People borrowing mortgage money today to buy homes in a panic, at record prices, are among the greatest fools. They are not investing, but rather renting debt. If interest rates had not been artificially collapsed by freaked-out central bankers trying to stave off a deflationary depression, there would be no housing bubble, part two.

The coming rise in rates is inevitable and unstoppable. This, combined with lingering unemployment and rotten economic growth levels, will pop this bubble with a vengeance. Those who thought the near-death experience of last autumn was a bullet dodged will surely awaken to see their wounds. The world’s still a dangerous place, no matter what the Canadian Real Estate Association tells you.

Some of my comments in this vein were included in the article below, published today in the Globe and Mail.


Toronto: Listed for $529,000, sold for $551,000. Semi, mutual drive, 1 bath.

By Rob Carrick, Globe and Mail (Saturday June 20, 2009)

It looks like a miraculous resurrection.

In the midst of recession, the average national price of Canadian resale homes hit a record level in May, and sales activity increased for the fourth consecutive month. While U.S. residential real estate prices have been falling for almost three years, Canada seems to have stumbled and picked itself up again in a span of 12 months. To some real estate agents, the market looks as good as it did before the global financial crisis began to bite last summer.

“Without getting nitpicky, yes it does,” said Toronto real estate agent Laurin Jeffrey. “I just lost out on a multiple offer last night on a house, and my client asked me to have a look at what’s going on with that sort of a house. In that price range and style of home, 14 out of 19 sales in the past 30 days have been at or above the asking price.”

The average national resale home price in May reached a record $319,757, up a tick from the previous record set in May, 2008, the Canadian Real Estate Association (CREA) reported this week. The group noted that the sales activity behind this increase was skewed by expensive markets such as Vancouver, Calgary and Edmonton, but it nevertheless declared that the “national resale housing market activity returned to prerecession levels in May 2009.”

Crisis averted in the housing market? Forget it. Prices may be climbing in some markets, but so are the interest rates that have fed the recent rise in sales. Meanwhile, incomes are stagnant, and jobs are disappearing in bunches. If you’re thinking of getting into the housing market right now, mind the cracks in its foundation.

The house that Mr. Jeffrey’s client failed to get was a semi-detached, two-storey, all-brick home in the leafy mid-town neighbourhood of Leaside. With three bedrooms, one bathroom, a detached garage and a mutual drive, it was listed at $529,900 – and went for $551,000. According to Mr. Jeffrey, houses in that price range have sold for an average of 105 per cent of their asking price in the past 30 days.

And Toronto, where the number of homes sold rose 1.9 per cent last month, wasn’t even one of the hottest markets in terms of sales activity. CREA figures show that sales in Victoria, Vancouver, Calgary and Edmonton were up between 11.3 and 18.7 per cent. It would be reasonable to expect that housing sales would be in a slump during a recession. But strangely, the economic downturn has actually helped to propel the real estate market higher.

For one thing, many people were too unnerved by the global financial crisis to buy late last year. So pent-up demand for housing in the first several months of 2009 played a role in the spring numbers.

“The kind of month-over-month increases we’ve seen in the last four months can’t go on forever,” said CREA chief economist Gregory Klump.

The Bank of Canada has also helped to juice the market, though inadvertently. By ratcheting interest rates lower to stimulate economic growth, the central bank has cleared the way for mortgage rates that remain at historically cheap levels even after recent increases. Fixed-rate mortgages with a five-year term can be had for about 4.25 per cent with a top discount right now, compared with 5.5-to-6 per cent in spring, 2008. A couple of months ago, five-year mortgages were less than 4 per cent.

But low rates are also one of the reasons analysts are worried about the surprising surge in the housing market. “It’s all happening because of the crack cocaine of housing, which is rock-bottom interest rates,” said Garth Turner, author of Greater Fool: The Troubled Future of Real Estate . “They’re so irresistible, especially to inexperienced first-time buyers. That’s what’s propelling the market.”

Mr. Turner’s concern is that rising rates will eventually propel the market lower by making houses less affordable. His level of confidence that the boom will last? Zero.

In his book, published in early 2008, Mr. Turner warned that the Canadian housing market was in a bubble just like its U.S. counterpart. After a peak-to-valley decline of almost 14 per cent in Canada’s national average price, he’s predicting another plunge for home prices that will be triggered in large part by rising interest rates.

“We’re now into the housing bubble, Part Two,” said Mr. Turner, a former member of Parliament who now gives financial seminars and promotes his books. “I think this bubble is going to burst later this year. It’s going to be short and intense.”

In the near term, though, he sees rising rates being used to get buyers to jump into the market immediately. “People are being told, ‘Your affordability is going down if you don’t buy now, you’re going to be forever shut out of the market.’ It’s the eternal siren song of real estate.”

Many economists doubt that the prime rate – the rate banks use as a base to calculate other lending rates – will increase before next spring, but it’s a different story with the longer-term rates that influence fixed-rate mortgages. They’ve already bounced off the lows they hit in the depths of the global financial crisis, and more increases are expected. Rising rates make houses less affordable, but this can be offset if housing prices are falling and incomes are rising. In many cities, though not all, prices are actually rising. As for income gains, they’re constrained by the recession.

Robert Hogue, senior economist at Royal Bank of Canada, said wages are still creeping higher, but many families have been affected by job losses. “Over all, household income has at best increased very slowly, if not kind of stalled for a bit,” he said. For Mr. Hogue, rising rates and house prices are a threat to a housing market that appears to be stabilizing. But his outlook isn’t all negative. When the job market improves, he believes that household income will rise and help make houses more affordable.

“The moment we have the labour market picking up, to me that would be the sign that says we’re in the clear now.”

Original article is here.


#1 Cash is King on 06.20.09 at 9:19 am

Also in today’s G & M

“At the current pace of sales, it would take 10 months to move all the houses now for sale in the United States. That’s about twice as long as it would take in a normal market, said Stan Humphries, vice-president of analytics at, a Seattle-based company that tracks U.S. housing prices.”

“The problem is, that only counts the houses on the market now. Based on a survey that asked homeowners whether they would sell once the market begins to stabilize, Mr. Humphries said there could be as many as 20 million properties up for sale once prices bottom out. That’s a five-year supply.”

The article also mentions that investment funds are purchasing from 20 – 300 homes per fund in the Pheonix area. Could this explain the “surge” in home sales?

L-Shape curve anyone?

#2 squidly77 on 06.20.09 at 9:21 am

think buying and selling houses is a tax free exercise
better think again
even 1 transaction of your principle residence can be considered earned income

the taxman gonna have some fun

#3 Confused and fed up on 06.20.09 at 9:27 am

Hi Garth,

Talk to a new neighbor (Downsview area) who just moved in last month or so. He told me the reason he bought is because the fear of “..high inflation is coming in the US and soon we will follow…”
My guess is there are quite a few people out there think the same way my new neighbor does making them the greater fools.

#4 squidly77 on 06.20.09 at 9:36 am

The gain on the sale of real estate is a capital gain unless the property has been purchased with the intent of reselling at a profit, or developed and sold as a business endeavor. If it is considered a business transaction, the entire profit or loss on the sale is taxable or deductible. If the transaction is a capital gain (principal residence, summer cottage, second home, rental home, etc.), only 50% of the gain is taxable.

There aren’t any set rules about how often a person can buy or build a house, move into and reside in it, then sell it, without the transactions being considered business transactions. Canada Revenue Agency (CRA) would look at the frequency and the intent (i.e., whether the houses were being purchased or built with the goal of reselling and making a profit, or because the person wanted a new house to live in). They might even look at a single event of purchasing or building and reselling a house and decide that it was a business transaction, even if the house has been used as a principal residence.

refer to CRA form IT218R
section 3 subsection A-I

Before making any real estate investments, make sure you know the tax consequences.

#5 squidly77 on 06.20.09 at 9:40 am


When you are caught, monetary penalties will be up to 250% of the tax payable and daily interest. In addition to the penalties, you will also have to pay the tax owing plus daily interest. If charged and convicted and you can’t pay the huge fine, prison is the alternative. Worse still a criminal record can put an end to your business and other travel outside of Canada.

Your credit will be seriously affected. The Canada Revenue Agency can even get a secret judgement against you without your immediate knowledge.

A lien can be placed against your home and it can be seized by the Canada Revenue Agency in order to settle taxes owed. They can also take your RSP and any savings as well as garnishee your wages.


#6 buy gold on 06.20.09 at 9:47 am

The trend is your friend …

read what he says about the houing market

#7 Flounder Digest on 06.20.09 at 10:05 am

As I put aside, after an hour’s read of Kierkegaard’s “Fear and Trembling,” a quite unexpected inner voice raised, to my surprise, your question of a few days back: “Do you think I should run or office again? “. I really hadn’t thought about your question since reading the blog.
If there is an election, say this fall, wouldn’t it be difficult to defend your power of political foresight in the light of the housing market doing roughly the opposite of what you predicted?
However, politics is not just about winning.
In “The Gathering Storm,” Winston Churchill describes his political activities of the ’30s when few would believe Hitler was the threat he proved to be. But the very fact that he was prepared to tell the hard unpopular truths in the face of ridicule and disregard provided England with an obvious leader when the debacle of Dunkirk finally aroused the sheeple.
Campaigning from your present position will be a public service. Win or lose, you will demonstrate to Canada that you are a genuinely honest leader ready to bare with, and see through, the the hype, hucksterism and propaganda to face the hard issues that years of collective and individual self-deception have brought upon our heads.
To use Kierkegaard’s language, be more than a “hero of renunciation,” be a “knight of faith”: go for it! Please.

#8 Nostradamus jr. on 06.20.09 at 10:06 am


#9 Dean on 06.20.09 at 10:13 am

Interest rates aren’t the only reason for this boom. The government has guaranteed the mortgages in most cases so there’s zero risk for the bank to hand over $400K to a twenty-something with any job. This manipulation of risk is exactly what blew up the US economy. They took high risk mortgages and treated them like AAA debt.

Seeing what has happened in the US is what frightens me the most. It’s like we just watched our best friend fall off a cliff, and our solution is to take a run at it.

#10 squidly77 on 06.20.09 at 10:41 am

it would be in your favour to approach the CRA before they approach you

remember fighting the CRA is like playing against another hockey team but your team has no sticks or skates

the law tilts heavily in CRAs favour

they do not have to prove you guilty
you must prove yourself innocent

simply paying what they say you owe may result in the CRA not applying the 250% penalty

fight them and you can guarantee that the CRA will apply the 250% penalty

tax lawyers are very expensive

hey happy condo flippers
yeah you guys that stood in line for 4 days to buy your pre-sale condo and with full intent of flipping it

paid your taxes yet
well did ya…..

*i know absolutely nothing about tax
i can only interpret the law as i read it
but it appears to me at least how i read it
if you flipped a house seek a lawyer
or just pay your taxes

it scares me even to quote the tax laws !!

black suits white shirts and a black tie
and no sense of humour

#11 Got A Watch on 06.20.09 at 10:45 am

“When the job market improves, he believes that household income will rise and help make houses more affordable.”

Yeah, that sounds almost logical. Except that when the “improvement” comes along (around 2014-’15 IMHO), the interest rates will inevitably rise.

When something is at a historic low, and can’t go lower (unless you think the BoC can lower rates to below 0), it will have to go higher. Rising interest rates, back to historic averages, which is 8.5% mortgages, from the present levels, will kill affordability.

The fact is that real estate moves in a cycle, like every other market, just more slow moving. Most “booms” do not last more than 7-8 years, and this one has been running longer than that. When the ‘bust’ phase comes along, and it always does, that period of declining home prices has lasted 4 1/2 years on average.

Since the preceding ‘boom’ was longer and moved higher than in the past, the resulting ‘bust’ is highly unlikely to be over in 4 1/2 years, probably more like 6 years or more. And when real estate reaches a ‘bottom’, it does not spring back like a penny stock can, there is a period of some years with a flat (“balanced”) market with little evidence of rising prices. Finally, enthusiasm creeps back in, slowly, and market interest and thus prices begin to rise.

Canadians who labor under the delusion that “it’s different in ______ (my town), it can’t happen here” have not learned the simple fact that it’s not. Just look at California, once the destination of choice in the USA, now the place everyone wants to flee.

Everything turns around in time, and there will be a real “recovery” in Canadian real estate -after 2018-2020. Demography indicates that things probably will never be as bubbly as the ‘0s.

So if you are looking to “invest” for the long-term, real estate is the last place to be looking anyway. The odds of positive returns will be much higher in other sectors for the next 10 years at minimum, and probably a lot longer.

Buy a house as a place to live, if you want to, but don’t expect it to make you rich, and only if buying is cheaper than renting a similar property.

#12 Rodney on 06.20.09 at 11:01 am

I live in Kelowna and have not seen house prices this low for many years. Ther are no bidding wars here and more bank foreclosures popping up.

#13 Glenn on 06.20.09 at 11:01 am

Dead cat bounce?

#14 Bailing in BC on 06.20.09 at 11:22 am

Sorry, this is off topic and re-posted from the last post, BC (Before Crash) but I just wanted to reach those who did not get to the the end of the last thread and who are doubting the authenticity of the letters Garth is responding to.

I am SMLFTRD’s friend who sold her investment in Kamloops at the right time. Damn me!!!

I can assure you that this letter is true.

SMLFTRD managed to accumulate equity through luck (being in the right place at the right time) but mostly through guts and hard work.

She did not fleece any ex husbands. She did however guilt her ex into getting a loan for her that she would not qualify for and then made all payments until she paid it off in full.

She got her first property renovated on a credit card and through barter (I’ll clean your house for 6 months if you do my electric etc.).

The suite got reno’ed first to bring in rent asap, while she lived upstairs with no kitchen and the most rudimentary of bathrooms.

She has done very well because she didn’t sit back with her success but went out and grew her holdings. She took calculated risks and they have paid off.

She has worked VERY hard for what she has. She has lived in renos for the last 7 or so years, a lot of which she has done herself. She is 5 foot nothing and has been known to do her own drywall.

She also deals with scum bag tenants because she has no one else to do it for her. The property managers that she has dealt with in the past are ineffectual since they have no skin in the game. As for kicking tenants out anyone who suggests that it’s easy has never had to do it. The changes to the legislation are relatively new and some of the staff at the RTO either do not know about them, or else, they are not telling landlords when they call for information. Anyway what’s so easy about paying a bailiff THOUSANDS OF DOLLARS to kick out a dead beat tenant who wouldn’t pay their rent and has trashed your place?

Before anybody jumps on me, I don’t think all tenants are dirtbags and I know that some landlords are exactly that.

#15 lgre on 06.20.09 at 11:30 am

we might as well shake hands with the U.S, because we will be joining them very soon.

#16 Toronto C9 Renter on 06.20.09 at 11:44 am

#2, 4, 5 & 10 Squidley, various posts about principal residence, cap gains etc…

Squidly, in my experience (I’ve sold six homes so far) there are no tax risks whatsoever, provided you only have one house at a time.

Obviously it gets more complicated if you have two or more. You need to decide which would benefit most from principal residnece status. Then, even after that one is sold, the principal residence status of the remaining one needs to be prorated, there is a tax form to assist with the calculation.

Finally, as you point out, even if the home cannot be fully designated principal, for most of us the profits are still taxed as capital gains which is far preferable to income.

#17 cowgirl kiss on 06.20.09 at 11:45 am

Any comments on the Concrete Equities case? I have a friend who put some inheritance money into their properties 2 years ago. I remember when she did it and it seemed like a conservative strategy at the time.

#18 rory on 06.20.09 at 11:51 am

Hey GT …could/would you explain why Nostradamus Jr. is being deleted …I know a lot of people welcome it but some not so much…if what Jr. posts is racial or hatred based then please delete but if it is just that he pissed you & others off …well!!

Then there is this book on Sheeple and that Harper guy that ‘deleted you’ + that dang slippery slope thing…anyhow …I would appreciate seeing the reason Jr got dumped and why he will always be or not deleted…Thanks GT …later all.

#19 Samantha on 06.20.09 at 12:03 pm

Low interest is sustaining this double bubble, and median income is the pin that will prick it.

These stats are slightly out of date, however, close enough that they provide a reasonable indication of the median income in Canada. These stats do not take into account job loss in the last year.

Median total income, by family type, by province and territory
(All census families)

Median total income, by family type, by province and territory
(Couple Families)

#20 Maurice on 06.20.09 at 12:06 pm

Amigos: So if you think that long term interest rates are going to go up, please explain the US 30 year Bond rate. Just check out what it has done over the last two weeks, as exhibited by the HTD (inverse Beta Pro). US 30 year rates are dropping like a stone. Deflation folks.

#21 Bill-Muskoka (NAM) on 06.20.09 at 12:09 pm

Might as well buy Coke (liquid or powder will do) because if Japan goes through with its very intelligent plan then all that gold and cash people are hoarding will be worth less than Canadian Tire Money.

To fight deflation, abolish cash. Could Japan make reality of ‘science fiction’?

However, meanwhile those wiley Germans are going for the Gold, and I do not mean at the 2010 Olympics.

Germans flock to gold bars vending machine at Frankfurt airport

But then a third plan is for Cash to Become Extinct as Chips Take Off

#22 Stasi leather trenchcoat on 06.20.09 at 12:16 pm

Wait until California falls thru the debt chasm and Octoberfest hits the stock markets…

#23 Bill-Muskoka (NAM) on 06.20.09 at 12:22 pm

Recommendation: Learn Mandarin soon!

China Commodities Undercut US Dollar

Yeppers, Old Hunter Thompson would be proud because it has gotten ‘weird enough’ now.

#24 hagbard on 06.20.09 at 12:24 pm

#5 squidly77

Good reminder encase anyone thought they were living in a free country.

#25 taxpayer like you on 06.20.09 at 12:31 pm

dd – just for you, direct from Squids link to CRA interp bulletin it 218r:

“There is no provision in the Income Tax Act which
describes the circumstances in which gains from the sale of real estate are to be determined as being either
income or capital. ”

So dd reading the income tax act wouldnt have helped.
Squid thanks very much for that. I checked some more recent sites and they still reference that IT, so I dont think anything has changed.

I wonder if the CRA finds out we’ve been reading this blog if they’ll say we had intent to generate income by
selling now, living off the proceeds and buying back in a
few years cheap……scary……

#26 Bill-Muskoka (NAM) on 06.20.09 at 12:44 pm

#19 Samantha

Thanks for that link and the stats. I also note that the truest and most meaningful one seems to be Family income, by family type and that the greatest number of Canadians are living at the $10,000 to $14,999 level consistently from 2001 to 2006.

I think that tells a truer story than the average median income, because that accounts for about 1/3 (of the people.

Which raises the serious question of ‘Where are all the bloggers claiming huge McMansions and incomes really residing?’ Who are these ‘fortunates’ who seems to escape the realities that most Canadians are living with? Are they real or merely pretending to exist?

#27 Nostradamus jr. on 06.20.09 at 12:52 pm

Your last blog was


#28 arjo soer on 06.20.09 at 12:54 pm

In Regards to squidly77

I had it happen that the government messed up my identify with somebody else and placed a 300k lean on my house, the interesting part is that we received no letter that this was happening and had no idea that the lean had been on the house for a little over a year.

My advice is to go to the registers office once every two years and verify all the leans against your property.

In our case the government acknowledged that they made a mistake and placed the lean on the wrong property but the lean has not been removed yet (3 months) and the government is not moving very fast in getting it removed.

#29 squidly77 on 06.20.09 at 1:07 pm

Squidly, in my experience (I’ve sold six homes so far) there are no tax risks whatsoever, provided you only have one house at a time.
you had better click the link and re-read it

you can buy sell and move as many times as you wish
heck its a free country

if your making money every time its clearly business income and if you dont believe that you have to pay any taxes on it then dont

you should be ok at least until your audited…

#30 tweedledum on 06.20.09 at 1:15 pm


it may be sooner than you think. CA credit rating in jeopardy

#31 lgre on 06.20.09 at 1:18 pm

“Squidly, in my experience (I’ve sold six homes so far) there are no tax risks whatsoever, provided you only have one house at a time.”

The CRA has come after people who bought and sold often, I remember reading an article about this not too long ago..a couple bought and sold 4 properties in a span of 9 years, and the government came after them for cap gain taxes..they were all principal residents in the Toronto area. If they catch on, they will come after you.

#32 runnie on 06.20.09 at 1:21 pm

i’ve heard the phrase “the new normal” tossed around often these days, so much so that i began to wonder if it’s becoming the new philosophical justification for this bear market….although roger mcnamee might have been the first to coin the phrase in 2004 named after his book, it recently has gained very wide currency often repeated by the pimco boyz, art cashin (at least three references this past week alone), the fast money crew, too numerous to mention cnbc and bloomberg experts, just to name a few…. in other words its become the new euphemism for ITS DIFFERENT THIS TIME ideology…of course the 2000 bubble had its own euphemism: the “virtuous cycle” and it appears this bear market has the “new normal”……

#33 lgre on 06.20.09 at 1:28 pm

Coming to Canada

Accidental Landlords

#34 squidly77 on 06.20.09 at 1:35 pm

from a canadian site

If the transaction is a capital gain (principal residence, summer cottage, second home, rental home, etc.), only 50% of the gain is taxable.
There aren’t any set rules about how often a person can buy or build a house, move into and reside in it, then sell it, without the transactions being considered business transactions. Canada Revenue Agency (CRA) would look at the frequency and the intent (i.e., whether the houses were being purchased or built with the goal of reselling and making a profit, or because the person wanted a new house to live in). They might even look at a single event of purchasing or building and reselling a house and decide that it was a business transaction, even if the house has been used as a principal residence

its all kinda confusing

#35 Bill-Muskoka (NAM) on 06.20.09 at 1:35 pm


Congrats on keeping your promise to ban the jerk. He has proven he is insane because he keeps repeating the same act, expecting a different result.

#36 taxpayer like you on 06.20.09 at 1:39 pm

26 Bill – that table shows a total number of families, not the number within the income bracket, so look at the difference in families between the that bracket and the next one up. I suspect there is another statscan table for the number of families in each bracket.

#37 Bill-Muskoka (NAM) on 06.20.09 at 1:45 pm

Re: My #26

1/3 of the people (7,411,900) is not as accurate as I would have liked. If we look at the total of the populance (reporting income that is) between $10,000 and $29,999 we find a far LARGER segment totalling 28,716,010, which is obviously depicting BOGUS numbers by StatsCan because they list a total of 7,629,330, and the population of Canada is only a little over 30,000,000.

Someone has their decimal points or something totally FUBARed for the ttoal number of families. Looks like more of Dim Jim’s math at work to me?

#38 dave99 on 06.20.09 at 1:46 pm

Good riddance to Nostradamus jr. :-)

#39 Samantha on 06.20.09 at 1:49 pm

#26 Bill

You’re welcome.

After looking at these numbers (and also considering your point regarding greatest number of population living at the 10,000 to 14,999 level), I can’t understand how the “sales” figures are supported, especially in BC, where a 3x income rule would mean houses should be 210K. Low interest rates aside, it just doesn’t make sense.

Another statistic that I would like to find is the dollar value/number of people (or residences)/region for HELOC’s. There seemed to be a lot of people using their homes like ATM’s in the last 4 or 5 years, particularly in “bubble” cities like Kelowna. That’s another wobbly rung on the “property ladder”, which we will all be paying for when this mess collapses.

Something else that comes to mind is the impact of reverse mortgages. I wonder how many people had clear title and then decided to take on this kind of debt?

I’m going to do a little digging later and see if I can come up with any information on the above two statistics, however, I think it will be buried pretty deep. If I find anything relevant, I’ll post it on here later.

#40 Charles T. on 06.20.09 at 2:27 pm

“Canada’s 308 members of Parliament claim almost $128 million a year in personal and office expenses – spending that’s risen 42% since 2000. But when the Star asked where the money was going, almost everyone refused to talk.”

Our MPs’ spending secrets

This is not a political blog. Move along. — Garth

#41 kc on 06.20.09 at 2:30 pm

Nostradamus jr. on 06.20.09 at 12:52 pm

“Your last blog was


LOL that was funny when I read it……..

#42 Calgary_rip_off on 06.20.09 at 2:40 pm

Another great post Garth.

Ive been saying this to myself for months: Interest rates will rise and Calgary will be done.

Today the realtors in Calgary are holding some promotional for people to buy houses. This was published in the Herald yesterday to let people know.

It’s a big problem here Garth. The houses here are nothing extraordinary. The place I rent is by far the nicest Ive ever lived in certainly but at $1600 a month I would expect it. When the landlord bought this place Im sure it was $180K. So he, and other landlords are sitting on a time bomb. He basically has a captive audience until the rates skyrocket. Then many people will be in serious problems, except the renters who can tell their landlords to pack it, as many qualify right now to buy such as myself but understand it isnt wise to do so. As it stands there are many families who own who cannot even afford to pay for things for their children. My wifes friend who bought before the boom says she is better off because my daughter can have classes and opportunities she cant afford for her kids because of their mortgage. How is it any advantage to own in Calgary when you get less house for more money and will soon be slapped in the face with skyrocketing interest and a resulting mortgage worth more than the value of your house? You would have to be clinically insane to buy any property in Calgary.

It appears that there are two parties in this issue: One, such as myself believes interest rates will end this mess. The other believes that Calgary’s cost of housing will drop a little but wont be pre-boom prices. I believe the last group is mistaken.

I talked with my neighbour today. He’s back temporarily after his stroke and I had a phone call from his wife asking me to help him back into bed, she couldnt lift him. I was chatting with him and he said now is not the time to buy, its very very bad and Canada is about to get pneumonia from the USA. He’s 78 and a self made man. Owned many companies in Calgary, raced horses here in Calgary, and owned shops in Banff. He advises against buying any type of property now.

Hopefully your site here will dissuade any Calgary people wanting to take advantage of this current new interest plan to think again-Buying a house for most is a one time deal. Media and many in Calgary would have you believe it is like buying, again, groceries. If you dont like it, in 4 years you can upgrade from your starter home as an investment to a bigger house as was traditionally done. One problem: Starter homes in Calgary are priced as expensive as what was previously a big house. So how is a person going to switch houses in 5 years and upgrade? Maybe they will win the lottery.

This situation in Calgary is the nastiest Ive ever seen in my life. It’s unbelievable the ignorance of many, however it seems that more and more people agree that the ridiculousness of prices proposed by sellers and realtors has got to go.

Hopefully the sellers realize that at least they have a place to hold on to and live in, rather than speculating and profiting off of fools.

#43 Jonathan on 06.20.09 at 2:42 pm

Finally Nostradamus jr. non value added comments are being deleted.

#44 Fred on 06.20.09 at 2:45 pm

#26 Bill-Muskoka (NAM)…..I think you have misread the table (data) you linked. The numbers are stating the families above the stated income levels, not those in the particular income range. The one item in the data that was shocking and indicative of leaner/meaner times was the 22% increase in families with an income of under 10,000 that shows in the numbers from 2005-2006.

#45 Boombust on 06.20.09 at 2:47 pm

This crash is like waiting for a scud missile. Just get on with it.

#46 Toronto C9 Renter on 06.20.09 at 2:48 pm

squidley, you worry too much. The tax man has better things to do (and insufficient resources) to chase every person that makes a few bucks selling their home.

#47 dd on 06.20.09 at 4:00 pm

#8 Nostradamus jr.

You just cant seem to get any respect.

#48 dd on 06.20.09 at 4:12 pm

.#25 taxpayer like you

“So dd reading the income tax act wouldnt have helped.”

It is the government. If you are making a buck for something you do more than once a year you could be faced with taxes (RC treats it like a business). Espeacially big items like houses. They can even tax you on the part of the land over 1/2 Arc. or so (you have to prove that all your land is used for your enjoyment blah blah). Stocks are the same … if you trade a lot and make money RC might try and grab more tax money.

#49 Tony on 06.20.09 at 4:43 pm


Sucks to be wrong! I’m surprised you have any credibility left with your blog dogs (chihuahuas). Evidence still that your clones (who live in their parents’ basements hoping for values to plunge so they can buy) don’t really effect the R/E market. Doomed either way, since lenders won’t give them a mortgage just because their greatest accomplishment is getting the high score in their favourite video game.

That was insightful. Come back when it wears off. — Garth

#50 barb the proof reader on 06.20.09 at 4:47 pm

Samantha, Bill, Calgary Rip Off,
I agree with all. Never the twain shall meet.
Canadian average living wages and lofty house prices don’t mix. The low interest rate temporary illusion is only adding fuel to the fire. As the song goes, Something’s Gotta Give.

#51 Samantha on 06.20.09 at 5:01 pm

As a followup to #19 and #39, here’s some data regarding the $ value of HELOC’s in Canada. The link follows, but here are some highlights of the March 28, 2009 article from The Star: (The entire article is well worth the read).

– BMO 14.3 billion at the end of 1st Qtr 2009.
– TD 48 billion same reporting period (with 2/3 of that balance insured).

…and a disheartening quote from the same article with reference to how this product (HELOC) can be structured:

“Generally, the product is meant for people who have at least 20 per cent home equity, allowing them to borrow up to 80 per cent of their house’s assessed value.”

Lovely. Bubble prices. 20% equity. Up to 80% more debt.

2006 was the crest of the boom for many areas or close to it, and in the same year we had a median income of $63,600.00 for families in this Country? What happened to DSR requirements? How did any of this nonsense (mortgage or HELOC) get approved?

Well, off to check for data on reverse mortgages.

#52 . . . fried eggs and spam . . . on 06.20.09 at 5:03 pm

#18 rory at 11:51 am — “. . . could/would you explain why Nostradamus Jr. is being deleted …I know a lot of people welcome it but some not so much…if what Jr. posts is racial or hatred based then please delete . . .”

Agreed. When and if Nostradamus Jr. apologizes meekly, grovels muchly and tempers his / her posts to leave out racial and hatred based stuff (I never interpreted that anyway), then possibly a week in the sin bin (like Harry S. on the old political blog, when he got his knuckles rapped) will suffice.

All opinions are worthy of taking note of, whether one chooses to agree / disagree with them. Or simply slide past that post altogether.
#20 Maurice at 12:06 pm — “. . . Deflation folks.”

On the surface, yes with the prices of material goods either treading water or slightly declining.

But the cost of essentials — food, clothing and the basics which all families need for their children — are increasing quite rapidly, so that leads to . . .

#19 Samantha at 12:03 pm — “Low interest is sustaining this double bubble, and median income is the pin that will prick it.”

When that pin does burst both balloons, most, if not all Cdns. will be at a complete loss as to what to do, as they have never been in this particular situation before. Mind you, not many of us have, being as this is a worldwide takedown.

Almost all adults and some teens / young adults are using credit cards regularly, and plenty just pay the minimum amount.

Inflation is at zero right now, but with interest rates quietly climbing, CC debt (for the most part) being left unpaid, it will not be a pretty picture when the whole deck of cards unfolds, then collapses altogether, a few months post-Olympics.

#53 Tom Jeffries on 06.20.09 at 5:19 pm

Today – I wandered by a growing forest of “Open House’ signs here in Vancouver.

Interest rates will go up LONG before Spring – just watch.

The Macroeconomic outlook for Canada is BRUTAL.
I know most won’t buy that – but believe me, we are in for the same retrenchment that we are seeing everywhere.

I am still struck by the number of people that drive BMW’s, Mercedes and Porsches, etc.
How the heck can these people afford to carry this iron?

Add this to the insane cost of housing here in Vancouver, and something just doesn’t add up.

As Bob Marley used to say ‘Soon Coming’ and am I the only one that can just about feel the storm just off shore?

One last telling anecdote. I won’t mention the Bank…but I have been dealing with the same Branch for nearly 20 years and have a great relationship with their Senior Credit manager.
Last month he called, right of the blue.
I was puzzled…but we talked for a few minutes and then I realized why he called. He was cold calling to try and get Mortgage referrals. Things have picked up a bit he said, but if I had any friends thinking about buying, please have them call.
This is the _____ Bank?

My, how times have changed.

One of the Top Realtors in Vancouver is of the opinion that there was a shelf when people had some latitude with price, but he didn’t field multi offers for the places he sold recently.

Is it because Vancouver has topped?

Toronto and Ontario’s economy is stagnating, so why are their prices holding, or going up?

Beats me – but sure as dandelions grow, when we see Interest rates start to climb, it will be ‘all hands on deck’.

One last thing. How many unsolicited Credit Card applications have you received in the mail in the last year?

Now, think how many you received say, in 2007.

Times have changed.

Get a good helmet – pay cash, pay off the credit cards and I wouldn’t buy Real estate for the next 5-15 years.

This is Japan redux.

#54 Nostradamus jr. on 06.20.09 at 5:32 pm


#55 Samantha on 06.20.09 at 5:51 pm

And as a followup on reverse mortgages from #39:

The first article dated 2005 on reverse mortgages is from:

Here is an appetizer from the above referenced 2005 article:

“The Honourable Tony Ianno, Federal Minister Responsible for Seniors, was recently quoted in The Ottawa Citizen in his continued call for government-backed reverse mortgages for low-income homeowners. These home equity conversion products enable a homeowner to convert accumulated value into cash without selling the home or having to repay the debt until a preset time in the future.

Escalating energy costs and increasing property taxes, combined with rising real estate values, are creating cash-poor, house-rich retirees. Although governments could put their resources into lowering energy and tax burdens for low-income homeowners, this announced investigation targeted at financially-disadvantaged Canadians indicates that the federal government may prefer to make it easier for homeowners to spend home equity to finance decades-long retirement. In the future, would the next step be to consider proceeds of a reverse mortgage as income which could reduce the benefits available from public benefit-support programs?”

and from the same website, but dated March 24, 2009:

“Canadian professionals and property owners, who still think of reverse mortgages as a fringe or marginal product, may be surprised to learn that current demand and projected growth for home equity conversion make the next step for the Canadian Home Income Plan (CHIP) a transition into a federally-regulated bank.”

Yep, pardners, stampeding debt with a herd of bubbles, HELOC’s and reverse mortgages, and we’ve been bushwhacked and are on the wrong side of the corral.

Will Rogers seems appropriate now….

“If stupidity got us into this mess, then why can’t it get us out?”

#56 CalgaryRocks on 06.20.09 at 6:13 pm

Damn, all the homes in my burg sell as soon as the For Sale sign goes up.

This is the most action I’ve seen since 2006. I guess there won’t be a sell off for at leat 5 years if people buying now lock in their rates. Of course the BOC is commited to not raising interest rates and even lowering them if the economy does not pick up so why lock in and pay the bank fleece rate when you can pay 2.65%.

#57 Charles T. on 06.20.09 at 6:14 pm

Garth. Re: post # 40.

The link I sent you for the story I mentioned in my post (Our MPs’ spending secrets) was the correct one. I clicked on this link when the “Your comment is undergoing moderation” box appeared on your site after I submitted my post, and it worked fine at that time. The link on your site does not work because the # 4 was left out of the url in the link when you put my post on your web site. The following is the correct link to this story:

Our MPs’ spending secrets

Still not relevant. — Garth

#58 taxpayer like you on 06.20.09 at 6:28 pm

Bill, Samantha – Fred and I will try to clear this table up a bit for you. The total familes in 2006 was 7,629,000. At 3.7 people per family thats about 28 million – the vast majority of canadians. Sounds reasonable.

I think the next row shows families making less than $10K – a couple hundred 000s. The next row shows a total of families making over 10K (NOT between 10 and 15K) which is 7,411,000. This includes families making 50K, 111K 231K etc. OK?

I just dont want ya gettin worked up for the wrong
reason. I want ya worked up for the right reason…..

#59 random guy on 06.20.09 at 6:36 pm

i’ve read this blog now for about eight months and almost every single type of investment has its fair share of pitfalls and commenters ripping it to pieces.
real estate – rates are going up, affordability dropping, houses will be worth significantly less in 1-20 years
having lots of cash – oh no, inflation.
buying gold – goldbugs be damned, gold hasn’t went anywhere in x years, good luck using it as a form of money
mutual funds – those fees will get you, market’s down 30 points from the top
whatever, everything has it’s issues and problems.

i’m a twenty five year old with $145K in house equity, a $105K mortgage, and $15K in the bank. no help from anybody, hard work and i got lucky when i sold my investments at a good time. everybody’s different. this site is not the gospel, look around and do what you want with your money. it’s yours for a reason

#60 taxpayer like you on 06.20.09 at 7:11 pm

51 Samantha – I read the link on HELOCs. If you want to
see a bunch of confused people check the commenters!

HELOC is just another type of mortgage with a variable
balance but no fixed payback schedule. They talked about them being “insured” but who’s insuring them?

The total owing between the conventional mortage and the HELOC is limited to 80% of house value. The people who have gotten into difficulty with them probably would have gotten into trouble anyway by just re-mortgaging over their head. I recently finished my mortgage, but
might get a HELOC so I have funds ready
for “vulturing” (no hummers, no harleys – sorry garth)
and get better rates than my non-secured PLOC. I will check Scotiabank as they tie theirs in with a Visa.

No hummers, no harleys, no hummers, no harleys……

#61 squidly77 on 06.20.09 at 7:14 pm

i’m a twenty five year old with $145K in house equity, a $105K mortgage, and $15K in the bank.

did you buy a condo in calgary in 2002 when you were 18 for $69,000 and now its appraised at $290,000
did you HELOC once for a $100,000 and have you spent it all except the $15,000

just asking…..

#62 Alberta Boom on 06.20.09 at 7:23 pm

Why are we worrying for these people? Our’s government is behind the banks which inturns backing up these morgages. Canadians bank accounts are at all times high with cash-o-la, we got so much money that we do not know what to do with it. So let them buy houses to make good use of the cash otherwise it will be rotten.

#63 Alberta Boom on 06.20.09 at 7:30 pm

If people don’t go out and buy houses now then the intention of the government to stimulate and cash infusion into the ecomomy will goes to waste. We must all do our part in helping to stimulate our economy and that is the easiest part of all, just buy a house.

#64 Samantha on 06.20.09 at 7:49 pm

#58 taxpayer

I checked out Bill’s link and you are correct – it is the difference between each income range that tallies the total number of families.

I still think (from my original links) that the median income doesn’t sustain the debt we are witnessing in this Country.

Oh and by the way, do check out my reply #138 to you on “Why I Did It”.


#52…fried eggs and spam…

Post-Olympic collapse…I think in the aftermath Olympian strength will be required to cope. We won’t get any medals for what I think will be a very long marathon.

OT, fried eggs, but did you notice that Lollaswinefluenza has now mutated, interestingly in Brazil….(and rather quietly in MSM) and Ottawa is no longer tracking cases…

#65 ts harpoon on 06.20.09 at 8:46 pm

Garth, everytime I see Nostradamus jr. DELETED it makes me laugh! HEY Junior! Watch this and you’ll know what I mean!

#66 random guy on 06.20.09 at 8:53 pm

nope sorry squidly. i live in ontario, bought nov 07. good try though. i don’t even have a line of credit. why would i need one?

#67 Devil's Advocate on 06.20.09 at 9:13 pm

Dubble Bubble gone wild. Many of the postponed condo developments in Kelowna appear to be ramping up to go ahead based on the market activity giving developers a “feel good” about prospects of selling the many more units they will add to the market.

Gonna be interesting in deed. These are interesting times but I suspect not so interesting as this time next year. Snap crackle pop.

Size Matters.

#68 TheFirstRick on 06.20.09 at 9:16 pm

#46 Toronto C9 Renter on 06.20.09 at 2:48 pm squidley, you worry too much. The tax man has better things to do (and insufficient resources) to chase every person that makes a few bucks selling their home.
CRA’s 55,000 full time emplyees, severely declining revenues and a projected federal debt of $700 billion.

Wanna bet?????

#69 OttawaMike on 06.20.09 at 9:19 pm

54 Nostradamus jr. on 06.20.09 at 5:32 pm

If he was really Nostradamus jr. he would have been able to see that was coming a long time ago.

#70 dd on 06.20.09 at 9:26 pm

#63 Alberta Boom

… We must all do our part in helping to stimulate our economy and that is the easiest part of all, just buy a house ….

Why? Money spent on housing is dead money for the next number of years. Look at the waste it has created in the states. All the money in equity … vanished and nothing but debt left over. Foolish. All this “money” should be going into productive assets and not marble top counters.

#71 dd on 06.20.09 at 9:36 pm

.#62 Alberta Boom

>>Why are we worrying for these people? <<<

You can’t be serious. Look at the US buddy. Prices are still falling. Calgary is going to go that why too. So if you have a $250,000 mortgage and the market value of the house is $150,000 what do you do? YA. While debted up the yingyang you are not going to spend money in the economy are you?

Why the hell would I overpay for a house anyway? It seems that you have money to through away.

#72 Bottoms_Up on 06.20.09 at 10:03 pm

Some blog postings from The Toronto Star on the impending garbage strike (disclaimer: foreshadow of lower house prices below):

“You are not alone. I’ve lost my job, my car disappeared in the night last week and I’m pretty sure the bank bailiff will be at my door June 30th. I’ve decided I will work nights at McDonald’s and spend my days at the library. I too have post grad education and have found nothing. Please don’t dispair. You are a fine person. Hang in. It will get better.”

“I am a highly educated man (I worked to pay for my education) who is now entering the 7th month of unemployment. I had to resort to ‘Ontario Works’ (face it – it’s welfare) to try and feed and shelter my family. I have sent out over 200 resumes in that time for jobs… ANY jobs to get the creditors off my back. Forget the fact I have no self-esteem left and have considered just disappearing numerous times. NOW… to have some morbidly obese unionized garbage collectors local tell me that they are wanting more money to protect ME is nothing short of obscene. I would gladly collect the trash for 1/2 what they’re getting paid. Come and live in the real economy for a small while… the hungry are waiting for you!”

#73 mikef on 06.20.09 at 10:13 pm

Interest rates blah,blah,blah,
Deflation blah,blah,blah,
Equity blah,blah,blah

A big reason single detached homes are always in demand
is because pet owners have no place else to live.

Can you imagine buying a condo “box in the sky”
or renting an apartment at $800 p/mo. and having
“Butch” barking like no tomorrow next door.

Here in Dorval/Lachine/Lasalle PQ
I’ve seen plenty of home owners living next to noisy
commercial property refuse to sell because they
couldn’t bear to give up “Fluffy” or “Amanda”.

#74 Bottoms_Up on 06.20.09 at 10:25 pm

The $hit is hitting the fan:

“About four million mortgages – representing almost 10 per cent of all the U.S. home loans currently outstanding – were delinquent at the end of March, according to the Mortgage Bankers Association. Many of those homeowners ran into problems in the first two waves of the housing crisis, when house prices began to fall and mortgage “teaser” rates were reset higher, making payments unaffordable.”

“About 20 per cent of American homeowners now owe more than their house is worth, according to, and the number is growing fast. Just six months ago, the percentage stood at 14.3.”

Now, a third wave of defaults is beginning, as even careful borrowers who had been diligent in making payments are falling behind because they’ve lost their jobs.”

#75 Uncertain on 06.20.09 at 10:26 pm

I’ve been reading this blog since last October. I want to buy a home not just a house but want to make sure that I’m getting the best value for my money. I have real issue with buying something today for it to be worth a whole lot less months down the road. We want to buy a home hopefully next June/July in Mississauga (Burnhamthorpe/Winston Churchill area) ~ are prices every going to come down… at this point it just seemslike they are going uo, up up…. what is your opinion on how the market might look like ina year?

#76 Samantha on 06.20.09 at 10:28 pm

#60 taxpayer

lol – You’re right about the commenters on that article – I would love to see them enter a road rally (or a math class).

I wondered about who insures HELOCs also. CMHC perhaps? By the way, can’t HELOCs be called in like a demand loan?

If I venture to vulture it shall be with cash. I like to cover my assets.

No Hummer? No Harleys? You could always go classic with a Willys or a Landrover, and for 2 wheel fun, a Triumph is a gem, or comfy touring can be had on a BMW.

#77 dgd on 06.20.09 at 11:04 pm


Jealous …….

The kids done all right. Leave him/her alone….you sad man you.

#78 . . . fried eggs and spam . . . on 06.21.09 at 12:31 am

#64 Samantha at 7:49 pm — “. . . Lollaswinefluenza has now mutated, interestingly in Brazil . . .”

John Lennon’s song ‘Instant Karma’ comes to mind, as a few days ago, the Brazilian PM called for a ‘new’ NWO! :-D ‘Spose Brazil, with their brand new, state-of-the-art Ford plant is also heading down the drain!

I have about as much trust and faith in the m$m as I do in Harper and Flaherty — nachos!
Official figures show 11.5% unemployment in California, but what do the ‘unofficial’, or real figures say? 20-30% is probably closer to the mark.

On the other hand, this is the whole country. —
Re: violence in Iran. First link is most recent —

“Last election, Ahmadinejad won with about 62% of the votes cast and nobody said anything; this election Ahmadinejad won with about 62% of the votes cast and apparently it is the most corrupt election in world history (at least according to American commentators, who should know a corrupt election when they see one). What happened? Did he start unprovoked wars? Did he steal the land of others? Did he lock people up in a cage and then slaughter them? . . .” \/ \/ — Comments courtesy

“Where were these self-righteous bozos [CNN] when Israel was dropping US taxpayer-paid-for white phosphorus on the children of Gaza?”

“President Barack Obama Saturday called on Iran’s government to “stop all violent and unjust actions against its own people,” the White House said amid swelling post-election tensions in the Islamic republic.”

Webmaster’s Commentary: “Or…. what, we’ll come in and do it for him?!?!?!?

“Is this going to be the excuse for going into Iran, (pardon me while I hurl, considering our track record in Iraq and Afghanistan) to “….bring democracy to the Iranian people”?!?”

Ron Paul’s take on the situation —

One thing that intrigued me: The official language of Iran is Farsi, yet plenty of protestors were holding signs written in English. Strange, until one recalls that the motto of the Mossad is: “By way of deception, thou shalt do war.”

After all, it was a combination of the CIA / Mossad / Indian secret service which carried out the bombings in Bombay, and also knocked off Benazir Bhutto.
Very good reasons why diplomacy, through negotiations is working well for Russia and China. Following from —

“Nigeria is rich in oil, natural gas, petroleum, tin, iron ore, coal, limestone, niobium, lead, and zinc.

“Namibia is rich in diamonds, copper, uranium, gold, lead, tin, lithium, cadmium, and zinc.

“Angola is rich in oil, gas, diamonds, iron ore, phosphates, copper, gold, bauxite, and uranium.

“Russia and China seem to be doing a great job at making deals to get when they want.

“The US, on the other hand, has decided to drop bombs to get the natural resources it wants; and we can see just how brilliantly well that has gone in Afghanistan and Iraq.”

#79 David on 06.21.09 at 12:52 am

It is tempting to read a whole lot into the normal buying season for real estate. Ponzi schemes and bubbles are sustainable as long as there is a fresh supply of new money to pay out those old buyers who decide to leave the market and leave the new buyers holding the bag. The new buyers get to live the dream of home ownership for a few short years at least, until interest rates reset and the pool of potential buyers dries up. Mistaking an asset bubble for a robust economy is a tragic mistake. Housing is not that unique of a commodity in that prices can rise and fall all the time. Housing is unique in the sense that the purchaser can have almost 100% leverage. The slightest downward price movement can have truly devastating consequences. The risk to homeowners becomes doubly amplified when the monthly payments increase due to interest rate fluctuations. People who doubt this should go and ask their boss for a 30% raise when their mortgage rates shoot up and their homes are worth less. Best of luck. Nice little sucker rally going on right now and let us all hope it makes it to September.

#80 BoB on 06.21.09 at 12:56 am

If the expectation is for interest rates to rise and house prices to come down is it more advantageous to purchase now in a high cost / low interest rate environment or wait until there’s a low cost / high interest rate environment?

At the end of 10 years who is better off? I buy now for 550K at 3.75% and the other guy pays rent for the next 5 years then buys a similar place to mind for 425K @ 7%. At the 10 year mark we’re even but I’ve enjoyed my home for 10 straight years.

That assumes the guy that defers gets his prediction right and I don’t pay my mortgage down faster using higher payments.

#81 confused and a little crazed on 06.21.09 at 1:37 am

thank you garth,

for deleting nostramus jr. His coments are slanted towards splitting this country up between east and west and his views tend to be suggestive in bigotry and racism.

Controlling immigration to remove individuals ( criminals and illmoral opportunists) is important but to single out a religion or color is just stupid. As much as refering vancouver as hongcouver or shangcouver. I guess that’s reverse racism. Other people live here.

He is like that idiot highschool classmate thats just doesn’t seem to get the hint…he’s he is offending everyone. The more you try to tell him to leave the more he wants to sit at your table at lunch…thinking he is so cool “everyone wants to know me”.

Sorry for the highschool reference but I think it is quite appropiate.

thanks for keeping it real…the truth shall set u free

#82 Calgreedian. on 06.21.09 at 2:51 am

@ Calgary_rip_off

Thank you for getting it, I really appreciate it.

I’d type more but I’m a renter so I can afford to go out for a pint and play some darts, off to the ship.

#83 gold bugger on 06.21.09 at 3:51 am

Squiddly, after you renew your prescriptions (they appear to have lapsed) avoid giving tax advice and stick to pushing tools.

Selling a principal residence will only be considered taxable under certain conditions that don’t apply to most people. You’re engaging in misinformed scare tactics.

Good luck with the wrenches, though.

#84 squidly77 on 06.21.09 at 8:27 am

scare tactics ?
only if information scares you
personally i have no idea how the taxman views re sales
but it appears to me that 1 flip is likely ok
but 2-3-4 sales within the same city
all at a profit
will likely get someones attention
as it should
as it looks like someone is trying to game the system

as always the greedy few will ruin it for majority

#85 Tony on 06.21.09 at 8:54 am

The rise in Canadian interest rates has nothing to do with demand for money. There still is no demand for money in Canada. It’s a function of many bad bond auctions in America over the last 6 months. The rest of the world has pushed US interest rates higher as there’s a lack of demand for US dollars. What you’re seeing now up in Canada is the lag period of time between the move in US interest rates and Canadian interest rates. The peak of bond prices in Canada just happened to coincide with the start of the March 6th bear market rally in US stocks.

#86 David Bakody on 06.21.09 at 9:22 am

Happy Father’s Day …… and for our ladies lets all hope Father is not grouchy …. ha ha.

#87 Popeye the sailer man on 06.21.09 at 9:27 am

#73 mikef ;

“A big reason single detached homes are always in demand
is because pet owners have no place else to live.”

You are partly right, about the pet thing. My wife and and I have a dog with our two children and curently renting a small little house in Spruce Grove Alberta which we are overpaying because we needed a place which will allow a dog. I have seen a number of places with garages and fenced yards for rent but all say no pets. Since we have sold our house in Shawnigan Lake BC, we have been looking to buy and waiting for the bubble to pop. If I don’t quite hit the bottom that is OK, but I’m trying my best not to be a greater fool. I have enough cash that I could pay for the house we are renting, or buy a nice new 1900sf Bi-level with 125,000 mortgage. Even at todays bubble prices. It is hard to wait, with the wife looking at the MLS daily.

Get this! back in 2003 the bank made us pay down CC and LOC even though we had about $90,000 on deposit. We were buying a house for 220,000 and only wanted to put down 10%. Single Income about 55,000
Today our cash much higher, and income is now 70,000 we are told that we qualify for a 325,000 mortgage at a fixed 4%, we still have a loan for 10,000 and CC at 3,000, which we are paying down but we don’t like to touch the house money. Point is they are willing to loan a hell of alot more money and not have us pay any loans down.

According to the lender we could morgage our selfs to the hilt and buy the best house in the linkside area next to the golfcourse. Yet Stats canada says I make about 20,000 less then the average family income for Spruce Grove. Good thing I don’t want to park my 2001 windstar among the BMW’s and landrovers.

#88 Nostradamus jr. on 06.21.09 at 9:44 am

# 40

>>This is not a


#89 dave in oakville on 06.21.09 at 10:59 am

How is this possible?

1 million people in the GTA using food banks yet housing prices are at new highs. Thats 1 in 6 people in the GTA.

Are people trying to save on food so they can put a down payment on a new house?

I’m confused.

#90 David on 06.21.09 at 11:34 am

Prelude in Canada to an uber housing crash? Resale values in Canada $317,757. Already well into the crash the US national median has fallen to $169K. The US housing market is very similar to Canada in demographic terms and there are still many more legs to the mortgage default crisis there.
The realtors can hope for a new pool of zero equity suckers with cheap financing to keep their gig playing. Wish them luck.

#91 taxpayer like you on 06.21.09 at 11:47 am

Squidly – I’ll thank you again for the IT reference, even if others say there are no worries. I could definitely see CRA putting more restrictions on this in the future to catch “the gamers”.

Sam – Dont worry, this guy doesnt need a “big HELOC”. I’m used to paying a mortgage for the last 17 years, so a few years of HELOC doesnt worry me, as long as its “no hummer, no harley”

Lizst certainly had a grand piano, but I wont speculate
about his organ…..

#92 Calgary_rip_off on 06.21.09 at 12:07 pm


BoB one of your readers commented about the dilemma between high interest rates and low principals and low interest and high principals. BoB seems to think that both arguments hold equal validity.

BoB, here’s the real issue: If you bought a more expensive house now in Calgary it wouldnt really matter now, you would be getting less house than for a comparable amount of rent. You would have subsisted in a house that is smaller but for more cash and now you can watch as your mortgage is worth more than your home when interest rates rise and the principals drop. How does this make sense? Your argument is the one typically used in Calgary by many.

What is so great about homeownership anyway? You as the owner are responsible for everything. Why would anyone want to be obligated for this a house they really dont want but bought in an instant in order to not be priced out? This isnt financially sound.

Your argument to buy a high priced home with low interest rates isnt wise IF you are stretched severely with the low interest rates. If interest rates rise you have no reserve backup. If however the house is to your liking and if interest rates rise and those payments are still manageable, then do buy. It still seems smarter to buy at very high interest rates and get more house and lower principals than the opposite.

#93 Chris no longer in England on 06.21.09 at 12:43 pm

Maybe it’s because I’m a weird foreigner, but I thought Nostradamus Jr was funny. As for his perceived (and sometimes real) slights on immigrants – so what? Are we all so delicate we can’t cope with a contrary point of view, even if it goes against current political correctness?

However…. it is Garth’s blog we are reading, so he is perfectly entitled to decide what is included in it, so that’s that. Mind you, I am disappointed to read so many posters applauding the decision. Do those who gloat really approve of censorship? Or is it because we are able to imagine what he has posted that we are content to have him deleted – after all, we can probably guess what he said (due to Vancouver being the next blah blah blah, and we heard it here first). In which case, would it really matter if we did read it?

TS harpoon #65 – I remember this man singing Mule Train back in the late 60s. I think he was on “Opportunity Knocks” (a talent show) after which he popped up here and there for a while before the novelty wore off. It also spawned a few interpretations by well-known comedians of the time. Always made me laugh, but you have to realise that the UK only had two or three TV channels at the time.

There was another man who won that show for a few weeks running called Tony Holland, who flexed his muscles to cha cha music. I can’t find a clip of that, but here’s an advert he did afterwards
(the last video on the page). Such was the TV entertainment in the 60s….. those were t’ days!

#94 Bottoms_Up on 06.21.09 at 1:05 pm

#87 Popeye the sailer man on 06.21.09 at 9:27 am
Popeye, stop eating the spinach and read some laws. Landlords CANNOT prevent you from renting the place because you have a pet (even though a lease may say ‘no pets’, legally they can’t enforce this). So, you have to lie to your future landlord, say you don’t have pets, and then just move in.

#95 dgd on 06.21.09 at 1:16 pm

Read this for all the doom and gloom bloggers that think America is going down for the count.

Positive attitude…….ahhhh what a breath of fresh …..well New York air.

#96 Barb the proof reader on 06.21.09 at 2:05 pm

Chris no longer in England, yesterday you asked:

“Being new in Canada and needing professional advice about investing, how do I find an honest, competent financial adviser?”

Chris, out of curiosity, I asked around for you, including DH with 30 yrs exp. we share a lot of insight, as well as some friends, one an owner of a financial services co., another is owner of a financial capital/investment co., past chair of the Investment Dealers Assoc., (now IIROC) and bank management friends.

There’s no silver bullet answer. Asking people you find you trust, to refer someone, is still best. Check out their credentials and keep looking until you find someone who fits all your needs.

For instance, when you seek out life insurance, go to the top, the owner of the agency and see what her/his qualifications are, how long in the business, etc. My 50-something life insurance/agency owner friend for instance, includes estate planning, etc. Or if it’s an investment firm, there are moderate size co’s you can get a feel for, and they also help with financial planning and investment strategies. Again, go to the top if possible, and thoroughly check them out. I’d pick someone with lots of experience and these that I know are all over 50. Younger than that, are more likely to make the same old mistakes. You need someone with a depth of practical experience and years of first hand knowledge who have been through it all. Those who were actually IN THE BUSINESS through the 80’s and have REAL experience to draw from — but ONLY if they have diligently kept up with their qualifications. Find out what they are a member of, for instance. If you have any hesitation about any one you are referred to, keep hunting. Perhaps people here can add to the list of charters and qualifications you’d expect from a good financial planner, or where you might start. Good people will have a reputation as such, and some well-placed phone calls to verify, and patience in your hunt, will pay off.

Perhaps Mr. Garth can talk about qualifications you’d want to see in a financial advisor? and what sort of companies you might find them in.

#97 Barb the proof reader on 06.21.09 at 2:15 pm

#86 David Bakody on 06.21.09 at 9:22 am
Happy Father’s Day …… and for our ladies lets all hope Father is not grouchy …. ha ha.

Happy Father’s Day to you, David, and to Garth, and all the good fellows here.

Speaking of grouchy, I called my Dad a couple of days ago to wish him an early Happy Father’s Day. He said (at 92) he prefers a Father’s Day where he can sit and watch his golf uninterrupted.. LOL! I knew that, so that’s why I called him early.. My four siblings phone calls to him today will no doubt be shortened I’d expect .. ha.

#98 GenXersinSask on 06.21.09 at 3:09 pm

Hey Samantha, #76…my wife and I just bought 2 brand new Triumphs! Speedmaster (me) and America (her). Awesome bikes!!! Out here in Sask we have miles and miles of open hi-way to run them down, too.
Sask and Alberta are full of Harleys these days. Triumph is the new cool, or at least the emerging cool. Happy riding!

#99 Jonathan on 06.21.09 at 4:52 pm

#49 Tony

You are definitely a real estate agent or a flipper.

#100 Darryl on 06.21.09 at 5:03 pm

“54 Nostradamus jr. on 06.20.09 at 5:32 pm

If he was really Nostradamus jr. he would have been able to see that was coming a long time ago.”

Need to change my pants now.

#101 Jonathan on 06.21.09 at 5:11 pm

Good video:

“A Recent History of the US economy”

Tell me how much faith you have in Bernanke now?

#102 dave99 on 06.21.09 at 5:20 pm

#80, BoB

?? What are you talking about? How exactly do you figure that you are even after the 10 years? Have you actually done the math?

You need to pay down $125k over the first five years so that you can be on even footing with the guy who buys the exact same house at $425k.

There are no more 3.75% 5-year mortgages. The best is 4.3%. 4.3% on your $550k is approx $24k a year. Another $2k in taxes, and lets say $4k a year maintenance puts your cost at $2500 a month. So unless the other guy is paying $4500 a month, he comes out ahead of you. Plus he gets liquidity, and investment income (presumably higher than 4.3%) on his money for 5 years before buying.

#103 confused and a little crazed on 06.21.09 at 6:11 pm

93 # Chris ….from england

I agree censorship is bad but if i recall Garth has mentioned this blog is for realestate and finance…not immigration/ religion or politics.

If govt imposes new rates or policies we can’t help that but N…jr goes way over off topic. It like all of us are watching NHL playoffs on the big screen and he turns the channel to UFC or cricket. Nothing wrong with either sport but this is not the discussion on that topic.

frankly he should start his own blog I ‘m sure people will follow his viewpoint . It is a free country but he won’t he will insist on putting out his opinions which will detract from the real estate/ finance dialogue on this blog.

But a contrary viewpoint is needed to keep balance but opinions on everything left and right isn’t. I think Van makes the best wonton soup in canada but do I think people will move here for that. I should say the Asian girls are into white guys here ” Me luv you longtime” I sure no one offended by that because this is hongcover/ shangcover

#104 Another Albertan on 06.21.09 at 6:21 pm


And if is any basic indication, a number of Harleys are sitting idle (rather than idling), waiting for new owners…

#105 Repatriated Expat on 06.21.09 at 6:28 pm

We’ll soon be seeing many more comments like this one posted by Eduardo on an msn sympatico financial blog. The topic? What do I regret buying:

I regret buying this house. $270,000. 40 year mortgage. 35,000 down. 6 months after moving in we lost the downpayment because values dropped.

$1535/month plus 145/m taxes, plus $45.00 insurance. Then utilities on top, about another $350.00
Working a fulltime job and a part time job JUST covers the house payment, and the utilities. I had my books worked out..and im (1200) in the whole EVERY month. Even thought im workiing my ass off.

#106 Nostradamus Le Vlad Impaler on 06.21.09 at 6:29 pm

Apologies to Nostradamus Jr., as I have now taken his / her handle in vain!
Liars, crooks, thieves, stealing one’s property to benefit oneself ;-) all reign supreme. Keeping in line with the current shenanigans cursing this planet, an e-mail I received last night is an excellent retirement plan through living and working incognito.

Keep one’s mouth shut, head down and hands to the wheel, no matter the ups / downs, positives / negatives of life and never complain.

Whether true or not, I don’t know, but nevertheless . . .
This is a Well-Planned Retirement From The London Times:

Outside the Bristol Zoo, in England, there is a parking lot for 150 cars and 8 coaches, or buses. It was manned by a very pleasant attendant with a ticket machine charging cars £1 (about $1.40) and coaches £5 (about $7).

This parking attendant worked there solid for all of 25 years. Then, one day, he just didn’t turn up for work.

“Oh well”, said Bristol Zoo Management — “We’d better phone up the City Council and get them to send a new parking attendant…”

“Err … no”, said Council, “that parking lot is your responsibility.”

“Err … no”, said Bristol Zoo Management, “the attendant was employed by the City Council, wasn’t he?”

“Err … NO!” insisted the Council.

Sitting in his villa somewhere on the coast of Spain, is a bloke who had been taking the parking lot fees, estimated at £400 (about $620) per day at Bristol Zoo for the last 25 years.

Assuming seven days a week, this amounts to just over £3.6 million ($7.6 million)!

And no one even knows his name.
A very good question — Who regulates the US Fed? 3:31 clip —
Seems the top 10 countries in the financial world (including Kannaduh) are spending beyond ther means. Maybe that is why population control is in order! —
Re: Iran. See 1953. History repeats itself. Kissinger has also called for ‘regime change’. —
Change and the climate are two of the many constants that will be here until the lower psychic regions [Physical – Astral – Causal – Mental – Etheric Planes] finish this current Kali Yuga cycle (a few hundred thousand years to go yet).

Today is the first day of summer. At best, it will get to a damp, cool 20C here in Kelowna, about four degrees below normal.

Global warming in other parts of the world, yes, but global cooling in the Okanagan — undoubtedly YES!

#107 Another Albertan on 06.21.09 at 6:46 pm

“Staff at Goldman Sachs staff can look forward to the biggest bonus payouts in the firm’s 140-year history after a spectacular first half of the year, sparking concern that the big investment banks which survived the credit crunch will derail financial regulation reforms.”

Expect pieces of commentary in the next few weeks about how the fixed-income and equity markets may have been juiced in the first half of ’09…

Everyone else’s mileage may vary.

#108 dgd on 06.21.09 at 7:05 pm

#94 Bottoms up

Yes, they can in BC.

And it becomes more difficult if the rental is in a strata corp that has bylaws restricting pets.

#109 CS on 06.21.09 at 7:06 pm

To #94 – Bottoms Up “….Landlords CANNOT prevent you from renting the place because you have a pet….”

Not true in BC. There is NOT a law that allows pets regardless of what the lease/rental agreement says. Bring a pet into a rental in BC after you’ve signed a ‘no pets’ acknowledgement and if the landlord finds out, you either get rid of the pet or get evicted with the full force of the law behind the landlord.

#110 rory on 06.21.09 at 7:18 pm

#81 confused and a little crazed on 06.21.09 at 1:37 am you said: ”

thank you garth, for deleting nostramus jr. [sic] His coments [sic] are slanted towards splitting this country up between east and west and his views tend to be suggestive in bigotry and racism…..the truth shall set u free.

Did you know that there are actually sentiments about splitting up the country …this is fact…some of Jr’s views tend to also be politically incorrect …not necessarily wrong or even right but politically incorrect.

Politically incorrect items need to be addressed before they fester into open sores. Not saying something or glossing over facts does not resolve anything.

Crazed, the truth will indeed set you free bit your truth wants to be buried in the sand…aka Mr. Ostrich Head.

This case of Jr. being ‘deleted’. Now expand how easy it is to control info if you own the info path like MSM and extremely popular blogs do …this was one of the things Garth argued against in Sheeple but here it is on display and how easily it can happen – the slippery slope…so who is next if they say the wrong thing.

I am not saying GT does not have the right or cannot blank whom he wishes (it is his blog)…just understand how what you read can be easily censored or filtered …it is an easily lost freedom….never embrace the loss of any of this freedom – never.

Those that claim victory and happiness about Jr’s fate need to know that you are indeed the sheeple …may you be rewarded with a lifetime of servitude. (my way of saying I am displeased with those that like Jr. gone for whatever reasons)

P.S. – kinda chuckle that GT says this is not a political blog with his book Sheeple being displayed for purchase + did he not ask on this RE blog if he should run for political office…beat up on Raitt, etc….other than that I say again I always read all the comments good, bad and a lot of the ‘whatevers’…all of course is IMO…and I will be back, I think.

#111 Barb the proof reader on 06.21.09 at 7:20 pm

#106 Nostradamus Le Vlad Impaler

re: Bristol Zoo parking attendant

It’s a fun story, but, it is an Urban myth.

#112 Canadian Army Guy on 06.21.09 at 7:43 pm

squidly77, Jim_S, Mike (Authentic) and Keith in Calgary are the same entity…

Sent from my crackberry in Cottage country.

#113 rory on 06.21.09 at 8:14 pm

To “Chris no longer in England” from your yesterday post you said: I have my own question to add to this. Being new in Canada and needing professional advice about investing, how do I find an honest, competent financial adviser that isn’t going to take me for a ride?”

Absolutely excellent question …my response is I have no idea …so many are focused on mutual funds only, buy and hold stuff and so on …some of the traders on this post will suggest you go it alone …probaly not the smartest advice…me I go it alone, again maybe not the brightest move but I am devoid of options also.

Right now, I think expertise in hedging, currencies, individual stock picking, being able to get out quick & a track record would be good qualities in a FP Company …not so sure the individual planner is as important. ..Comments for Chris???

Also, TY to Tony and Fried Eggs for ideas.

#114 Jen on 06.21.09 at 8:29 pm


Where are you paying 2k for property taxes on 425k home? Here in Ontario you pay 8k. No Joke.

#115 pjwlk on 06.21.09 at 9:51 pm

A friend told me on his way up north he saw a sign in front of a restaurant on the side of the highway that said;

“Stop in for a meal before we both starve to death”

Sign of the times?

#116 Repatriated Expat on 06.21.09 at 9:53 pm

#110 rory

My two cents in regards to Nostradamus Jr.: you make a valid point – but as a citizen of any community we have a respondsibility to respect the common values/laws of the members of that community. Nostradamus Jr, I sense was out to grab attention more than make a valid point about the topics at hand.

Garth, although seemingly hypocritical by banning a blogger, was in a differnt boat as an MP and was respondsible to his electorate, and to an extension to all Canadians.

We all know N. Jr will be back / is back under an pseudonom, and for what it is worth welcome back N. Jr. – we just ask you behave yourself. But the real question is will GT also have that opportunity?

Would anyone here support N. Jr to represent us?

#117 CalgaryRocks on 06.21.09 at 9:57 pm

#114 Jen on 06.21.09 at 8:29 pm Dave99

Where are you paying 2k for property taxes on 425k home? Here in Ontario you pay 8k. No Joke.

Probably Alberta.

Ontario (and others) are very, shall we say, taxing, for people with jobs.

#118 taxpayer like you on 06.21.09 at 10:31 pm

105 repat expat – I read that link.

That guys an idiot, and so are the people that lent him the mortgage! Firstly, that mortgage shouldnt cost more
than about $1250 so he’s getting hosed on his interest
rate. Second, if he nets about $1900/mo with two jobs,
he makes less than $12/hr. What kind of Mcjobber owns a $270k house? Third, if he’s $1200 in the whole every
month, how did he ever expect to make the mortgage payment? Thats just all too stupid.

I’m amazed he had a $35K down payment.

#119 Bobq on 06.21.09 at 10:59 pm

Totally agree with you Garth. But we just sold our house in four days in Toronto w/ multiple bids. So, we are feeling pretty good about that (and the price). Especially now that we can take the time to buy or rent wherever we want to line up the schools we want for our young children.

It’s not always about how bad it is (or will be)…sometimes it’s about how good of a time it is to sell. You know that buying POSs….

#120 confused and a little crazed on 06.22.09 at 12:55 am

# 110 Rory,

Good points …i like the once you censor something when will it stop because in some info venues control is very dominating but I’m not say don’t blog . Just keep it directed toward the topic this blog is designed for real estate/ finance. I can blog here and ask does anyone like X-men # 3 the movie and constantly bring points on the pro and cons on this blog and maybe the animated series then the comics books , then the character orrigins and what will they do for X-men 4…which character should date which character. I could go on and on and on and on. Sure there are other blogs that discuss X-men but I like this one. and you would n’t find it annoying?

There are plenty of blogs to discuss what ever topic you want…that the beauty of freedom of speech and I wouldn’t chaange it but I just want a little consideration. But IF I considered as a sheeple because i want a little order then guilty as charged. For instance, I wouldn’t organise a stripper/ hooker party at a church… I would be a bit more discreet and have it in place more private. Basically when I want sex w/naked girl I go to a brothel…I don’t go to church and vica versa

But hey I aam being a hypocrite here talking about freedom of speech on aa real estate/ finance blog this will be the last you hear from me aabout this topic. You are welcome to have the last word and I applaud you all for keeping it real ” freedom of speech is too important to lose”

#121 Jan on 06.22.09 at 1:25 am

Re: #14 Bailing in BC
So, you are the single mom’s girlfriend are you?
Then why, when I click on your name do I get

#122 dave99 on 06.22.09 at 8:49 am

#114 Jen,

In Toronto, the property taxes would be $3600 on a $425k freehold house.

However they are lower for condos.

But a quick search showed me that there are other areas in Ontario where it would be as much $6500. So I’m sure that you’re correct and there is somewhere that it is $8000. (although that is on the high end)

#123 Samantha on 06.22.09 at 2:05 pm

#91 taxpayer

May your voyage into HELOC waters be safe and worth the journey.

“Lizst certainly had a grand piano, but I wont speculate
about his organ…..”

I am bested – that was hilarious and I think the best pun I have ever seen. I may just needlepoint that onto a pillow.

#124 OttawaMike on 06.22.09 at 8:01 pm

Ok, the T.O. garbage strike is way off topic but I have to wade in as a former member(no not a garbage man) of that now striking CUPE local.
Their shear numbers in the outside worker’s ranks caused the garbage collectors to hijack that local years ago. I had the unpleasant experience of attending a couple of monthly hall meetings. Drunkenness, fist fights, verbal assaults; all part of the agenda.
The 18 bankable sick days are a farce, most municipalities have cut or modified that years ago. They have a 3 days off, no Dr. note policy, so many members take these mini holidays and have no sick days in the bank in case of actual sickness.
I have not much sympathy for anybody striking in these times.
On the counter side the collectors do have a very hazardous, physically demanding job. Not many kids plan that as a career. Privatization is a way to reign in the unions but they usually cannot do the job for less$.
At least the money paid to public sector workers is spread around more evenly. A private operator would send the profits back to head office or buy a bigger boat for his chateau dock.

#125 battledroid on 08.25.09 at 3:35 pm

I am way over my head on this blog site, I do not know the slightest when it comes to markets, investments etc. I am posting because I would like some schooling; I admire those finance majors. my dimlemma: I am a single parent, full time University student graduating next spring. I own my home in Lethbridge, paid 84,000 8 years ago. I have maxed out my student loan and still wish to attend law school next fall (hopefully through schoalrships and grants). I would like to go to U vic or saskatoon. I do not want to sell my house, still have 55,000 owing. but I hate the thought of paying someone rent in either of those new cities. and obviously cant afford to buy in either especially victoria and with olympics coming eek. advice?