Wrong answers

chart

BeeMo chart of Canadian house prices. It’s only started, folks.

The following appeared in the San Francisco Chronicle this week. When you read it, try substituting the words “Vancouver”, “Calgary” or “Toronto” for any of the cities mentioned.

U.S. home values continued their free fall in January, with prices in the San Francisco area among the hardest hit, according to a closely watched real estate index.

“Prices are going down as fast or faster than they were last month, last quarter and last year,” said David Blitzer, chairman of the index committee at Standard & Poor’s, which issues the S&P Case-Shiller home price index. “It’s getting harder and harder to find some new way to say it’s really grim and dismal.”

All 20 metropolitan regions tracked by the index showed price declines compared with January 2008, while 13 of them clocked record annual declines. Combined, the 20 regions had a one-year plunge of 19 percent in home values and a one-month decline of 2.8 percent from December to January. The three worst-performing regions were Phoenix, down 35 percent compared with a year ago; Las Vegas, down 32.5 percent; and San Francisco, down 32.4 percent.

As I wrote yesterday, the US real estate meltdown started to hit in the fall of 2005 and accelerated wildly in the Spring of 2006. That means it’s going into its fourth year and, according to almost every measure, is picking up steam. Home sales may be up, but that’s entirely because of vultures swooping in to buy foreclosed houses at a fraction of their former value. In fact, their actions perpetuate lower prices.

In contrast, the Canadian real estate market was – according to the industry and all those bank economists – roaring here one year ago. It was not until the summer that news of declining sales hit, and months after that before homeowners heard about slightly falling prices. In other words, our market has been tanking for about eight months.

So, I have asked a few times, why would we think the housing market here will dip for a year or less, while the US will surely experience at least a half-decade crash?

If you say because we didn’t have a bubble market driving prices as high in Canada, wrong answer. Between 1997 and 2007 Canadian real estate values jumped an average over 80%, just a few points behind the American average. Bubble there, Bubble here.

If you say they had subprimes while we did not, wrong answer. Our 0/40 mortgages allowed people without any savings and zero downpayment to buy homes. In fact, thousands of new homes were bought from our biggest builder on credit cards, since only the closing costs were required. Forty-year ams amounted to just rent, so virtually no principal was repaid. No equity meant when prices started to decline, new buyers were screwed. Our banks dropped appraisals and approved deals based on postal codes. Our banks also allowed liar loans (and still do), with self-employed able to state their own incomes, without verification. We have not even started to see the fallout from this mortgage madness.

If you say the dumb Yanks went on a credit orgy while we were prudent, wrong answer. Today the average US household debt equals 130% of personal income. In Canada, debt equals 127% of personal income.

If you believe the American economy is in worse shape than ours, wrong answer. Based on population, we have been losing 3 jobs for every 2 they shed every month for the past quarter. This is typical of a branch plant economy, where the hinterland actually takes a worse beating than the economic motherland. I mean, if Chrysler has to choose between pulling out of Canada or exiting the US, guess what?

I could go on, but why bother? It’s obvious.

Real estate in this country has not hit bottom and won’t be there for a long time yet. Once it does tank, it will stay there for a long time after that. We’ll have a real estate recession that lasts years, while other assets gain in value. Those who think otherwise have been chugging maple syrup and spending too much time with beavers.

Letter of the day:
As a gov’t employee living in Ottawa (wife same), are we in trouble housewise?  We’ve found our “dream” property, and are looking to offer – increasing our debt load, but getting a place we know we can afford (for now).  It involves increasing the mortgage by around 50%, and would mean increasing our payments likewise.  We can afford it, at present rates, and maybe have some flexibility, but I get the impression that’s a huge mistake…?

Answer:
Duh.

147 comments ↓

#1 john on 04.01.09 at 10:45 pm

Garth,

Look into your crystal ball:

TSX – Oct. 08 – 10,000
TSX – TODAY – 9,000
TSX – Dec. 09 – ?
TSX – Dec. 10 – ?

I see ? and ?. — Garth

#2 Shawn on 04.01.09 at 10:47 pm

You took a 40 year mortage, zero down and now there is negative equity.

So what? If you still have your job simply pay your mortage like you agreed to do. Chances are you can renew the mortage at a lower rate and pay off the principle faster.

The goal was to pay off the house. Nothing has changed. Pay it off and stop watching house prices. You were’nt palnning to sell anyhow right?

Unless you were speculating in houses, the market price does not much affect you except psychologically.

We got a recession. Big deal. 90% of us are still living well. I mean have you cut off your cable yet, sold the second car? Unless you lose your job, the recession is not a big deal.

Wrong answer. 40-year ams pay off virtually no principal. And renew at a lower rate? Impossible. — Garth

#3 Investx on 04.01.09 at 11:17 pm

“Wrong answer. 40-year ams pay off virtually no principal. And renew at a lower rate? Impossible. — Garth”

But if you can still keep up with the payments, what’s the issue?

Try it, and see. — Garth

#4 Luke Peterson on 04.01.09 at 11:21 pm

We do have a slight bounce back in March, at least in Calgary. Let’s see how long that lasts… with unemployment rate jumping 1% in 1 month. You gotta give some props to the realestate people and the paper for driving up the sales though, I would have thought it was obvious to more people that putting on more debt in this environment is pretty stupid.

Us in their 20s had been brainwashed that renting is bad, that “buying” a house (owned by a bank?!) is good. Having never seen house prices going down in our lives, a lot of young people today are trying to “catch up” to their peers who bought big fancy places a few years ago. Driven slightly insane with comparitively good deals and interest rates.

Still, with some companies like Syncrude crazy enough to actually give a 4% raise and renew its retention bonus (20% base salary up to $20k) for the next 3 years, perhaps there are some people who can afford the crazy prices.

#5 North Vancouver Citizen Jr. on 04.01.09 at 11:22 pm

It’s time!

…To reject East coast Capitalism/Religion…which are one in the same…aren’t they.

it’s time to go back to the land, West Coast style.

it’s time to legalize canabis…the world will be a better place for it…canabis is the solution to all the world’s problems.

smoke a spliff and see what religion is really all about.

smoke a temple ball and note that Wall Street is but a shill for the elite few.

BC Bud, the next Financial/Trade/Leisure capital of the world.

…You heard it here first…

#6 double mike on 04.01.09 at 11:23 pm

My landlord – big RE combine sent me a poster with prices for their newly minted town homes in my area. $375K a pop. Can you imagine that? Not houses, cardboard boxes with .5’x.5′ patios. And they have dozens. Now who in his right mind would be buying the stuff?

Markets rallying on record unemployment numbers, cab drivers and janitors buying $650,000 homes, teens driving Rangerovers… Is the world crazy? Or it’s just me?

#7 Winnipeg is No Different on 04.01.09 at 11:28 pm

– Garth wrote:

“Between 1997 and 2007 Canadian real estate values jumped an average over 80%, just a few points behind the American average.”

Over the same period in “steady-as-she-goes” Winnipeg, average MLS prices jumped by 102%. Meanwhile, Manitoba’s nominal GDP growth was only 63% from 1997-2007.

WinnipegREALTORS® seem to dispute the notion that the local market has grown at a greater rate than either the Canadian or American average. As president Deborah Goodfellow explained in the February 26 edition of the Winnipeg Real Estate News:

“I’ve been telling clients since October that we are an anomaly in Canadian real estate. Historic data (wha..?!) shows we never experience the extreme peaks and valleys of other markets.”

#8 Ultraman on 04.01.09 at 11:44 pm

“Chances are you can renew the mortage at a lower rate and pay off the principle faster.”

Good luck with that. First you’ll have to pay the penalty, in the thousand of dollars, which you most likely can’t afford, Obviously.

Now for you own enjoyment just go on any bank website and play with various interest rate scenarios.

#9 chris on 04.01.09 at 11:47 pm

Garth,
my wife and i are living in calgary,putting money away monthly for a down payment on our first house. I know everyone says prices are coming down, and I see it in the 400+ range…but when and by how much do you see the entry level homes come down.I think some people are jumping over a 300k starter home thinking its a good deal just because they are used to seeing it at 375k, instead of 200k where it should be.Gonna keep renting .. just cant justify crazy prices.

#10 Al on 04.01.09 at 11:51 pm

I think it would be smart for anyone who took out a 40 year mortgage to print themselves out a 20 or 25 year amortization schedule and try to follow that scedule by paying the difference as an extra payment each week/month. At least you’ll pay it down somewhat and if you do lose your job you will have an easier time being obligated to pay the 40 year payment until you find another job.

#11 Jon B on 04.01.09 at 11:56 pm

I’ve just finished a kitchen reno. I live in the Vancouver area. During the past month I have purchased everything from light bulbs to stone countertops, paid for all sorts of services like plumbing and tile setting and logged dozens of hours in retail stores. I have a Ph.D in bargain hunting and I can attest that not a single dollar was released from my wallet without doing sufficient research to ensure I was getting the biggest bang for my buck.
My question: Retailers aren’t showing any signs of lagging sales, there are few advertised bargains out there, strip mall parking lots are packed, the trades all brag about being as busy as ever, trying to negotiate pricing on big ticket appliances is futile; so where’s this ailing economy?
Answer: The media might be reporting doom and gloom, but for the mass majority, it’s spend, spend, spend. No consumer confidence issues from what I can see.
Let me guess; wrong answer?

#12 Da HK Kid on 04.01.09 at 11:59 pm

Garth, your take is getting better everyday brother!

I’m moving to Malaysia (KL) in July from HK to save 70% of my living costs to further our proactive safety net and troll for RE. They have a good Harley Dealer as well!!!

For the Ottawa Fed Folks, I was a High Tech exec in Ottawa through those sweet RE growth periods. Moved 5 mins west of the city every 3 years and landed huge coin despite 9-11 and VC’s becoming invisible.

Hence my move to Asia!

If you are looking for validation and every reason not to buy you came to the right place. There is quite a few of my mates running for the Fed jobs over the last year but this is drying up if not already a dessert for open requisitions.

Guess what happens when unemployment in good ole Ontario hits the bricks at double digits (and it will).

HINT : NO TAX BASE, NO SPENDING!

ANSWER to where are the fed’s going to look???? Right At You Bro! Unpaid days, 10% salary haircut, job sharing etc etc.

This monster is unlike no other so DUH! is simply your answer here and you even have a head start called the US economy to pave the Canuck direction.

Garth, I am still amazed at the lack of reality some of these newbies to your blog exhibit. It must be very special having one on ones with them at your seminars.

#13 ts harpoon on 04.02.09 at 12:06 am

Garth – Pardon the sarcasim, but why do you even bother trying to convince them? Everyone I know wants a “lawyer-foyer” in the burbs -what’s wrong with living in the moment? Are you doing this because our elected politicians are not telling us all they should be?

I am sure glad we have you on board…

#14 Grumpydawgs on 04.02.09 at 12:09 am

Has anyone considered that the recent ‘crime wave’ in Vancouver is the perfect cover and distraction for the PLOTICIANS in Victoria and to a lesser extent all the local PLOTICIANS who would otherwise have to be answering for the horrifc state of the economy?

It has been a media Godsend to Gordon Campbell, without the Bacon Bros and all the other cockroaches who have fortuitously crawled out of the valley sewers what do you think the ’sheeple’ would be talking about. If I was a Liberal Party MP up for re-election I would be down on my knees offering up a fatted calf or whatever your persuasion dictates.

Now what if this media blitz was just mis direction , obfuscation and a big plan to blow smoke up your ass so that you weren’t thinking about the 6 billion thats been blown on the Olympics or the huge growth in unemployment or the final collapse of the forest industry and cruise ship tourist trade just in the past two weeks back to back?

Where is the concern for the tens of thousands who have lost thier jobs in the past 60 days in BC’s construction industry, wheres the investigative reporting? It’s been just too easy to drive out to Abbotsford, Surrey or Chilliwack and sit inside the Tim Hortons to wait for a drive by shooting or high school execution.

Is the ‘ negative denial’ campaignmore widespread and sinister than anyone could have imagined.

Theres just too much ” Kum By Ya’ glee-speak and positive propaganda by the MSM to be accidental this close to an election.

#15 UBC Frank on 04.02.09 at 12:30 am

Nothing to worry about here in Vancouver – prices are going back up.

Just like they did in Sacramento in early 2007.

http://1.bp.blogspot.com/_oqQI_LytgCE/SFg6S29nifI/AAAAAAAAAto/saUkSrxtWW0/s1600-h/SpringLedge.JPG

#16 ERIC From Toronto on 04.02.09 at 12:30 am

The latest debt/income ratio is 136% in Canada

#17 Needlesscasualties on 04.02.09 at 12:54 am

Garth, this is seriously wrong. San Francisco home appreciation since 1996 has been WAAAY more than Canadian home prices.. I know someone that bought in San Francisco (the valley) for 450K in 1996. That house is now worth 3M (and that’s *after* the 31% decline)!!!
Absolutely nothing like that happened here.

Don’t compare apples to oranges.

#18 Big Picture Guy on 04.02.09 at 1:03 am

“We can afford it, at present rates, and maybe have some flexibility, but I get the impression that’s a huge mistake…?”

Mmmm you gotta wonder about people when a cliff is staring at them. But hey what would you expect from a government employee?

#19 Ed on 04.02.09 at 1:08 am

Garth I disagree with your explanation of the Canadian price experiance. While it may be true an 80% value increse was experianced from 97 to 2007 similar to the US the fact is that was it for most of Canada as far as price inflation in the past decade. Prior to to 97 Canada was recovering from the earlie 90’s down turn whereas the US had price inflation since 1993 putting a much larger gain ahead of the 97 period. How abot 270% in the uS form 1993 would be more accurate.

#20 Lucky on 04.02.09 at 1:14 am

Garth, you’ve stated that you think we’re headed for deflation. Do you not believe we’ll see inflation in a few years’ time, due to the increase in the money supply?

#21 dd on 04.02.09 at 1:24 am

Letter of the day: …but I get the impression that’s a huge mistake”

Buddy, don’t let fear and common sense get in the way.

#22 dd on 04.02.09 at 1:27 am

#2 Shawn

“Unless you lose your job, the recession is not a big deal”

What planet are you living on?

#23 NewFather on 04.02.09 at 1:31 am

I’ve got the handbrake pulled on my wifes nesting instinct, but she’s pushing full throttle for a house. We’ve been doing donuts around the Buy/Wait conversation since September, and I often cite this blog in my Wait argument.

Our income is around $100,000/year and we have $30,000 saved in RRSP’s. But we have line of credit of $20,000 which we are paying off fairly quickly. We own our cars and rent. She owns her own business which is doing well now. We have a new baby, which is what is driving this. We’re like the typical first-time-dumb-asses who have been buying this spring.

The median household income is around 40,000 in the neighborhoods she feels we can afford. (~$280,000) houses. I don’t understand how those lower income people do it.

Where is the source for your chart? I’m hoping for a longer time-frame. To my wife, that chart will look like housing prices do nothing but go up. Which in her lifetime has been pretty much true. With 20 year charts, everything looks peachy. Interest rates get better and prices only go up! “This dip is an opportunity” Ack

#24 confused and a little crazed on 04.02.09 at 1:41 am

Hi Shawn,

How much lower can the interest rate go

“Chances are you can renew the mortage at a lower rate and pay off the principle faster.”

right now RBC GIC are 0.4 % that’s right less than 1/2 a percent. If the rate goes any lower will GIC be 0.1 %

at that point …Why bother putting it in a bank? check it for yourself go on their RBC website.

if you max out your bothering power now…when it goes up even a little you will be in trouble

#25 Danny on 04.02.09 at 2:06 am

A lot of Canadians are still in denial as far as I can tell.

I’ve moved to Vancouver about 8 years ago and I’ve noticed this ignorance more then few times.

It’s not just economics, it’s everything.
Canadians(especially Vancouver people) seem to think
this is really special place where all the bad news can not touch.

Let me spell it out just a few of the TRUTH about
Vancouver.

-High crime rate – lots of gang war due to drug industry
-Extremely poor public transportation system.
(Whatever they have is full of homeless and junkies.)
-Major streets are full of junkies.
-Lots of racism(A lot more then people like to admit)
-Generally very dull/boring/cultureless city.
(especially if you are from large city)
-Unless you are tree cutter or travel agents,
it’s hard to find jobs.
-Crazy real estate price considering its poor job market.
-Your kids can buy drugs much easier then tobacco.
-Freakishly depressing weather :
rains pretty much half of entire year.
(I know lots of immigrants from Europe/Asia who
started taking depression pills since they moved here.
)

I could go on and on.

Lots of real estate marketing were talking about
‘investing in the best place on earth’.

Best place on earth?
You seriously need to start traveling more often.

#26 LS on 04.02.09 at 2:40 am

And in the middle of this.. Victoria, always the contrarian. Sales up, prices up. Insanity.

http://victoriastruth.blogspot.com/2009/04/march-sales-numbers.html

#27 CM on 04.02.09 at 2:55 am

“In other words, our market has been tanking for about eight months.”

Uhm, it’s been tanking here in Calgary since the peak in July of ’07, which was 21 months ago.

And weren’t we last to the party?

#28 TS on 04.02.09 at 3:16 am

The best “dream home” right now is one that is:
1) paid off
2) reno’d to be fuel efficient

How low can home prices go? I guess it depends on the local impact of job losses. Windsor Ontario now has homes priced at $35,000 and that is BEFORE Chrysler shutters another factory and puts more people on unemployment. Windsor is now considering trying to promote itself as a ‘retirement’ community to draw retiring boomers from other parts of Canada.

http://finance.sympatico.msn.ca/SavingsDebt/KerryGold/Article.aspx?cp-documentid=18741126

#29 TS on 04.02.09 at 3:17 am

#2 Shawn on 04.01.09 at 10:47 pm

Hmmmm…. must be hard for Shawn to breath with his head stuck in the sand….he is obviously not in touch with reality.

#30 Tony on 04.02.09 at 3:29 am

Prices in the greater Toronto area should flatten out because of the upcoming tax harmonization. I am seeing sales pick up already. Ottawa i consider to be the most overpriced city in Ontario and it should get hammered in the next year. Vancouver should plunge in price. I am seeing good value in Edmonton in the west and south west areas but only in the townhouse and apartment sector. I am starting to buy up at what i believe is rock bottom prices. The nowhere else to go theory will hold true and the people from those townhouses and apartments will soon learn there is nowhere else to go. I don’t consider moving to the east coast into a century house as a place to go.

#31 Munch on 04.02.09 at 3:39 am

Shawn

It doesn’t affect you until you need to liquidate in a hurry.

Now, serious question for the borad, if I may?

We are seeing European properties start to crash quite seriously – South African property prices are only now starting to pop – can anyone offer me a reasonable explanation for the lag?

Visit here for insight – http://capetownbubble.blogspot.com/

Thanks

Munch

#32 betamax on 04.02.09 at 3:42 am

Govt employees may not be laid off, but they can (and have in past recessions) have their pay cut by 10-20%. So the fellow writing the letter o’ the day should be doubly careful before buying his “dream property” on two govt. incomes.

#33 Mike (authentic) on 04.02.09 at 3:59 am

“So, I have asked a few times, why would we think the housing market here will dip for a year or less, while the US will surely experience at least a half-decade crash?” – Garth

Grath, I believe it’s not a matter of numbers, analysis or hard data, it’s emotion driven. No one wants to really know how bad it is or will get. They prefer to close their eyes, cross their fingers and hope it all goes away.

Plus we have short memories, we think wherever we live “it’s different” and that it “happens to the other guy” and not to us.

Even if they are lucky to be one of the “untouched” and didn’t lose their job, they house didn’t go down, they didn’t lose in the stock market they will get hit with taxes for the bailouts.

Calgary SFH prices flat in March, but that’s not the whole story. Take these 3 houses, 1.5-2 years for sale and still not sold.

Now $1.1m (vs 1.5m last year) in Calgary best neighbourhood, Mount Royal. Ridge lot, innercity.
http://www.realtor.ca/propertyDetails.aspx?propertyId=8122608

Now $774k (vs 1.28m last year) in Calgary top 5 neighbourhood, Scarboro. innercity.
http://www.realtor.ca/propertyDetails.aspx?propertyId=8123402

Now $4.5m (vs 12 million last year!), top 5 neighbourhood, river and mountain views, innercity.
http://www.realtor.ca/propertyDetails.aspx?propertyId=7465082

Sure, prices are only going down 13% for some…

Mike

#34 Mike (authentic) on 04.02.09 at 4:07 am

#2 Shawn said on : You took a 40 year mortage, zero down and now there is negative equity. Unless you were speculating in houses, the market price does not much affect you except psychologically.
We got a recession. Big deal. 90% of us are still living well. I mean have you cut off your cable yet, sold the second car? Unless you lose your job, the recession is not a big deal.”

Well Shawn negative equity may not matter to you but, if your the lending bank, it matters a heck of a lot. You want a morgage for MORE MONEY their your house is worth? (insert banker laughing at you). Next bank please.

You said it all with “negative equity.”

“Unless you lose your job, the recession is not a big deal”

Psychologically it WILL matter even if your standard of living doesn’t go down, your “quality of life” will. You won’t feel or act the same as you see others struggle and lose their jobs around you, shopping will get more stressful as shelves are empty, stores you shoped are closed down and you worry about your job next. Then you have your friends who may not be as lucky as you…Not a big deal right? You’ll be fine.

Mike

#35 David Bakody on 04.02.09 at 6:32 am

OMG …… The Ottawa crowd is at it again “What are we to do with all our money” ?

As I have mentioned before …my dearly departed Mother who lived through Two Word Wars and the depression always told me when I asked for advice especially financial ” If in doubt DON’T”

As for those who who continue to talk up the false numbers 90% working “Give your head a shake” please stop and think what you are saying? Add a few extra hundred thousand who are not on Ottawa’s list, those who now working for 50% less than before, the poor the sick and tired increasing daily!

This Great Recession is not even close to being funny any more (analogy expression only) suicide and depression rates are skyrocketing, children are being threaten in a host of areas, Afghanistan is broken beyond repair with a fall out in PTSD and another host of ill concerns never experienced before in this country.

Think? This is not 1929 but is far more serious, back then there was NO! TV, Radio, Internet, multi thousand dollar homes, expensive toys, excessive demands by children, large cities housing millions, shopping malls, fast food outlets, Sunday shopping and of course organized sports …… ALL of which are being removed from the lives of millions daily in part or in whole. And it is world wide ladies and gentlemen. Dare I mention riots in the streets.

It is now becoming even harder and harder to read and write as these hardships hit home. I have spoken to some friends who were once believers that this was a mild recession and now know the truth. Things are about to get a whole lot worst and the fall is going to be deep and hard.

Even CNN is now stating: It’s not the stock market it’s unemployment numbers. The are finally getting it … the market is only speculation and distribution of paper wealth.

My take is we will have a world with 20% having to fend for themselves in developed countries and another 20% working and living on less wages. And there ain’t not stopping it. AND no government will have any money to turn it around having mortgaged seven generations ahead …. to paraphrase Garth T. governments are about open 0/40 mortgage on our children’s future world wide.

#36 SaraBeth on 04.02.09 at 6:58 am

I used to look at those signs at the banks touting their 0/40 mortgages and wonder….”How can they do that and make any money?” Just always thought it sounded too good to be true, and never looked any farther….

I’ve always moved around a lot, and so have always rented. But I had hoped that someday I would find a place I could put down roots and find, not a house, but a home…to call my own….

I still think it is possible…but I wait at the sidelines for now…, like a vulture, watching and waiting…for the right opportunity to present itself. I suspect there will be some pretty desperate sellers in a year or so…eh?

#37 vtj on 04.02.09 at 7:15 am

Garth’s response to the letter of the day: “Duh.” … priceless.

Garth, I hope you’re wrong but my gut tells me that you’re likely right. I fear we’ll collectively have to go through much more pain before we hit bottom.

North vancouver citizen: I’ve been skipping over your posts for the last couple of months. Today, I mustered up the courage to read your latest words of wisdom. I see that you’re still a complete idiot.

#38 pbrasseur on 04.02.09 at 8:09 am

Of course you are right Garth, how could the Canadian RE market not fall into a deep recession while prices are still inflated and unaffordable, debt levels are historically high, jobs are being lost by the thousands and interest rates can only go one direction: up.

It is easy to see that this market is unbalanced and unsustainable and that a correction is inevitable, anything else makes no sense.

What is less easy and where we should be cautious is when trying to predict how this correction will unfold. Will it be a brutal drop like in the US or a long slow decline or even a super long stagnation?

Typically the Canadian economy is less responsive than the US economy which is known for its bloody but mostly short crisis, therefore I would think the drop in Canada would be less brutal than is the US. However just because the correction may unfold more slowly and less brutally here does not mean in the end it won’t be just as deep.

#39 anon - GTA on 04.02.09 at 8:21 am

Garth, Didnt you say Stock Market was a leading indicator… It seems to picking up steam at the moment….. So the real estate jump is what – 6 months away, if the stock market keeps appreciating ?

Closer to 60 months. — Garth

#40 CJ on 04.02.09 at 8:24 am

Garth, i just finished your book and in it you say NOT to buy farmland in Sask but your bullish on commodities, i would think farmland in sask has a lot of longterm upside. Hey even Jim Rogers is buying canadian farmland.

Asked and answered. Commodity prices go up way in advance of the land which produces them. If you are buying for capital gain, I hope you have a long, long-term perspective. — Garth

#41 Bobby G on 04.02.09 at 8:29 am

Trying to solve a debt problem with more debt
plus making currencies worthless. Not hard to
see how this is going to end. Believe in the corporate
PR machine LOL

#42 North Vancouver Citizen Jr. on 04.02.09 at 8:30 am

Real Estate #101…Location, Location,Location

…To all you pansy a$$, local renters, Eastern Canadian brothers & sisters…read this,

You should accept that every educated/contemporary Chinese, Japanese, Malaysian, Russian, Indian, Australian, US, European and the rest of the world look at Vancouver/Hongcouver w/ a “I wish I could live there” dream.

All your griping is simple jealousy.

…The next Financial/Trade/Culture/Leisure capital of North America has…

Location/Gateway to the Far East..just ask Da HK Kid

Infrastructure/transportation w/ Live and Work downtown.

Climate/Leisure, Olympic infrastructure will attract the world elite.

Very small population…V has less than 1 million citizens.

…I could go on, but until you perceive from a foreigner’s POV, you will not realize your mistake.

“The Vancouver/Hongcouver market is different to any other market in North America”.

…Wake up and smell the roses…BC Bud to the rest.

..

#43 Jonnay on 04.02.09 at 8:34 am

If you say the dumb Yanks went on a credit orgy while we were prudent, wrong answer. Today the average US household debt equals 130% of personal income. In Canada, debt equals 127% of personal income.

Not only that, but in a recent speech (to the House of Commons’ finance committee?) the deputy governor of the BoC proudly stated that plastic credit went up nearly 10% over a year ago. Yay.

In the meantime, Metro Ottawa newspaper stated that Mark Carney would unveil a framework on printing money, on April 23. Fun.

#44 lgre on 04.02.09 at 8:38 am

Denial is still present on the board for some reason.

I guess some people missed the news last week about 25k mortgages in canada might not be renewed because the mortgage is more then the house..0/40 sound familiar?

#45 Duh on 04.02.09 at 8:42 am

Well, I’ve been told. I do appreciate it, Garth. For the record, we are in an okay state wrt the mortgage (bought the present residence prior to the “boom”), so are quite comfortable staying. Got a numbers question, though. Hypothetically:

– bought present house before boom for $170000
– house now “valued” (yeah, yeah) at $340000 – figure at least $320000 if on market ASAP.
– “dream house” “valued” at $400000
– selling at $370000 due to apparent pressure to sell (personal)
– Adding in selling, moving costs, increase mortgage by $60000.
-let’s say I owe $120000 now – on a house that, before the boom was $170000 (listed at $190000, needed work). I will now owe $180000 on a house that was probably ~$225000 (?!?!) before the boom…
– both homes in same neighbourhood
– “dream home” MUCH more marketable (lot size, location within neighbourhood) than present home, even if market goes south.

Still better to stick with the status quo?

I am PROBABLY NOT GOING TO BUY, by the way. Just want to get a grip on the numbers…

#46 Investor on 04.02.09 at 8:47 am

Newfather,

Here is a better chart.

http://www.mississauga4sale.com/TREBprice.htm#graph

I love this guys estimates in the future. Nothing but up. :) If you do any statistical analysis you always have three scenarios, up, down, stay in a range.

#47 observer on 04.02.09 at 9:03 am

DA KH KID: I enjoyed your comments. Husband is thinking along your lines (although Cdn “pure laine”)….

I would like to know who are referring to with the sentence on “unpaid days, 10% salary haircut, job sharing”; the federal public service?

Good luck in Malasia.

#48 Signal Loss on 04.02.09 at 9:08 am

Actually, when you stop viewing North Vancouver Citizen as a serious poster and instead consider his/her posts as a source of humour, his sad boosterism becomes really funny in a down-market sense. I picture him as the David Brent of the BC tourist board, standing on a polluted rocky shore in the pouring rain describing how lovely it is. I mean if you’re going to put up with that much annual rainfall, move to the UK or the Amazon, because, hey, at least then you’ve gone somewhere interesting.

#49 Johnny_Five on 04.02.09 at 9:14 am

What Shawn (#2) completely misses is when the 0/40 comes up for its five year renewal, he will be screwed. When the house is worth substantially less then when he bought it, he will not get a mortgage that will cover the outstanding principal. Garth is right, you won’t get a mortgage for the amount you need and you will be required to cover the gap. Could be tens of thousands (or more) dollars. Can’t cover it? Foreclosure.

#50 timbo on 04.02.09 at 9:14 am

#9 Chris

http://findcalgary.files.wordpress.com/2009/03/condoaveragemedian.gif

looking at the chart you should see that in 2006 housing went nuts.

http://www.gemoney.ca/en/docs/444514_09_40%20year%20amort%20mortgages%20release_042806.pdf

and 2008 is when they took out 0/40 year mortgages. I cannot find the wonderful map that showed that almost 50% of the mortgages in 2007 were 0/40 year. with that said you should buy after these mortgages reset. Without equity 0/40’s will be toxic to banks and r/e/ prices.this should push prices down to a proper level = rent but that might take years to work out.

Save your money and keep it fluid out of hard assets. Cash is king in a recession and debt is poison.

#51 Bill-Muskoka (NAM) on 04.02.09 at 9:25 am

Well, here we are, The Day After Yesterday, the Conficker Virus didn’t, the G-20 didn’t, the world didn’t, reality didn’t.

It appears the Little Boy Who Cried Wolf is really Chicken Little!

Unbelieveable! Simply unbelieveable!

#52 timbo on 04.02.09 at 9:29 am

#9 chris

http://www.calgary-mortgages.com/mortgage-real-estate-news/?p=107

half are 0/40 – with no equity at all and if you look at the numbers today and compare with the chart you will see that they are underwater and off the market unless in distress.

when these come up for re-finance is when your cash is king and you will know exactly how much they are underwater before even opening your mouth.

Save bud Save

Check out the assumables that are out already, people are stuck and look at house rentals, lots of for-sale signs in front tell you something.

#53 dd on 04.02.09 at 9:38 am

#42 North Vancouver Citizen Jr.

“The Vancouver/Hongcouver market is different to any other market in North America”.

True … it has farther to fall.

#54 bobs your uncle on 04.02.09 at 9:39 am

# 2 Shawn,

I understand your reasoning when saying that a recession doesn’t matter if you still have your job but remember, who will the municipal, provincial and federal governments turn to when they seek to fund their “stimulus” programs?

They can’t tax the unemployed, the shut down mills or factories so they will be going after anyone who still has their head above water .

#55 Basil Fawlty on 04.02.09 at 9:44 am

It is interesting that as real estate prices have been falling in Vancouver over the past nine months, the best investment class over the last three months has been gold shares. That’s right the index is up 16% this past quarter, with the next best asset class being technology at 4%.
Recently, some deflationists on this blog have become so enamoured with their opinions that they are now calling inflationists “idiots”. This is nothing short of fascinating given that historically hyper-inflation has has occured through an increase in the velocity of money, caused by a loss of confidence in the currency during an economic downturn. The US total bailout package is at $12.8T and some of this money is starting to leak out into the economy, for example the billions that went from AIG out the back door to Goldman Sachs and other banks. If confidence in the US dollar decreases the velocity of money will increase and this is inflationary. In addition, just because most asset prices are falling does not mean that new money will go back into those falling assets and it will all be an inflation/deflation wash. Much of the current deflation in asset prices is based on ficticious values anyway ie. if I owned my house when it was worth $200,000 and it went to $400,000, then back to $200,000. Did I lose anything? I have no idea if inflation will occur, but for some to definitively suggest that it will not is simply folly.

#56 POL-CAN on 04.02.09 at 9:48 am

T.O. market update

Called about a brand new listing yesterday. Very nice condition and priced right in a desirable location of Toronto (Roncesvalles). Gone in less then 24 hr for full asking price of 559 K. The agent said that the first person to see it put in the offer and got it.

Moral of the story is that houses are moving but only if they are in the right place and at the right price. There is a ton of over priced sh*t sitting on the market for months but the new good stuff is moving like a bat out of hell.

#57 North Vancouver Citizen Jr. on 04.02.09 at 9:52 am

So the real estate jump is what – 6 months away, if the stock market keeps appreciating ?

“”Closer to 60 months. — Garth””

#40 CJ Garth, i just finished your book and in it you say NOT to buy farmland in Sask… Hey even Jim Rogers is buying canadian farmland.

“”Asked and answered. Commodity prices go up way in advance of the land which produces them. If you are buying for capital gain, I hope you have a long, long-term perspective. — Garth””

…Garth, and you recently bought a farm?

Are you expecting the legalization of Cannabis….you gonna grow some BC Bud?

No farm. Bunker. — Garth

#58 Shawn on 04.02.09 at 10:11 am

I said negative equity no big deal keep paying… renew at a lower rate… reccession no big deal if you keep your job.

Garth replied to me: Wrong answer. 40-year ams pay off virtually no principal. And renew at a lower rate? Impossible. — Garth

Point is, people need to live up to their commitments and stop whining. If you are a couple years into a 40 year amort that you can handle, you may be be able to get a lower renewal now with blend and extend to a new five year term at 4%. Most mortages allow about 10% extra princiapl to be paid every year if you have the cash. It is fully open to repay at he end of the initial lock-in such as five years. Save your money and pay that principal.

House will be worth what its worth in 30 years does not matter much what the price does between now and then.

Yes if you have to liquidate that is trouble. Point is stay put work hard, keep your job and bloody well honor your committments.

Definition of recession – Your neighbour loses his job

Depression – that’s when you lose your job.

#59 Marc on 04.02.09 at 10:29 am

#5 North Vancouver Citizen Jr. on 04.01.09 at 11:22 pm

talking of weed fixing lifes problems, reminds me of the great quote “Alcohol, the cause of and temporary solution to all of lifes problems.”

I partake in B.C. bud smoking, and I watch the messiah Don Cherry religiously. Only missed 1 coaches corner in the last 6+ years, after falling asleep with 2 minutes to go in the first period. I was unsure if it was the bud putting me out, or the Leafs, both will tend to do that to a person.

#60 go green on 04.02.09 at 10:35 am

#18 Big Picture Guy on 04.02.09 at 1:03 am

Mmmm you gotta wonder about people when a cliff is staring at them. But hey what would you expect from a government employee?

Typical typecasting. Not all govt. employees are stupid. Many non-govt. employees are, however, are jealous.

#61 PTDBD on 04.02.09 at 10:40 am

Ducking the Bill – Newest Canadian sport grows in popularity!

7.3 per cent increase in the “national consumer delinquency rate” of bill payments in February compared to last year. These are accounts that have missed 3 or more payments.

Heck, can you blame them? They are waiting for the credit card company bonuses in return for closing their debt.
Also, shouldn’t their debt be adjusted down with the new accounting rules flexibility that the Banks are getting?

#62 Save on 04.02.09 at 10:55 am

#12 DA HK KID

I have always enjoy your contribution to this blog. Malaysia is a good choice at this moment in time, cost are comparatively very reasonable when compared to HK and Canada. I live in Malaysia so I know what are the comparative advantage especially for those who are retiring or have other purposes to choose to stay in a particular country. Of course they may be other nice places to live in South East Asia.

#63 PTDBD on 04.02.09 at 10:56 am

Another week, another Trillion. Hmmm, I dink I see a pattern.

#64 Save on 04.02.09 at 11:01 am

#25 Danny

Refer: Best place on earth? You seriously need to start travelling more often.

Thank you for sharing your thoughts which is enlightening. In your travels you have research which are the possible better places to live on earth, could you share a bit on this.

#65 rory on 04.02.09 at 11:12 am

Hi all …I think we all get it …houses done, employment done, wages crashing and so on.

So, what’s next?

Besides oil, gas & other commodities what can Canada produce that is competitive and gives us the edge? For example, if an IT geek in India can do the same quality as a Canadian geek then no advantage here – wages have to drop to compensate or wages need to go up in India. Simple. Money goes to the path of least resistance.

If you are a believer in the theory that everything eventually regresses to the mean, then it means we are all going to have a much lower standard of living…everything down.

Unless someone knows the next big paradigm shift that we Canadians can to better, sooner and charge big bucks for we are pretty much toast.

Go oil sands …we got nothing else …not that I trying to make NVC jr. case but one has to think out West would be a better place to be, at least for now…IMO.

#66 jwk (nee jwkimba) on 04.02.09 at 11:12 am

in no particular order:

NewFather, right there with you. Similar stats, baby coming soon. We are in a bachelor with a 50k mortgage. No other debt. We will be putting 20% down on a very conservative (less than 250k) purchase and accepting any future losses.

#55 – there was nothing in roncesvale last year for less than 700. So 559 is a new low for that area, thus the benchmark is set quite a bit lower now.

I agree with Shawn’s point – When I buy the 250k townhome this summer, as long as I can make the payments I am not worred about the asset value right now. Even with minimal inflation, in 20 years the 250k will seem minor.

#67 go green on 04.02.09 at 11:14 am

#25 Danny on 04.02.09 at 2:06 am

I’m so pleased that I did not move out to BC back in ’76. Visited a friend who had moved out to Vcr. with her family. Tho the weather was great when I visited (July or Aug.), she told me how depressing the weather could be – weeks on end of rain. Another friend in Victoria, who a few years back, told me about the druggies & needles laying on the sidewalk outside of her govt. office. Seem to recall in the early 80’s listening to the radio about the cost of housing in Vcr. – old, small homes costing $300K back then. Sure it was a beautiful, but even then unaffordable. One of them, now retired, moved to PEI last year and appears to be enjoying life & no regrets.

#68 Stupid40year_guy on 04.02.09 at 11:17 am

Good morning Garth,

Not that I don’t agree with most of what you are saying but when it comes to your assessment of what type of people have 40 year amortization mortgages I think you tend to paint with too wide a brush. Perhaps my friends and myself are the exception and not the rule but I put forward our cases to balance the viewpoint.

In my small group of friends three of us purchased houses around the same time. Since we were all aware of each others purchases we shopped around for mortgages and all ended up with the same choice and same options since we agreed it made the most sense. We all went with variable prime – .75 open mortgages with the intention of getting a 25 year amortization. As each of us dealt with the bank we were made aware from the representative that we could change our amortization to 40 years but since the product is open we could still pay extra money to keep it on track with a 25 year. All this would do would give us flexibility if something major happened and if my wife and I suddenly did not have the earning potential we’ve enjoyed up until now. Theoretically the option for 40 costs us nothing in this scenario.

When we spoke to our friends we found out that all three households had made the same decision with the bank representative even providing us with the breakdown of payments required to keep the amortization at 25, 20, 15 and 10. When I asked them why they decided this option (because I was second guessing myself) they all indicated “why not”?

Since our 40 year mortgage started we’ve never had a payment less that double that of the required 40 year minimum payment and in fact our current amortization is listed at 10 years, 2 months. Our friends have not been as aggressive but they are paying at the 25 year accelerated rate.

Bottom line, at least some of those 40 year mortgages were taken out with a somewhat good reason in mind. I have no idea what percentage of people are in the same boat as myself and my friends but I imagine a number of people thought the same way. That’s not to say that I don’t doubt a good chunk of them did not use this logic or pay at a higher rate but I have yet to see a statistic that applies.

Just something to think about.

Jay

#69 Got A Watch on 04.02.09 at 11:30 am

Well, now we know where NVC Jr gets his information from.

He dreams it all up, after an hour alone with his bong.

At least he provides comic relief.

The depths of delusion of many Canadians is still epic. They have Depression staring them in the face, but remain optimistic. “Canada is different”…”MY area is different”…blah, blah, blah.

I still get this reaction from many friends here in Ontario, even those who have had hours cut-back at work, pay cuts or lay offs etc.

Just look at Garth’s chart there. If prices have only been falling for 18 months, some areas less than that, and the previous run up lasted 8-9 years…prices have only one direction to go, and that ain’t up. If it’s only a 4 year correction, which seems wildly optimistic to me, we still have at minimum 2 1/2 years more of falling prices before the market pancakes flat.

If you look at the prices in ’98, around $150 K, this was a normal market where a price of $150K was proper and affordable, at roughly 3 X average annual family income. This is a national chart, so it is a broad brush stroke, but still useful.

Today, the national average family income is probably around $65K and falling fast, down from around $70K in 2007. So the average home price should be at around $200K and falling fast, more or less.

This indicates a further fall in home prices to an average of $150K-$180K, matching the average family income of $50K-$60K range we’ll be at by then – means the average home price has about another $100K to lose, or around 36%. Or 1997 price levels to get to, more or less.

With overshoot to the downside in a steep decline situation, I can see the average home price falling to $120K -$140K or less, to reach the real bottom.

If you want to buy real estate, wait 5 years at minimum. No rush, by then there will be huge numbers of listings, POS, auction sales etc, and few buyers. Whatever property you wanted, it will be much cheaper then. And by then, the Banks should be eager to write new mortgages. Interest rates will be higher, but affordability will be greater.

#70 Tony on 04.02.09 at 11:37 am

Garth do you think i give replies to questions to exercise my fingers on the keyboard? Take a ride on the clue train. Look at the reply on misc.invest.stocks to the post Alternative Investments. I post these sort of things to help make people money just like i posted the first day of the big rally March 10 2009 on the same newsgroup. Anyone who took my advice would be very pleased as they exited the Dow today at the Dow 8,000 level. We’ll see who’s right. Remember the one day thing with gold and the two day thing with silver? What happened to gold and silver after that?

#71 Sondra on 04.02.09 at 11:48 am

Devils Advocate 04.01.09

Thank you for your post, I enjoyed reading it.

Just my 2 cents; The number of Sales Representatives, licensees under the BC Real Estate Act does is not as accurately record the number of working licensees anymore.

Remember years ago when a Sales Representative, licensees had to leave the business if they had another job? Now they have several jobs, and keep their license. The numbers continue to misrepresent the real working Sales Representatives that are licensed in BC under the BC Real Estate Act.

Grumpydawgs, I hope my wording on this post was accurate enough for you. Please feel free to edit at your will. Yeesh.

Garth, one question. Indulge me if you will.

When the RCMP ( for national security purposes of course) and the BC Real Estate Council serve you with legal papers asking for the IP addresses of the people who infringing on copyrights will you be able to keep it confidential or should we just chuck our computers and have a techy start us up all clean with new or alternating IP addresses and start new again?

I admit I do have several staplers in my desk and a small mini stapler in my briefcase, so I’m a little scared of of welcoming committee.

Yeesh.

#72 North Vancouver Citizen Jr. on 04.02.09 at 12:04 pm

West Vancouver to get Mt Rushmore style attraction.

Toldy’all, Vancouver/Hongcouver is Canada’s leading city.

North Shore News…

http://www2.canada.com/northshorenews/index.html

#73 Future Expatriate on 04.02.09 at 12:38 pm

#39, with a straight face: “if the stock market keeps appreciating…”

ROFLMFAO

#74 Future Expatriate on 04.02.09 at 12:41 pm

#26: Not Year-over-year, LS; not year-over-year.

It’s what they DON’T tell you in the spin that will keep you from being able to properly sit for decades.

#75 smwhite on 04.02.09 at 12:50 pm

#71 North Vancouver Citizen Jr.

Is it going to have Gordon Campbell’s face or ass attached?

#76 Ryan on 04.02.09 at 12:57 pm

From TS…

“How low can home prices go? I guess it depends on the local impact of job losses. Windsor Ontario now has homes priced at $35,000 and that is BEFORE Chrysler shutters another factory and puts more people on unemployment.”

Yep and across the bridge in Detroit…the average home price is…drum roll please….

$6,000

Now do you see how bad it can get!

#77 live Within Your Means on 04.02.09 at 1:15 pm

#68 Got A Watch on 04.02.09 at 11:30 am

“If you look at the prices in ‘98, around $150 K, this was a normal market where a price of $150K was proper and affordable, at roughly 3 X average annual family income. This is a national chart, so it is a broad brush stroke, but still useful.”

We bought our last house in ’91. for $116K. Including all prov. taxes & legal fees, etc. it amounted to a little over $118K. and we put 25% down. We ended up with a mtg. of about $89K. Yes, we were approved for far more, but looked at it from the perspective that if one of us were to lose our job, could we manage to pay our mtg. and still live ‘relatively comfortably’.
—-
Today, the national average family income is probably around $65K and falling fast, down from around $70K in 2007. So the average home price should be at around $200K and falling fast, more or less.
—-
“Guess we should consider ourselves very lucky then. I’m retired and our income – and I assume you mean gross, is more. Maybe I’m out to lunch, but most on my street, many retired, have an income comparable to ours, if not more. And, I don’t live in one of those previously prosperous provinces.
—-
“This indicates a further fall in home prices to an average of $150K-$180K, matching the average family income of $50K-$60K range we’ll be at by then – means the average home price has about another $100K to lose, or around 36%. Or 1997 price levels to get to, more or less.”
………

I checked out the rise in our assessment values on our street last week. Since 2001 our house, the 2nd lowest valuation on our street, and in one of those have-not provinces, has risen $100K. Some assessments have risen considerably more. I know assessments are mainly for tax purposes. On our older part of the street, lots were taxed at the same rate, regardless of size. One neighbour has a double lot and is charged the same as single lots. Ours is approx. 70×200 ft. The new extension of our street lots went for $51,200. per lot and are 1/2 the size with house assessments ranging from a low of $291.600. to $421,600. More taxes for the municipality.

Our neighbours next door to the new street extension have lost all their privacy. The trees behind and beside his house were bulldozed and his back & side yard looks onto houses & a swimming pool & I see their assessed value has decreased, in comparison to others.

#78 smwhite on 04.02.09 at 1:19 pm

It seems that Carney is starting to distance himself from Harper…

If I read correctly yesterday, Carney is stating its important to not over react, and ding dong Harper thinks its ok to over react…

http://www.google.com/hostednews/canadianpress/article/ALeqM5hjZmboxpaxFaV1B9ji83-zIFNx4w

http://www.calgaryherald.com/news/Harper+says+nations+need+overreact+recession/1452235/story.html

Credibility is on the line and long after Harper is thrown out of office, Mark Carney will still be an ECONOMIST and bank governor…

#79 Live Within Your Means on 04.02.09 at 1:23 pm

#71 North Vancouver Citizen Jr. on 04.02.09 at 12:04 pm

Poor, PATHETHIC Harry.

#80 Vantown on 04.02.09 at 1:25 pm

Interesting: I’ve had an RSS feed for bctechnology.com’s jobs for a few years, and I have never seen as many jobs on the feed as there are today.

#81 Soylent Green is People on 04.02.09 at 1:25 pm

#65 jwk (nee jwkimba)

I agree with Shawn’s point – When I buy the 250k townhome this summer, as long as I can make the payments I am not worred about the asset value right now. Even with minimal inflation, in 20 years the 250k will seem minor.

***************

What about job loss? What if your wife goes on Plenty of Fish and finds herself a new man? I know someone who went on there and found herself a new guy while she was still living in the marital house with her legally but not physically separated husband. What about falling off a ladder? Hit by a car…

I can’t believe you won’t wait for prices to fall… I can’t believe it, you have the information staring you right in the face and you’re still going to buy!!!!!!!!!!!

I’m soooooooooooooooo sick and tired of people poo pooing the blond doomsayer; I want to scream at them to wake up, but I’m getting to the point where I realize I can only control myself and I shouldn’t worry about them anymore. They really don’t want to hear any of this.

#82 Comrade Okie on 04.02.09 at 1:25 pm

Re: Government employees living the dream.

Found their “dream” property. Pretty dreamy world, theirs.

Good thing he comes here and gets a regular dose of Uncle Garth’s elixir…

#83 K on 04.02.09 at 1:29 pm

#25 Danny…..Good Post…. You tell it like it is! B.C is NOT the best place on earth but quickly becoming the most
expensive place on earth….I plan to move back to the Prairies soon…..I want to be ahead of the mass exodus of people leaving here after the Olympic GAMES

#84 jwk (nee jwkimba) on 04.02.09 at 1:31 pm

re #71, April fool but very well done….

#85 timbo on 04.02.09 at 1:33 pm

read this people

http://www.cnbc.com/id/30010276

first ray of hope and this is not sarcastic. G20 has finally done something right for a change.

I almost feel that they are about to spread the losses around and use a general fund to keep currencies stable.

I love the fact that they are going after the offshore accounts.

Hopefully this is not smoke and mirrors.

#86 Martin on 04.02.09 at 1:35 pm

Now this beats hunting for squirrels or crows ;)

Boats Too Costly to Keep Are Littering Coastlines
http://www.nytimes.com/2009/04/01/business/01boats.html?_r=3&hp

#87 dd on 04.02.09 at 1:42 pm

#71 North Vancouver Citizen Jr.

“West Vancouver to get Mt Rushmore style attraction. North Shore News”

Wow the North Shore has a new paper. Never heard of it.

#88 rory on 04.02.09 at 1:44 pm

Hi all …most of us are continuing to just sputter along not really knowing what to do with our money, at least what is left …would like to hear from all about what is where and what all are doing about it.

I am like a deer frozen in the headlights …have no clue what to do next except watch the train hurtle towards me.

So for me:
Assets:
RE – 0% (sold out about a year ago – kinda on Garth’s advice – thank you)
Bonds – 0%
Cash – 40% (most in MM funds)
Equity Mutual Funds – 53% (all actively managed with low MER’s)
Precious Metal/gold – 7% (do not hold any physical gold/silver).
Alternative funds – 0%
Total: 100%

Liabilities:
Debt – 0%
Total: 0%

Net worth: assets – liabilities = 100%

Actually I am feeling in pretty good shape as in no debt, as Garth has said many times is bad right now …just wish the total $$$ was bigger but such is life. So do I sell all equity, put cash where, etc …have fun …might even be surprising to a few.

#89 Dave on 04.02.09 at 1:46 pm

This is nothing short of fascinating given that historically hyper-inflation has has occured through an increase in the velocity of money, caused by a loss of confidence in the currency during an economic downturn. The US total bailout package is at $12.8T and some of this money is starting to leak out into the economy, for example the billions that went from AIG out the back door to Goldman Sachs and other banks.

————————————

oh yeah? prove it! My research tells me that cash injections take time to cause inflation. High inflation usually occurs after times of war. There was hyperinflation in quite a few countries in the 1920’s (Germany after WWI), there was high inflation in a few countries (I think Greece was one of them) in 1946 (after WWII), and the U.S had high inflation in the mid 1970’s (after the Vietnam war AND the oil embargo/energy crisis) which caused fuel prices to sky rocket and prices everywhere to go up.

It seems like you’re going to need a borrowing orgy by the general public as well corporations and governments. Spending/lending from Goldman Sacchs isn’t solely going to cause hyperinflation.

Conclusion: look at the trends of the past. High inflation would be caused by increased economic activity fueled by war, some sort of energy crisis where there is supply limitations, or complete deregulation of lending standards (like we witnessed the past few years) by governments. Inflation should increase in the next few years, but that’s obvious-there’s only one place to go after this deflationary spiral.

#90 kc on 04.02.09 at 2:03 pm

53 bobs your uncle on 04.02.09 at 9:39 am # 2 Shawn,

“They can’t tax the unemployed, the shut down mills or factories so they will be going after anyone who still has their head above water .”

further proof to what you said (you hit it bang on!!)
Mill closure + vacant homes = town tax shortfall

In White River, Ontario, Domtar Forest Products closed the mill and the woodlands in 2007.

236 people lost their job when the mill closed. And those people are now moving away from the area to search for work. There are currently 20 vacant homes and 2 empty apartment buildings (48 empty units).

Now the municipality is suffering from a loss of property taxes. With its mill idle and many homes vacant, this single-industry town (pop. 841) is now only able to raise half of what it normally needs to fund its $1.8-million operating budget — including interest on a new $5.2-million drinking-water plant.

The municipality will have to turn to the province of Ontario for assistance.

http://foresttalk.com/index.php/2008/03/

Many people bang around the CBC – to you CBC haters – get a life. Of all MSM they seem to be the only ones who tell it like it is with in-depth reporting. They DON’T seem to fluff the articles. I follow CBC newsworld and many many times I am thankful to the stories they report. ask yourself why the Gov. wants to cut cbc funding?? I will bet it is because CBC is a thorn in their side.

anyone catch this piece on the national last night?

Starving for Attention
April 1, 2009 (Runs 11:37)
As the G-20 summit gets underway in London, Brian Stewart reports on how the global recession is hurting the world’s poorest people

http://www.cbc.ca/national/blog/video/internationalus/starving_for_attention_1.html

and what about this series??

Hard Times Hard Choices
Red, White and the Economic Blues

http://www.cbc.ca/national/blog/special_feature/hard_times_hard_choices/red_white_and_the_economic_blu.html

this is the one with the guy selling coons … florida’s busted ponzi scheme, detroit’s busted housing… etc…

to the ones on here who feel we are in just a small blip in this (tiny) recession… you truely need to get your head out of your ass and take a EYES WIDE OPEN look at what is really happening in the world.

keep up the good work Garth!

cheers

#91 supersocco on 04.02.09 at 2:14 pm

“West Vancouver to get Mt Rushmore style attraction.”

Published: Wednesday, April 01, 2009

April FOOLS. hahahhaah.

#92 Harmony on 04.02.09 at 2:16 pm

#25 Danny: if you don’t like it, leave. Please. Go back from where you came and make their lives sad and depressing. I can’t understand the mindset of someone who complains about where they’re at and not do something about it. No chains holding you to where you are – so go away.

So now that we know the problems, what are the solutions? It’s all well and good to point out the wrongness, why not put forth the ideas to right it?

#93 Iain on 04.02.09 at 2:35 pm

http://www.cnn.com/2009/POLITICS/04/01/jillette.skid/index.html

#94 Dodged-a-Bullit in Alberta on 04.02.09 at 2:50 pm

Greetings: A bit late for the April Fool BS, however, goes along with the rest of North Vancouvers’ postings.

#95 CTM on 04.02.09 at 2:55 pm

Re: Danny #25

I lived in Vancouver for over a year in ’94-’95

(Yea, I’m getting old…)

And as for your comments, it sounds like some things will never change in Van!

#96 james murphy on 04.02.09 at 3:17 pm

73% of Canadian GDP is generated by the domestic economy……so it;s really a case of “markets become the stories that people tell about them”.

The more air time that Garth gets on this…the more likely his books predictions are to come true.

I hope very much for the sake of Candian jobs…that there are others out there who will shout just as loud with positive news.

#97 gold bug on 04.02.09 at 3:44 pm

@Harmony the Hippie: Life is not all sunshine and puppy dogs. Sometimes, what starts as a complaint about present circumstances turns into action and results in change.

What kind of world do you live in where nobody complains?

#98 kc on 04.02.09 at 3:59 pm

I can’t believe the ignorance of the BC Government…… I just renewed my BC driver’s licence and the new one came in the mail… I am floored that on the top left corner it says BRITISH COLUMBIA The Best Place on Earth…… This really PISSES me off….. I have circled the globe in the 90’s yes we have our nice places but to say it’s the best place on earth is a slap in the face to the rest of the world….. ARRRRhg thanks for letting me rant……

#99 highway61 on 04.02.09 at 4:00 pm

http://www.calgaryherald.com/business/real-estate/Calgary+housing+market+picks+buyers+tiptoe+back+into+market/1453293/story.html

go figure… (especially after reading some of the reader’s comments)

#100 David on 04.02.09 at 4:04 pm

Hard to believe, but yes, there are some people on this board who still think 0/40 mortgages were a good thing. These toxic instruments were good in the sense of short term greed versus long term risk for the debt holder. The Federal Government turned a blind eye to the bubble, until it was too late. Other than turbo charging an unsustainable housing price bubble and selling homes to people who could not afford them these mortgages serve no useful purpose.
Windsor not Vancouver will be the new price leader in Canadian homes prices for the foreseeable future and that trend is headed you know where. The new talk at cocktail parties in the future will not be about unrealised appreciation on houses, but about how little one paid for an abode.
The squirrels can now breathe easier with racoons destined for the crock pots of Canada.

#101 David Bakody on 04.02.09 at 4:05 pm

Nothing changers with Vancouverites ….. they hate the rain and they hate sustained rainy days even more …. but they never want to leave town. good for them! not me…..

#102 Live Within Your Means on 04.02.09 at 4:07 pm

OT, but not really. Yesteday bought a roasted chicken – $6.49 at Costco. Cheaper than buying & roasting one. It’ll do us 3 meals & making stock for chicken soup. Nutritional and cheap.

Rec’d a postcard yesterday with BO with Whitehouse in the background. I immediately thought what the hell. Msg on the back was – Dear * & *. Sorry you could not make it to my inauguration in Jan. Hope to see you soon. The Cherry trees are starting to bloom. The Prez. (aka * & *) We had a good laugh.

BTW, I have to laugh how our Dear Leader has been spending hundreds of $$ going to the US on Faux News and CNN speaking out one side of his mouth and in Canada speaking out the other side of his mouth. He’s on the world stage bragging about Canada’s Banking regulatory system. Yet in 2005 or 06, when our Dear Leader was in opposition, he was all for deregulation. What a non-leader & an embarrassment on the world stage he’s proven to be. He couldn’t even make it to the photo-op this AM. Maybe he was having too much difficulty buttoning up his ‘always’ too tight suit jacket.

#103 CM on 04.02.09 at 4:25 pm

Maybe this is one of our problems:

George Galloway on Jason (Doughboy) Kenney’s decision that Galloway poses a security risk to Canada – and we all know that’s not the real reason.

“But it just shows that it was a foolish move politically, as well as quite a dangerous one. It’s a creeping problem, I think, in Canada, that their government is the last bastion of dead-end Bushism in not only North America, maybe in the world.”

http://www.democracynow.org/2009/4/1/canadian_judge_upholds_government_decision_to

#104 Harmony on 04.02.09 at 4:49 pm

#95 goldbug: LOL, I’m about as far away from Hippie as you can get! I didn’t say that no one in my world complains, and if you knew one IOTA of my world, you’d know that yes, we DO complain. But with those complaints also come suggestions of solutions. A complaint is no good without an action plan to solve it. What kind of world do YOU live in where everyone whines and no one takes action?

Go ahead everyone. Bitch away. Cry and drip and moan about the economy, about the job losses, about how stocks take a beating, about how our homes are losing equity. We get it. Waa waaa, boo friggin’ hoo.

What are we to DO about it? Why are we depending on the government to bail us out of this? What are WORKABLE solutions to the problem? How can one person (or more) make things better?

#105 Paul Fist In Your Face on 04.02.09 at 4:56 pm

Nice graph. This is a classic depiction of an economic bubble right? We can all agree on that-we are looking at a bubble. Good so far. What do we know about bubbles? Well, firstly they burst. Secondly, after the pop THEY ALL REVERT TO THE TREND LINE PRE-BUBBLE. Holy cow people I cant under stand the sentiment expressed by some that this isnt happening. Well it is and you better hope the very people that have been beaten up here, the Real Estate schills, keep doing their job and dont throw in the towel. They are about the only part of the economy that is protecting the value of your home. …………… well I guess we truly are screwed then.

#106 Got A Watch on 04.02.09 at 4:58 pm

#76 – Live Within Your Means – Thx for reply.

Bear in mind that is a national chart of average prices, so it is hard to translate that into a snapshot of a local area or region. Comparing it to specific homes is trying to wring out too much detail, this is a birds eye view.

I was talking about the old rule for real estate affordability, 3 X average family income should equal the average home price (3 bdrm detached), in a normal healthy market that is not in boom or bust.

As another commenter ably pointed out, if you work the figures backwards, it amounts to a quick and easy gauge of how much house is affordable at the historical average of mortgage interest rates, around 8%.

As Garth pointed out, if the historical average interest rate on a mortgage is in the 8% – 8.5% area, we have a big problem right there – when interest rates rise, as they inevitably will, people won’t be able to afford the payments on that house that they were “qualified” for at a much lower rate. Unless they pull much higher income, which seems unlikely in this economy. Reversion to the mean there will kill the real estate market right there, even if the economy is healthy.

Tax assessments will come down over time, they are just slow to follow the market down. Remember, your municipality sets the mill rate, which means that the amount of taxes you pay should not rise just because the assessed value does. If the municipality is spending more money this year than last, and most always do, then your tax bill will rise. That’s a spending issue, not a tax issue – if they held spending flat, or even, God forbid, cut spending, your taxes should be flat or falling in $ amount, as the mill rate would be lower.

You did not say what region you are in. Where are you located?

#107 From the Hip on 04.02.09 at 4:59 pm

Good Post Garth,

My only question for you is will the Government allow the same type of banking meltdown in Canada that happened in the US. Even with all of these 0/40 mortgages, will they learn from our neighbours below and just buy up all of this toxic lending before it causes the same problems. It seems like they started down that path last year when they bought up a tonne of mortgage, I think it was close to 100 billion.

What are the boards thoughts? and if they do buy them up in advance of a meltdown like the US, does that save the Canadian Real Estate market.

#108 john on 04.02.09 at 5:06 pm

Stock Market

Leading Indicator???

#109 Disconcerted on 04.02.09 at 5:11 pm

#33 Mike (authentic) – http://www.realtor.ca/propertyDetails.aspx?propertyId=8122608

I am extremely familiar with that particular area. This is actually a somewhat mundane house in these parts, and without a doubt is just ‘riding the coattails’ of the neighborhood.

A huge number of houses were posted for sale around late last summer, some were sold, most of the signs just disappeared though over the winter. Many of the houses are under renovation too, so the owners could justify the assessed lot price.

Having lived in West Van and Point Grey back when 1.5MM would get you a large historic mansion with tennis courts, pool, and enough turf to play rugby on, I guarantee you that most places around Mount Royal & Elbow Drive do not justify a 7-figure tag. Its only real advantages are relative proximity to downtown offices, somewhat isolated old streets on the top of a hill, and rich neighbors (cosmetically at least).

The acreages way out west in Calgary/Springbank have structures which justify that though, if you can stomach huge amounts of chipboard construction and repetitive tacky post-modern cum prairie-style hip roofed mc-supermansions.

Your last example, http://www.realtor.ca/propertyDetails.aspx?propertyId=7465082
looks like a pure subdivide-play, although I don’t know it well. 1800 ft^2 from 1953, probably sitting on a flood plain, just ain’t worth 4.5MM, sorry.

So, yeah, overpricing abounds…

#110 JoeCalgary on 04.02.09 at 5:13 pm

#100 “…a roasted chicken – $6.49 at Costco. Cheaper than buying & roasting one.”

If the chicken came from China and was fed its melamine-tainted animal feed, it will cost you more in the long run.

For those of you buying so-called organic meat at your local farmers’ markets, ask the sellers if their animals are being fed any of that cheap animal feed being imported from China.

And let’s hope our squirrels and racoons are dining free-range here at home.

#111 Kash is King on 04.02.09 at 5:22 pm

Completely and utterly fascinating:

http://realestate.shop.ebay.com/items/Real-Estate__W0QQQQ_dmdZ1QQ_sacatZ10542

Real live price discovery

#112 Bill-Muskoka (NAM) on 04.02.09 at 5:29 pm

I think, in Canada, that their government is the last bastion of dead-end Bushism in not only North America, maybe in the world.”

#101 CM on 04.02.09 at 4:25 pm

With such a completely accurate description of the Harper Goobernment it is no wonder Kenney banned him from Canada. Truth is not one Harper’s strong points.

Obviously, in Harper’s and Kenney’s mind Galloway is a Security Threat to THEM!

#113 Grumpydawgs on 04.02.09 at 5:35 pm

I have to give kudo’s to Dean Beauvais who wrote a letter to the editor of the Richmond Review stating,

” We should be ashamed of ourselves for being so easily led by the government. Manipulating statistics and skewed reporting of them has become the single most determining factor in governments ability to control the public. Facts and reality are out the door.”

Well said Dean, where ever you are.

#114 . . . fried eggs and spam . . . on 04.02.09 at 5:46 pm

The tail-end (right side) of the BMO chart bears a striking resemblance to an e-mail only report and chart I received from Money & Markets today.

According to M&M, the global economy is declining for the first time since World War II, whilst world trade will suffer a major plunge of 6.1% (World Bank forecast) or 12.2% (OECD forecast), unemployment, bankruptcies and foreclosures are significantly higher.

On both the World Bank Chart’s forecast for 2009 and the BMO chart, the right side is headed straight downhill. The two charts do note bode well for the future, so 2011 on for a decade or more will be a very interesting and chaotic time period.

The Mayan, Aztec and Incan calendars all finish between 2012-2018, presently $1.5 quadrillion in derivatives (which may be frozen until someone figures out what to do with it), US$700 + trillion in CDS (most of which stem from AIG, which is why the US govt. cannot let it fall), countries’ debts / deficits ballooning combined with the worldwide boomers retiring, it may be time to cut loose and have a couple of wars.

It should be noted that only Alexander The Great has captured and held Af’stan for three years. Since then, there have been lots of invasions, but Afghanistan is a tough nut to crack.

It raises the question: Why is Obama requesting a further 10,000 troops for that country? Not for security purposes, that much is clear, so Canada and the US have invaded another country illegally, but for what reasons or purposes?

There are no ‘terrorists’ there, so why are Cdn. taxpayers forking out millions to enslave our troops there?

BTW, there have been two volcanoes which recently blew their tops, along with two earthquakes yesterday all down the Ring Of Fire.

If the Big One has happened, is Congvouver still standing, or is the Okanagan beach front property now?

#115 North Vancouver Citizen's Analyst on 04.02.09 at 5:50 pm

Dear posters, please be patient with my patient.

He has a terrible habit of getting high and then trying out his newest stand-up material here on this board.
He’s hoping to be the next Russell Peters, in Anglo form.

The chart tells us one thing – this is a bubble and it has burst.
Anyone who knows anything about any market knows two things:

1. When a bubble bursts, it’s never a straight line down – there are alway small rallies along the way due to suckers thinking that the price is now a bargain. Once they’re in the downward spiral continues until the next small batch of suckers repeats the process.

2. When a bubble bursts, it almost ALWAYS overshoots the true bottom on the way down – hence, prices in my patient’s neighborhood could go well past 2002 prices when the bubble started and possibly reach 1998 prices or earlier.

Of course, all this would have happened even in a normal economy but in THIS economy the slaughter can and probably will be even greater.

BTW, did I mention that Vancouver has been tapped to become the next gangster/homeless/junkie capital of the world?
You heard it here first.

#116 North Vancouver Citizen Jr. on 04.02.09 at 5:59 pm

Property sales strengthen in current market cycle

VANCOUVER, B.C. – April 2, 2009 – The Metro Vancouver housing market experienced a movement away from volatility and toward stability to start the spring season.

Home sales in March 2009 returned to levels witnessed at the beginning of the decade, with 2,265 sales recorded across Metro Vancouver for the month, a 53 per cent increase over February but a 24.4 per cent decrease over March 2008, when 2,997 sales were recorded.

Since 1999, March sales have increased 31 per cent, on average, over the month of February. March 2009 marks the second consecutive month that sales have outperformed the ten-year average for this month-over-month comparison.

“There’s more confidence in the housing market today than we were seeing late last year. Sales activity is rising to more typical levels given the season, and the number of homes being listed for sale is levelling off,” said Scott Russell, president of the Real Estate Board of Greater Vancouver (REBGV).

New residential listings on the MLS® declined 22 per cent in March 2009 to 4,385 compared to March 2008. This is the fifth month in a row that new listings have decreased year-over-year and the third consecutive month where those declines exceeded 20 per cent.

Despite these trends, total active listings at the end of March 2009 had still reached14,579, a 19 per cent increase compared to the end of March 2008.

“REALTORS® are seeing an increasing level of interest from first-time buyers who are attracted to low interest rates, good supply of housing, greater affordability, and a considerably lower overall cost of servicing a mortgage compared to recent years,” Russell said.

Sales of detached properties in March 2009 declined 19.6 per cent to 897 from the 1,116 units sold during the same period in 2008. The benchmark price, as calculated by the MLSLink Housing Price Index®, for detached properties declined 15.1 per cent from March 2008 to $649,342.

Sales of apartment properties declined 28.8 per cent last month to 976, compared to the 1,370 sales in March 2008. The benchmark price of an apartment property declined 13.5 per cent from March 2008 to $337,099.

Attached property sales in March 2009 decreased 23.3 per cent to 392, compared with the 511 sales during the same month in 2008. The benchmark price of an attached unit declined 11.2 per cent between March 2008 and 2009 to $420,563.

#117 Sun Yat-sen suit on 04.02.09 at 6:21 pm

As this ugly slide progresses there will be a need to quell the anger in the land. Flaherty for beginners should pay political price for 0-40.

Maybe our Duke of Ottawa was stuck in the English loo trying to flush a Flaherty..?

#118 hagbard on 04.02.09 at 6:27 pm

I’ve been a firm believer in the real estate bubble since 2003, that’s why I sold my house in 2004. Unfortunately, I thought the market had pretty much peaked (how could it possibly go any further??) Who would have counted on such insanity driving the market further and further into the stratosphere?

So, I’m sitting on my cash and trying to decide my next move. Once again, here is my problem. My fear is a currency collapse or hyperinflation. People laughed when I talked real estate bubble back in 2003. I get laughed at in this forum talking hyperinflation. While I hope I’m wrong, I saw where we were going the last time out. Prove my theory wrong.

Where is a safe place to park money? And please don’t tell me the N. American stock market.

#119 john m on 04.02.09 at 6:29 pm

Well its been a long brutal winter,now the suns shining ,people can feel spring in the air,in our day to day,pay check to pay check lifestyle that so many have become accustomed to it seems like all the people still working feel nothing is really happening around us. It totally boggles my mind how far from reality so many people are. I was just chatting with a guy today who just sold his house…i said good for you this is a tough market…he looked at me like i was from another planet and told me how wrong i was and he couldn’t wait to buy another…..this is the time to buy he said…i said well everyone to their own,personally id be renting for awhile.I hope the best for everyone but my gut tells me by the time next winter rolls around this country is going to be in dire straits….when everything is full of negatives there is no positive merely fantasy. IMO

#120 jess on 04.02.09 at 6:49 pm

austrian aristocratic bankster arrested

http://www.nytimes.com/2009/04/03/business/global/03meinl.html?partner=rss&emc=rss

#121 jess on 04.02.09 at 6:53 pm

food stamp printing presses are working overtime
http://themessthatgreenspanmade.blogspot.com/2009/04/one-in-ten-americans-receives-food.html

#122 john m on 04.02.09 at 7:03 pm

G 20 and Harper’s commitment…..Canada agreed to contribute $12 billion to the International Monetary Fund to assist developing countries coping with the downturn, nearly doubling Canada’s previous contribution.

That was Canada’s pledge towards the massive G20 plan to triple IMF spending with a guarantee of an additional $500 billion to $750 billion to help struggling poor countries.

Harper said the “large sums” being pledged were also recognition of the need to preserve stability in poorer countries, where the recession could have deeper and more serious effects.

“We all understand that you go from a market crisis to a financial crisis to an unemployment crisis, the real risk is crises of international peace and stability,” Harper said. ……….WOW a whole lot more money from our “every things fine high rolling leader”…great photo op after i hear. Pretty bold move for a government who seems unable to get a $400 cheque out on time to an out of work Canadian who has paid into UI all his life. But who am i to judge.

#123 . . . fried eggs and spam . . . on 04.02.09 at 7:04 pm

If anyone would like a 6 1/2-min. time out, this is the banned SNL skit on the economy.

http://patdollard.com/2008/10/it-is-here-the-banned-snl-skit-cannot-hide-from-louie/

#124 Future Expatriate on 04.02.09 at 7:05 pm

Bad news for you and every else, #105; in the US real estate HAD reverted to the trend line before the bubble, there was a minor uptick, and now it’s headed right back on down, faster than before.

This is one crash that won’t be merely reverting to the trend line before the bubble; things have changed. Big things.

#125 Future Expatriate on 04.02.09 at 7:08 pm

#108: “Leading indicator” = futures-driven pie-in-the-sky fantasies of those remaining fools who still believe in an untenable unsustainable crashing economic system based on paper voodoo shell-games.

#126 Dave on 04.02.09 at 7:15 pm

#118 hagbard on 04.02.09 at 6:27 pm

Once again, here is my problem. My fear is a currency collapse or hyperinflation. People laughed when I talked real estate bubble back in 2003. I get laughed at in this forum talking hyperinflation. While I hope I’m wrong, I saw where we were going the last time out. Prove my theory wrong.

——————————————

read post #89. A hyperinflation cannot be assumed just because cash was put into the economy.

#127 JoeCalgary on 04.02.09 at 7:16 pm

#122, JohnM: Have you got a link for that quote? I’d like to read the whole article. Thanks.

#128 JoeCalgary on 04.02.09 at 7:18 pm

#122, JohnM: Have you got a link for that quote? I’d like to read the entire article. Thanks.

And, I agree; whoever touted the term “fiscal conservative” didn’t appear to know what they were saying!

#129 Peter on 04.02.09 at 7:26 pm

Few of my friends already FUMED up by the media and now they are buying a house…They are all HYPED out and they wont listen to anyone anymore because the builder are offered them somewhat 5 % discount (which he told me it was a decent discount…i said its bullcrap)…Another one bought a foreclosed home around my area with double leverage from her condo (I asked her how will you provide downpayment ?, she told me she will take out equity from her condo, leverage it and buy this townhouse, she also arrange this from the Aggressive RED bank with low interest rate and they taught her to do this so she can rent that out and the banker will reap out 2 mortgage from her…) At last, one of my friend told me he and a few guys have connections from asia and some asian business owners and they have loads of financial backings to flip home and condos with this environment and they would like to buy it low and sell it high…(asian flipper/gambler mentality is back is GTA !!!)

#130 JoeCalgary on 04.02.09 at 7:28 pm

Exodus from Michigan: state loses one family every 12 minutes

http://www.detnews.com/article/20090402/METRO/904020403/Leaving+Michigan+Behind++Eight-year+population+exodus+staggers+state

Is anyone here looking ahead to population movement trends in Canada? If so, I would be interested in hearing your thoughts. Social displacement can bring both good and bad things.

#131 dd on 04.02.09 at 7:37 pm

#115 North Vancouver Citizen’s Analyst

“BTW, did I mention that Vancouver has been tapped to become the next gangster/homeless/junkie capital of the world? You heard it here first.”

Now that is funny. So true so true.

#132 dd on 04.02.09 at 7:50 pm

#116 North Vancouver Citizen JrR.

… Property sales strengthen in current market cycle Home sales in March 2009 returned to levels witnessed at the beginning of the decade … There’s more confidence in the housing market today than we were seeing late last year…

Unknown to the unsuspecting home buyer he had to signed his mortgaged life away and given up the first born because that what it takes to buy a house in Vancouver these days. “But oh well I live in Vancouver” he says to himself but really in the back of his mind he knows that Vancouver has been tapped to become the next gangster/homeless/junkie capital of the world? And in his mind he keeps hearing the phrase “You heard it here first” again and again, and again.

#133 TUT on 04.02.09 at 7:53 pm

G20 communique:
http://www.londonsummit.gov.uk/resources/en/PDF/final-communique

If what is said in this document is what we may expect from the world leaders better we prepare for the worst. It is hard to imagine how to write 3053 words with more grandiloquence and less real content.

The main points are:
1 – Pledging of $1.1 trillion in various concepts to fix financial, trade and job issues in the global scene.
2 – Create an FSB (Finance Stability Board) to oversee the financial system.
3 – Watch over the retributions of financial executives to achieve fair compensations.
4 – Increasing help to poor countries in the tune of $56 billion.

My personal feelings about this document are:

1 – It seems to me that throwing $1.1 trillion into this mess is equivalent to myself trying to buy a 100ft yacht with my monthly pay and promising a nice trip in it to my loved one.
2 – More useless bureaucracy.
3 – Reduce some severance packages from 500 millions to 495 millions for the “bad” performers and increase them to 1 billion for the “good” ones.
4 – Poor countries are saved, at last! They will receive: “.. $50 billion to support social protection, boost trade and safeguard development in low income countries..” and “.. $6 billion additional concessional and flexible finance for the poorest countries over the next 2 to 3 years ..”. Oh my gosh! almost one full month of the DOD budget! Is that a joke?.. Sorry but I guess is not.

As a light note it seems that the person(s) that wrote the document are at odds with the English language, specially with the letter “z”. Found in the text: recognise, organisations, capitalisation,
conditionality.

Better go buy some condo before it’s to late or you will be priced out!

Regards

#134 Marcus Aurelius on 04.02.09 at 8:10 pm

#56 POL-CAN and #66 Jwk:

Fearing that POL CAN may be a deluded agent, it bears reminding that:

1. Roncesvalles Village is the classic Toronto Venus Fly Trap: a former down-at-heel First Wave Eastern European enclave given the “Yuppie transitional neighbourhood” Lipstick on the Pig at the height of the bubble cycle by feckless agent-whores. To say that someone paid List at $559K for product that ‘used to be higher’ only means that transitional neighbourhoods are going to go lower than ‘non-transitional’ (read: Central Toronto “Last-Bastion-for-scared-sh**less- professionals- who- don’t-want-a- Halfway House-next-door”) areas.

2. Anyone – ANYONE – who pays list in Toronto today overpaid. Moral: there’ll always be an idiot who overpays, in any part of the cycle.

#135 Sammie from SK on 04.02.09 at 8:11 pm

So, Garth, what’s your view on Saskatchewan? We seem to be skating through this recession largely unscathed. Houses in Saskatoon are quite pricey. Premier Wall and our mayors from Regina and Saskatoon are in Toronto at a job fair trying to entice people to move here.
After seeing on CBC the report about Detroit I then viewed realtor.ca for Windsor and was surprised at how low real estate seems to be there. To entertain a substantial decline here is unfathomable!

You think? — Garth

#136 Da HK Kid on 04.02.09 at 8:24 pm

#62 SAVE, yes the decision to move to KL was a good one. The proactive move was multi fold but ideally suited for reducing my family cost of living.

Those who have not visited SE Asia are missing out.

Malaysia has the MM2H program (Malaysia My 2nd Home) program for all of you in Canada who may be looking to step off for a few years.

It allows you entry, visa, no tax and you may bring a car in with a one time investment of around $70K CAD towards a home.

There are so many baby boomers who have toasted their retirements so if they choose to not work, they must look at alternatives.

And YES, they have an ICE HOCKEY RINK and RUGBY CLUB.

#137 dekethegeek on 04.02.09 at 8:31 pm

#31 Munch.
Hard to say why S.A. properties are lagging the EU and America. Your country is still a major producer of gold, silver, diamond, etc.. However this economic slow down is a world wide( rather than regional ) event not seen in 70 years?
Canada is in somewhat the same boat as S.A. The U.S. began melting down in 2007 and it didnt really filter down to Canuckda til late last year when the stock market had a turd. Then every company world wide began shitting their corporate knickers and slamming the door to further purchases and loans.
Just took a little longer for the meltdown to spread that far south I reckon. At least your talking about it, I ran into some retirees today from kelowna,B.C. that said,”What recession? The traffic is still crazy here in Vancouver and everyone seems to be buying.”
Ah yes, retired people don’t have to worry about being laid off. Wait til the Mutual fund statement slaps them back to reality. Wal-Mart blue never looked so stunning on a elderly couple.

#138 $fromA$ia on 04.02.09 at 9:17 pm

Double the amount of currency and you debase your money very simple. As far as CPI it does not count food or fuel. War?

You think war needs to be present to push inflation?

What war inflated the price of our homes?
Did you do any research on that?

What war inflated gold to $800+ and ounce in 1980?
Did you do any research on that?

What war inflated oil to $140 a barrel last summer?
Did you do any research on that?

Why don’t you change your name to Marc Carney.

Funny guy, can’t wait till the banks cut their dividends.

#139 Boombust on 04.02.09 at 9:51 pm

“I’ve moved to Vancouver about 8 years ago and I’ve noticed this ignorance more then few times.”

I was born and raised in Vancouver and I quite like it.

So there.

Which do you like? — Garth

#140 Dave on 04.02.09 at 9:56 pm

ouble the amount of currency and you debase your money very simple. As far as CPI it does not count food or fuel. War?

You think war needs to be present to push inflation?

What war inflated the price of our homes?
Did you do any research on that?

What war inflated gold to $800+ and ounce in 1980?
Did you do any research on that?

What war inflated oil to $140 a barrel last summer?
Did you do any research on that?

Why don’t you change your name to Marc Carney.

Funny guy, can’t wait till the banks cut their dividends.
—————————————————-

if money is printed but buried underground, how does that create inflation? banks were given money, but none of that money is getting out! Also, the millions of people that were spending their paycheques as well as maxing out their credit cards and leveraging their homes are no longer doing that, therefore the money mentioned above is not competing with the rest of the money in the economy. If the spending orgy was still going on, then we would have inflation- what are the chances people/banks will be doing that anytime soon?

what inflated the price of homes was extremely low interest rates, cheap money, & ridiculous lending like 0/40 mortgages and subprime mortgages…people had so much extra money because of the lavish lending that was allowed. The extra money competed for goods in the general economy which created inflation. Sorry if this is rocket science for you.

was there some sort of massive stimulus prior to 1980 that caused gold to go to $800??? not that I’m aware of. I’m a gold bug myself, but I can’t make the connection that many people make on here that money injected into the economy instantly causes some sort of hyperinflation….i think that takes time and it depends on circumstances

as far as oil going to $140 last year, there could be many factors. First, I believe in peak oil. If you want more information on that, see Matt Simmonds book as I believe it is the absolute best book related to oil fields and their depletion. I also believe that since we went through a period where people borrowed for everything they wanted in life, with no worry for the bill, lavish lifestyles were lived and people over consumed in every respect. Fuel and a fast paced life go hand in hand.

#141 RM in Oakville on 04.02.09 at 9:56 pm

#58 Shawn on 04.02.09 at 10:11 am

If you bought your house with a 0/40 mortgage with, say a 5 year term, by the time it comes up for renewal, you could be in for a nasty shock:
– you’ve paid almost none of your principal (assuming no prepayments)
– rates will almost certainly be higher in 5 years
– your house may well be worth less than when you bought it

So for example if you bought a $300K house and mortgaged the whole shebang, sure you can keep up the payments, but the bank may balk at renewing if the house is only worth $270K at renewal time and you still owe most of the 300. Negative equity.

If you were somehow able to make, say 10% prepayments per year, sure you’d be ok come renewal time…but on the other hand if you had the means to do that, why would you take out a 0/40 mortgage in the first place and pay the extra CMHC-imposed interest penalty?

#142 Dave on 04.02.09 at 10:02 pm

somebody, prove to me that this stimulus will cause inflation or hyperinflation!! I dare you! didn’t Japan go through massive bailouts in the 1990’s?? any hyperinflation there?

I’ll say it again, most times of high inflation occured after a major war, after an energy crisis, and times of cheap money/lavish lending.

I’m looking for insight here. It seems nobody can gauge was causes inflation. The best way to understand it, is by looking at the past!

#143 Gord In Vancouver on 04.02.09 at 10:10 pm

#116 North Vancouver Citizen Jr.

Global posted that article today.

I agree that the bottom is closer than is was a few months ago. However, until employment rates stabilize and local developers stop holding fires sales, a “bull” Vancouver real estate market cannot be declared.

If North American stock markets can hold their recent gains/momentum, current real estate sales levels will be maintained.

#144 POL-CAN on 04.02.09 at 10:39 pm

#134 Marcus Aurelius

You wrote:

“Fearing that POL CAN may be a deluded agent, it bears reminding that:”

lol

I am probably one of the biggest tin-foil hat wearing bears on this blog. I was simply writing about a first hand experience from 2 days ago. As non-yuppie Easter-European professionals with secure jobs, we find that Roncasvalles is one of the few areas of T.O. that we are interested in. The others are High Park, Little Italy, the Beaches, and Riverdale. The interest is based on lifstyle rather then value. Why drive somewhere when you can walk and if that costs more then so be it.

And yes I do agree with you…. All houses in T.O. are overpriced and one should not pay full price in a buyers market. We will run out of the current crop of greater fools within a coulple months at which point the downward march will resume.

Cheers….

#145 Simon on 04.03.09 at 12:30 am

Keep in mind that the 0/40 crowd put nothing in the way of equity into the real estate to begin with.

#146 Bill-Muskoka (NAM) on 04.03.09 at 11:03 am

#123 . . . fried eggs and spam . . . on 04.02.09 at 7:04 pm

Thanks for the link. That was HILARIOUS!!

#147 Chris in England on 04.03.09 at 1:26 pm

North Vancouver Citizen #42: “…I could go on, but until you perceive from a foreigner’s POV, you will not realize your mistake.”

Well I am a foreigner. Let’s start with the weather …. rain. Do I want to go from England where we have plenty of that, to Vancouver where they have plenty of that? Er, no. Thanks!