Hot & bothered


– ‘Overpriced and Overbuilt: Canadian Housing Market Returns to Fundamentals’, TD Economics

On a day when the government of Canada was getting into the used car warranty business, when markets were falling because they had rashly risen, when CanWest Global got a two-week stay of execution, and mighty Alberta posted its biggest deficit ever, I was walking through Toronto airport.

“I hate to say it…”

And I heard a voice behind me, just as I was wondering what it would cost to buy my car back from the parking garage (it was $244).

“…but, Turner, you were right…”

Turning around in the crowd’s swirl, I saw one of the country’s top economists dragging his suitcase along and giving me a smile. This guy, I recalled, took some delight one year ago in telling reporters that if I wasn’t an idiot, at least I was a fool. Or maybe just an extremist. No way, he’d asserted, that Canada was going to have a real estate correction.

About this time yesterday another bunch of economists, this time at the TD Bank, was publishing an opus on the housing market. The forecast: Home prices will continue to erode, falling more throughout 2009 and then flatline.

Hmmm. Where have we heard that one before?

Meanwhile in Calgary the woman in charge of the local real estate board looked at the latest stats and clicked her heels. “The Calgary market is slowly shaking off its winter blues,” said Bonnie Wegerich. “We’re moving into a more balanced market.” Not far away, LePage head flogger Phil Soper was telling eager reporters that first-time buyers were flooding back into markets across Canada. And in Toronto, local realtors were celebrating a 7% decline in sales over March of last year, saying that is a sign the corner has been turned. Said a spokesguy: “A greater number of households have taken advantage of increased affordability in the housing marketplace.”

So, what do we make of all this? House sales rising in several key cities. Calgary prices stable from the previous month.  Toronto prices down but a smidge from a year ago. Sales in Vancouver during March up 31% over February.

But at the same time, the auto industry is clearly headed for Armageddon. Job losses will be piling up steadily until unemployment hits double digits. Brand name companies like CanWest and Air Canada are on the path to bankruptcy. Governments everywhere are vaulting into debts and deficits, guaranteeing higher taxes, fewer services, or both. And interest rates have crashed, meaning they can only go up, making life more expensive.

Why, then, are more people buying houses?

The simple answer is that with mortgages at 3% and homes 18% more affordable in Calgary or Kelowna than they used to be, affordability is less of an issue. People who wanted to buy, but could not, can now.

The more complex issue is that lots of those first-time buyers, so crucial to the real estate industry, are being cattle-prodded into action. First the feds said buyers could raid $25K from the RRSPs, tax-free, to buy a home. Then Ottawa chipped in a $750 gift to help them close. Then go-boys like Soper and his twin at Re/Max churned out media releases about young buyers, cranking up the peer pressure. Then the mortgage lenders, the real estate boards and the media jumped on the bandwagon. I’ve even heard that CKNW, Van’s hardest-news station, is running PSAs telling people that now is the time to buy. And I have not even mentioned Sikorsky parentals.

But the real reason homes are changing hands is an eternal one: greater fools. People who pay scant attention, who are moved by headlines and still think kitchen hardware actually matters. These poor sops believe we are at, or close to, the bottom of the market and that cheap mortgages mean they can afford a home. Therefore they must have one. It will only rise in value. They can’t lose.

Sadly this is just what a lot of US buyers believed when they were offered cheap subprime mortgages – don’t worry if rates rise later, since house values always rise. Can’t lose.

I won’t run through all the reasons why house prices will be lower at Christmas than they are now. You need only remember one – jobs. And when it comes to a number of years ahead of stagnant real estate values and lost equity, nobody should be surprised. Our future holds higher taxes, less disposable income, rising interest rates, energy inflation and years of recovery from the current corporate and economic plague.

There will be some fine places to make money. This ain’t one of them.

Finally, I would like you to cut the following words out and tape them to the fridge. They were penned by those high-priced eggheads at TD who, I’d say, have been skulking this blog:

“Over the long-term, the value of housing cannot exceed what households are able and willing to pay to live somewhere.”

Amen, brothers & dudes.

Letter of the day:

Hi Garth: The technical analysis columnist for the Toronto Star, Bill Carrigan, has a monthly chart of housing prices in Toronto. I took his latest chart from March, and applied what I saw regarding head and shoulders formation, as well as the support from 96-99, which I’m enclosing for you.
Note that if this technical analysis is correct, both the head & shoulders pattern, as well as the support line intersect approx $280,000, which is approximately 10-15% lower than the present value. Of course you predicted this further 15% erosion weeks ago. Bravo!
Regards, Dave


#1 Billy S. - there is no turning back, it is programmed on 04.07.09 at 10:11 pm

Listen to the banks: they are bringing it now DOWN! Very Fast. Why the TREB media relations guys/girls are not buying 1000 properties each? on 40000 years mortgage? It’s a good time to buy, buy …buy it YOURSELF! We are tired already of your paranoia. go see the DOCTOR.

Average home price will fall to $246,000 in ’09: TD
TD economists expect the average Canadian house price to fall to about $246,000 in 2009, down 24% from the peak of $324,000 in 2007. As of February, the average nation-wide house price stood at $282,000, down 13% from its peak.

#2 OttawaMike on 04.07.09 at 10:29 pm

Driving to work this morning in the wet snow, CBC radio is talking about potential 5 year wage freezes on the fed employees & Nortel people who have lost their pension money and job. Perhaps John Roth could sell one of his diamond encrusted backscratchers and donate the money to his worker drones..

Don’t worry though, the tax remittances from the oil patch and car biz will keep this dreary little town going or not?

#3 JRK on 04.07.09 at 10:35 pm

I don’t get the graph.

#4 Da HK Kid on 04.07.09 at 10:54 pm

Yup, and you would be simply manipulated and brainless if you purchased right now.

Wait until the bottom is in sight as when interest rates begin to climb, the house you purchased at the bottom better be affordable! Take that 3% variable out of the gate, move into a locked in 5-7yr at lowest rate possible and you better look at paying that puppy off.

While the avg. price will be down 24% to bottom, $324K to $246K, the homes upwards of $400K will have a 30% shave and over $500K likely 35% or more.

Frugality is the new norm but let’s see how many can handle the trend.

Furthermore, anyone making a decision to buy right now will only raise their chances of defaulting later.

As long as unemployment is gaining, home prices will continue to drop, this is again a simple indicator to watch for the rookie.

Here’s how I see the trend continuing, more defaults even on refies, more unemployment, more defaults, repeat until end of 2010.

When markets starts to turn, watch for moderate inflation in 2011-2012 then by 2014-2015 watch the wave of pain start to increase again when those who purchased 4 years earlier cannot pay their mortgage.

Your home will be a place where you live people not an investment!

#5 nonplused on 04.07.09 at 11:03 pm

Watch the builders. They are still finishing up the last bit of thier inventory of big homes at a profit (although a greatly reduced profit). After that, they will retool to sell smaller, cheaper homes people can afford. That’s what they did in the 80’s. Although building starts will continue to drop, they have never gone to zero before. The builders just sell fewer, smaller houses on 25 foot lots. Got whole communities of them from the 80’s and they can do it again!

This will put enormous pressure on existing house prices over the coming years. Not right away, but out 5 years for sure. Even if mortgage rates are low, why would a new home buyer buy a 20 year old 2600 sq ft house for $600,000 when he can go 3 miles down the road and get a brand new 1800 sq ft house for something closer to 200,000? Not that he can now, but with the trades and lumber all off he might be able to once the subdivisions are redesigned. The builders that don’t go bankrupt retool thier product line to match the climate.

#6 dd on 04.07.09 at 11:22 pm

“The Calgary market is slowly shaking off its winter blues,” “We’re moving into a more balanced market.”

A more “balanced” market. You mean there is going to be blood in the streets. Ya prices do you great if you saw the right up in prices in the last couple of years in Calgary. However prices are still way to high compared to income.

#7 Gord In Vancouver on 04.07.09 at 11:24 pm

I won’t run through all the reasons why house prices will be lower at Christmas than they are now. You need only remember one – jobs.

I’m more of an optimist than you are but agree that job markets will, ultimately, most heavily impact housing prices.

Many employers didn’t hand out pink slips until right after Christmas which means that a TRUE representation of real estate markets won’t be revealed until October/November (EI benefits last for about 9.5 months). This effect will be most pronounced in “sexy” areas like Vancouver, Kelowna, and Victoria where residents see relocation as a last resort to exiting the unemployment line.

#8 dd on 04.07.09 at 11:28 pm

Oh look … isn’t that North Vancouver Citizen Jr’s condo price way up there … I mean it was there … I mean it sure is ugly, I mean wow … look at the price bounce around on the ground and go sideways.

Wow North Van Cit Jr welcome back to earth.

#9 Investx on 04.07.09 at 11:31 pm

Garth, do you also agree with the TD economists that the RE crash won’t be as bad as in the US?

“However, Canada will avoid a U.S.-style housing crash because the oversupply of housing is much smaller.

TD estimates the overhang of residential homes in the Canadian market is equal to about three month’s supply, compared to about 10 months in the United States.”

#10 Keith in Calgary on 04.07.09 at 11:33 pm

“Record low interest rates. Dropping house prices. Buyer incentives. It is officially a buyers’ market–but how do consumers take advantage of this opportunity? Today, the Herald starts a six-week series called Your New Home. Turn to pages I7 to I10 for more buyer profiles and tips on how you can get the most from this market. And look for more information in the New Homes section each Saturday through May 9.”


The Calgary Herald is pulling out all the stops for it’s REIC advertising masters with a 6 week series of “manufactured consent” disguised as a news spread about how FTB’ers are jumping into the market.

The Canwest/Global shill machine who is possibly out of business shortly anywyas, and never could care less about journalistic ethics in the past, is working overtime for the major, and perhaps only significant advertiser they have left…..the REIC.

#11 eddy on 04.07.09 at 11:35 pm

“So, what do we make of all this?”

everyone wants a decent place to call home. this is the logical result of low mortgage rates and low down payment options. i suggest a return to conventional 1st mortgages with 25% down, abolish cmhc, remove david miller and dolton mcguinty from office, remove school tax from the property tax base (i think mike harris talked about that), base property taxes on something other than current market value, (i prefer a flat rate tax and pay for service)

condo death spiral:

“I smell Chinese drywall”

#12 smwhite on 04.08.09 at 12:14 am

“Over the long-term, the value of housing cannot exceed what households are able and willing to pay to live somewhere.”

ABLE without excessive credit or monetary policy manipulation being key. Seemed those rules and policies that governed us safely through tough times in the past have been negated…

TD’s D.Drummond was one of the first on the truth telling band wagon, right around when it was starting to became obvious that we were in it up to our chin.

I bring up the point again about Carney preaching a more conservative religion then Harper lately as well.
Self-serving politicians, unlike “economists” with integrity, will not acknowledge the obvious even when its staring it them in the face.

However, more of the talking heads, in order to protect their own credibility, will(and are) start to put the word out that things aren’t as rosy and being spewed by our federally elected officials and local real estate associations.

So while we’re on the topic of economists, this on the drop in housing starts…

“This is the good news. It means the faster they slow down, the less a correction house prices that we will see. It’s positive for sellers because prices will not fall in a significant way. It’s good for the economy although bad for the housing sector.”

So less people building homes, less demand for raw materials, and so on, but hey, my over valued ranch is still over valued, what a relief! The last time we’ve heard that kind of pillow talk from an economist to the public was Lereah. I have no idea what the percentage of Canadian GDP was attributed to the overall housing sector since 2005, but I’m not naive to think that its some trivial amount.

Yet, this kind of backwards thinking, that is being dictated by some banks? Scared that the old “3 to 1 housing to salary ratio” doesn’t come into play, otherwise they’ll be stuck with more magical paper”.

Don’t worry, taxpayers will be stuck with that cheque. Deflation isn’t coming, its knocking on the door and will be sticking around for a lest another year…

Anyway Garth, after myself trolling around here for the past year, nice to see you feeding up a depressionary delicacy besides squirrel, humble pie.

#13 Nick on 04.08.09 at 12:25 am

You’re right about the CKNW ads, I heard one and assumed it was from RE/Max or some other real estate company. When it said it was a PSA from the Corus radio network, I almost choked on my coffee.

#14 Midas on 04.08.09 at 12:50 am

With all the shenanigans going on with ‘quantitative easing’, stimulus packages, bail-outs, talk of new reserve currencies, increased financial authority of the IMF and the World bank and…and…and…

It’s safe to say that in these times no one, least of government and media experts really know how this game will turn out in the end. The rules of the game, like the new accounting rules for banks, are changing so rapidly that I am not even sure which game we are playing, and neither do I believe does anyone else, Mr. Turner included.

This will end much worse than any of us expect, of that the odds are ever increasing. Whether by design or by accident national sovereignty is out, international plutocracy is here. Whatever this bodes for sovereign Canadian individuals, it bodes ill more than it bodes well. The politburo in London at the G-20 has spoken and the plan is to soon take our currency away and along with it our sovereignty. O Canada! where did they go that stood on guard for thee! Is there not one nation on Earth any longer that will give its citizens an honest currency rather than paper promises? That we are heading for a greater depression is a foregone conclusion, the question is will it bring greater oppression with it?

#15 Grumpydawgs on 04.08.09 at 12:59 am

Garth it’s real tug of war for whats true out there, the propaganda fog is so thick you can cut it with a knife. Every medium is blasting ‘buy buy buy’ in our ears like a mad hypotherapist. It’s starting to resemble an old fashioned battle for hearts and minds, an apoplectic fury between the forces of good and evil. I am almost expecting big paper posters to go up in front of movie theaters and in the work place showing the faces of the Real Estate Bears such as yourself redrawn as a wild enemy of the state as they would during war time.

Honestly I don’t want to believe that theres a conspiracy by the vested intrests to wrench the market back towards the safer shores of forever increasing prices, but man, the full court press by the government, media and industry are really pushing the limits of ethical and moral leadership.

After all, whats so wrong with the truth? So a few condo speculators go bust, so what? So a few more Canadians put some cash away, isn’t that better for the economy long term? Won’t we have a stronger automobile industry if we let them eat each others lunch until only the strongest is still standing? Are consumers really suffering from a mental disorder when displaying a lack of confidence?

Meanwhile, on the other side of the pond, some truth is leaking out.

– an excellent observation by a British journalist as to why the real estate market is the process of executing a dead cat bounce and why this Real Estae bear Market is giving the unwary on more chance to lose money.

“The truth is that all real bear markets tend to offer the unwary investor one last opportunity to lose money. The summer of 2009 is probably that opportunity this time round.

There may well be a quite a big pick up in inquiries, transactions and even prices over the next few months. This will be partly down to the fact that, for those who have cash and want to buy at some point, the housing bear market is getting boring – and partly because a lot of property looks cheap relative to its peak price.

But the basic market conditions are still all wrong for recovery. For starters, cheapness shouldn’t be measured relative to peak prices, but relative to historical trend prices. And, on that basis, UK house prices are still totally out of whack: they’ve still got a long way to fall to get anywhere near the usual 3.5 times average earnings. Look at the Land Registry prices and ONS numbers on average earnings, and you will see that the ratio is still well over five times. A house that looks cheap compared with its 2006 price still looks very expensive compared with its historical average.

Still, even if you aren’t fussed about long-term affordability ratios, consider this: for a real recovery to get going now, a very large number of people need to have five things: a job; a firm belief that they will still have a job in five years even as unemployment rises over 3m; a conviction that you can’t lose in the long term with bricks and mortar; a good £20,000 as a deposit; and – most importantly of all – the ability to get a mortgage. Know many people like that? Nor do I.”…..14709.aspx

#16 Munch on 04.08.09 at 1:24 am


Nice article, very nice!

The parallels to what is happening in South Africa are eerie – but I won’t bore you with that.


#17 Grumpydawgs on 04.08.09 at 1:25 am

Trouble in paradise ,median house prices down 68% in Hawaiian islands

Neighbor Island home sales plunge
Read comments (8)Recommend (2)Print this page E-mail this article Share
Buzz up!Twitter

By Andrew Gomes
Advertiser Staff Writer

The absence of many resort homebuyers continued to weigh heavily on sales and prices of existing homes on Maui, Kaua’i and the Big Island, with some segments of those markets down by more than half last month.

The most dramatic change was in the median price of previously owned condominiums on Kaua’i, which dropped 68 percent to $220,000 in March, from $677,500 in the same month last year, according to data from Hawai’i Information Service.

#18 victoria reader on 04.08.09 at 1:32 am

I see my home town at the top of that chart. Everyone I talk to says that victoria is ok because we have tourism and government work. I tell them summer isnt here yet and government workers get paid from tax money that is disappearing fast.

#19 The Machinery Guy on 04.08.09 at 1:38 am

Nice Graph, It’s the end of the world as we know it……
The bankruptcy of the Detroit Three will wipe out the housing market and municipal tax base of auto towns like St. Catherine, Hamilton, Brantford, Kitchener / Waterloo, Woodstock, St Thomas and all the communities along the 401 between London and Windsor. Prices will drop by 50% to 80%, (maybe more). Rows of vacant houses will be boarded up. Every town will have soup kitchens. Anger will slowly grow as it did during the 30’s.

Buy a house now? Are you kidding? Save today and buy a dozen houses tomorrow.

#20 Mike (authentic) on 04.08.09 at 3:10 am

Just as you said Garth, raised taxes. Alberta did just that effective immediately.

Alberta forecasts record $4.7B deficit in 2009-10 budget

EDMONTON — Albertans will see major spending cuts and possibly tax increases in the coming year as Premier Ed Stelmach’s government grapples with a record $4.7-billion budget deficit.

The 2009-10 budget says the government plans to identify $215 million in immediate spending cuts, but there’s no word on where that money will come from.

It’s a huge turnaround for a province that enjoyed multibillion-dollar surpluses for more than a decade.

Tobacco taxes are increasing immediately by $3 a carton and the markup for liquor will boost the price of a dozen beers by $1.30 and a bottle of spirits by $2.89.

Most communities will see an increase in education property taxes, municipalities will get less money for projects and the $200 per year patients get for chiropractic services is being eliminated.

#21 popeye the sailor man on 04.08.09 at 3:51 am

I’m sorry but I don’t understand the graph. Can someone tell me how to read it. Thanks.

#22 HalifaxFamily on 04.08.09 at 5:59 am

This will lock a generation who feel entitled to a house because they can ‘afford’ it into decades of debt slavery. How sad.

It allows the BOC the ability to modulate the economy, as these people are at the mercy of the BOC’s rate changes.

#23 just a poor guy on 04.08.09 at 6:34 am

“There will be some fine places to make money.”

Are you gonna let us know?

#24 pbrasseur on 04.08.09 at 7:02 am

“There will be some fine places to make money. This (RE) ain’t one of them.”

Sorry to ask but if that’s the case then why are you buying?

Everybody needs a bunker. Especially, POS. Last time I’m answering this question. — Garth

#25 Grantmi on 04.08.09 at 8:03 am

tick tock,,, tick tock…


Canadian government offers help to auto parts makers, car buyers
Tue Apr 7, 6:21 PM
Julian Beltrame, The Canadian Press Email Story IM Story Printable View
By Julian Beltrame, The Canadian Press

OTTAWA – Ottawa is providing nearly $1 billion in guarantees calculated to reassure consumers and parts suppliers that do business with shaky auto companies, most notably General Motors and Chrysler.

Industry Minister Tony Clement said Tuesday that Canada will follow a U.S. program and guarantee warranties on new vehicles sold by GM Canada (NYSE: GM) and Chrysler LLC.

But the minister surprised some with his candid admission that the survival of the automakers is no longer assured given last month’s decision by Washington and Ottawa to send the two back to the drawing board on their restructuring plans.

#26 lgre on 04.08.09 at 8:03 am

“There will be some fine places to make money.”

Are you gonna let us know?

Stock market I’m guessing, there will be a fire sale very soon, already most stocks are down 50+%, they are going lower then that. I guy on BNN was talking about DOW at 1000 and gold at $4k..very bearish..

#27 Grantmi on 04.08.09 at 8:07 am


Full report!!

#28 timbo on 04.08.09 at 8:15 am

that was a fantastic read Garth, TD has sure nailed the problem down

The graph come from TD. Give this a read after you make a pot of coffee and it should give you an idea why prices this year cannot rise.

There is money to be made Garth in giving out stats that people need to make informed choices. Advertising on blogs will kill mainline news and unfortunatly book sales. You might have a heck of start to a research blog that can link people to facts as long as advertising is not in a conflict of interest. I think you should contact gun dealers and canned good manufacturing. Just an idea.

#29 Happyplace on 04.08.09 at 8:19 am

HK Kid – People buy real estate because they need a place to live and sometimes waiting is not an option. This doesn’t make them brainless or manipulated. Also, how do you expect to see when the bottom is in sight? Will there be a line drawn on the horizon somewhere?

#30 Grantmi on 04.08.09 at 8:23 am

Igre: God help us if he’s right!!

Right now were at a 9.2 ratio!$INDU:$GOLD&p=D&yr=3&mn=0&dy=0&id=p81728644400

He’s talking a MINUS 4 ratio.

I’ll be moving into Garth’s Farm Complex….. taking my shift at the turrets!!

#31 Expat in NC on 04.08.09 at 8:24 am

Well, I have been looking to move back from NC to the east side of Toronto for a while now, getting more serious in the past year. I saw houses come on the market, stay on the market for a long time, and if they sold, sold for a lot less than asking. I though this spring would be my time to buy, but every house that I’ve had my eye on has sold in the last few weeks…all of them!!! I still have a house to sell in NC, but if a good house comes along in the area I am looking at I may jump in. Yes, I am in a panic…but I really want to move back this summer.

#32 613 Happy where I am on 04.08.09 at 8:28 am

Where is Ottawa on the chart???

#33 Coho on 04.08.09 at 8:35 am

#14 Midas,

Good post. As for your question at the end:

“That we are heading for a greater depression is a foregone conclusion, the question is will it bring greater oppression with it?”

You know the answer to that as do the rest of us who are paying attention. And the answer is….drum roll please….YES YES YES…a resounding YES!

#34 Bill-Muskoka (NAM) on 04.08.09 at 9:13 am

Sheesh, reading all the Purveyors of Profitable Property Crystal Ball Priesthood’s prediction predicated on past performance and probable persistent profits promulgates a precipice of predictable prestidigitation purported on perceived promises perpetuated primarily by poor people perusing paper predictions promoting pretended perception. I think there will be a lot of ‘P’d’ people!

#35 john m on 04.08.09 at 9:19 am

Great post Garth. As our government keeps making future commitments(now auto warranties etc.) our deficit heads further into unknown territory increasing our future tax burdens.As more people are being enticed into investing in real estate they become our future victims.Where will it end i wonder…..bad decisions and false propaganda are compounding our problems.It appears to me nothing short of a miracle (such as has never been seen before) will bring a speedy acceptable end to this fiasco. I find it amusing Garth that your critics are now trying to save face by doing an about turn and trying to make your predictions their own………doesn’t say much for their credibility or our future as they flip -flop along with our destiny in their hands. Perhaps one thing positive could be..they actually are getting some smarts and will stop throwing our money in every conceivable direction trying to save face . IMO

#36 Needlesscasualties on 04.08.09 at 9:24 am

Garth, if I may be so arrogant as to propose some advice: In your media appearances you appear muted and even jovial; you do not characterise the financial pain you are attempting to explain. That makes you seem smug (not that you are… ok maybe a little). In that you are attempting to be a voice of reason, and in that you are talking about very long-term cycles that the news media can not capture in sound bytes, you can not expect anyone to swallow your story by joking about it. If you really expect to sell this one, you need to show more conviction. Calling new home buyers fools masks the issue. You had this conviction last year and prior, but you seem less convinced this year. Every time you take a measured stance, it impacts your credibility. Yours may be the story of the “fusspot”, and history has many fusspots. Fusspots are always worried, so noone listens to them (mind you, noone listens to me either…). Your blog is informative, but your mainstream message is diluted; your base of support may erode similarly.

I’ll practice blowing smoke from my ears. Actually, the last thing most stressed-out people want is a mad prophet. But thanks, mom. — Garth

#37 Toronto C9 Renter on 04.08.09 at 9:24 am

#23 Just a Poor Guy said:“…There will be some fine places to make money…Are you gonna let us know?”

Poor guy, here’s one suggestion for you. It is possible to earn good returns trading ETFs. Strategy is continual buy and sell, not buy and hold.

Random examples, from “Horizons” 2X ETFs which are traded on TSX:

Oil: Bull (Up) HOU / Bear (Down) HOD
Gold: Bull HGU / Bear HGD
Financial index: Bull HFU / HFD

They move significantly during the trading day so it is not hard to harvest profits on the ups, buy back on the dips and so on. Definitely not a tool for buy and hold

One can generate significant profits by actively trading these ETFs. (all the usual warnings apply — can be a risky strategy; they experience decay because they apply a multiple to the commodity or index being tracked; dont invest more than you can afford to lose etc. etc)


#38 Torquemada on 04.08.09 at 9:27 am

#29 Happyplace, you wrote:

People buy real estate because they need a place to live and sometimes waiting is not an option.

Can you please give an example where waiting to buy real estate is not an option?

#39 pbrasseur on 04.08.09 at 9:33 am

Interesting article about the potentially durable changes brought by this crisis in the relationship between people and their house.

#40 North Vancouver Citizen Jr. on 04.08.09 at 9:34 am

Uh oh…I have a stalker on this blog site.

DD comments my every post w/ angry tirades…

He/she/it obviously craves my acknowledgement and acceptance.

DD, send in a request to Garth and I’ll pass along an autographed picture to you.

…Ill sign it….”From Garth Turner government’s next Federal Finance Minister.


“Sir” North Vancouver City Citizen

I’m in line for a Knighthood, fyi…apparently my insight is world renoun.

#41 Toronto C9 Renter on 04.08.09 at 9:44 am

#31 Expat in NC said: “…if a good house comes along in the area I am looking at I may jump in. Yes, I am in a panic…”

Expat, first, glad to hear you’re coming back. Second… DON’T PANIC — BIG MISTAKE!

I’ll use the analogy of buying a car. The spring RE market is like entering a car dealership on a sunny Saturday morning, first day of the new sales Quarter, just after the new models have been delivered. — Everyone else has the same idea and you have limited negotiation power.

As we all know, better to wait until 8:30 PM the last evening of the sales Quarter, hopefully its raining, and you’re the only customer in the showroom. If there are going to be any”deals”, thats when they will happen. In RE terms, that time is June to January. Look what happened last year. Many of the homes that are selling now sat all last summer / fall / winter. This summer will be much worse (/ better depending on which side of the fence you occupy!)

My opinion


#42 dd on 04.08.09 at 9:46 am

#40 North Vancouver Citizen Jr.

It must hurt when people call you on your BS.

#43 Da HK Kid on 04.08.09 at 9:47 am

#32 613, since Ottawa is between Toronto and Montreal, I would guess that’s where it might land on the chart as well.

#29 Happyplace, Last I heard, RENTING was an option.

Buying now and owning now two separate scenarios OR ARE THEY???

As said, the bottom of housing is somewhere around the bottom of bad unemployment news. I am now curious which traditional leading indicators are still valid.

#44 Da HK Kid on 04.08.09 at 9:51 am

Just had to post this from Mish’s site, classic!

Bernanke’s Deflation Preventing Scorecard

In case no one is keeping track, Bernanke has now fired every bullet from his 2002 “helicopter drop” speech Deflation: Making Sure “It” Doesn’t Happen Here.

Bernanke’s Scorecard

Here is Bernanke’s roadmap, and a “point-by-point” list from that speech.

1. Reduce nominal interest rate to zero. Check. That didn’t work…
2. Increase the number of dollars in circulation, or credibly threaten to do so. Check. That didn’t work…
3. Expand the scale of asset purchases or, possibly, expand the menu of assets it buys. Check & check. That didn’t work…
4. Make low-interest-rate loans to banks. Check. That didn’t work…
5. Cooperate with fiscal authorities to inject more money. Check. That didn’t work…
6. Lower rates further out along the Treasury term structure. Check. That didn’t work…
7. Commit to holding the overnight rate at zero for some specified period. Check. That didn’t work…
8. Begin announcing explicit ceilings for yields on longer-maturity Treasury debt (bonds maturing within the next two years); enforce interest-rate ceilings by committing to make unlimited purchases of securities at prices consistent with the targeted yields. Check, and check. That didn’t work…
9. If that proves insufficient, cap yields of Treasury securities at still longer maturities, say three to six years. Check (they’re buying out to 7 years right now.) That didn’t work…
10. Use its existing authority to operate in the markets for agency debt. Check (in fact, they “own” the agency debt market!) That didn’t work…
11. Influence yields on privately issued securities. (Note: the Fed used to be restricted in doing that, but not anymore.) Check. That didn’t work…
12. Offer fixed-term loans to banks at low or zero interest, with a wide range of private assets deemed eligible as collateral (…Well, I’m still waiting for them to accept bellybutton lint & Beanie Babies, but I’m sure my patience will be rewarded. Besides their “mark-to-maturity” offers will be more than enticing!) Anyway… Check. That didn’t work…
13. Buy foreign government debt (and although Ben didn’t specifically mention it, let’s not forget those dollar swaps with foreign nations.) Check. That didn’t work…

#45 Happy Renter in North Van on 04.08.09 at 10:01 am

Garth you’re right… Corus Radio Networks are running PSAs about this being a good time to buy real estate… Why bother running PSAs for kids with cancer or muscular dystrophy when Vancouver has its own charity case? – the Real Estate Industry… Maybe we should have a “Give Bob Rennie a Hug Day”?

#46 ally ally oxycontin free on 04.08.09 at 10:10 am

Lament for TRUTHINESS from RE boards …

The data deficit in real estate

“Transparency would be an asset of great value to Canada as the country faces perplexing policy issues on home ownership and mortgage lending in the current recession. As things stand, however, the severity of the problems in question is largely a matter of anecdote and guesswork.”

#47 Another Albertan on 04.08.09 at 10:13 am

Explanation of the stock market-style chart:

The pink line is a linear, straight-line extrapolation of where prices should conceptually sit if the trend PRIOR to the recent run-up was extended.

Bill Carrigan is surmising that the left shoulder started in mid-2005 and completed about a year later. The head formation is from 2006 to the end of 2008. The right shoulder formation started in 2008 and if completed, the future direction of pricing will be distinctly downward.

The level of historical pricing support is that straight-line extension. When you plot the intercept of those two lines, you get a prediction of the level to which the assets prices could drop.

When you look at the timeline on the 2nd graph below, it shows sales volume dropping while prices were going up. This is a technical indicator that the trend (price increases, in this case) is running out (or is out) of steam.

#48 Kent on 04.08.09 at 10:13 am

#38 Torquemada – [i]Can you please give an example where waiting to buy real estate is not an option?[/i]

Essex county. Very few rentals, lots of cheap houses.

#49 ally ally oxycontin free on 04.08.09 at 10:28 am

Hey, don’t worry folks, [ I / We ] got your back!

Jim Flaherty insists Tories are prepared for a ‘rainy day’ – Color

Now if we can only convince you to spend, spend, spend … and the banks to lend, lend, lend we’ll work our way outa this mess. Relatively speaking, this is a MILD recess … er … depression.

Giorno, I want you to get Carney on the blower and tell him he’s got to stop saying things like this;

“There’s no question the world economy is falling at the sharpest rate since the Second World War and is in the throes of a crisis in confidence. Growth, when it comes, will be slow and muted as the world enters a period of clearing away years of spending excesses and the build-up of trillions of dollars of debt.”

BTW … remember … The fundamentals are strong, and I almost forgot … the banks are too!

#50 ts harpoon on 04.08.09 at 10:34 am

After a short period of time on a steady diet of enriched reading provided by Garth Turner and the sensible blogosphere contributors, the time has come for me to prepare a prescription for my family and friends:

T1 – Save your money. Avoid media claims to buy-buy-buy, practice frugality, learn how/continue to love your job, avoid debt, hunker down and stay put until 2015 (earliest). Visit your favorite octogenarian and ask for advice in surviving in the age of fiscal uncertainty.

T2 – Drive less. Travel less and prepare for an attitude adjustment on the imminent rising cost of gas. Try working from home. Buy local and walk to all destinations. Get in shape. Cancel the cable t.v. subscription and avoid the HG channel.

T3 – Upgrade the energy efficiency of your home. Investigate the possibility of an alternate heating/electrical source. Turn off the frickin’ lights when not in use. Start by enlightening your neighbours and hang the laundry outside to dry.

T4 – Invest in a smaller home. (If you plan to build, downsize, or relocate) then investigate a super-insulated, passive/active solar, alternate heating/electrical sourced. Think: efficiency, efficiency, efficiency. Save your money. Get rid of the Lawyer-Foyer. Cancel the Pod storage lease.

T5 – Invest in a 72-720-1152- Hour emergency/survival kit. This is relatively cheap insurance.

If allowed, I will likely post this list again.

#51 George on 04.08.09 at 10:38 am

Richard Russell who is the greatest dow theorist alive, and has been writing his newsletter for over 50 years has this to say: “Gambling is a tax on people who don’t understand money. Investing in the stock market is a long-term tax on people who want something (profits) without doing any real work for those imaginary profits. This website of yours is very unique and informative but sometimes you have to think what’s the point of it all.

#52 Alberta Ed on 04.08.09 at 10:39 am

Well, at least if CanWest craters, we may be spared more of the RE BS series “Your New Home”. Calgary builders are still trying to throw up as many dreadful, unaffordable McMansions as they can before they hit the big swirl (along with the rest of Alberta’s economy, thanks to the ersatz ‘Conservatives’).

#53 ally ally oxycontin free on 04.08.09 at 10:41 am

Exclusive Interview—Rosy outlook from Harper and Carney ‘unrealistic,’ Dodge says—Long and deep recession will fundamentally alter the nature of capitalism, David Dodge says in an exclusive interview a year after he left the Bank of Canada

HEATHER SCOFFIELD—Globe and Mail—Wed Mar 18 ’09

O’Flairity is just, well … so far above it all.

#54 ally ally oxycontin free on 04.08.09 at 10:47 am

#50 ts harpoon on 04.08.09 at 10:34 am

That’s a good list … but I’ve got real reluctance about you plagiarising the ING guy … T1 – “Save your money.”

Did you know ING got out of the insurance side of their business … Selling it off for a 20% premium?

#55 George on 04.08.09 at 10:51 am

Also, if markets existed to make money for the majority, then most market participants would be millionaires and we all know that’s not the case. I have a good feeling about collapse. People will be wiser from it. In my opinion this is a greater depression because the markets have to get in touch with themselves, they have to go down deep into the rabbit hole and grow up. They have to do what is now unavoidable. Isn’t it obvious that this entire economic model/paradigm will be dead soon because to leave a brain dead mechanism on life supports doesn’t advance the human condition/journey.

#56 ts harpoon on 04.08.09 at 10:59 am

Twitter: Job Losses

#57 Al on 04.08.09 at 11:06 am

Nice special report by the folks at TD. As an Econ 101 paper, I would have given it an A. Unfortunately it was delivered over 2 years late, so I’ll have to mark it down to a C-.

#58 Got A Watch on 04.08.09 at 11:11 am

Nice charts. Seems that the further West you go in this country, the more delusion there is, until you reach the pinnacle, where NVC Jr lives. Maybe it’s the Rocky Mountain effect.

I think Dave is optimistic with his reading of the chart of Toronto real estate. When a sharp correction occurs, there is usually overshoot of the mean at the bottom, price declines will probably go past the “support” line before the real bottom is reached. Then there would be some bounce back, as the bargain hunters rush in. But that would lack follow-through from mainstream consumers unless jobs and income make a big come back. So I predict fearlessly prices will make the real bottom at around the ’97/’98 levels, before bouncing up slightly, then going flat for years, until the economy really does recover some strength. Probably around 2014-2016 time period, at a guess.

Average family income in Ontario is headed down to the $50K-$55K level, so the average house in Toronto should be priced at around $190K or so at 3.5X income. Take another $100K minimum off those prices, much more at the high end.

Crystal meth dealers have far more ethics than Realt(ho)rs. You will never, ever, get the truth from a Realt(ho)r, they do not know what the word means. Simply assume every word of their press releases, speeches and comments are a lie, evasion, or at best a half-truth, and you can’t go far wrong. A profession that needs to go away, all of them, and not come back.

btw, I used to be a Realt(ho)r, I saw this first hand every day. Made some good money for those days (late 80’s, early ’90s), but I had to quit and get a real job, as working in that industry made me feel unclean and predatory. It is a sewer, not an industry. Or an open air sewage treatment plant, and that ain’t roses you smell. Probably the most useless and non-productive “profession” there is.

I am sure now hurt Realt(ho)rs will angrily reply. So what, the truth hurts, don’t it. Get a real job at your true level of ability – toilet cleaner comes to mind.

#59 Marc on 04.08.09 at 11:17 am

Phil Soper was on CKNW this morning, talking about how the Vancouver market dropped exactly where he predicted. I thought in early 2008 he said there would be a slight increase in value? Now he is saying the 12% drop is right where they predicted?

My RRSP is down about 20% currently. The 5K increase means dick to this first time buyer. If I was to take out 25K, I would lose the ability to return my loss when the market picks up again. Makes no sense to use RRSP at this time for any downpayment, until my loss is back to something more workable.

#60 ally ally oxycontin free on 04.08.09 at 11:17 am

Unemployment tidal wave …

Fisher: Unemployment Could Top 10% by End of ‘09

1. Planting the seeds of future inflation

2. Setting the stage for a demise of the dollar

3. Placing the Fed’s independence at risk

#61 Roial1 on 04.08.09 at 11:22 am

#15 Grumpydawgs on 04.08.09 at 12:59 am

Honestly I don’t want to believe that theres a conspiracy by the vested interests to wrench the market back towards the safer shores of forever increasing prices, but man, the full court press by the government, media and industry are really pushing the limits of ethical and moral leadership.

Hey! Watch Bill Moyers report on Face book.
The one where he interviews Black.

Now you can believe in conspiracy!

#62 questioning on 04.08.09 at 11:44 am

“It was better than expected, it did not deteriorate further, it adds to the growing body of evidence that the Canadian economy actually did OK in March,” Doug Porter, deputy chief economist at BMO Capital Markets, said of the data.”

is this a lie?????

Who cares? One month of data means nothing in this environment. — Garth

#63 R on 04.08.09 at 11:54 am

#18 Victoria Reader…Yes you are right on the mark. Government jobs will start to vanish . Tourism..What tourism the numbers are way down and my guess is they will stay down for many years. Sure they get their fare share of cruise ships but they are only there for the for the day. Forestry all but gone. Retail had a bit of a bounce back but not for long. Schools closing due to lack of enrollment. The Health Authorities are covered in red ink. IMO next year at this time the s**t will start to hit the fan. Victoria will probably be in worse shape than Vancouver. It wont be pretty.

#64 MikeB on 04.08.09 at 12:00 pm

What is happening in Toronto according to is that the huge runnup of inventory has been eroded and does not seem to be being replaced at any great pace.
What is coming out is lack lustre at best and somewhat pricey. In the area we are renting (we sold late 2007) you cannot beg borrow or steal a buyer…Stuff is too expensive and some of it is just junk .. Builders are dumping some inventory at a loss but it is essentially uninhabitable.. Stuff is selling and although I would love to think a US style drop in prices is imminent I just don’t see it yet.

#65 OttawaMike on 04.08.09 at 12:07 pm

Phil Soper’s press release says:
The drop took the real estate sales company(Remax) by surprise.”
The press release is titled:
“House prices hold up better than expected”

Don’t those two statements cancel each other out??
How can anybody believe what comes out of this guy’s mouth?

#66 Argentum Aurum on 04.08.09 at 12:11 pm

Next Wave of U.S. Mortgage Defaults


If this is true, why will (any) stocks rally?


#67 Sail1 on 04.08.09 at 12:14 pm

I Guess its not all doom and gloom.

Canada housing starts post strong increase

#68 rory on 04.08.09 at 12:18 pm

Hi to all the Calgary folk …need an opinion …this is now on the mls at 500K …GT & TD are talking about another 15 – 20% off …what do the locals think this property is really worth …heck it may even be a good deal….ok I was just blowing smoke …used to live in this part of town so I am very curious.–Alberta-home/virtual-tour-index.html

or mls # C3361120 at

#69 Toronto C9 Renter on 04.08.09 at 12:32 pm

#64 MikeB said: “.. in Toronto according to…the huge runnup of inventory has been eroded …dose not seem to be being replaced at any great pace…What is coming out is lack lustre at best and somewhat pricey”

Mike I agree.

On a hopeful note it seems the ratio of “price changes” to legitimate new listings continues to be very high which is a good sign for those still waiting.

For example today Guava showed a ratio of about 40% with around 20 price changes & 49 new listings (in fact some of the new listings are no doubt just phantom price changes)

Last year at this time there were zero price changes

#70 "Sir" North Vancouver Citizen Jr. on 04.08.09 at 12:48 pm

As my insight continues to attract a growing flock of admiring stalkers on this site, and as I will be knighted shortly by Her Majesty the Queen, well before being duly elected, then appointed as Garth Turner’s government’s Federal Finance Minister…it is appropriate I prefix Sir to my moniker.

#71 PTDBD on 04.08.09 at 12:55 pm

#44 Da HK Kid – nice post Kid, yar. Bernanke has many more tricks in his bag. He seems quite smug and satisfied how things have progressed so far :-) going forward :-)

#61 Roial1 – that Black interview was an eye popper. Geithner was named, exposed and pinned. Is he going to litigate, or resign?

#72 @Garth 2 on 04.08.09 at 12:55 pm

Despite all the facts and punditry going on here… I’m still meditating on the phrase coined here on this blog called the “faux spring market”. Look it up on google… you will see it largely attributed to this website.

Now, let’s see. Despite a bit of wispy snow in TO, it feels like spring. Looking at the TREB price data for instance, it feels A LOT like spring; not “faux” spring, or anything else of similar ilk.

Could someone please define “faux spring market” (or at least what it meant 2 months ago) and why we’re having one when average prices are still near their all-time highs?

We are 75% through the traditional spring market, and it’s a wuss. Faux, baby, faux. — Garth

#73 Grumpydawgs on 04.08.09 at 1:01 pm

Yesterday, the RCMP busted 29 marijuana grow operations in residential houses in Kelowna alone. The majority were houses where families with children were in full time residence. The nonsense that it is all ‘organized crime’ is just that ‘nonsense’, it’s organized desperation.

What a false economy it is when the facade of home ownership has to accept ccriminal activity as a ‘mortgage helper’.

In fact there are so many grow ops in so many neighbourhoods run by lawyers , firemen, police men, costco workers etc etc that pretty soon there will be no market for this crap as they will only have themselves to sell to, the amount of dope being grown is out of control. When desperation sets in because too much is hitting the street then the criminals and homeowners will become more desperate and tempers will flare as they are in Vancouver with profits squeezed due to to many players all selling the same thing.

The police public relations are saying that the quantities are being squuezed due to a gang war in Mexico, this is misdirection, the truth is we have tons of dope right here and theres too many sellers for not enough buyers and they’re killing each other for greater market share.

The RCMP has either dropped the ball and or our politicians have let this ‘marijuana liberation ‘ thing run out of control.

When a family has to resort to criminal activity to pay a mortgage in thier home town then we have chaos in the real estate market and the problem with unafforadability is much greater than is being let on.

#74 Jeff Smith on 04.08.09 at 1:02 pm

Here is a nice article about how real estate high prices will never come back.

#75 Jay Currie on 04.08.09 at 1:14 pm

It could get nasty in Victoria but we are coming from an extremely aggressive economic position. The last couple of years saw a labour shortage in Victoria. This has obviously changed.

From a real estate perspective, Victoria proper and Oak Bay seem to be holding up; but in the outlying areas there seem to be more listings than buyers. And, as one commentor mentioned, right now is the very peak of the RE sales season. The seller buyer imbalance will likely get worse going forward.

#76 @Garth 2 on 04.08.09 at 1:34 pm

Garth, name-calling and rhetorical antics aside (wuss?), I’m seeing the wheels come off here. You have some nice charts, but you’ve got some splainin to do. I think the only ones listening now are those with squirrel pate in the fridge.

What metrics would you provide that could give the TREB numbers a “wuss” rating? Or should we wait for April’s numbers?

I don’t answer to people with faux names. — Garth

#77 MikeB on 04.08.09 at 1:48 pm

Being on the bearish side for some time now I watched the BNN special with some true heavy weights yesterday.
Notably… Noriel Roubini…Meredith Whitney…Eric Sprott (who was fantastic) and Ian Gordon of the Long Wave group. Gordon was prompted to comment on real estate and made some chilling comments referring to a house sold in vancouver in 1929 for 75K that sold again in 1939 for 7,500 .
Have a look and listen

#78 Bill-Muskoka (NAM) on 04.08.09 at 2:35 pm

#73 Grumpydawgs on 04.08.09 at 1:01 pm

They are probably supplying #70 “Sir” North Vancouver Citizen Jr. with his daily needs!

#79 Two-thirds on 04.08.09 at 2:37 pm

Good news, everyone, residential construction in Canada has rebounded!

“OTTAWA — Construction of new homes picked up a “mind-boggling” 13.7 per cent in March, despite expectations for a continued slide.

Housing starts rose last month to 154,700 units, at a seasonally adjusted annual rate, an increase from the 136,100 pace seen in February, Canada Mortgage and Housing Corp. said Wednesday.

Construction of condominiums in central Canada was mainly responsible for the rebound.”

Great to know that more condos in Ontario and Quebec will provide much needed relief to the market.

What? There’s more to read in the article?

“The surge was “mind-boggling” and puts a halt to a six-month slide in home building activity, said Millan Mulraine, economics strategist at TD Securities.

“On the surface, this was a very strong report,” he said. “… However, in the grand scheme of things, the key economic fundamental factors continue to point to further weakness in Canadian housing sector activity.””

Oh, never mind… False alarm. We are still in trouble.

(sarcasm off)

#80 Rhino on 04.08.09 at 2:39 pm

#73 Grumpydawgs on 04.08.09 at 1:01 pm

“…there will be no market for this crap as they will only have themselves to sell to, the amount of dope being grown is out of control.”

Remember the old adage from the Fabulous Furry Freak Brothers…

“Dope will get you through times of no money, better than money will get you through no dope”

Maybe they are their own customers stocking up for a long, broke summer… Then they can sell their house and move to a trailer park to join “The Boys” (Bubbles… here we come!!)

Oh… BTW… that is one market that is strong, though supply/demand may lower prices.


#81 Rhino on 04.08.09 at 2:49 pm

I am surprised no one has commented on the G&M -ROB story today:

“Home construction rebounds”

“On the surface, this was a very strong report,” he said. “… However, in the grand scheme of things, the key economic fundamental factors continue to point to further weakness in Canadian housing sector activity.”

Most of the increase stemmed from a large increase in condominiums in Ontario and Quebec, a market segment that some experts warn is volatile and in danger of being overbuilt. Urban multiple housing starts rose 28.3 per cent, to 81,500 units.

But construction of new single homes also increased, up 1.3 per cent to 46,400 units in March.”

What the heck is going on? Ontario and Quebec? From my Montreal area perspective, things are getting tougher. Friends and family are losing jobs at a steady trickle. The kind of thing that doesn’t get headlines, but over a few months is staggering. I see lots of McMansion development sites where construction has visibly slowed down.

Lots of “For Rent” signs along the T-Can industrial areas.

I do not get it…

#82 ally ally oxycontin free on 04.08.09 at 2:49 pm

The number of people receiving regular employment insurance benefits in Canada in January rose 4.4 per cent from December.

Flood of EI claims overwhelms staff

Hundreds to be hired to process EI claims, says HR minister

“Let’s hope they hire individuals who have not been retired from EI system over the years. This is a rumour that is out there. We need to give work to those who do not have an income coming in and not contract work to workers previously employed in the system who can milk the system twice.

Another government hiring issue similar to Citizenship and Immigration hiring practices. Create pools and never use the pool and spend money creating more pools to draw individuals from.”

O’Flairity has you covered … or does he REALLY?

I still think O’Flairity and Finley are above all this …

#83 Too Old Bob$ on 04.08.09 at 2:49 pm

“I hate to say it…” “…but, Turner, you were right…”

Well Garth! you know what they say about people that are right. They tell them to write books.

#23 just a poor guy on 04.08.09 at 6:34 am “There will be some fine places to make money.”
Are you gonna let us know?

Garth and I will let you know a short time after we’ve invested in them.

How about this scenario.

First time buyers. House, Condo, Apart. or Tent buying:
1. No more than 3 -4 times salary.
2. 400 sq.ft. per person living in house (animals not included).
3. 25% down payment.

Only exclusions would be someone who is rich and can pay cash.

#84 ally ally oxycontin free on 04.08.09 at 3:18 pm

Question for all [ x ]

What does a lawyer who’s laid off do? Does he become a mortgage broker? … You know, the one who arranges ‘financing’ like ABCP, with CDO’s and other loose unethical businees arrangements.

“Hey, I got you financing for $400 thousand, and my fee is 4%, but you still have to arrange the deal with a real estate broker.” BTW, the $16 thousand is incremental to the $400 thousand in the deal financing. Don’t worry if you have poor credit, no job or prospects. You’re a NINJA in the broker trade … A deal is a deal.”

The Law Page: LAYOFFS—The axeman cometh?

“The Ottawa office of McCarthy Tétrault LLP is the envy of the federal bar.

Last month, the Ottawa branch earned another distinction: an uncertain future.

The Toronto-based firm’s senior executives advised its seven Ottawa partners, two associates and Mr. Manley in early March that their office is under review for potential closing. Since then, sources say, a number of partners in the office have hired an employment lawyer and others are casting about for new jobs. Four weeks after the bad news, they are still in the dark about the firm’s plans.”

#85 ally ally oxycontin free on 04.08.09 at 3:25 pm

When softwood hits you with a two-by-four in the LUMBAR region

“The dispute 8 The U.S. says four provinces shipped too much lumber in 2007 The tariff 8 A 10-per-cent tax to be imposed until the U.S. collects $54.8-million (U.S.) The blow 8 Associations in Quebec and Ontario warn that 10,000 jobs are in jeopardy.

Canada’s Trade Minister, Stockwell Day, played down the tariff, saying “that in any relationship between two countries, there are times when there are disagreements.” He noted that Canada is taking the case back to arbitration before a trade tribunal in London.”

Why didn’t Stockwell Day arrange to visit S. Korea to talk about the need for a Hyundai assembly plant in Canada? I think if you sell cars in Canada, you should have an assembly plant in Canada.

#86 ally ally oxycontin free on 04.08.09 at 4:10 pm

A highly valued resource …

Civil unrest, starvation, destabilizing of sovereign states on rise as economy tanks (April 3)

#87 Got A Watch on 04.08.09 at 4:19 pm

Boy I feel better knowing Stockwell is on the case now. He is one of the most competent people to ever serve in Ottawa, and a credit to the nation. Every time I see a member of the Harper Government on TV, or hear them on radio, my heart warms knowing we have such incredibly able people in charge. Canada is truly blessed to contain these exceptional individuals.

OK, I lied.

#88 JOHN on 04.08.09 at 4:24 pm

“We are in the middle of a serious recession. I expect the numbers will continue to be worse over the next several months,” Mr. Flaherty said. “I expect tomorrow’s numbers to be not encouraging.”

I thought he just said a few days ago we were in a mild one. This guy is a joke,Garth your right how can we trust this guy

#89 jess on 04.08.09 at 4:53 pm

car sales incentives ?

-dealers are already being shut down
-look at the help wanted ads for salespeople
-the base salaries are so low and the 100 dollars /car will not feed anyone’s family.

So will commissioned sales be a thing of the past. Perhaps showrooms will be in certain areas as for demonstration only and ordering direct from internet . Isn’t this form already in brazil.

#90 Chris in England on 04.08.09 at 5:01 pm

Dear Sir North Vancouver Citizen, Jnr,

The Queen does as she’s told these days, so unless that world saviour, Gordon Brown, has recommended your knighthoold, you may be sadly disappointed. Of course I can always speak up for you but I don’t think he likes me much.

#91 Chris in England on 04.08.09 at 5:02 pm


Oh well, that’s the British education system for you!

#92 Kash is King on 04.08.09 at 5:03 pm

#50 ts harpoon

Great list ! Sounds like something from a Diefenbaker era conservative. Words to live by.

Here’s one to add : Pay as you go

How about also: Neither a borrower nor a lender be…. probably all 80 yr olds know that one !

Once upon a time Stephen H. would have proclaimed the very same things…

What happened to him? Why is he pimping debt now? Both for individuals and the country.

Stephen, if you read this, how about a little real conservative leadership; like encouraging us to tighten our belts, pull together, don’t go further into debt! Allow corporate Darwinism to happen.
Be a real conservative!

#93 jess on 04.08.09 at 5:11 pm

familiar deals in b.c.?

george monbiot from the guardian uk

private companies build public infrastructure – roads, bridges, schools, hospitals, prisons and the rest – then lease it back to the state for 25 or 30 years.

If the government underwrites the scheme, the greater part of the risk will fall on taxpayers, negating the entire rationale of PFI. But, citing higher lending risks during the recession, the banks backing PFI infrastructure projects have increased their margins, in some cases by 500%. The government will lend or promise to lend cheap money to the banks, which will then charge us, through the consortium, stonking rates of interest for the use of our own cash. ”

#94 Expat in NC on 04.08.09 at 5:12 pm

#41 C9R

Thanks for the response man…much appreciated. I have read this blog long enough to know how things “should” turn out…but what I am seeing seems to be the opposite…hence the panic.

I can wait until July and maybe as late as early August, but if school starts where I am I can’t move my kids mid-school year…so I’ll have to wait another year…and I really don’t want to do that.

Lets hope for a flood of homes on the market when the trees start sprouting leaves and the flowers come up :-)

#95 David Bakody on 04.08.09 at 5:14 pm

Well now, with good ode softwood lumber staying north perhaps really cheap wood will be available. Where is Emerson when you need him? As mentioned here before by Garth GM Pension Plans are now front and centre …. and then there is a good ode income tax scam unfolding ….. yup Real Estate is up, up for grabs for top news items.

#96 Bill-Muskoka (NAM) on 04.08.09 at 5:45 pm

#88 JOHN on 04.08.09 at 4:24 pm

With Dim Jim it is like the weather…Wait five minutes and it changes!

#97 Bill-Muskoka (NAM) on 04.08.09 at 5:47 pm

#87 Got A Watch on 04.08.09 at 4:19 pm

‘Lied” Au contrare mon ami…the proper HoC line is ‘Mis-spoke’ They cannot fathom the ‘L’ word in any manner whatsoever!

#98 dd on 04.08.09 at 6:02 pm

Jeff Smith

“real estate high prices will never come back.”

Never say never. If there is inflation then one day there will be higher house prices. Could take 20 years but there will be higher house prices.

#99 SSS on 04.08.09 at 6:06 pm

Othet than the low intrest rates, what other forces are currently holding the RE market. As with the current economy conditions, we should have a decent choice available. I am intrested in buying house in Edmonton and I have noticed that, in good family neighbouhoods, I don’t have any choices available in my price range (300-350K).
I know for sure there are a lot of frustrated RE investors, but no one is willing to list at a reasonable price. Imagine a 1978 built home selling for $370K… unbeleivable ….. should better wait

#100 905er & Spouse on 04.08.09 at 6:16 pm

Now this is the first I’ve seen of this, a half-built home being abandoned by the builder. I guess the bank came calling:

#101 . . . fried eggs and spam . . . on 04.08.09 at 6:20 pm

#26 lgre at 8:03 am — “. . . I guy on BNN was talking about DOW at 1000 and gold at $4k..very bearish..”

FWIW, I’m sticking with my prognostifications that the Dow / TSX will level off at 1500 – 2000, the NASDAQ about 500 [from spring 2010 on, when the Olympics have bankrupted Convouevar] before they all start heading north — slowly — again, which leads to . . .
#60 ally ally oxycontin free at 11:17 am — “. . . Unemployment tidal wave … Fisher: Unemployment Could Top 10% by End of ‘09 . . . 1. Planting the seeds of future inflation . . . 2. Setting the stage for a demise of the dollar . . . 3. Placing the Fed’s independence at risk . . .”

With Kanaja, The Exotic Stripes of Amurica The Byootifull and Mexicancan, it will end up being an unemployment tsunami of around 30-50% across the bored, combined with drug wars on streets all over the continent that leads to a police state / dictatorship / NWO.

Did anyone know that Af’stan had record poppy (heroin) crops this year, the Brits are protecting those crops and the Yanks are protecting the Brits? That’s the only reason why they’re moving there.

Stranger things have happened, although they took quite a lot longer to happen, and someone wants to control the masses of livestock (us).

#102 Darryl on 04.08.09 at 6:22 pm

“Sir” North Vancouver Citizen Jr.

Your good for a laugh . I’ll give you that . Now let us practice for your knighthood . Give me thy sword sir and bow so that I mighteth knight thee . ( just don’t peek )

#103 Frank on 04.08.09 at 7:02 pm

Interestingly, once you get away from the overheated BC and Alberta maraymenys drop to a pretty workabe level, =/- 30% and a low ratio to income. Thats’ sorta what folks have been pointing out for a while, right?

#104 Tony on 04.08.09 at 7:28 pm

Bill Carrigan is one sick puppy! I laugh when i read his columns. If you ever want to know how to make big money always do the opposite of anything he says. The poor boy at one time granted a long, long time ago had some sense and predicted things slightly more correct than the average laymen but Bill has fallen off his trolley car with age and bases everything on meaningless chart patterns of yesteryear.

#105 Da HK Kid on 04.08.09 at 7:59 pm

From The San Francisco Chronicle:

Lenders nationwide are sitting on hundreds of thousands of foreclosed homes that they have not resold or listed for sale, according to numerous data sources. And foreclosures, which banks unload at fire-sale prices, are a major factor driving home values down.

“We believe there are in the neighborhood of 600,000 properties nationwide that banks have repossessed but not put on the market,” said Rick Sharga, vice president of RealtyTrac, which compiles nationwide statistics on foreclosures. “California probably represents 80,000 of those homes. It could be disastrous if the banks suddenly flooded the market with those distressed properties. You’d have further depreciation and carnage.”

#106 dekethegeek on 04.08.09 at 8:01 pm

#70 Sir North Van Citizen Jr.
Gadzooks fine sir, methinks the rabble doth protesteth too much ! Begone all you toothless rabble. This fine knight has spoken.
Be glad he knows not what he speak(eth?). For he runs with the occupants of Bedlam. Good day to you sir.

#107 dekethegeek on 04.08.09 at 8:03 pm

#70 Sir North Van Citizen Jr.
….is “namaste” latin for a really bad pox on us all?

#108 905er & Spouse on 04.08.09 at 8:18 pm

We are really starting to personally see the effects of the recession around us with our close friends and accquantainces:

-My organization cut back my hours (all the part timers).
-Both my sibling and sibling’s spouse, both upper level management with MBAs, had to take pay cuts and unpaid days off.
-2 close friends are completely laid off – one is a project manager, other is a health care professional.
-Neighbour with auto company is laid off.
-friends living in US unable to their sell home at a ridiculously low price, are scared as he works in the steel industry and may have to go to half time.

What is really interesting is that all of the above examples, except the auto worker are not manufacturing related jobs, but are in white collar professions.

#109 Jason on 04.08.09 at 8:37 pm

Massive Mortgage Fraud

The financial industry brought the economy to its knees, but how did they get away with it?

#110 jwk (nee jwkimba) on 04.08.09 at 10:25 pm

#100. What really weird is they still want 550k for it! If you look at google maps aerial view, the house is on there so it has been a work in progress for many years…

#111 Cendrine on 04.08.09 at 10:27 pm

@#38 torquemada

I agree with Kent – waiting to buy in Essex county and Windsor is counter productive. We still haven’t found anything suitable after a month of looking (on weekends). The better properties are sold within days, many that are on the market have problems that we do not want to deal with. Some are over priced related to comparables or recent sales. Renting is not acceptable to DH mainly becuase he does not feel prices will come down as fast or sharply as Garth predicts. I never found this much difficulty finding a property, ever.

Sure, we’re vultures but we’re picky vultures….

#112 kc on 04.08.09 at 10:31 pm

Garth, How is the unemployment rates calculated inCanada? does the rate only affix itself to the number of people on UI claims? or is the rate also included into the whole picture of the population taking into account welfare, homeless (without any support) and the people with part time work as opposed to full time workers? anyone know the true forms of how the Gov comes up with the numbers?


reason for asking is from reading this on the US numbers the report states that the total number today sits at 15.6%. here is a paper from mish.

Ex Baal-4

#113 kc on 04.08.09 at 10:31 pm

ooops no idea what link that was supposed to be….

Ex Baal-4

#114 kc on 04.08.09 at 10:32 pm

#115 gold bug on 04.08.09 at 10:48 pm

Are the CKNW ads the ones where the announcer suggests Victoria is different because “our industry is government, education and the military…”?

I happened to be driving right by our so-called navy base at the time. Oh how I laughed.

#116 Winnipeg is No Different on 04.08.09 at 11:18 pm

The Winnipeg Real Estate News has just published a new headline: “Increased confidence in housing market in Manitoba”

The article mentions how 25 per cent of residents in Saskatchewan and Manitoba intend to buy in the next two years, compared with 21 per cent in 2008. However, a majority at 60 per cent think it makes more sense to wait until next year to buy.

I’m not sure that the above statistics scream “confidence”. Instead, sounds like an overheated market. Does overheated = confidence?

Link to article:

#117 dd on 04.08.09 at 11:45 pm

#115 gold bug

… where the announcer suggests Victoria is different …

True Victoria is not different. However the ad does say that the $1.00 spent on local made products will make a difference. It does.

#118 nonplused on 04.09.09 at 12:07 am

#31 Expat in NC

Are you sure all the houses are selling? I have been watching select houses for some time around Calgary, and I’ve noted many that have been up for a long time will disappear from MLS every now and then, only to come up again a few weeks later with a new agent and sometimes a slightly reduced ask. I’m sure others get rented out. But some of the lower priced units in the area (especially POS’s) do indeed sell. Sales are not zero, but they don’t appear robust.

Rent, my friend. The house I am renting was listed previously and will list again when I leave. They are around. Besides, realty fees are expensive and who stays in the same house for more than a few years at a time these days?

Instead, wait for a deal and then maybe buy a small apartment block and rent it out. Use the income to pay rent on your house. That way you can move when you need to for free. This doesn’t work in a rising market of course because capital gains on your principal residence are tax free. But this is the most compelling reason to buy a home, and it only works in a rising market.

#37 Toronto C9 Renter

I agree that double ETF’s are a fool proof way to make money. In other words, no fool is ever going to do it! The only difference between trading doubles and trading singles is that you go to the poor house twice as fast. It’s akin to trading on margin. Actually, that’s exactly what it is. (How else would they get the leverage?) So if you have a margin account you don’t need doubles. The only advantage is that the ETF manager “manages” his margin so the fund doesn’t get stopped out, which you might not be able to do while you are at work.

The Horizon funds might be different. It could be that the “bull” fund is a contractual inverse of the “bear” fund, which would reduce the need to actually enter the market if the funds are roughly the same size, but I don’t know if that’s how they operate it or not. Still, even netting the funds wouldn’t work at the extremes because eventually the loosing fund would run out of money.

#44 Da HK Kid

Good post, but Bernanke was envisioning a credit market problem only. If the real economy is also in trouble, all those efforts only “push on the rope” until wages and incomes are restored. Since many people’s income is derived from those very securities he’s manipulating, there is also a negative feedback loop in place he didn’t account for. (RRSP’s pay retirees squat right now, and that factors in on the income side.)

#62 questioning

I agree with Garth but will offer an elaboration. Sales always pick up in the spring. Since sales are not zero, it makes sense they went to a higher non-zero number. I expect them to rise in April and May as well. However, year over year they still suck and the CREB was cherry picking comparisons.

Until sales look to threaten “average sales numbers” they still suck.

#67 Sail1

Starts are also seasonal. Are they up y/y? How do they compare to say the 5 year average? Curiously, the article doesn’t say. Plus it’s possible my “retooling” theory is working faster than I expected. What kind of starts? Have they gone down market (ie cheaper houses)? If so that is bad news for the resale market. New houses are competition.

#119 Heather W on 04.09.09 at 2:04 am

I bought.

In West Abbotsford, a 25 year old house 2200 square feet, top condition, updated everything, neat as a pin with an edible yard also well cared for. Fruit trees.

I can walk to everything – groceries, bank, library, park and other activities, and my spouse who supports us can walk to work.

For those who care about numbers, $385K.

Sure I could wait until October by which time many more “perfect” homes will be on the market, but this one is just what we were looking for. Plus now I can relax and get on with life, and not feel like a horrid vulture picking at some poor desperate shmuck’s bones. We may lose $100K more on this house as the economy continues to shrink. That would be sad – and not just for me. But I doubt it will be that much, and by the time another decade has passed and retirement becomes reality for us, that will have sorted itself out. Meanwhile we’ll pay off that mortgage like there’s no tomorrow.

We were lucky – sold last August and moved to Abby and rented there until we knew what and where we wanted in a house. No smarts, just fool luck. We hadn’t wanted to move, but the job went away so we had to go away too.

This is one person’s story. Everyone’s is different and people should read all the stuff but make up their own minds and create their own stories.

#120 Jeannie on 04.09.09 at 3:18 am

I’m presently visiting family in the Middle East.
For the past few days we’ve been banned from this site, just managed to access it this morning. Please Garth,we are not ‘spies’ or anything else sinister!

Building here continues at a frantic rate, this is a fabulous lifestyle for those with the credentials.

Read an article in this mornings newspaper about the Alberta problems, seems they pay attention to what’s going on in other oil-producing areas of the world.

#121 patriotz on 04.09.09 at 1:23 pm

“do you also agree with the TD economists that the RE crash won’t be as bad as in the US?”

It won’t be as bad overall because the bubble overall wasn’t as big in the US. Compare BC with California+Arizona+Nevada+Florida, for example (% of total population).

No bubble in Quebec which is the 2nd largest province with 1/4 the population.

But the bubbly parts of Canada will crash just as hard as their US counterparts.

#122 patriotz on 04.09.09 at 1:25 pm

Correction: bubble in Canada wasn’t as big as in the US.