yuck.
Mike
Sorry to tell you, the anarchist and bullon bunnies are right.
“#44 Gord In Vancouver
Doesn’t our country have a labor shortage?”
It did, but the shortage is getting shorter.
“#91 Keith in Calgary Almost half of Americans now expect a depression. Always bet against public opinion.
Well…….to flip that around, the other half think we won’t have a depression. So why not bet against them instead”
That’s not how it works. When you do a poll, you don’t just ask yes or no. People who can’t respond to the question, just give no answer. This is why most polls give you a selection.
1.- Yes
2. – No
3. – Maybe
4. – Don’t know
In this case we don’t know how the other half responded. So in reality we have to go with the highest number and in this case it looks like it is “almost half “.
This is the amount of people that feel this way and must have said so. The other half have mix feelings.
Using numbers like this is how people get in to trouble. The math throws them off, number cruncher’s love the tactics.
Median prices are up an insignificant amount (i.e. less that 1%—$1500 this month for SFH and 0%—-$100 for Condos) and that’s after a monumental fall over the last 20 months. The number of listings is also up for Condos and SFH’s in Calgary each to the tune of about 5%.
Dodgy Dodge, where are you getting your bogus stats from? If you need a legit source, please go the following link before you bring your garbage here.
http://www.findcalgary.ca/listings?pathway=127&pageId=19
As for homebuilders in Calgary.
I’ve been here a while and never seen one that compared in quality to anything seen out East. This is due to our shoddy building codes and a general lack of good tradesmen….sorry, tradespeople.
#121 David Dodge
“Well, how about a two-month blip(does two months make it a trend already??). Calgary condo median prices were also up in Feb, about $7,000(3%).”
Was this reported by the real estate board? Wage roll backs have started, on top of the increased unemployment. Those numbers are baked.
I said no major banks will fail. And that is a fact. — Garth
I say the fact is what already happened. Statement above is speculators crap.
Be civil. — Garth
Op-Ed: Will the Real Toxic Assets Please Stand Up?
The American people are now at a crossroads. We can force the painful restructuring of our economy on our leaders. They can stimulate, print, and urge you to spend – but we don’t have to listen.
Instead, we can heed Thomas Jefferson’s warning: “A government big enough to give you everything you want, is strong enough to take everything you have.â€
http://www.minyanville.com/articles/AXP-C-bac-MCO-fre-fnm/index/a/21732
Layoffs seem to be speeding up around Edmonton Oil & Gas production. Oh but for solar panels and acres….Ontario has the right idea on Xurbia today. Wish Alberta would get with the program.
Ledcor: 300 employees…15 left as of yesterday
http://WWW.altafab.com rumoured to be shutting down also
So here I go quoting Schiff on the Hour again (he’s quite positive for us (eventually):
Dr Doom pt 3
Canada is going to experience conflicting forces. On the one hand & obviously trade with the US is going to be diminished and to that extent there are Canadians who are going to be hurt because Americans will be to broke to buy Cad products….not all but many..
On another note more Canadians will be able to afford American products. Hopefully we’ll start producing more. Eventually Canadians will be able to take advantage of what I believe will be a greatly appreciating Cad $, where a Cad $ will ultimately buy 2 or more US$.
On the other hand I think Canada will see a greatly enhanced trade with the ROTW, particularly Asia & China. I think when the Chinese currency eventually depags from the US$ the Chinese R&B? will rise dramatically & I think as a result Canada will find many very wealthy Chines to buy resources that their poor American counterparts can no longer afford. So ultimately Canada is going to benefit & in the long run the Chinese are going to be a much better trading partner than the Americans because the Chinese can actually afford to buy your products.
http://www.cbc.ca/thehour/videos.html?id=1065863016
And also in support of Garth’s argument
Leap 2020 does not predict a depression for Canada just a deep recession of 3-5 years
Wish You Were There
I dunno know, President Obama is laying out the economic plan on green jobs and of course Ontario is making a real move for solar initiatives with their budget plans. And then we have the ever so supportive PM saying nothing about the green economy without apology.
And, more troubling, Iggy is so silent you could hear a pin drop.
But that great, graying leader of BC who implemented a carbon tax that goes nowhere but into general revenue is so MIA. He is going into an election in May after all.
Er, what’s next Gordie? You could follow Dalton’s lead or take the low road. Wish you were There and then you might do something for Here.
Gateways only work if you have international economic activity – think about Gordie; we need something to call our own.
It’s all about real estate – what would you buy? A home with solar panels or granite countertops?
And that’s my rant for blog confidential.
…….and they plan on spending $900,000,000.00 of CANADIAN TAXPAYERS MONEY on Olympic “security” in 2010. Who can afford to come except the Media hacks, the Athletes, and the Uber Rich.
Love to see an auditor sniff their way through that Olympic Party bill when it finally is over .
Estimated cost $5,000,000,000.00 .
I’m sure our grandkids will be happy to know we partied like it was 1999(my apologies to Prince) while our Budget “spendandtax” locked them into 50 years of debt.
I need a winning Lotto ticket and a south sea island to hermit away to for a decade or so.
“If all economists were laid end to end, they would not reach a conclusion.”
-George Bernard Shaw
“If all economists were laid end to end, it would not be a bad idea.”
-Unknown Wise Person
Garth can we make a rule that you have to look at the following sites before you bash the Calgary RE market:
http://www.bobtruman.com/Whats_New/page_1691541.html
http://www.findcalgary.ca/listings?pathway=127&pageId=19
From last month the comps YoY for:
pending sales are up
sales are up
vacant/new construction are down
listings are down
Basically everything is positive.
Da HK kid has a point: Moving to Kuala Lumpur under MM2H program might be great idea to weather out the storm, enjoy warm climate, good food, nice beaches and friendly people and all at low price and no taxes and all of this in English.
127 Go Green on 03.19.09 at 3:43 pm
(smile)
Greenfield Park today…
The old 117 hwy is now 3 lanes and traffic blows by. Entire sections are now “tiny boxes, made of paper, little boxes made of ticky-tacky and they all look the just the same” as the song goes. Huge development during the past 10 years – almost unrecognisable.
I lived in the “heights” – i.e. Otterburn Heights. 289 Helen Street, just below Mt. St. Hilaire. “New Development” in 1958… Still go back every year to climb mountain – which is now a UNESCO World Heritage site. Still mostly apple farms, and beautiful in the Spring blossom time. Great place to take nephews from the City – i.e. Terrace Vaudreuil.
Thanks for the good wishes… times still hard, but surviving. As The Secret says… believe, and the universe will provide. (If you work at it!)
To #120 @Garth2:
“Wealthy Renter, watch your negative spin factor buddy.
Y-on-Y numbers are:
2009 2008 Y-on-Y-pct
================================
January 2670 5075 -47.4%
February 4120 6015 -31.5%
mid-March 2565 3183 -19.4%
Toronto prices are also rising month-to-month. They are not back to 2008 levels yet, but they are gaining and fast..
In recent times, March average prices are lower than February, higher than January. As it goes, March 2009 prices are tracing higher than January AND February.
Whatever the realtors are doing, it’s working. Again…”
——————————————————–
Are you serious? What are you talking about? Sales are still down/falling from previous levels, and you state that they are rising fast? Are you suggesting that because the ship is sinking at a slightly lower rate, people should jump on board? Really?!?!?! And if prices arent “back to 2008 levels” then they are FALLING!
You talk about spin? It is just like the latest news out of TREB that states the rate of decline is the smallest in months. In plain english, that should read that sales were falling and continue to still fall. The ship is still sinking.
I also suspect that the general trend would be to have price increases for the first half of the year if compared month over month. I think that prices will be lower for March 2009 then in March 2008.
Truth hurts.
Vaguely Familiar
I was living in Parkland Fl. in the summer of 2006, that year a neighbour paid $445,000 for a three bedroom bungalow. Month after month as prices dropped it became a race to the bottom, when we left Parkland in the fall of 08 the same three bedroom home was listed for $214,000, vacant, nobody looking nobody buying. This all seems sadly familiar, I remember when it started and here’s hoping it doesn’t get as nasty. Our neighbours in Florida where so busy spending……… they never saw it coming!!
No Fool #136
When you stop hyperventilating make sure you’re comparing apples to apples, which you are not. I’m using 30-day prices, you’re using month-to-date prices. But it doesn’t matter, condo prices in Calgary are up no matter how you look at them.
The Jan median price of condos was $243,000. The Feb price was $249,900. Thank you for confirming that the March condo price is up, even if it is only $100. That’s not exactly “crashing hard.”
CREB’s website shows the 30-day median price of SFH today is $379,500. Feb was $375,000, and Jan was $374,700. Up, up, up!
Seeing what the average person doesn’t see is the key to riches in real estate. As oil prices keep on heading higher and interest rates lower it seems the place to buy very soon is Edmonton. I’ll be buying dozens of townhouses and maybe a few apartment complexes this October or November. I’ll be buying in the west and south west areas. Take this at face value it’s not advice i’m only telling you what i’ll be doing in the future.
Rising food prices might have nothing to do with some arcane business concept of what “inflation” supposedly “really” is, but I’ll tell you this; food and sundries prices are surely inflation to whomever has to pay a higher and higher chunk out of the paycheck to pay for the increases each week.
Of course food prices should be figured into inflation figures. As they were for the majority of the 20th century.
People I have been following, David Rosenberg (Chief US Economist, Bank of America/Merrill) Albert Edwards (Banque Societe Generale), Ray Dalio (head of hedge fund Bridgewater Associates) say the global economy is going into a “depression” defined varyingly -sometimes as -10% GDP decline. Paul Krugman has been talking of a Japan-type scenario at best. Nouriel Roubini (NYU) warns of a risk long period of stage-deflation like Japan experienced. Robert Shiller sees the housing slump as lasting for years and the risk of depression-like conditions. Stephen King (HSBC) thinks the best we can hope for is 1990s Japan. Moreover others (Stephen Roach (Morgan Stanley) see no easy route out and are very critical of policies designed to restart things that were unsustainable in the first place. It is a shame Canadians do not read more internationally because we seem very out of touch – David Dodge’s comment was the first by a prominent Canadian to raise alarm bells about the gravity of the situation. Hard to fathom why the country most dependent on the US could ever think that it could follow a different path from the US. Unfortuantely we made are bed with the US and are now forced to lie down in it. The only bright spot is that this crisis will force a fundamental re-thinking of Canadian economic policy.
149 David Dodge
CREB’s website shows the 30-day median price of SFH today is $379,500. Feb was $375,000, and Jan was $374,700. Up, up, up!
Yeah…. South Florida and California sales stalled then prices started falling off the charts yet NewYork was still on the rise, it just took a little time before the whole country was going in the same direction. When you’re the last one in it only means you’ll be the last one out.