Realtors (3)


Did I tell you the Canadian Real Estate Association took a pass on asking me to speak at its annual gabfest this year? Now, there’s a surprise. I’m sure a Garth Turner speech right now would have the same effect as one I delivered years ago to a big city real estate board luncheon.

They threw buns at me. Man, and all I did was give a rousing talk on how real estate commissions are obscene.

I mention this because  for the past couple of days I have savaged our national realtors’ group for a totally unethical media release, and for propagating the myth that housing is (as CREA said), “back to pre-recession levels.”

Actually nothing is back to the way it was a year ago, except human folly.

When I visited my lawyer a few days ago (he specializes in real estate, and I had a property to close on), he said he’d never been busier – ever – than he is right now. This astonished him. In fact, he thought he’d have so much time to kill with a moribund office this summer that he signed up to do some college lecturing. His new burden: no-money-down, long-amortization, first-time purchasers of suburban tract housing outside TO, bought from plans.

Of course, he said he’s also busy representing some buyers who did exactly the same thing last year, and are now walking away from $40,000 deposits, after losing their jobs.  Is that called irony?

I also mention it because this week CREA’s wonky stats were blown out of the water by another housing survey, the Teranet-National Bank index. This one (in stark cntrast) shows a weak real estate market, with prices down almost 7% in April from year-earlier levels. Home prices in Vancouver were off 11%, down 9.8% in Calgary and cheaper by 7.6% in Toronto. On a positive note, prices were up 2.4% in Montreal, 0.6% in Ottawa and 0.2% in Halifax.

This brings me an unproven factoid I don’t want overlooked. Media, the real estate industry and their accomplices in the mortgage biz believe they can influence public opinion enough to alter consumer behavior. And they’re probably right. In fact, they’re doing it now. Why do you think my lawyer’s so damn busy?

And how about this guy? He’s just some mortgage broker with a webcam in Calgary, but he scares me nonetheless. He is so typical of people justifying the unjustifiable (a housing boom during a job crisis and a recession), and making up a storyline to do so. His theory: Garth Turner is an evil dork for cautioning against the impact of rising future interest rates on housing.

Hey, says Brokercam, rates will be only “150 to 200 basis points higher” five years from now. That’s it. Big deal. No story. Move along. It’ll mean a pittance of a monthly increase on a $400,000 mortgage – and people’s wages keep on going up, anyway.

And this is based on what? Nothing. He made it up. Just like the big real estate companies do. As CREA does.

Buying a home and investing in real estate are good, solid things to do. But with huge sums of money and giant loans involved, they need to be done with care, especially in days such as these. Buying into a local bubble market could be the path to heartache, just like assuming rates will not soar or the value of your asset can’t ever tank.

Maybe the feds should spend less time worrying about how to regulate the regulated stock market and more sweat on taming the unregulated housing market. After all, it’s bigger, represents more equity and debt, touches many more people, impacts the economy more intensely and is run by manipulative bun-tossing pirate hucksters.

And I was so looking forward to that speech…


#1 The Other David on 06.24.09 at 10:50 pm

this is how you keep canada’s housing market afloat

Canada a ‘primary’ source of Ecstasy, meth: UN report
National Post – ‎1 hour ago‎
“Canada has become a major trafficking hub for meth and Ecstasy,” says World Drug Report 2009 by Vienna-based UN Office on Drugs and Crime. …

#2 Rural Rick on 06.24.09 at 10:59 pm

A good writer paints with short strokes.
Bun tossing hucksters.
Nice picture

#3 Marc on 06.24.09 at 11:04 pm

Obvious brag at being able to afford a lawyer Garth. is what I am using for my divorce, unless she retains a lawyer, and I am forced to represent myself.

#4 Paul on 06.24.09 at 11:09 pm

And I sold!

#5 Paul on 06.24.09 at 11:10 pm

And i’m happy I sold!

#6 Basil Fawlty on 06.24.09 at 11:33 pm

Much of the general public remind me of Wily Coyote. Just as he runs off the cliff and stands there in suspended animation, not relizing that anything is wrong. Then he looks down and wakes up to a world of hurt.
Most people just do not realize that the world has changed, and the mainstream media is greatly responsible as they whitewash reality with perma-spin.

#7 Grumpydawgs on 06.24.09 at 11:36 pm

The honey in that previous picture sure didn’t get that tan in Yarmouth. This is another typical example of Canadian bait and switch.

#8 nonplused on 06.25.09 at 12:08 am

I am only surprised that you are surprised. I have some years experience working with traders and brokers, and although it is probably only a few bad apples that spoil the basket, they are prone to all manner of deception when things go against them or there is a dollar at stake. Mismarking the book, understating positions, shelving deals, we all remember the California energy crisis (at that time our traders were actively trying to make energy available to PGE, for which we were treated nicely by the various investigations afterward but we only had a small book), round trip trading, you name it. I’ve had a couple of different risk management assignments, and can state unequivocally that there are plenty of traders out there for whom transparency and honesty is the same thing as death or a direct assault. They hate it. I have also worked with a number who are as honest as the day is long, so it’s not all of them, but the bad apples are rotten to the core, and spoil the whole deal. I have seen companies curtail or shut down entire operations because they could not control a few liars who lost them millions in questionable circumstances.

And the funny thing is, even when everyone’s job is on the line and management is making it crystal clear that they demand more transparency, the jokers will come back with “We can’t do our job if we have to comply with all this oversight and diligence. We need to spend our time making money.” Whereas I have traded before as well and can testify you never miss a t-time.

PS the banks are chalk full of these characters. If they have a proprietary trading floor, chances are they are at risk. How do you tell if they are at risk? Did they make outsized profits in a given year? If they did, it was more likely that they are taking outsized risks than that they are superior alpha traders.

Yesterday’s picture was better.

#9 polecat on 06.25.09 at 12:25 am

I’ve been a bear since 03.Followed Garth’s previous blog and some local RE blogs.But in 05 talked to a broker and pretty much had me convinced I could afford 500 000 no problem.I make a decent salary but not that good.Glad the wife kicked me in the junk at the time,don’t think I would’ve done it anyway,but wow.He didn’t even want to talk about a down payment.Waste of money he said,I’d make that up in equity in one year.Well,happily renting and living well,not antsy about buying at all anymore,did get a travel trailer to escape the city though,gotta stay sane in these times…

#10 squidly77 on 06.25.09 at 1:01 am

that mortgage guy is a flat out liar
everyone e-mail this freak @

these conmen piss me off
hold nothing back swear at the prick
i did big time

#11 squidly77 on 06.25.09 at 1:08 am

ha………i have already been deleted
spam this prick and give to him
not once but everyday..i will

hes a freaking liar and a con

#12 Nostradamus Le Mad Vlad on 06.25.09 at 1:13 am

As you placed a colorful pic leading into this post, I figured a small contribution would be in order. Hence —

“. . . except human folly . . . Is that called irony?” — Applies directly to folks who continually buy lottery tickets in the hopes of striking it rich and paying their vast mortgages off. There is a far better chance of Captain Ahab harpooning Mt. St. Helens.

If we are fortunate enough to eventually sell, renting would be our only choice. Invest the net proceeds, stay outta debt / stay outta trouble, neither a borrower nor lender be and keep on keepin’ on.

No matter what, there will always be a greater fool until the world runs out of people.
US follow-up to Garth’s post. —
Deflation? ECB says “Non merci!” — — Whereas gold + / – deflation? —
So much for the Con-bots; they can never, ever be trusted. —
These two links share one common point — things are becoming clearer in one part of the world! —
Pancakes At The Panik Pandemonium! Original 60 Minutes TV segment from 1976, when Uncle Sam was sued for a few billion dollars for the damage the vaccinations caused. —
Another link, this time between Monsanto and Dole (nuke-powered veggies!) —
Portugal decriminalized drugs in 2001, Holland is following suit, Taiwan and New Zealand have legal brothels now — at least some countries are taking a common sense approach! —

#13 squidly77 on 06.25.09 at 1:19 am

can i be a prick absolutely
will i post like an ass tomorrow…probably
but not like that cheap cheesy piece of shit
you need a permanent link to that guy
he needs to be made an example of the REIC corruption

#14 Calgreedian. on 06.25.09 at 1:21 am

So let me get this right, he says, “The type of information that is available to us on the internet is um, you know, really interesting, much much better information than what we get in the traditional media.”

Then he goes on to cite the blog, talk about payment shock and says that he doesn’t expect that the payment shock of 617 assuming that interest rates double, is not a big deal because income rises at least the rate of inflation.

I couldn’t help but notice that he said that Calgary is a bit of an anomaly (read it’s different here).

Does anybody have anymore questions?

I’ll be at the pub quaffing a pint.

#15 barb the proof reader on 06.25.09 at 1:33 am

“Maybe the feds should spend…more sweat on taming the unregulated housing market”

Garth, it can be done. After all, the ‘new’ government set up a Trans Fat Task Force in 2007
and warned if significant progress wasn’t made in 2 years they’d develop regulations. A Trans Fat Monitoring Program was set up. Aglukkaq announced recently that Donuts from popular coffee shops had reduced levels of trans fat. (By the way, it’s confirmed this was the only way they could get the prime minister to lose a few pounds.)
Nonetheless, Trans Fats are “non-essential” and greasy, thereby making them profoundly similar to realtors, so there’s no excuse why the gov’t can’t set up a Real Estate Task Force to help enforce regulation of their blubber. It’s just that simple. Isn’t it?

#16 conan on 06.25.09 at 1:59 am

If selling real estate could be turned into a paid by the hour job it would have happend by now.

The captains of industry are all ways looking to save costs and if was posible to reduce the commision level they would have done that to.

If people were more considerate, and a little bit less “anti- entrepeneurial”, commision rates would plummet.

I laugh when ever I read the anti commision posts on your blog Garth because in a strange way they perpetuate the need for high commisions.

So were they fresh buns or stale?

#17 rick in Surrey on 06.25.09 at 2:02 am

This Mortgage Huckster, webcam touting twit is either completely ignorant of facts or he is delusional! “Income rises at least at the same rate as inflation”. Give me a break buddy, you’ve been inhaling the fumes from all that BS you’re peddling and it’s affecting your grip on reality. Mind you, I guess if he is referring to a deflationary economy, perhaps THEN AND ONLY THEN would wages be keeping up to the rate of inflation.

People like this make me sick! All they see is an angle for making themselves money and not the fact how it will impact others. Hey buddy, why not mention what interest rates were like back in the early 80’s! Of course, that could’nt ever happen again and won’t happen again. Not in his little reality, or for the other Sheeple’s reality.

It’s jackasses like this guy and the people that believe his rhetoric that got us in the pickle we are all in today. So, go ahead folks buy up all the RE you can today! As Realtors like to say “Buy Real Estate, their not making any more!” Never mind the state of the gobal economy and how that will affect your ability to afford all that granite and high end appliances. But don’t worry, it will all work out. Enjoy the tours of Open Houses for sale, and may I recommend you drink the Realtor’s refreshing “Kool-Aid”…it’s tasty and will ease your anxieties!

#18 BBC on 06.25.09 at 2:13 am

Take a look at this G&M article:

It is more like an advertisment than news. These realtors are a credit to their fellow realtors (more free advertising) and a discredit to the Canadian public and our current economy.

Time to be part of the solution and not part of the problem!!!

#19 JET on 06.25.09 at 2:39 am

Fascinating – more pain to come in the US housing market:

#20 Jimster on 06.25.09 at 2:48 am

Heads up! Matt Taibbi’s new article on Goldman Sachs is in the latest issue of Rolling Stone. You can read it here:

It’s called “The Great American Bubble Machine” and describes how Goldman Sachs has repeatedly pumped and dumped the US economy to engorge itself with the hard earned money of American workers.

#21 Munch on 06.25.09 at 5:19 am

Off topic, but … {looking upwards to see if the sky is falling on Munch’s head}

US soccer team dis[patched the African Champions 3-0 couple days back – they have now beaten the European Champions (Spain) and they are now into the final of the Confederations Cup being held here in South Africa.

That is a MAJOR achievement, trust me!

Well done to them – they will be meeting either Brazil or South Africa in the final.

A lesson in the power of Self Belief!

It looks like Obama’s “Yes We Can!” is starting to bear fruit?



#22 Canadian Army Guy on 06.25.09 at 5:28 am

Hmmm… well interest rates could reach pretty high in the next 5 years if that money printing press down in the USA keeps on printing $billions daily. The currency will be just about worthless, unleashing inflation to counter balance. That is clear… cut and dry.
How will it impact us? Who knows ’cause a crystal ball I do not have.

“Warren Buffett said Wednesday the U.S. economy has “no bounce” and will take time to recover, but there is no risk of deflation to push it further into despair.”

No risk of deflation? Better chances for inflation then…

The US Federal Reserve Board on deflation & inflation:

“The U.S. Federal Reserve Board signalled Wednesday that the weak economy likely will keep prices in check despite growing concerns that the trillions it’s pumping into the financial system will ignite inflation.:

#23 Repatriated Expat on 06.25.09 at 6:42 am

The RE industry has been making out like theives by taking > 5 % of each house sale, and acting like hucksters by keeping the allusion of a boyant housing market alive.

The fee/ransom is easy for sellers to swallow in an appreciating market, but when a owner’s mortg. is underwater and he is counting pennies to make it through the month, but untenable in a depreciating market. It’s unfortunate that houses for sale by owner is still so fragmented even with the internet advantage.

The RE industry still represents the excesses of the past and is working hard to keep their pound of flesh.

It’s great to get another source of info on the housing market from Teranet, even though sponsored by a major bank. I’ve seen a lot of references to Teranet on over the past few days, but anyone even thinking about buying a house should look at there site.

Like buying free-falling stocks in a bear market – you’d want to see the rapidly declining curve at least bottom out and recover before putting money on the table. Same for house prices.

I used to often shear that you can’t time the market, these days you can’t afford not to time the markets.

#24 Mike B on 06.25.09 at 7:19 am

Sorry did I read correctly… Garth is closing on a second property in less than 4 months???? Another POS ???

I closed a sale. — Garth

#25 CM on 06.25.09 at 7:23 am

Squirrel update:

UK residents eating grey squirrels to control the population

“The UK is at war on the home front.

And they’ve decided the best way to win, is to eat the invaders — barbecued or spread over crackers.”

#26 PTTM on 06.25.09 at 8:02 am

I know this is a housing blog, but I was wondering what your guys take on this is. It was posted yesterday on MISH’s blog.

#27 Onemorething (aka DaHKkid) on 06.25.09 at 8:05 am

Oh yeah the good ole’ mortgage brokers. I understand they might be the first one’s in line when the lynch mob comes!

#28 Black on 06.25.09 at 8:08 am

The hpi is the most honest metric in Canadian real ea

#29 lgre on 06.25.09 at 8:09 am

“Heads up! Matt Taibbi’s new article on Goldman Sachs is in the latest issue of Rolling Stone. You can read it here:

ah, you beat me to the punch…this is a scary article since Carney is also a Sachs boy..

#30 dd on 06.25.09 at 8:16 am

…. Maybe the feds should spend less time worrying about how to regulate the regulated stock market and more sweat on taming the unregulated housing market….

Oh you are funny. The industry would find the closest tree to hang the ring leader from if this came true.

#31 $fromA$ia on 06.25.09 at 8:32 am

Uh, ya ehem… GOLD!

#32 wjp on 06.25.09 at 8:39 am

The stock market has changed forever, it is now and will be for years to come, a trader’s market not an investment market. For example, commodities and the U.S dollar are intertwined, as the dollar plunges, oil goes up (the new gold) and therefore oil company stocks. For the foreseeable future, (10 years), I would suggest getting into real return bonds in Canada (once the deflation threat is over) and U.S. Savings Bonds I series, (matters not when as your principal is guaranteed however you have an exchange risk so you might want to hold off on the U.S. bonds until the dollar is at parity and I believe you can only hold 30% of your RRSP portfolio). This way your principal, interest, and return at the rate of inflation is guaranteed. The real return bonds in Canada however do have a deflation risk attached.
I would suggest the market is dead for the buy and hold investor as there will be lots of swings to come over the next few years. There is no certainty that when it comes time for you to cash out that the market will be up. However, if you like risk, and want to trade, the market is the place to go, currencies and the stock market. Speculators with mega bucks are playing all the time in the markets so guaranteeing your retirement savings through inflation protected bonds seems to me to be the preferable route.

#33 Pet on 06.25.09 at 8:54 am

Actually Polecat (response #9), you were dumb for not doing the deal. Had you bought in ’05, I almost guarantee you’d be in a profit position today regardless of where you bought. As for being a bear since ’03, I guess that worked out for you well also eh? Missing an 80% run in the markets? Even if you didn’t sell anything on the way up (which I’m sure you would’ve taken some profits along the way) you’d still be about flat. I’m not saying go in now, but don’t pat yourself on the back for staying out of a great run

#34 Onemorething (aka DaHKkid) on 06.25.09 at 9:00 am

Roubini interview. He makes some very good points especially at the end when he summarizes his recommendations for Summers! He does hit on the US looking at going from a 5% savings rate to 10-11%. If this does happen, someone is going to have to pick up the spending. Everyone will look to China but I dont think it will happen!

#35 Devil's Advocate on 06.25.09 at 9:04 am

Did I miss something? I was expecting Mr. Williamsons video to be more bullish, more outlandish, more full of false promise. On the contrary at the end of the video he does advise that new buyers calculate their mortgage affordability on something of a higher rate than would be available to them today so as to avoid “mortgage shock” in the future when they go to renew.

I prescribe more to Mr. Turner’s advice than Mr. Williamson’s but am not so opposed to Mr. Williamson’s even though he might have a nieve outlook of the potentially devastating consequences of this bubble on a bubble. Certainly I could introduce you to a good handfull of vastly more wreckless brokers than Mr. Williamson who are far more deserving of Mr. Turners condemnation.

These are interesting times. By all accounts the economy is not experiencing (yet) the correction it ought. Why? Because our governments are doing everything in their power to avoid it. The real estate industry is not alone inflating the bubbles. The real estate industry’s actions are consequential to the bubble. The real estate industry might at best be guilty of presenting the statistics in such a skewed manner as to make the bubble apparent, not as a “bubble” but a market phenomena which some might consider an indication of a bigger bubble to come. It is those fools who might be the last fools to get in, but I don’t think quite yet.

My own prediction is that somewhere on the not too distant horizon we are going to be witness to someting more economically devastating than we have ever witnessed which will make the economic concerns of late last fall look like a cake walk. There will be no significant warning of it. It will snap with a crack so loud it reverberates around the world. Until then things will seem, for the most part, like governments are doing a fine job keeping a lid on things. Maybe they are. Maybe governments are better economic guardians than I think. Who knows? I suspect not though.

The markets are very active today, while prices are down from a year ago they are well up from January. Volumes are up significantly too. These are facts strange as they may be. Prices will, I think, continue to hold as buyers continue to think “now is the time to buy”. For every follower of Mr. Turner’s blog there are two who know nothing of what sad state of repair the economic mechanics are in. All they see is that we are cruising down the highway and getting where ever it is we are going, where, I think, there lies a brick wall on that path which will be our undoing before we need to pull over to replace the spark plugs.

Hey I am one of those real estate pirates. But I am one of the many who don’t get the positive attention our industry deserves because of the actions of a few bad apples. I could earn countless thousands more if I were to lower my ethics and take advantage of young buyers willingness to be the next “greater fool”. But I’d rather build a long lasting business of trusting long term relationships that will carry my business through. There are others like me, we’re just not so high profile as the hucksters.

#36 dd on 06.25.09 at 9:11 am


… stock market has changed forever…

That is an extreme statement. Is it nothing like 74? early 80’s?

…Commodities and the U.S dollar are intertwined …

Yes for now. Once supply is cut or demand changes then we have a different story.

… For the foreseeable future, (10 years), I would suggest getting into real return bonds in Canada (once the deflation threat is over) and U.S. Savings Bonds I series…

YA right. US saving bonds. The US buck is slowing losing value and the loonie is showing strength. Bonds where the place to be 8 months ago. How about corporate bonds in strong companies (some 10% yields).

#37 Dean on 06.25.09 at 9:20 am

Right on the mark. It’s like a big propaganda machine to inflate prices. I guess if you lie about RE and manage to convince enough people, then you’re not really lying are you?

But come on people. Real estate never goes down in value. Look at the US…no wait bad example, look at the UK…er…Japan…look at last year….hmmm….Ok, I got it: Look at average numbers of sales in a single month. That’s the definitive benchmark, everyone knows this.

Next month’s press release:

“Prices Skyrocket on housing across Canada”. The CREA reported that on Thursday, June 25th 2009, between 4:00 and 4:02PM the average price of a home sold in Canada was 1.6 million dollars. Reality Translation: Some dude bought a condo with a view in Vancouver.

#38 VOODOO on 06.25.09 at 9:26 am

This isn’t good for Canada:

“Another helper: [US] imports fell at an annualized pace of 36.4 per cent, deeper than the 34.1 per cent rate of decline previously estimated. That translated into a bigger boost to first-quarter GDP from trade. U.S. exports fell sharply but not as much as imports.”

#39 AM on 06.25.09 at 9:31 am

Another example of the success of “spin” would be the stock markets. We had conflicting reports this week on the state of the global economy, and it seems that most people prefer to believe the not so bad news over the bad news. This appears to be the case as evidenced in the activity on the TSX as of late. Could the confidence in the TSX be related to the confidence (aka positive spin) in the housing market.

With headlines like “Payroll employment down in April: StatsCan” where does this confidence come from?

#40 Kris on 06.25.09 at 9:37 am

So how many investment properties do you own Garth?

I’m looking to set up a nice, new mortgage brokerage to cash in on all these naive first time homebuyers. Have any office space to lease to me – a nice low all inclusive monthly rate would be great!

#41 CalgaryRocks on 06.25.09 at 9:40 am

#11 squidly77 on 06.25.09 at 1:08 am
ha………i have already been deleted
spam this prick and give to him
not once but everyday..i will

hes a freaking liar and a con

He does mention to set your pmts today as if the interest rate was 5.5% so as to not get a shock at renewall 5 years from now. He also mentions that there may be no rise in prices during this time.

How’s that lying or conning?

#42 youshouldknow on 06.25.09 at 9:40 am

To all who work:

“Offshorability” =salary deflation.

Today, offshorable occupations are not low-end jobs.

IT has already been paying a notable wage penalty for being highly offshorable.

But 22 to 29% of the US workforce is potentially offshorable. Among the most vulnerable: Drafters, actuaries, economists, editors, technical writers, artists, biochemists, scientists, etc…

Look at offshorability charts (from page 38 to 43) compiled by Princeton U. professor Alan Blinder (can be googled if need be).

Blinder, Alan (2009). “How Many U.S. Jobs Might Be Offshorable,” World Economy, 2009, forthcoming.

#43 CalgaryRocks on 06.25.09 at 9:48 am

Had you bought in ‘05, I almost guarantee you’d be in a profit …

We bought 2 in 2005 and now our pmts are about 50% of what equivalent rent would be. Looking to pay it off 5 years from now but if the end of world happens we live on a good street where the neighbours know and speak to each other. When we went 2 Europe for a month earlier this year, we left our house keys with our neighbours on each side and never had to worry about it.

#44 Eduardo on 06.25.09 at 9:51 am

Hey Garth,

Does the falling inventory in Calgary mean anything? Inventory is at ~5400 condos and SFHs at the end of the month. Sales will be ~2500. That’s absorption ratio of <2.2.

Is inventory falling in all parts of the country and what does it mean?


#45 Sylvia on 06.25.09 at 10:21 am

I suspect a significant portion of the recent buying spree is the result of the “moral hazard” we heard so much about. These days everyone anticipates to be bailed out. The expectation may be that should interest rates shoot up and foreclosures loom by the thousand provincial and federal governments will step up with some type of relief for delinquent mortgage holders. That’s what happened in US and the precedent is set. So why should today’s buyers worry? Live it up now then help yourself to the public purse.

#46 Devil's Advocate on 06.25.09 at 10:30 am

There are many a good saying coined by those of greater experience before us but none seems more aptly applicable to today than “ignorance is bliss”.

“A fool and his money are soon parted”. Greater fools abound. Who are the fools? Time will tell. “Education is a bargain at any price”. Many will pay tomorrow for the education they unknowingly are receiving today.

#47 pbrasseur on 06.25.09 at 10:31 am

Interesting stats about the bust-recovery cycle in RE market. Past shows bust is quick but recovery usualy takes years.

#48 @Garth 2 on 06.25.09 at 10:32 am

#32 wjp: If you really believe that the bull market dynamic is over for good then, in principle, mutual funds are dead. Additionally, hedge funds that can profit in any market are the way to go with the speculative portion of your portfolio. If you can properly discount the rhetorical, Madoff-esque media hype, then volatile markets make prudent hedge funds (i.e. ones that truly hedge) a viable and even practical option.

The housing market is still riding high in Toronto. I took a bike ride through Leaside today, 9 out of 10 resale homes are sporting SOLD signs. Garth suggests that it is naive first-time buyers fueling this market…

There’s something incongruous about people strictly in the 27-33 age bracket affording these $700K-$1M homes in Leaside. Either Garth is underestimating the maturity of the buyers out there, or his advice is really only for the few wealthy 30-somethings that can pile full throttle into Leaside real estate.

Again, I am not a realtor. I am watching the whole thing unfold just like the rest of you. My heart is with Garth’s politics, but my wallet is having a polite disagreement with the personal finance strategy he’s currently peddling.

#49 rory on 06.25.09 at 10:36 am

Hi all …we all seem to be missing what needs to be done and that is return to the KISS concept – keep it simple stupid.

If we want to control RE we need to ensure the people buying have ‘skin’ in the game as in their own money to the tune of 20% or 25% including flippers, speculators, etc. Real money, not leveraged from other properties.

Banks that lend more can buy insurance but need to understand the public purse is not responsible if there are defaults….2nd mortgages will be more prevalent along with higher rates due to risk….we will see 3-4x salary back in a hurry as now the mortgage lenders have skin in the game, also.

Nothing else is needed. It will self correct all by itself.

RE/Mortgage agents will go broke as volumes/prices plummet to equalize this bubble. It will hurt a lot of us but we deserve it by letting this get out of hand . Unfotuantely, even all of us prudent ones will pay big time.

KISS people, apply it to everything and all will unfold nicely, in time. A little simple in scope but they are called fundamentals for a reason…IMO.

Responsibility is the new game or should I say the old game brought back. And follow the money.

#50 CM on 06.25.09 at 10:45 am

Re babe in bikini from previous post:

Is the maple leaf Canada’s version of the fig leaf?

Maybe she represents our economy – barely concealed artifically inflated assets, fundamentals ripped out at the roots, having lost the shirt off our backs and standing on a crumbling foundation.

Ohhhh, catty! Scratch, hiss….

#51 ralph on 06.25.09 at 10:57 am

Good point Garth about the real estate industry!

The conservatives seem to be more concerned about busting ma and pa grow operators instead of the real con men. If the government had cared at all; zero down, forty year mortgages should never have been allowed.

#52 Alberta Ed on 06.25.09 at 11:08 am

It’s edifying to watch the media/shills try to suck and blow at the same time.

#53 Repatriated Expat on 06.25.09 at 11:09 am

#26 PTTM

I also read that article and tend to agree with the findings that CD’s can better than buying and holding of stocks.

For a while I compared my returns versus a high-interest (ING) savings account and the savings account came out ahead.

I attributed this to a poor investment choices on my part, but regardless at the end of the day it didn’t really seem like my money was making much of a return. Seeing this is difficult because true returns are complex to calculate when making regular contributions or trading. More time required than I could commit.

A few years ago I started to move more and more into individual corporate and provicial bonds (through TD waterhouse) laddering and always holding to maturity. Average return for the last year is between 5 and 6%.
None of my investment grade bonds ever defaulted and you can diversify within fixed income.

One more point on bonds, why is it that the bond market is way larger than the stock market, but “they” always recommend that individuals invest more in stocks than bonds?

As Mish pointed out why risk the capital when you don’t even get the return.

Call me crazy – but I like to know what I am signing on for upfront and what I’m getting at the end of the day. The risk of inflation is insignificant when compared to real capital losses.

#54 Melodie on 06.25.09 at 11:21 am

Got this in my inbox this am from this company

Speaking of spiking rates:

Statistics taken from CMHC shows the average Canadian annual 5 year mortgage rate.

Some of the highlights include:

* Annual average 5 year Canadian mortgage rate has ranged from a low of 5.46% in 1951 to a high of 18.15% in 1981.

* What impact does this have on a mortgage payment?
o A $100,000 mortgage at 5.46% would cost you $608.07 per month. A $100,000 mortgage at the 1981 peak of 18.15% would have cost you $1,477.49, a difference in monthly mortgage payments of $869.42.
o Your total principal and interest payments, assuming a 25 year amortization period based on a 5.46% mortgage rate would be $182,419.52 while your total principal and interest payment based on a 18.15% interest rate would be…$443,246.39, a difference of $260,826.87.
* Mortgage rates in 2003 at 6.04% have not been seen since 1954 at 6.01%.
* Notice that in most cases, interest rates reached something of a peak at the beginning of every decade. Could we see a spike in 2010?

#55 Melodie on 06.25.09 at 11:24 am

oil acting like interest rates

#56 PTDBD on 06.25.09 at 11:42 am

Bernanke has problem remembering the location of the OFF button on the Prestidigitizermoneyprinting machine. It must be hidden by all the green shoots…

Fed extends emergency funding facilities and swap lines until Feb 1 2010.

#57 Devil's Advocate on 06.25.09 at 12:06 pm

#49 rory on 06.25.09 at 10:36 am “If we want to control RE we need to ensure the people buying have ’skin’ in the game as in their own money to the tune of 20% or 25% including flippers, speculators, etc. Real money, not leveraged from other properties. Banks that lend more can buy insurance but need to understand the public purse is not responsible if there are defaults….2nd mortgages will be more prevalent along with higher rates due to risk….we will see 3-4x salary back in a hurry as now the mortgage lenders have skin in the game, also. Nothing else is needed. It will self correct all by itself.”


#58 JoJo on 06.25.09 at 12:27 pm

Hello Garth!
Where is your housing bust in Toronto Area?


1996.– 55,779 sales, avg. price $198,150
1997.– 58,014 sales, avg. price $211,307
1998.– 55,344 sales, avg. price $216,815
1999.– 58,957 sales, avg. price $228,372
2000.– 58,343 sales, avg. price $243,255
2001.– 67,612 sales, avg. price $251,508
2002.– 74,759 sales, avg. price $275,231
2003.– 78,898 sales, avg. price $293,067
2004.– 83,501 sales, avg. price $315,231
2005.– 84,145 sales, avg. price $335,907
2006.– 83,084 sales, avg. price $351,941
2007.– 93,193 sales, avg. price $376,236
2008.– 74,552 sales, avg. price $379,347
2009. Year-to-Date*May/09*– 30,233 sales,
avg. price *May/09* $395,609

Well, we’ll wait more than 10 years for detach new house in Oakville for less than 300K? Or maybe every house will be more than 1 Mil.? Did you learn from history INFLATE or DIE….
However Bank of Canada reported that low interest will be till June/2010 so will wait maybe in 2011.
Yep, will get lower price 10% in 2011 but than interest rate will be 8%. And, again you should pay even higher mortgage monthly payment than now.
Welcome to Canada…

#59 Jungberg on 06.25.09 at 12:29 pm

Greg Williamson says if rates go up to 8.~% from 4.~%, payments will only increase by $6xx dollars on a $450k mortage. Anyone confirm this? I ran this on a mortgage calculator because I couldn’t believe that, and I cannot reproduce his numbers.

#60 Toronto C9 Renter on 06.25.09 at 12:37 pm

The market impact of Realtors is overstated. They are like fleas on a dog. I’ll never understand why so much emotion about the evil RE agents.

The main influencing factors are Supply (i.e. greedy sellers); Demand (i.e. even greedier buyers); and the cost of financing.

When these factors conspire to collapse the market, many unfortunate agents will be crushed in the wreckage, and be looking for new careers.

P.S. I’ve seen mention of people paying 5% even 6% RE commision. Thats too much. Everything in life is negotiable. A listing agent can and will reduce his/her cut, especially in a hot market Just do it up front and get it in writing like you would any formal agreement.

#61 rjag2034 on 06.25.09 at 12:45 pm

I’m having a hard time decoding this….

Doesnt seem to make a lot of sense as we are seeing a load of sub $700k houses selling in Victoria and nothing is really moving above $700k to $1.5 million…..but this is reported

” Upper-end sales reflect “sellers’ knowledge of what pricing should be and buyers are realizing that there is value there,” Piercy said.

The transactions are among 66 sales, or pending sales, through the Victoria Real Estate Board’s Multiple Listing Service, of homes priced at $1 million or more between April 1 and yesterday, said Randi Masters, board presidentelect”

#62 rory on 06.25.09 at 12:57 pm

#59 Jungberg you said:

“Greg Williamson says if rates go up to 8.~% from 4.~%, payments will only increase by $6xx dollars on a $450k mortage. Anyone confirm this? I ran this on a mortgage calculator because I couldn’t believe that, and I cannot reproduce his numbers.”

The only way I get close if it is the difference between what the expected rate of 6% he talks about (which he says you should base your payments on) and the 8.5%?? rate …then it gets close …otherwise it is like $1200 bucks …very misleading….go figure?

#63 JoJo on 06.25.09 at 1:00 pm

Garth prediction was that soon will see again $ 100 oil price,and higher interest rates. And much higer living expences,So Melodie this scenario is HYPER INFLATION and we are going again in 2007,2008 oil/housing prices.
Maybe you’ll save 10K on buying house but you have to pay double interest next year.And your monthly mortgage payment will be $ 500 higher.

55 Melodie on 06.25.09 at 11:24 am
oil acting like interest rates

.#56 PTDBD on 06.25.09 at 11:42 am
Bernanke has problem remembering the location of the OFF button on the Prestidigitizermoneyprinting machine. It must be hidden by all the green shoots…

Fed extends emergency funding facilities and swap lines until Feb 1 2010.

What about Mr. Carney from Bank of Canada,he is champion of green shoots. Bank of Canada extends emergency funding facilities and swap lines until June 30th, 2010.
GREEN EXPLOSION in Canada. Watch the TSX stocks,never ever we have seen this railly on the Canadian Stock Market in History.
PPT (Plunge Protection Team) in Canada is most active in the world.

If you’re going to quote me, get it right. I predict $100 oil in a year, not next month. Ditto for substantially higher rates. And I have said categorically there will be no hyper-inflation. Anyone overspending on real estate now, and banking on that, is headed for a berg. — Garth

#64 rory on 06.25.09 at 1:00 pm

Also, I don’t know about anyone else but to me $1200 is a house payment not “an in addition” to a house payment as rates rise …IMO.

#65 Bill-Muskoka (NAM) on 06.25.09 at 1:05 pm

Talking about covert operations and disdain in the RE industry is interesting. HOWEVER, here is a story about how the real Pro’s (You know them as ‘Da Government’) handle Whistle Blowers.

9/11 FEMA videographer at Ground Zero goes public

For all those who have doubted the 9/11 ‘official reports’ here is MEAT, not fantasy about what happened.


#66 BoB on 06.25.09 at 1:11 pm

#33 Pet – Right on! That’s what the bears seem to miss on this blog.

#67 Two-thirds on 06.25.09 at 1:16 pm

“Maybe the feds should spend less time worrying about how to regulate the regulated stock market and more sweat on taming the unregulated housing market”

No need to worry folks… the RE industry, is regulated – *self regulated*

PLUS, they have a stringent code of ethics that they say they adhere to – who needs external verification?

AND, if something goes wrong in your dealings with RE agents, you can always complaint to your local RE board’s “ethics advisor” – why bother with hard laws?

I would say we are all safe because of the RE industry’s “HIGHER STANDARD THAN THE LAW REQUIRES” – see a posting from a few days ago below


#111 Devil’s Advocate on 06.23.09 at 11:38 pm


#49 Devil’s Advocate

“If you are considering buying or selling find yourself an individual REALTOR who adheres to the CREA code of ethics but has an otherwise economic philosophy and outlook which is more in line with that of your own.”

I do agree with this statement and have had a tough time finding a realtor that agrees with GT. THEY ARE OUT THERE.

Nevertheless, having a code of ethics and *enforcing* it are two different things.




Aren’t they supposed to try to get the best deal *for their clients*? YES.



#68 Repatriated Expat on 06.25.09 at 1:27 pm

# 60 C9 Renter

I don’t think we can dismiss the RE industry as being a flee on a dog.

Using JoJo’s (#58) numbers for sales in 2008 in Toronto, 75,000 house sales at an average of $375, 000 per house is 28 billion dollars in sales. That is over a billion dollars in RE agent fees being sucked out of the housing market yearly.

Now go and multiply that for sales across Canada .

#69 Crazy bc mortgage broker on 06.25.09 at 1:30 pm

Hi Garth: What galls me about this Calgary mortgage broker is the lack of credentials.
Why should we believe him? There is no correlation between a successful sales career and intelligence. He preaches like he is some economist. Probably got his degree the same place Stephen Harper did.
I’ve spent 13 years trying to dispel the myth of sleazy mortgage brokers.
I still carry a day timer and and at the front of each book I put this quotation from Ralph Waldo Emerson
“To Laugh often and much
To win the respect of intelligent people
And the affection of children
To earn the appreciation of honest critics
And endure the betrayal of false friends
To appreciate beauty
To see the best in others
To leave the world a bit better
Whether by a garden patch, a healthy child
Or a redeemed social condition
To know even one life have breathed easier
Because you have lived. This is to succeed.”
I may not be the “ top producer” but I do have loyal clients

#70 CGL on 06.25.09 at 1:30 pm

Has anyone considered inheritances or sizeable cash gifts from parents / relatives as a factor in partially explaining why (in addition to cheap financing) many first-time home buyers can afford to buy ‘more house’ than their otherwise low incomes would support?

Sure, it may seem like first-time buyers should not be able to afford $300,000+ houses, but are their parents / relatives part of the reason they can – thus indirectly contributing to the seemingly high house prices we are all trying to come to grips with?

Not sure if there’s data on this, and I base this observation purely on personal experience, but in several instances my wife and I have friends with very “average” incomes who are able to afford a huge home (by that I mean $400,000+) but only because their parents kicked in $100,000+ of equity OR MORE (!), or gifted them a huge down payment.

It ticks us off, because we got NO HELP when we bought our house (O.K., I admit – we’re jealous!). We easily have the highest household income among our group of friends, but live in a more modest home…

In another instance, I have a friend whose parents bought him a townhouse (!) when he graduated university, and he kept all the equity as property values skyrocketed in the ensuing years. He was thus able to buy an even bigger house with the profit, making a huge down payment – thus the remaining mortgage is small and manageable for his modest income.

Finally, I’ve seen homes sell in my neighbourhood where two and three families move into the house. Two+ families can probably buy more house than one – so might that be a factor keeping the prices elevated too?

Just a thought, but maybe this explains some of the froth in house prices that doesn’t seem to square with the dismal economic data we are seeing today?

Garth – keep up the good work – I’ve been an avid reader of your blogs / newsletters etc. for many years – even back to the “WGO” newsletters you used to do.

#71 Shifty on 06.25.09 at 1:34 pm

And on this side of the moat.

#72 Mike (Authentic) on 06.25.09 at 1:57 pm

With any sales occupation I agree with a comission base, but as prices of homes go up in value I’m thinking it should be moved from a “Future Shop” style commission to a “Best Buy” Flat rate to sell or find a home in the future.

Also, Realtors should not be called a “professional” position, they make other professionals who earned that designation look bad. Realtors should be called “Salesmen and no more”.


#73 Renter in North York on 06.25.09 at 1:59 pm

#59 Jungberg
He is lying through his teeth

4% 25 year 450k – Monthly Payments = $2367.09
8% 25 year 450k – Monthly Payments = $3434.46

#74 MikeB on 06.25.09 at 2:19 pm

Ahhh Realtors… what a lot they are… I am looking at a property here in Toronto where the realtor is calling for offers at 7PM but according to my realtor will only disclose any registered offers himself rather than the normal way of through the listing office. Of course realtors are governed by RICO (RECO) which is a self governing board so it might be unlikely that things will ever be truly investigated. Imagine that, a self regulated group governing the most expensive purchase people make in their lives … Why… Mike Harris changed this during his disastrous leadership where hospitals cut back as did schools and of course the all popular amalgamation ….too funny…. what a visionary. We used to be able to go to a government body who would over see this whole thing but not any more…. It is like the wild wild west…. these guys do whatever they so choose and no consequences… utterly ridiculous..

#75 My_View on 06.25.09 at 2:20 pm

Sorry Garth,

We don’t need government to get bigger and use up more funds, and then there are the lobbyists, yeah. The numbers are all fudged on everything and fundamentals do not exist. Plus the Toronto average detached home is 395k, yeah right. Good luck trying to find one.

#76 gookgobbler on 06.25.09 at 2:26 pm

JoJo (post #58) is putting it to you Garth… What is the catalyst for an ungodly home price crash for Toronto? Most of middle class Toronto are financial types or supplemental workers of similar ilk.

Weren’t these folks bailed out? Isn’t the stock market rallying? Why would a finance driven town like Toronto experience any sort of price reduction?

I dare say, if you don’t expect stocks to take one on the chin, then you are way off about Toronto. And from what I read, you expect stocks to grow faster than real estate. Total chicken or egg scenario, circular reasoning. I’ve watched this blog for awhile and the two-bit put downs are getting tired. Answer the question.

Where did I ever predict “an ungodly home price crash”? Stop making things up, be accurate. I said we should expect a 15% correction in GTA prices from the peak, and that is what we will get. BTW there is no correlation between Toronto real estate and the stock market. I thought you’d know that. — Garth

#77 Uncertain on 06.25.09 at 2:46 pm

Garth in response to your quote, “I said we should expect a 15% correction in GTA prices from the peak, and that is what we will get.”

So 15% from peak given comment #58 JoJo is May 2009 now the peak?

#78 gookgobbler on 06.25.09 at 2:51 pm

SAYS GARTH: “Anyone overspending on real estate now, and banking on that, is headed for a berg.”

Come on Garth, what about the people that “overspent” in 2005, and 2006, and 2007, and 2008. These were the subjects of your book but now they’re safely out of the woods?

There is a genuine disconnect here. I’ll commend an early call on the correction, but a correction doesn’t warrant the worry that you tend to generate.

You are trying to get people to worry about over-allocation to real estate, but you totally skirt the issue that it is a stable investment versus your alternatives i.e. OIL ! Oil is a commodity play; it is not a reasonable gamble for the average boomer.

Garth, Greater Fool might be an eye-opener for house flippers but for regular Canadians, it is a lot of “market pundit” noise.

You (and most banks) did predict a real estate correction. BUT you did not predict a disastrous stock market crash which, if one had invested precious home equity in it, would have wiped them out.

Hyperbole of any sort is dangerous.

So buy a house. Like I care. I’ve never claimed to be more than a guy with an opinion. — Garth

#79 gookgobbler on 06.25.09 at 3:16 pm

SAYS GARTH: “BTW there is no correlation between Toronto real estate and the stock market.”

This is absolutely dead wrong. Every single Torontonian participating in the real estate market from October `08 to March `09 was concerned about the stock market and the effects of a prolongued episode where their mutuals, hedgies, stocks and bonds returned -35%. The stock market was THE reason for the -10% winter blip in Toronto.

Again, Toronto itself has little else but finance… and those people deal and invest personally in the market. The correlation is uncanny.

You are delusional. 65% of people in the GTA own houses. Only 8% own stocks. Only 2.1% work in the financial sector. Get some new friends. — Garth

#80 My_View on 06.25.09 at 3:16 pm

Maybe the feds should spend less time worrying about how to regulate the regulated stock market and more sweat on taming the unregulated housing market. After all, it’s bigger, represents more equity and debt, touches many more people, impacts the economy more intensely and is run by manipulative bun-tossing pirate hucksters.

BTW there is no correlation between Toronto real estate and the stock market. I thought you’d know that. — Garth


You are flip flopping all over the place, thats what you wrote.

Learn to read. — Garth

#81 MenWithHats on 06.25.09 at 3:19 pm

The oracle of Omaha backs up the oracle of Halton :

No green shoots or blue shoots or shoots of any other colour are on the horizon .
A world of hurt is headd iur way .
Those dumb enough to dabble in real estate,Garth obviously excepted , deserve what they get .
A big fat doughnut hole with zero equity after ten years or more of out sized payments .

Warren Buffett doesn’t see the “green shoots” Ben Bernanke and other bullish investors have spoken of in recent months. In fact, the billionaire investor believes the economic picture will grow darker before things improve.

“Everything I see about the economy is that we have had no bounce,” Buffett told CNBC anchor Becky Quick in a televised interview Wednesday. “There were a lot of excesses to be wrung out and that process is still under way, and it looks to me that it will be under way for quite awhile. In the annual report, I said that the economy would be in shambles this year and probably well beyond, and I think that is true.”

Unemployment, said Buffett, will continue to drag the economy down. He told Bloomberg news that unemployment is “very likely to go above 10%.” About 9.4% of the population — about 14.5 million people — was unemployed in May, the last month for which statistics are available. High unemployment will continue to depress consumer demand for everything from energy to cars and homes, Buffett said.

Wednesday’s news about new-home sales supported Buffett’s argument. New-home sales fell 0.6% in May, dashing the hopes of many bullish investors who believed the economy and credit markets had turned around enough to fuel big ticket purchases.
But then you are all a lot smarter than these two gentlemen .

#82 David Bakody on 06.25.09 at 3:41 pm

Mr. Warren Buffet has basically said the economy is in the tank and will be there for a long time to come. He also stated many good long time lost jobs will never come back …… has he been reading Garth Turner. ca?

When Canada has its real big time RE bust it could be devastating and by that time Harper/Flaherty & Co will have deserted the ship like “Rs” ….. any bets?

#83 Basil Fawlty on 06.25.09 at 3:44 pm

Non mainstream perspective from John Williams of Shadow Government Statistics

“If Williams is right, unemployment is over 20%, gross domestic product is shrinking by 8% and consumer prices are jumping by nearly 7%. His forecasts border on apocalyptic. The government is creating so much new money, he says, that the all but inevitable result is hyperinflation, where “your highest denomination, the $100 bill, becomes worth more as toilet paper than money.” Buy physical gold, he advises.”

#84 Ben on 06.25.09 at 4:16 pm

Hey Garth, I just finished reading the entry and haven’t even read the other comments yet, but this article is without a doubt one of your finest. Well done.

#85 landlord on 06.25.09 at 4:17 pm

So buy a house. Like I care. I’ve never claimed to be more than a guy with an opinion. — Garth

make sure it’s a pos though!

#86 wjp on 06.25.09 at 4:29 pm

# 36 DD…go back and read my post about exchange risk on U.S. Savings bonds I series, you obviously missed that point!

#87 My_View on 06.25.09 at 4:39 pm

If your prediction is for a 10-15% correction, why even write about it or at least make it so dramatic? Honestly 15% on the average 395K home is 60K. If you bought it at 395 and have to sell the next day/year (only speculators/flippers do, small %), wow that’s a kick in the nuts, but if you’re going to LIVE, start a family, you will have many years of joy and most definitely the property will appreciate. Hell, even after 20 years and it does not appreciate, you get something, not like the dreaded rent. I never met someone who said, it’s great to rent my whole entire life………..

Do you put this much emotion into owning or leasing your car? It’s just a place to live, dude. — Garth

#88 ncoffee on 06.25.09 at 4:48 pm

Re: #78 gookgobbler (wtf?)

“Hyperbole”? Dude, come on, it’s not like anyone was talking about potentially dealing with a second depression, eating squirrels, or that Canadian Real Estate would follow in the footsteps of the US, or …

Oh wait … uhm, nevermind …

Also, Garth — it is really fair to refer to yourself now as just “a guy with an opinion”, when the About The Author page here has “He is the financial touchstone of his generation” in big letters at the top of it, among other credentials?

Me, I’m just a guy with an opinion — but you’ve set yourself up as a financial/RE guru to be listened to. When someone calls you on your financial/RE advice, on a blog where you have solicited comments, basically shrugging and saying “whatever” really doesn’t cut it. Maybe instead of just deflecting the charges of this “gookgobbler” (again, wtf?) you should confront his points head-on. Clearly, lot of people here have the same questions.

I truly mean no disrespect, but to many long-term fans here, it really seems like you’re downplaying a lot of things you previously were playing up. The original prediction was “15-30%”, but now we only seem to see you referring to 15%, with certainly no mention of the, what was it last, a 20-30% chance of a 30’s-style depression?

Just the recent consistent usage of 15% instead of “15%-30%” says to me you’ve changed your mind at least a bit here. And really, with all that’s occured since Greater Fool was published, it would be strange if you hadn’t. No?

Actually I said a 15% to 30% correction, depending on the market, and 15% overall from the 2008 peak. I still hold to that. Housing cannot continue to rise beyond the ability of people to buy it. Duh. The 20% chance this whole thing could yet devolve into very nasty times also still holds. But it’s only 20% so you can safely ignore me, right? Obviously you cannot. So I win. — Garth

#89 Paul on 06.25.09 at 4:58 pm

scroll down a bit for an interesting graph

#90 Jimster on 06.25.09 at 5:13 pm

A little old, 2005 but still true (or so I’m told).

Police fear gang war over pot: Price drop expected to ignite violence between crime groups

#91 lgre on 06.25.09 at 5:16 pm

Wow, we had a greater fool run in the last 2-3 months due to free money, and everything is back in order according to some on the board. I guess for some, grade 3 math has been forgotten long time ago..its a shame.

#92 Jonathan on 06.25.09 at 5:47 pm

‘North American Debt and it’s impact on Canadian Real Estate’

“Inflation-adjusted mortgage debt has grown by over 400% since 1980, and by over 75% since 2002.

… the appreciations in Canadian home prices are fictitious”

#93 Devil's Advocate on 06.25.09 at 6:03 pm

#72 Mike (Authentic) on 06.25.09 at 1:57 pm “Realtors should not be called a “professional” position, they make other professionals who earned that designation look bad. Realtors should be called “Salesmen and no more”.”

Definition of a professional, among other things, is one who is accountable for their actions. So it is with REALTORS(TM). A REALTOR does you wrong they are accountable. A REALTOR does you wrong hold them accountable. A REALTOR does you wrong report them to the applicable authorities. We good REALTORS do want to rid ourselves of the bad ones. Help us accomplish that by taking them to task. Really we do have a system that will accomplish this but you need to initiate it.

#94 Devil's Advocate on 06.25.09 at 6:07 pm

Has anyone been able to “sell” you a house? Get real, if a REALTOR was to “sell” you on a house you are a gullable fool and using the wrong REALTOR. On the listing end we market a property, on the buying end we help a buyer find the right property. There is no “salesmanship”

#95 Nostradamus Le Mad Vlad on 06.25.09 at 6:20 pm

Possibly this — — has something to do with gold rising.

Gold is not really heading north, it’s the US greenback which is shooting downhill ever faster, thus pushing up the overall price of many other things.
Farrah Fawcett and Michael Jackson have both moved on from here (broken on through) — /\ — and proved to themselves the reality of the continuation of life in the lower psychic regions (probably not the higher spiritual ones).

But our time will soon come!
They are both fortunate to be out of this mess of a planet; at least they doesn’t have to put up and live with all this BS from “Club Bilderberg” —

As well, this — — is the flag the protestors are waving, except it is the flag used when the Shah ruled (one of the first US puppets, like Pinochet and Musharaff).

Apparently, the Shah’s son is backed by (guess who?) the CIA / Mossad / other interests mentioned above..


Seems like war with Russia (Iran’s seventh-largest trading partner) is moving ever closer. No doubt China will be involved as well.

#96 TJ on 06.25.09 at 7:01 pm

Has web cam man been living on Pluto?
Inflation adjusted wages have not risen since the late 80’s in Canada.
Now it takes two incomes to try and stem the tide. The tsunami is just off Kits Beach, pal.

The outright ‘three card monte’ hucksterism of some elements in the RE business is disturbing at best and outright disgusting at it’s worst.

I hasten to say there are honest RE agents, no doubt – but you have to remember their incentive is to make the commission – full stop.

There is a new condo high rise that is being pre-sold here in D/T Vancouver. It will complete in just over two years. Now – tell me, do you have the jam to fire up a pre completion on a 24-36 month time line?
Do you really think that condo will be worth MORE in two and half years?

Is a Fiat a Chevrolet?

The Elliottwave Theorists, and the brilliant Alan Hall from the Socionomist, a new Prechter publication, are convinced that the next wave of the downturn is going to be savage. Brutal.

Check something called the Baltic Dry Shipping Index. That is a clean chart of how busy world chipping, ie. commerce is. The Index has collapsed.

The VIX is something called a Confidence Index. 70 is good. Last I checked it was 16.

The US GDP fell 5.5% in just 30 days.

Interest rates will have to go up – and so all those lines of credit will start to tighten around homeowners.

Banks can call your line of credit anytime.

“Hello….could we have a check for 50 K at the office before end of business today and oh, by the way, we have raised the rate on your credit card to 30%…..”

To be up to you neck in debt, betting that the ‘home’ you live in will ‘go up’ forever has been put to a lie by the numbers that Garth posted today.

Inflation in food prices, insurance, gasoline and heck even Toronto Blue Jay tickets and deflation in core ‘assets’ like houses, cars, and whole lot else, is going to make us all feel poorer.

It’s called “Stagflation” and it’s a disaster.

Great comments fellow blog dogs.

#97 Samantha on 06.25.09 at 7:08 pm

#78 gookgobbler

This is the best critique of Garth’s work that you can offer?

I agree there is a “genuine disconnect here”, however, it isn’t at Garth’s end.

“Greater Fool might be an eye-opener for house flippers but for regular Canadians, it is a lot of “market pundit” noise.”

“Regular Canadians” are impacted by job loss and a gutted manufacturing sector. They are impacted by shelter costs that long ago outpaced their incomes and a financial sector that gleefully processed mortgages and stretched DSR’s into the stratosphere.

“Regular Canadians” were the buyers, fearful of being priced out of the market, who were enabled by 0/40 mortgages (and of late the new 5% down product profiled in Garth’s June 15/09 “Part Deux” post).

“Regular Canadians” are impacted by Canada’s future which is entangled with the smoke and mirrors sideshow that comprise the global markets and financial institutions.

“Regular Canadians” are impacted by our major trading partner, the USA, who is experiencing record foreclosures and NOD’s (which don’t always get factored into the statistics or MLS listings) and they are about to face another flush of the real estate toilet when the 0 interest/ARM market has another long and difficult dump beginning in 2010 through to 2012. This catastrophe is in addition to, their national debt which, if it doesn’t stop soon will be difficult to label as they won’t have a letter of the alphabet left with which to name it.

Yes, “regular Canadians” are households with too much debt, too little savings, who face increases in taxes, food and utilities.

You state that Garth is “trying to get people to worry about over-allocation to real estate…”. How so? Do you find his writing alarmist?

This is a real estate blog and frankly, stating ”BUT you did not predict a disastrous stock market crash…” is another example of your “disconnect”. Garth did not state he is a financial advisor nor do I recall him donning a turban aka Carson as “Carnac the Magnificent” and pretending to be a psychic. He has, however, offered insight, common sense, and an opportunity to discuss real estate issues via this blog. A valuable offering, especially where younger, inexperienced, and more vulnerable persons are concerned.

Toronto’s real estate crashed by 39% in the Great Depression. How many people today could take a hit like that?

The greatest fool of all fails to heed the Chinese proverb: “There is no feast which does not come to an end.”

#98 Nostradamus jr. on 06.25.09 at 7:09 pm


…Looks like Fed funds have hit the wall…no Fed funds for TO’s streetcars.

After the massive bailout of GM, those Fed funds slotted for the new streetcars will now, regretably imo, be paid to TO’s civic workforces.

…Ontario, Canada’s newest Socialist/Welfare Province.

#99 Bobby on 06.25.09 at 7:14 pm

No doubt, “Devil’s advocate’ is a realtor. The student who pumps your gas is accountable for their actions, yet they are not a professional. The same thing could be said about the mailman. They are again accountable, but I would say it is a stretch to call them a professional.

In fact, a true profession is one the is bound by a code of ethics. No, that doesn’t include realtors. They are just commissioned salespersons selling a commodity, just like car salesmen.

Let’s be honest here, the role of a realtor is to sell houses. If you don’t buy or sell, they don’t get paid. What kind of professional would advocate a would be first time buyer to get into a bidding war and make an offer to purchase without any conditions. Yet, realtors do this all the time.

Ask any realtor the true state of the market and they will not tell you it falling, as you wouldn’t buy, and remember they wouldn’t get paid.

No, realtors are not worth their commissions and I speak from experience as both a buyer and seller. I see a time quite soon where realtors will be paid by the hour by both the buyer and the seller. It will flush out the large number of incapable boobs and then we will see it as a useful occupation.

How can you spot the realtor?

#100 Bobby on 06.25.09 at 7:20 pm

For TJ, yes the Baltic Dry Index is a useful indicator. The realtors out there may think it is a rain gauge but it is watched closely by many economists.

Another useful index is the Case/Shiller Index that is used to quantify house prices in the US. This index shows that housing prices still have 20% more to fall in most parts of the US.

They are attempting to bring something similar to Canada but nothing significant as yet.

Watch, I’m sure the realtors out there will try to have it banned. Ha Ha

#101 Onemorething (aka DaHKkid) on 06.25.09 at 7:34 pm

Wow, quite a bit of negative feedback to your opinion on this one Garth. People must be getting worried.

People keep forgetting the hidden costs of bubbles other than the obvious ones but in my opinion.

The last thing Canada needs is an at par currency with the US but you can count on one thing, if the Canadian RE does not correct itself now, it will get hammered quickly and take loads of people in its spiral.

A smooth deceleration in RE prices will not be in the cards. The only thing that stopped the first decline was the Equity bubble in which came in time for Canucks to boost their attitude.

The problem is there mistook the equity bubble for a property buying opportunity. The Manipulators won RE owners, good luck!

Furthermore, with a par dollar and high RE, I’m sorry but the only buyers are Canadian, foreign investors will opt out!

Agree with poster above watch the HPI Canada and Case-Shiller when even you smart one’s get a tiny itch.

Clue : Watch Unemployment! DaKid Out!

#102 Nostradamus jr. on 06.25.09 at 7:34 pm

15 Reasons why


#103 David on 06.25.09 at 7:45 pm

Sounds like CamBroker considers Garth a false prophet sowing the seeds of confusion among the faithful. Being the village atheist at a revival meeting always has its perils. How the broker came up with that $600 figure is anyone’s guess. My figures came in at $1047 increase in monthly payment at the end of 5 years. I left out increasing utility costs and municipal taxes just like he did. It is awfully tough to find an employer these days who automatically indexes salaries to the rate of inflation. Nice try in the false assumption category though.
Hope those realtors stocked up on bear spray because they are going to need it.

#104 Devil's Advocate on 06.25.09 at 8:14 pm

#99 Bobby on 06.25.09 at 7:14 pm

Bobby, a gas attendent is not responsible beyond loosing his job if he screws up. If he spills gas on your car and lights it afire the owner of the station is liable.

REALTORS ARE bound by a code of ethics and individually accountable for any breach, error or omission they commit against their principle.

#105 taxpayer like you on 06.25.09 at 8:20 pm

Devils advocate said:

“Definition of a professional, among other things, is one
who is accountable for their actions.”

Everybody is accountable if they commit fraud or misrepresent. Otherwise, realtors take ZERO liability.
Lawyers, surveyors, home inspectors, appraisers, all
take liability for their work and opinions in real estate transactions.

Do realtors lose sleep at night due to a misdiagnosis of a deadly disease? An error on a construction survey? A roof collapse from Not enough safety factor on a snow
load calculation? A client rotting in jail? Gimme a break.

Explain to me how a realtor can cost as much as the COMBINED fees of engineers, surveyors and geotechs on a new development WHEN THEY TAKE NO LIABILITY!!!

#106 taxpayer like you on 06.25.09 at 8:24 pm

Oh yeah and those professionals will continue to be liable as time goes by, BUT GET PAID NOTHING WHEN THAT PROPERTY IS SOLD AGAIN AND AGAIN.

OK, steam valve closed, I feel better now…..

#107 Mike B on 06.25.09 at 8:33 pm

The best part of real estate is selling it after you have worn the life out of the box and sell it for gobs more than u paid for it. Plus tax free… There are people who make a living from this… The worst part of real estate is the upkeep and dealing with agents who do little but show washrooms and kitchens… Advice??? Best stick to a palm reader … Better track record!!!

#108 dd on 06.25.09 at 8:35 pm

.#86 wjp

“# 36 DD…go back and read my post about exchange risk on U.S. Savings bonds I series, you obviously missed that point!”

Saving bonds (indexed or not) are not a great investment over the long term. Your better bet is corporate debt or bonds. If rates spike then bonds could be a place to park the money but not until then (inverted yield curve).

#109 john m on 06.25.09 at 9:06 pm

Crazy times…when up should be down and fantasy land prevails..what has happened to our offspring i wonder? Boomers would never be sucked in by this total lack of reality and common sense :-)

#110 PropertyGuy on 06.25.09 at 9:36 pm

#104 – Devil – “Bound by a code of ethics”

That is if the code is even enforced. This guy seems to think not and is making his case:

#111 don bool on 06.25.09 at 9:39 pm

Condo resales are on a roll
“Resale buyers are a breed apart from those who buy new condos,” he says. “They don’t want to wait two or three years. Their personal circumstances demand they buy now.

“What they see all around them is the perfect time to act.”


Nice to see the positive comments on the condo market. Unfortunately it,s sure different here. Since December we,ve had my mother in laws condo for sale. Been reduced twice with not one offer. This is in Comox on Vancouver Island in the middle of the town next to a golf course,shopping mall,hospital. Everything within walking distance. Over 1400 sq,ft. Been reduced twice. There,s over 250 condo,s for sale in this area. This is the epidomy of location,location,location , and is a first class unit. This note from our realtor sums it up.


We have had a few showings this past week, with good traffic.

Everyone says this is the best unit, as the others in the complex are on the back (dark) side.

However, not much is moving, as it appears there are tire kickers, with most of them having something to sell first.

Let me know if you have any questions. Talk to you soon.

#112 Bobby on 06.25.09 at 10:42 pm

For #111,

The sad reality is that there are a growing number of foreclosures in the Comox Valley and other parts of the Island. I get the update every week.

Many of the units are grossly overpriced and have a long way to fall. Why would someone buy a $259 k unit in Comox to retire in when you can buy a home on a golf course in Arizona for the same money. There are new units on Mt Washington that have been for sale now for almost 5 years.

Yes, the market will crash and areas like Comox will be hit the hardest. The salaries there cannot support the prices being asked. Have we seen this before. Sure, a few times and in each case it was ugly.

Get out now at whatever cost.

#113 gookgobbler on 06.25.09 at 11:08 pm

SAYS GARTH: …Only 8% own stocks. Only 2.1% work in the financial sector.

Ludicrous! As I said, the damage wrought in 2008 to mutual funds, hedge funds, stocks and bonds, and (dare I forget) pension assets were almost universally known and exposure was widespread… especially in Toronto! You think only 8% of Torontonians have financial assets outside real estate and autos?

The Toronto financial sector is enormous and encompasses banking, insurance, real estate, brokers of all flavours and numerous other support functions.

Besides which, many regular working stiffs periodically monitor their “RRSP” via online banking and roil at the carnage. In 2008 Q4 and 2009 Q1, these people were scared, and priced their houses to match!

Samantha (#97), you raise some essential observations that are (especially today!) regaining sway in the markets and in the collective consciousness. But recessions come and go and each time it’s potentially the big one… and Garth is no stranger to financial market predictions… are you kidding? He’s just plain wrong sometimes.

By the way, being wrong and learning from it is priceless.

#114 Greg Williamson on 06.25.09 at 11:15 pm

Hello all my new friends, really enjoyed the comments today.

Liar? Ouch. Anyway I just posted my Math on the payment shock example I used in my Live Show. please go check it out

Also, for those of you who failed general math in high school, #10 Squidly, #59 Jundberg, #62 Rory, and especially # 73 Renter please remember when you get a mortgage you make PRINCIPAL and interest payments so at the end of five years when you are calculating the new payment to compare payment shock you need to use the NEW principal amount amortized over the new number of years. go check out the post. I showed my work to.

– Brokercam
(Greg Williamson)

PS: Wish some of you other cowards would post your real names and the links to your blogs so we can see your views and opinions, other then hiding your lame cheap shots behind fake names…nice work.

PPS Garth when can I pencil you in for the show?

#115 AppleCrunch on 06.26.09 at 12:26 am

Only 15% in TO/GTA? I was hoping for 50% so I could go in and buy some good stuff with cash…

#116 Devil's Advocate on 06.26.09 at 1:00 am

#117 Nolan Matthias on 06.26.09 at 1:17 am

Hi Garth,

Just wanted to post the comment I left for Greg Williamson in response to his video blog which you posted a response to here. Knowing Greg’s reputation and professionalism, I do not believe that he in any way was trying to be misleading, and that you took a shot at him as opposed to having a logical discussion. The more professional thing to do would have been to debate respectfully and let individuals make up their minds on their own, however that does not sell books does it? You must remember that Greg has a business to run, he sells mortgages, just like you sell books. There is no way to tell which of you will be right, but you both have the right to give your advice. Ultimately I believe both of will be wrong in the majority of your predictions, but only time will tell. In the mean time I think you should both keep your comments respectful.

Kind Regards,

Nolan Matthias

“Hi Greg,

Congrats on getting Garth Turners attention, I think it is positive that Garth is bringing attention to an alternative view, and obviously that someone with an alternative view is willing to take him on. I personally have commented on a couple of his blogs only to be blocked due to making logical arguments that were against his beliefs (I did in fact back these up with numbers which is why I believe he deleted them).

I have read several of Garth’s books and he does make many valid common sense points. It is clear that in an economy where jobs are being lost, that incomes will not rise. This is basic common sense, all long term income stats aside. Remember, there are fluctuations in long term data and there have been 5 year periods where income has in fact stayed steady or even decreased drastically. Take for example the average combined family household income from 1982 to 1987, which dropped from $66,800 to $59,200 in 2007 dollars. In fact, for each five year period starting the four years prior, you would have ended up with a lower average income at the end of the five year period, disproving your theory that incomes always rise and will inherently do so over the next five years. Incomes could stay stagnant in much the same way for the next five years, not rising as predicted. (This data is for Alberta and was pulled from raw statistics Canada data, which any
economics student or economist knows how to find).

It is apparent that Turner is somewhat of a fear monger in his delivery. However, having a voice like Turner’s to bring balance is a good thing, and who knows he may just be right. Just look at Peter Schiff who took a beating for going against the grain and ended up being spot on (you can find video clips of the beetings he took on youtube).

Unfortunately, all of our crystal balls remain fuzzy at the best of times, and making predictions on either side of the debate is gutsy. I envy you for having the guts to put yourself out there like you have. (On that note I do understand your views, and his as well).

I am curious however, where the 200 basis point interest rate increase comment came from. In a prior comment you attributed it to Benjamin Tal, but obviously you have other data on this which I think many of us would like to see posted. Having sat through the same seminar sponsored by Firstline that Tal presented at, and that you have definitely been quoting from almost in its entirety, including your comments about the money multiplier, I have a hard time remembering Tal commit to any specific increases in rates. He did say several times that rates would certainly rise, however he was very careful not to give a number when prompted several times. He did use a rate of 6.5% in an example, but again was adamant that it was not a prediction but an example. (I took notes on this and starred and noted next to the 6.5% ‘example not prediction’, as he made this clear).

Anyways, I guess that was just a long winded way of requesting to see the interest rate rise prediction data posted for all of our benefit (unless of course it was hypothetical, but you definitely make it sound as though you have data to back it up, “I believe based on research and following a couple economists religiously (Benjamin Tal from CIBC) that long term interest rates will be in the 6.50% range in five years.”)

I do agree with much of what you have to say with respect to your strategy, but I do believe you may have opened yourself up to the attacks that have been made.

Kind regards,

Nolan Matthias”

#118 wjp on 06.26.09 at 5:14 am

#108 dd…I wouldn’t argue your point, mine was the stock market is a crap shot and for speculation and bonds were a better way to preserve capital with inflation protection. Best one pick the right corporate bond however, as the guarantee is not quite as good as the US or Canadian governments…corporations can’t print money! The average investor has little time to research as they are busy trying to hold on to their jobs. Financial advisors are a dime a dozen, a good one hard to find!

#119 dd on 06.26.09 at 8:53 am

#118 wjp

“the stock market is a crap shot”

Well it is better than putting all your money into one asset in one town and on one corner. And that is what a lot of people do.

#120 Samantha on 06.26.09 at 9:09 am

#114 Greg


I have an issue with the term “payment shock”. It’s a bit of jargon that distances people from the greater meaning behind the term, which is increased interest rates and their impact upon payment ability/budget, and cost of borrowing.

Regarding your PS “Wish some of you other cowards would post your real names and the links to your blogs so we can see your views and opinions, other then hiding your lame cheap shots behind fake names…nice work.”

I believe that the “cowards” you refer to did offer their views and opinions.

And because I just can’t resist, regarding your PPS
“Garth when can I pencil you in for the show?”

Will you be serving buns? Garth has experience with the bun toss. I wonder if that is a realtor custom? Or maybe, Garth said he really enjoyed those buns and the realtors were so nice that they wanted to send some home with him? Wow, I just thought of something, maybe the realtors threw the buns at him because they are environmentally conscious and did not want to use plastic bags. You realtors sure sound like a swell bunch. I bet you even toss buns to the food banks too, cause no one would waste good food when so many people are going hungry, right?

Samantha (really my name)

#121 wjp on 06.26.09 at 9:27 am

I don’t think I suggested that anywhere!

#122 Nolan Matthias on 06.26.09 at 6:31 pm


Seems like you are throwing some buns of your own. Greg is not a realtor, however he is being attacked, as are realtors in general, as if they are the scum of the earth. There are good and bad people in every profession, it is unfare to lump them all into one category as many of Garth’s readers, and Garth himself tends to do.

Kind Regards,

Nolan Matthias

#123 Samantha on 06.26.09 at 8:12 pm

Hi Nolan,

No, I am not throwing buns (although the visualization is quite humorous – might just try it next time I need to liven up a dull dinner party).

The first part of my comment to Greg (which was serious) was regarding the use of jargon in the sense that it distances people from the greater meaning behind the term.

I believe that this particular phrase “payment shock” minimizes the true implication to the consumer.

To clarify, I don’t dislike realtors. They market real estate, and like any other sales person, there are those who want to cultivate a loyal, long term clientele. Unfortunately, there are others who have a different set of ethics. Some of the work I did in my life involved marketing. This is why I raised the jargon issue. Internally, it works for many industries, however it’s not a good form of communication when dealing with the client.

The PS response was Greg’s words, not mine. I quoted him and reminded him that people were in fact giving him their views and opinions. Possibly not what he wanted or expected to hear, but such is the frontier of e-communication. We can’t see or hear the other person, nor does the communication flow with the normal speech/pause for questions/clarifications.

The PPS comment stemmed from Garth’s reference to buns being tossed at him during a luncheon speech he gave to a group of realtors. I thought “oh no, not another invite”. All good fun there and no bashing. Perhaps I watched too much Monty Python?

Thanks for the response.

#124 Jason Dodd on 06.29.09 at 1:15 pm

hi there,
i agree we need to be cautious in regard to purchasing real estate. I would guard against making speculations on interest rates at 8% or comparing today to the early 80’s rates of 18.5%.
Monetary policy has changed since then and a lot more is at stake from lender and insurer standpoints on raising interest rates that high. If it goes that high then even the wealthy would have no choice but to walk into their lenders office and drop the keys at the desk. Lenders need to make sure money is accessible and it is not at these rates. Will that prevent rates from going that high again? who knows but you can certainly argue that decisioning and forecasting will be looked at strongly so as to not completely freeze credit markets and make home ownership a foreign concept.

Keep in mind if that happens than no one is safe. All the investments Garth told you to buy will be worthless and we can all line up at the soup kitchen together. These things need to work with some symmetry and as we have just seen if credit collapses so does your investment portfolio. Be careful what you wish for you just might get it.

Ideas are great so lets share them and raise public awareness. Real estate is not necessarily the evil that people are portraying here. Everything in moderation and with careful consideration and research and you will be in a safer position.
Listen to Garth’s points(very valid) and other industry people before considering your options. I respect Garth’s opinion but he has been wrong in the past like so many others and will continue to be going forward. Protect yourself and fill yourself with as much knowledge as possible so you are not putting all your decisions based on one advisor.