No issues


The sight never fails to impress. Pull onto Highway 401 around 7 am any weekday west of Toronto, and as far as you can see are car bums and taillights. Around Trafalgar Road, for example, wheels barely move, so covering the 50 clicks downtown can take well over an hour.

In fact, the average commute time in the area is now 75 minutes, and at $1.05 a litre, it’s as costly as it is long. This is where the greatest number of people in the history of Canada have bought houses within the last ten years. Miles of farmland have become mazes of homes, with predictable results – traffic, congestion, delay, overcrowding and crime.

You might think people came to the burbs to escape that urban blight. But they didn’t. They came to get big, fat houses on single lots. And – guess what? – they’re coming again. The past couple of months have seen real estate activity jump in the nether regions of Best Buy and Home Depot, which has resulted in a mess of cocky talk from realtors. Like this blog, from Milton, which seeks to discredit guys like me:

First let’s talk about the ‘false up’. Doomsayers want you to now believe that this market rebound is only temporary and that we are heading downwards again by September. Their rationale is that we are still in a worldwide economic recession and that it is time for real estate to enter a bigger decline after an eight year run.

But all the economic indicators tell you that the housing market is sustainable at these levels. While unemployment is higher, unemployment is no way near the levels of the eighties and nineties. Affordability – real estate prices, mortgage rates, and incomes added together – is the best (lowest) it has been in over ten years.

We have no foreclosures hanging over the market – in fact we have a shortage of listings in the resale market and a sale to listing ratio of 60% when a normal market is about 35%.  Meaning, for every 100 homes listed, an average market will absorb 35 of them per month (or about a 3 month supply).  Right now, some neighbourhoods and/or types of homes are hovering at nearly 100%.

Finally there has been no price ‘bubble’ – just prices rising in the 3-5% annual range – the historic rate of increase for real estate.

The earlier correction towards the end of 2008 and early 2009 was only caused by a lack of consumer confidence and not from underlying economic issues.

So much crap, and so little time… where does one start?

I’d say this realtor wouldn’t know an economic fundamental if one stuck to his shoe. We have a record number of people out of work today, costing the government a stinging $5 billion in extra survival payments. Behind all of that unemployment is a mess of profitless employers and failing companies. Behind that is a punitive tax system, a too-high currency, reluctant lenders and an American economy in reverse – where 70% of our manufactured goods end up.

Also fundamental is the fact few in this country (with the exception of this blog’s astute readers) have done anything about the problems which caused our malaise. Household debt is up, not down. Canadian savings rates have flatlined. No-money-down real estate is back. And pumpers like this realtor say affordability is up, when any sane person knows these teaser mortgage rates will not hold.

Young couples who have never seen a serious recession or a housing reversal are egged on, resulting now in a sales flurry and higher prices. As for ‘no bubble,’ it was CREA which just last week trumpeted a 16% increase in prices in the last four months. Is that a suck, or a blow?

But, thank god, there are no “underlying economic issues” to worry about. That’s good news. It should be enough to wipe away a $2 trillion Obama deficit, catapulting energy costs, nationalized banks, bankrupt car companies, manufacturing Armageddon, the Boomer tidal wave, a generation of higher taxes and vaulting interest rates.

But if it doesn’t, the newly-mortgaged should be told where to expect Ground Zero.

They sleep there.


#1 nonplused on 06.29.09 at 10:24 pm

Maybe there are some “green shoots” on the lawns outside Toronto!

On the other hand, if the government can keep the pedal on the money creation car to the floor long enough to actually speed up inflation, real estate might make a surprise comeback. I don’t see it happening for a long while, but in Weimar Germany real estate actually turned out pretty good for people who could hang on to it.

But we have different circumstances here. Lots of personal debt and mortgages, which Germany did not have. So I think we get different results, at least until the debt is dealt with.

#2 lgre on 06.29.09 at 10:57 pm

Miltonians are quite dellusional when it comes to RE, I know as I lived there..the quality of homes built in the last 4-5 years are very poor in Milton…just a few months back before Carney decided to give away free money, again..Milton was DEAD..and it will be again once rates start to rise.

#3 Nostradamus jr. on 06.29.09 at 10:57 pm

Hey Bob and Doug …..the Canadian Bro’s

…Please tell everyone on this site who is buying all those + $1 million dollar homes on the North Shore on the left coast of Canada.

Try using words other than bacon, bozo or hoser.

……and like we didn’t know who Bob & Doug were.

(it’s dd in disguise folks)

#4 squidly77 on 06.29.09 at 10:59 pm

remember your blog dogs are rabid
the blog below had to shut down as it responded to your opinion of the mortgage pumper williamson

i guess opinions only matter to realtors when they favour realtors and no one elses are worthy

#5 Investx on 06.29.09 at 11:17 pm

From that blog:

“Affordability – real estate prices, mortgage rates, and incomes added together – is the best (lowest) it has been in over ten years.”

You never see realtors acknowledge the supposed affordability figure: no more than 30% of your monthly pre-tax househol income should go to towards mortgage payments.


Is this a realistic ratio?

#6 Nostradamus Jr's Analyst on 06.29.09 at 11:33 pm

We have no foreclosure problem YET because we are 2 years behind the US.

How do these clowns sleep at night knowing that they’re screwing people over for their lifetimes just to make a quick buck?

Damn, they make lawyers look respectable.
Maybe even pirates.

#7 Dale on 06.29.09 at 11:57 pm

Patience is the name of this game, any one feeling pressure to buy in now will get the hair cut of a life time. The U.S.A. has just been steam rolled by subprime and more mortgage are about to reset next year. The writing for our housing prices are not what some agent is telling you or the lies published by the real estate media for the sheeple but what you and I are willing to pay. I will not pay over 2.5 to 3.0 times my yearly household income. Edmonton and Calgary will see another 35% drop. Vancouver is a basket case with 50% earthquake under its feet.

#8 Dave on 06.30.09 at 12:08 am

I have to say, this housing bubble is completely moronic. I have people around me, people that have well-paying jobs, that assume real-estate is a sure-shot at all times. They assume it’s always a good time to buy (the first asset class ever if their dream came true).

A guy like me has to sit there and listen to these morons who cannot attach any basic economic fundamentals to the price of a home to determine if it’s a good buy. I study markets like a mad man. I go back hundreds of years deciphering post bubble contractions and I have to listen to (I must say it again) these morons with the same arguments..”the real estate market in toronto is fine”, or “interest rates are great, it’s an awesome time to buy”.

It’s completely annoying. I’m not someone who comes here for reassurance from Garth that prices of homes will fall, I know they are. I also know that it takes time for the masses to realize what’s going on in a post bubble contraction. By that point asset prices, many of them being leveraged, will have declined dramatically….I know all this.

For the time being I have to sit there and engage in conversation with these people and respect their opinion because what’s obviously going to happen hasn’t happened yet! To them, I’m no different than anyone else. The guy who reads The Toronto Sun

#9 taxpayer like you on 06.30.09 at 1:03 am

“Behind that is a punitive tax system” – ga-garth (oh sorry again, I can hear the moans, just shoot me…no wait, GT started it)

But an interesting comment. Garth you’re in business. Own some property etc. You were paid as an elected rep.
And I’m pretty darn sure in all the above endeavours you
paid your taxes. Could you embellish how you find the
system punitive, and what you might propose to “fix”
that? Thanks.

#10 kc on 06.30.09 at 1:05 am

I know this site is more geared for residential RE however, I would like to throw this article at you and see if you can comment from your town/area.

I was going to comment on this the other day and it slipped me. I am noticing around many places here were i live in Greater Vancouver that there was/is this huge build up of Commercial Re, and on top of the new buildings that are for lease, (no one has built any stores in them or rented the offices) the ones that have shut there doors in the past year are still vacant. Large and small. Here is a section from page 2 of a reuters report. (US)

Global property slide may be long

“Parkus estimated that from now though 2013, about $1.415 trillion of commercial real estate mortgages will mature, and more than $1 trillion may have problems refinancing.”

Can I ask for a straw poll here and get your comments on if you notice any decline in occupancies? or vacant buildings. and what area you are in. One of the reasons why I find this interesting is many funds/investments are tied to Commercial RE, and if there is a HUGE tidal wave of defaults as this article states, is this the start of the next shoe that will be dropping hard? (not to mention all the ARMS that are coming due)


#11 Nostradamus Le Mad Vlad on 06.30.09 at 1:17 am

Has any thought been given to having workers, instead of doing a daily mass commute to and fro, being given the opportunity of setting up shop to work from home?

Only a small fraction of people would be able to set-up an office at home, but some councils and employees who do a daily two or three hour grind would see an advantage to this.

Add to that the cost of gas / diesel getting higher, it may be worthwhile to invest $10K in top-of-the-line computer equipment (or whatever is needed) to work from home.
The Greatest Fools will be the young couples of today, who are suckered into buying big homes ‘coz “it’s great for the economy”. I guess starting life in a second-hand, 3-bdrm. townhome is beneath their means.

Speaking of “. . . nationalized banks, . . .”, would thee be speaking forth of the US or Cdn. banks?

Never forget that Harper, Flaherty etc. said that Canada was “as strong as the northern rock” (or something like that), that Canada would come out first of a recession (we’re still in AfPak, wasting billions and now Obama wants us to stay until 2015, so what’s that gonna do to our debt / deficit?) — all babblegook and doublespeak, and all we can do about it is nothing.

If foreclosures start piling up, company bankruptcies, individuals going broke, etc., how will that affect the “stability” of Cdn. banks?

The feds. are throwing money into a never-ending chasm — when does it all stop, take a breather then start again, so how will the social safety nets be affected (or trimmed)?

Seems like we got the govt. we voted for, and it’s a great harvest for the wealthy and elite, so I can surmise that it goes nicely with the first link.

The Generation Gap may be an addition to Garth’s column, as families are having fewer children (except Jon & Kate). —
Chinese banks may not be as stable as previously thought. —
Russia and France are also proving to be highly suspect at running their respective countries’ finances. — \/
The lead-in for Harper’s Elite to cut spending. —
For today’s may / may not be a conspiracy theory —

#12 Kelly McMae on 06.30.09 at 1:45 am

This blog has really helped me to better understand the micro and macro economy. I can’t remember what brought me here but I thank everyone for the information and their perspectives.

It also leaves me bewildered at the current schizophrenic nature of the stock market while the flock stampede single file into mortgage backed serfdom.

#13 Happy Renter in North Van on 06.30.09 at 2:10 am

“I’d say this realtor wouldn’t know an economic fundamental if one stuck to his shoe.”

Garth, let’s face it, most of the real estate agents out there today were the ones too dumb to become financial planners 15 years ago… Somehow they thought it was a good idea to put their mug shot on their business cards…

#14 OttawaMike on 06.30.09 at 2:13 am

Dispatch from Denver,Colorado: I’m down here visiting friends and doing some touring via motorcycle. (Real sport touring bikes, not the cruiser style farm machinery that Fonzie & Garth prefer.) There are very few signs of recession in this state as housing has only dropped 5% from peak. It could be the diversified economy but also the local prices follow the 3 x family income rule so no bubble. Telluride, Vail etc. still have krazy high valuations and plenty of construction activity. Arizona is not far from here and is the epicenter of the USA bust.So what city in Canada will be our Denver?

On another note I’m glad to see I didn’t miss too much in the blog comments section these past days, other than some off topic flame wars.

#15 Brittanny on 06.30.09 at 4:21 am

It should be law that first time buyers take a course in Economics 101. CREA should not be able teach the course.

#16 Mike B on 06.30.09 at 5:18 am

A bit of reality in Toronto… I have indeed seen “offer nights” go bust even in great locations. Also have seen ones sit for 60 plus days have a couple offers go sour then finally sell for 40 k less than asking even after a 40k reduction. I am also seeing listings with “motivated seller” yet some of these are hugely over priced still. Perhaps the summer slowdown?? Dunno. What I do know is that every single business in my downtown commercial building has seen anywhere from a 20-50% drop in their businesses,and this is all types of work. Summer in general is slow so going from slow to dead is pretty much a freakin disaster. The busy folks are the broker types… realtors and stock guys.
The big picture is that the US is insolvent including alot of their banks, same in England.. This kind of stuff does not just go away. Will it effect Canada?… Yes… How bout that 5 month correction ? Funny… when I was looking during that time sellers were still in denial. Today it is the realtors who are in denial. When have ever had a 5 month correction… never…. 5 years … That’s more likely… As for being pegged a doomer… well I just calls them as I sees them.

#17 MrC on 06.30.09 at 6:38 am

Money must be growing on trees somewhere. No one on this blog, including myself has figured out how to grow or find these trees though.

#18 Bill-Muskoka (NAM) on 06.30.09 at 7:30 am

TREB does HAVE ISSUES with Bell Canada over commissions! Greed permeates the RE industry. What a shock, eh?

Bell ‘frightened’ real estate board, court hears

#19 double mike on 06.30.09 at 7:36 am

75 minutes/day? You got to be kidding me. How can people stand it? What is the justification of losing more than 13 days of your life per year sitting in the traffic?
Some ppl say that they buy houses because it improves their quality of life. If this is an improvement, I’d rather stick with the unimproved quality.

I haven’t lived more than 15 minutes from work for last 10 years and usually it’s a 5 minutes drive one way.

For many GTA burb-dwellers, that’s 75 minutes each way. — Garth

#20 Downsized and Delighted on 06.30.09 at 8:06 am

It’s very easy for everyone to agree that real estate prices may slide in the current recession. So where are you investing all of your money that guarantees it will be safer? That is the question. Of course, if you have no money it makes good sense to wait to buy real estate.

Kevin O’Leary says he doesn’t like equities for at least the next year – and possibly for years after that! BNN is FULL of doom and gloom talks and just this AM are saying the market rally is over.

So the question isn’t whether or not real estate may have a price adjustment. The question is, other than putting your money in a sock, where are you going to invest that is safer?

I don’t have any debt – I have 25% of my net worth invested in my house and honestly that’s the only part of my portfolio that I don’t worry about!

#21 The Other David on 06.30.09 at 8:06 am

Can’t afford it, no problem, let’s torch it.

Second fire at same townhouse complex in Mississauga

#22 Devil's Advocate on 06.30.09 at 8:19 am

Integrity… if you have it nothing else matters, if you DON’T nothing else matters.

Education is a bargain at any price.

A fool and his money are soon parted.

Need more be said?

#23 Barb the proof reader on 06.30.09 at 8:27 am

#9 taxpayer like you “Could you embellish how you find the system punitive
If you ever want to check it out yourself, read through Garth’s posts last year, say around, pre-election, it’s all there in his archives. Although, you’re right, it would be nice if he’d do a refresher, I found one quick paragraph to get you going.
“Income taxes have not come down a dime since Harper came to power. In fact, he raised them in his first budget. GST is lower, but who has the cash to buy much right now? Gas prices have shot up, and Harper’s refused to lift a finger to reduce federal tax or to collar gougers. He’s rejected income-splitting for families and he even threw out legislation Parliament passed to let you deduct RESP payments from your taxable income. This guy just doesn’t get it.”

#24 Devil's Advocate on 06.30.09 at 8:29 am

Median sale price in Kelowna has risen from $396,000 at the close of 2008 to $436,000 this month just 6 months later. My math says that’s a 20% annualized increase. Does this make any sense at all?

The economy is sputtering along on half it’s cylinders yet we keep stepping on the gas rather. You just know she’s gonna blow.

Does the tale of The Tortise and The Hare not come to mind here?

#25 JeffinPickering on 06.30.09 at 8:29 am

You never see realtors acknowledge the supposed affordability figure: no more than 30% of your monthly pre-tax househol income should go to towards mortgage payments.
Why?Is this a realistic ratio?”

Why don’t you see realtors acknowledge it? What do they care what you can afford? If you default on your mortgage it’s no skin off their ass.
Now, if they had any sort of ethics they would have this discusssion with you, but frankly, why should they? There should be some personal accountability on a buyers part to understand what they can actually afford (vs. what the bank approves them for).

As for 30% being a realistic ratio, I think absolutely! In fact, if you’re smart it should be quite a bit less, and any difference you would be wise to throw at the principle or otherwise accelerate payments.
When you consider 30% of gross to service mortgage debt (and that should also include servicing a home equity loan/line of credit), then factor in other debt and expenses (credit cards, property tax, utilities, etc.), if you carry a mortgage that’s more than 30% of household gross, you will end up saving just about nada at the end of every month….which is EXACTLY where things are right now – zero savings rate.

#26 Grantmi on 06.30.09 at 8:31 am

Garth.. this is pretty racist IMO!! from Nostradamus Le Mad Vlad!!

For today’s may / may not be a conspiracy theory —

Agreed. It’s trash, and should not have been posted. — Garth

#27 Barb the proof reader on 06.30.09 at 8:34 am

#10 kc

“straw poll here and get your comments on if you notice any decline in occupancies?”

“Calgary headed toward office real estate crisis”

#28 wjp on 06.30.09 at 8:36 am

I seem to have missed something here, the markets, both RE and financial seem to be heading higher and yet the fundamentals of the economy look soft and while the rate of unemployment may be abating, nevertheless there continue to be job losses monthly. Now I realize the stock market is an indicator of things to come and not of the present moment, but I am puzzled as to why stock purchasers might believe the road ahead looks better than today? With states like California teetering on the edge, and federal deficits looming ever larger, and consumers pretty well up to their eyeballs in debt, and boomers having most of the assets in RE, and Canada largest trading partner looking pretty anemic, obviously I have missed something…

#29 Samantha on 06.30.09 at 8:40 am

“But all the economic indicators tell you that the housing market is sustainable at these levels. While unemployment is higher, unemployment is no way near the levels of the eighties and nineties.”

Is it now? Ok, here are the stats from hrdc:

National: 1983 (12.0%), 1993 (11.4%),

and more in-depth stats from: (note the date of these stats don’t include that nasty little jump we had in early May 2009 but does include the alarming increase in part time workers) Just how many part time jobs would someone have to work to afford of your fancy houses there, feller?

“Affordability – real estate prices, mortgage rates, and incomes added together – is the best (lowest) it has been in over ten years.”

Let’s rewrite this so it’s more accurate:

Qualification continues despite high real estate prices because of low mortgage rates offered to brainwashed buyers with not so secure jobs and incomes that do not warrant the amount of debt they are committing to for the next 35 years of their lives.

“We have no foreclosures hanging over the market”

No, the foreclosures are hanging around the banker’s desks, collection units of the banks, and the desks of realtors who have the connections with the banks to get “exclusives” on their completed foreclosures. Not to mention tax sales, and pre foreclosure status homes, and future projections.

“Finally there has been no price ‘bubble’”


“The earlier correction towards the end of 2008 and early 2009 was only caused by a lack of consumer confidence and not from underlying economic issues.”

Really. This guy doesn’t get out much does he? Read something other than real estate propaganda before you trip over those “underlying economic issues” buddy. And they wonder why there is a lack of “consumer confidence”? Bad consumer…bad! It’s all your fault because you weren’t buying. Stupid sensible consumer! Waahh!

We can only hope that “bubble”, “green shoots” and “payment shock” (or any other phrase ending in “shock”) end up on this list and quickly….

#30 Mike B formerly just Mike on 06.30.09 at 8:52 am

RED ALERT… as per BNN this morning.. the last quarter we had that was as good as this previous quarter on the TSX…was 1987. Ok…. now that should speak volumes indeed. We were at the suckers peak in 87 and the years to follow were to say the least jaw dropping. Can you say suckers rally???
Not to mention GDP still in the negative. No real positives EXCEPT our friends in real estate who have suckered tons of people into getting into debt, perpetual debt , by buying a house well beyond their means.

#31 smw on 06.30.09 at 9:18 am

#30 Mike B formerly just Mike

Finally somebody talking sense, and not whining about the cost of real estate. The only bullish group in the Canadian economy at this point is under 30 somethings and real estate sales people.

#29 Samantha

Nice post!

#32 Popeye the sailer man on 06.30.09 at 9:25 am

Employment numbers in Calgary (Alberta), are not as strong as some would lead us to believe. How many in this clip will be buying a house soon. Comments of people are very telling.

#33 Fred on 06.30.09 at 9:27 am

Widely watched index shows US home prices down by 18.1 pct. in April, but trend is stabilizing

“the 20-city index is off almost 33 percent from its peak in the second quarter of 2006, and the 10-city has dropped by almost 34 percent, which means home values are now around 2003-levels.”

#34 Nostradamus jr. on 06.30.09 at 9:27 am

Uhmmmm…lots of double talk going on here.


R E values owe their long term rise due to inflation.

…So what do we have, deflation, flat line or inflation?

…What will we have, deflation, flat line or inflation?

…What is the new Socialist/Welfare Province of Ontario, deflationary, flat line or inflationary?


Location, location, location…(this is a given)


#35 Mike B formerly just Mike on 06.30.09 at 9:30 am

#20 D&D… good to have a hard asset indeed but the problem is that the prices for real estate are not in sync with the real value and/or peoples ability to pay for them.
Most agree that paying off a house mortgage sooner is better than later. Taking 30 years is a great way of making the bankers rich and make the realtors happy.
They make money on the mere act of transactions not whether it is a good investment or not.
75% leveraged means that the bank owns more of the house than you do… a fact.. It also means that when you renew your mortgage you are at their mercy .. Rates will likely go up as they have nowhere to go downwards. Your 75% leverage now becomes a burden not an asset IMO.

#36 Popeye the sailer man on 06.30.09 at 9:30 am

more of the same

#37 Denis on 06.30.09 at 10:02 am

Eugh … The reason why people look at us with blank faces and think we’re nuts! (note: Good Sample Size too)

CMT remarked on twitter: 85% of Canadians would rather own than rent. (Genworth survey: “Makes sense. Most would also rather be rich than poor.” … So owning a home instantaneously makes you “rich” … Is that logical? Especially if these new home buyers aren’t putting 25% down in a depreciating market? Even with 25% down … Home – 400k Current Value … Asset 100k (Down Payment) Liability $300k (Mortgage). Net Worth = – 200k.. That’s – / Minus / Negative $200k!!!! How does that make you rich?!!? You’re 200k in the hole!!!!

Press Release:
The housing market may have experienced some ups
and downs this year, but the spirits of potential first-time homebuyers across
Canada remain strong. According to Genworth Financial Canada’s First-Time
Homebuyer’s Monitor released today, 84 per cent of those surveyed said that
owning a home goes beyond its financial value and feel that homeownership pays
off in more ways than one.
“The survey results show Canadians have a deep emotional attachment to
homeownership,” said Peter Vukanovich, President of Genworth Financial Canada.
“Most people closely associate financial security and emotional well being
with homeownership. That’s particularly true among first-time homebuyers.”
The study measured both the financial and psychological factors of
homeownership – providing the following insights into the link between
homeownership and personal fulfillment:

– 84 per cent agree with the statement, ‘Owning a home provides a
greater sense of emotional well-being and security’.

– 85 per cent believe that even though homeownership may mean more work
and effort, they’d rather own than rent.

– 88 per cent say they would feel more financially secure owning their
own home.

The national survey of 2,521 Canadians was conducted between April 24 and
May 4. The complete Genworth Financial Canada First-Time Homebuyer’s Monitor
with a regional breakdown is available at

#38 c9 renter on 06.30.09 at 10:05 am

To #16 mike B…

Agreed, all is not rosy in the market here in Noore Park / Rosedale either. In the last few months many have gone well below ask, and there have been many price reductions. In the last three weeks several listings have withdarawn after languishing since 08.

#39 View from the south on 06.30.09 at 10:12 am

KC – commercial vacancy

Come to my home town – Windsor, ON. We have tens of thousands of square feet of commercial, professional and industrial space vacant, and local developers are still building more.
At the foot of Ouellette Ave. overlooking the Detroit River is our signature property, the Canderell Building. Originally planned for 30 plus stories of office, condo, hotel and commercial. As built – a lot smaller, no condos, no hotel. The main tenant Chrysler Canada. Ground floor commercial – never, ever been used, still bare concrete and open ceiling.
One block up TD Canada Trust is building a new main branch. Two smaller downtown branches will consolidate as well as a commercial services branch outside the core. So, build one new leave three empty, super.

#40 Alberta Ed on 06.30.09 at 10:24 am

Heck, there’s no recession, no bubble. I just heard on Calgary’s CBC Radio that according to a real estate company’s actual authentic survey that Albertans are willing to “alter their lifestyle” so as to afford recreational property in BC. The Okanagan, specifically. They even quoted a Vernon realtor, and a woman who just bought a condo there to spend summers when Alberta weather is so rotten! Better head to the bank to get little Billy’s college money before they’re all sold…

#41 VOODOO on 06.30.09 at 10:25 am

Second fire at same townhouse complex in Mississauga
In a rising market this never happens. Pretty solid evidence of where the real estate market is headed…

#42 Samantha on 06.30.09 at 10:43 am

And further to “no underlying economic issues”this just in…(note the RBC and St Thomas Real Estate Board are accepting donations. How altruistic of them.)

“Salvation Army needs public’s help to replenish food bank
Tue, June 30, 2009
Officials are seeing an unprecedented demand on the service”

“Donations can be dropped off at any Salvation Army location in the city, at any public library or RBC branch as well as at the London St. Thomas Real Estate Board, 342 Commissioners Rd. W. and South London Nissan.”

#43 Dave on 06.30.09 at 10:47 am

but in Weimar Germany real estate actually turned out pretty good for people who could hang on to it.


Weimar Germany wasn’t in a post- bubble contraction like we’re in. They came from a very active war economy, and bad fiscal policies that triggered their hyperinflation. We’re in a deflation which has devastated the credit markets and has taken asset prices downward. There’s countless examples of situations like we’re in. Don’t bother looking at examples that resulted into hyperinflation because those examples started much differently than our current situation

#44 PTDBD on 06.30.09 at 10:47 am

Are there any statistics on the number of retired selling out their homes in more expensive locations to downsize into smaller towns?

This, of course, would give a great temporary monetary boost to the economy as these people then can afford to maintain their life style on the proceeds. House prices in the smaller locations would also see a boost.

Unfortunately, payback then shifts to the younger folk who bought those older houses in the more expensive areas.

#45 VOODOO on 06.30.09 at 10:51 am

“Increases in the activities of real estate agents and brokers and wholesale trade mitigated the drop.”

1st timers delusional.

#46 905er & Spouse on 06.30.09 at 10:55 am

Check this out… High end Mississauga townhome development destroyed by huge fire. Hmmm, kinda makes ya wonder doesn’t it…

#47 905er & Spouse on 06.30.09 at 10:58 am

Oh yes, further to that last post, I quote from the Star:

“In February six units at the same site burned down. The cause of that blaze, Diciano said, was arson, and he suspects this fire was also deliberately set”.

#48 Halifaxfamily on 06.30.09 at 11:06 am

I haven’t commented in months, but this is truly sad. We are now, more than ever, slaves to our debt. It’s tough to see this generation get saddled with empty promises and a dream that might eventually become a huge nightmare.

#49 Jonathan on 06.30.09 at 11:10 am

Now is the time to invest in economic output. Between 1950 and 2050, we will move from

-1 retiree per 10 workers to 1 retiree per two workers.
– average life expectancy below retirement age, to average life expectancy 40 years above retirement age.

The burden on the system will be immense. We should have invested in real investments – that is projects that have a real economic return and add value to the economy.

Capital gains are not real if you are relying on unsustainable debt load to prop them up. Between 2002 and 2009, we will over double mortgage debt to almost 1 trillion dollars. Yet our GDP has barely changed. We already owe more mortgage debt per capita then the US.

What are we borrowing against? Leverage should only be used to invest – not to consume. If you want to consume, then spend your pay cheque, not the banks.

#50 JAY on 06.30.09 at 11:11 am

Looks like deja vu all over agian in Edmonton. Hey Garth any comments.

#51 mattbg on 06.30.09 at 11:18 am

That was always my question to anyone considering moving to somewhere like Milton: how do you plan to get out of Milton? And they’d say the 401… or Steeles (essentially a 2-lane rural road that far west).

I can only assume it is terrible now. Coming out of Georgetown, which feeds onto Steeles, it apparently takes 10-15 minutes just to feed through the light onto Steeles. And 5 years ago, I planned to take the 401 to work and realized after a couple of days that it was backed up to Winston Churchill every single day because of on-ramp congestion way down the highway in Mississauga.

I ended up taking an assortment of local roads for the next few years I had to drive to work and got to work sooner, despite the fact that the 401 was the shortest and ostensibly the highest posted speed way to get there.

And now I take the GO train to a place that is double the distance away but I get there in roughly the same amount of time as I did to the old place when driving.

#52 Boombust on 06.30.09 at 11:22 am

It’s simple. Be patient or be a patient.

#53 Maurice on 06.30.09 at 11:29 am

Check out Owen Sound. This city gets re-stocked every year with GTA refugees. We sell in the GTA and move to the Grey-Bruce area where houses are one third the price. Then, invest the rest and live in God’s Country. Some times the traffic backs up here for maybe 5 minutes, on weekends. All of the services, non of the stress.

#54 lgre on 06.30.09 at 11:55 am

More and more grow-ops are popping up, the problem is that banks and agents are not disclosing the information with the ‘we didn’t know’ excuse.

A friend almost bought one a month ago unknowingly..he went back for a 2nd visit and found 3 areas of the foundation cracked with water leaking through. he didn’t buy it, but some other fool did. Then the bank and agent disclosed the info,..this is fraud, I see lawsuits brewing.

#55 rory on 06.30.09 at 12:05 pm

Morning all …from the site

Look at the TO prices this guy is predicting …he is saying the TO market, for all intensive purposes, is going to be flat for the next 20 years …the slow deflation will eat away all equity gained through your regular mortgage payments …yikes.

I also agree with him about the avearge median house price for Calgary which he says will come in around $265K which is pre-bubble (2005) and I am guessing is in line with inflation.

So, if I interpret this right, once prices hit their historic values (2005 levels), the market will be basically flat for 20 years. Of course, it still is location, location, and more location. I am generalizing but the big money (or any money) to be made in RE appears to be over…IMO…Comments?

Sorry, money will still be made by all the unnecessary, over the top charges by middlemen/women – like RE agents, mortgage brokers, and govt’s with their land transfer taxes.

#56 Mike B formerly just Mike on 06.30.09 at 12:10 pm

C9 renter #38 Not sure how you can afford Moore Park…. pretty pricey.. We are slumming it after having sold late 2007 and watch prices slide slightly in the beginning of the year then bounce a bit. Still if stuff is not absolutely perfect things don’t sell. I have been in a couple multi offers BUT ONLY two bidders and they have to choose one to deal with and I don’t do verbal offers just to goose the others offer. They can screw off… no house is worth that IMO they ask you if you will go higher so I suggest that they sign back my offer to find out…. Even my agent who is a builder feels that some of the prices people expect are so far out of line with reasonableness… Hell …. one agent asked people to bring certified cheques and come to the house so the could all bid on it at once… They have rules people!!! Some realtors just ignore them and the rest are gleefully counting their dough… I feel that RE will never be a good investment unless you buy super low and it has nowhere to go but up.

#57 conan on 06.30.09 at 12:12 pm

RE: 15 Brittanny on 06.30.09 at 4:21 am

“It should be law that first time buyers take a course in Economics 101. CREA should not be able teach the course.”

Drugs go through a complicated approval process before they are approved for the public. Perhaps it is time to do the same thing with financial products?

Sales people need regulating but let us not forget to put the architecture of the financial products that are being sold under the microscope.

Trillion dollar little mistake on the ABC paper. Thank you economists but it is time to put away the charts and graphs.

#58 Alex on 06.30.09 at 12:16 pm

No doubt. The RE prices in GTA are excessive. However, the factor of high gas price may not be as critical, due to the fact that the plug-in electric cars will be available within next 5 years and because in the future we will work more from home thanks to IT technological advancement.

#59 X on 06.30.09 at 12:17 pm

In regards to the Mississauga townhouse fires….The fire apparently took place after a meeting yesterday evening of neighboring residents who are opposed to the townhouse construction. Apparently the townhouses overlook a lot of other properties and the owners of those properties are non too impressed.

In Markham…where I live…almost every For Sale sign has a Sold sticker on it.

I personally don’t care how much anyone tells me RE is going to go up. I refuse the pay almost 500K for a townhouse in Markham, like some have been asking. Makes no sense.

Poor Obama…how to get a consumer economy to consume, when everyone is out of work?

#60 rory on 06.30.09 at 12:26 pm

GT has an audio post over at

#61 gold bugger on 06.30.09 at 12:40 pm

What a bunch of pathetic whining losers.

There is only one person to blame for driving up home prices – BUYERS.

Realtors, banks, politicians and central bankers – for all their real and imagined sins – do not and have not ever forced anybody to buy a house.

Stop blaming salespeople for earning commissions for selling stuff. That’s how they make a living. If you are too lazy to engage your brain cells to filter or even completely discount their advice, that is your problem.

#62 debtfree on 06.30.09 at 12:45 pm

hi garth
loved the book “after the crash” It’s kind of odd but most of your advise that you give I have all ready followed and could care less what others do. The negativity on this blog is something to behold . I live near Terrace B.C and we are not booming but there is allot of things happening here . We have an ever expanding container port at prince rupert running at capacity ,rio tinto alcan is up grading and adding capacity at kitimat . The highway 37 north power line is being funded study nearing completion . The enbridge pipe line to kitimat is nearing construction . Houses are being built and sold . The owner of basspro ( billions in pocket ) is buying up every rec prop he can get his hands on . People from van and ont are down sizing and coming here . Oh yes and the ridley island terminal just fired dan veneiz ( best news of all) If this is too optimistic for you then let this be a lessen in generalizing .

#63 Another Albertan on 06.30.09 at 12:46 pm


One of my colleagues is a health inspector here in Calgary. She goes through 2 to 5 grow-ops each and every week, averaging about 3. Needless to say, she comments that the police drug squads have been “extremely busy” in the past few years.

When I asked her about what neighbourhoods are more popular and if there were any surprises, she responded that “every community has at least one grow-op… without question.” and one of the most shocking was “a $1.8M house in a very well-to-do neighbourhood… so wrecked that it will probably have to be torn down. It looked beautiful from the outside, though.”

Everyone else’s mileage may vary.

#64 molson cdn on 06.30.09 at 1:03 pm

the car jams are not exclusive to west toronto.
if you look at east toronto, you will see traffic (coming in from ajax, whitby, osh awa, etc..) for miles.
everyone has a minimum 2 cars!

remember last year when gas was 1.50, all the whining and finger pointing. in the near future, its all going to repeat itself.
solution; live in downtown toronto! enjoy the world spinning around YOU.

#65 Mike B formerly just Mike on 06.30.09 at 1:08 pm

Jobless numbers double in Calgary up to 6.6%… Lots of jobs…in retail and only part time…5000 job seekers…
Students for summer work.. others looking for six months and others will take any job. young and old alike.. Yet the realtors keep pumping..

#66 mattbg on 06.30.09 at 1:09 pm

#58, it takes a long time for new car technology to work its way into the population (how many hybrids do you see? And how long have they been available?). And that doesn’t solve the congestion problem.

Also, if a critical mass of plug-in electric cars are on the road then where is the electricity to power them going to come from? Best case, the cost of electricity will shoot up. Worst case, it won’t even be available. And they will take hours to charge vs. a few minutes to fill up with gasoline. That will be quite an adjustment.

And your idea suggests that electric cars will make driving even more attractive — that we will tolerate even longer distances and therefore use even more energy — so the implications for electricity in general are not good.

We really need to get over this lack of consideration for how our behaviour changes the picture and that changing one aspect will only affect that one aspect and that everything else will stay the same. We weren’t meant to apply the scientific method to all areas of our thinking :)

#67 rory on 06.30.09 at 1:14 pm

Hey all …check this guys latest. He has some good and different perspectives …check some of his previous postings if not a regular follower. …new article on RE: De Facto Socialism, 20 Million Vacant Houses and Squattertown, USA

#68 taxpayer like you on 06.30.09 at 1:24 pm

23 Barb – tx for the link. I read that one page, but it wasnt following what I had wanted to know. Garth had said the “system” is “punitive”. His suggestions were still within that system. Some were good (income splitting) some were bad (mortgage interest deduction) others
partially implemented or may implemented soon.

My own tax situation is horribly complicated (at least for
me). I pay my accountant big bucks year after year to avoid and defer all the tax that I can legally. The small business I run was purchased “turnkey” and with it came a bunch of baggage that I dont think I can get out of. Total tax was enought to support a retired couple with no debt, but I never know just how much I owe until the last minute. Not only that, but I think my acct will advise more complication to split some assets.

Any thoughts on overhauling the system? Move from tax on income/investments to tax on consumption? Guaranteed minimum incomes for all to replace various assistance programs?

I’ll search garths sites further.

#69 Bowlsh!t on 06.30.09 at 1:31 pm

75 minute each way is on a good day. Try commuting during a snow storm, it could take more than 4 hours. I can’t understand why people spend so much on a home that they rarely spend time living in it.

#70 Brian on 06.30.09 at 1:40 pm

I am a Realtor in Toronto, and Spring has been very busy. Why?? 3.5% 5 yr rates! Now the rates have been going up and will continue to go up. Just as in Toronto there was a buying frenzy before the TLTT came in, there was a buying frenzy for FTB because of cheap rates, Rebates on LTT, federal tax credit, and lower spring prices because winter was so bad. Has the market recovered? NO! Sellers are back to asking way too much, and buyers are skeptical. The cheapest rates in history is over, and now we are in the regular recession cycle. Was it a smart time to lock in a 5 yrs rate at 3.5%? You betcha! But if you missed that boat, don’t try to jump off the dock trying to catch up. Do what’s right for you and your family. TLTT = Toronto Land Transfer Tax, LTT = Land Transfer Tax (Provincial), FTB = First Time Buyers

#71 wjp on 06.30.09 at 2:11 pm

DBRS cuts ratings on Canadian Banks preferred shares!
Source: BNN

#72 X on 06.30.09 at 2:13 pm

Watch out Alberta.

#73 Samantha on 06.30.09 at 2:17 pm

#54 Igre

Good comment. Wait until the houses that were used as meth labs hit the market. Based upon information from a PBS special I watched approximately 2 years ago, the cost of cleaning up a house in Washington State was USD $60K.

I think there should be a clause add to OTP’s similar to the one used when UFFI insulation was common. The vendor states that the house was not used for the production of drugs.

Mould from a former grow op is bad enough, but the toxic dump that is a former meth lab is horrific.

A slightly different point, but along the same lines regarding future problems and lawsuits, concerns the issue of the DIY/flipper renovations. I wonder how many of those renovations are ticking time bombs, particularly where wiring is concerned or even light fixtures that were replaced. Plumbing is another potential for disaster (leaks and mold)

There is one house in our town where some fool cut the main support beam to acquire an open concept look. And from what I saw, it did not appear that they installed a header to compensate for this alteration. A young couple with two small children bought the house.

#74 Nostradamus jr. on 06.30.09 at 2:30 pm

#53 Maurice

>>Check out Owen Sound. This city gets re-stocked every year with GTA “”””refugees””””.<>So, if I interpret this right, once prices hit their historic values (2005 levels), the market will be basically flat for 20 years. Of course, it still is location, location, and more location.<<

…Isn't it always about Location X's 3?

I previously posted that 100% Electric Cars will be mainstream in a couple of years…but it got deleted.

…I understand the North Shore of Vancouver (North & West Vancouver) is also nicknamed….North America's Switzerland.

…You heard it here first…

#75 Maureen on 06.30.09 at 2:33 pm

What galls me about the government is there grand decision to cancel 100% CMHC insured financing. These mortages were offered at the best rates to consumers. Yet, CMHC continues to insure 95% Loan to value mortgages for lenders who are gifting the downpayment of 5% to the customer and charging the customer a premium rate for the gift. 100% financing is alive and well but now more profitable for the lender and not a good deal for the consumer. The government pretends to be practicing some fiscal responsibility but continues to look after the interests of the big banks and the consumer continues to gets shafted.

#76 Mike B formerly just Mike on 06.30.09 at 2:35 pm

Gold Bugger #61 OK thanks for that vast insight.

#77 miketheengineer on 06.30.09 at 2:53 pm

Garth et al:

As we get closer to Xmas 2009, more people will realize what is going on with the economy. God forbid a bank holiday, or major unrest in the USA. I believe that the people pumping homes right now will not be doing that later in the year, maybe even crying the blues. Defaults will continue their slow steady rise. People will finish their EI and dump their homes as the conditions worsen. Look at the food bank issue (london area I think)

This is just the start guys…..buckle in cause it is going to be very bumpy. Watch where you spend your money. Only buy stuff on sale. Give to the food bank. Keep a small stock of food (enought for 2 weeks, canned goods)

This is all we can do…feel sorry for the guys buying homes in 2009. Over priced shacks. Wouldn’t live in Milton for anything. Mattamy built shacks on super small lots. Yea that’s living baby. Almost no industry in Milton. Almost no jobs. Bad buses. Bad roads.

#78 Samantha on 06.30.09 at 2:54 pm

#61 gold bugger

While I agree that people are not “forced” into buying a house, they most certainly are manipulated into it.

The average person, when dealing with a bank, does not regard the situation as the bank selling to him and/or her, and approaches the situation with a comparable mindset to a job interview. The almighty approval from the bank which translates into the bank telling them what they can afford. And, let us not forget the person who applies for a mortgage or even a renewal who leaves the bank with a LOC and a credit card to boot! Why? Because the loans officer told them they could afford it! Because people (consumers) are conditioned into thinking the bank isn’t SELLING something to them.

Don’t even try to tell me otherwise. I spent many years of my life working in specialized units and branch banking for the banks in this country. I also had to deal with clients in trouble and over and over again I saw the same pattern – people who were sold into too much debt by the bank. People who did not read and fully understand the terms of what they bought from the bank (debt or investment). Much of my time was dedicated to educating people about financial management, which let me tell you, they will NEVER get from a bloody loans officer!

If I sound angry, you bet I am. Until you or anyone else here has ever had to listen to the horror stories I did, up to and including suicidal clients, a hysterical client who was too afraid to buy milk for her baby because of the collectors calling and threatening her (I took care of the collectors), and a thousand other stories of ordinary working people caught up in too much debt and/or job loss and/or life events that upset their financial apple cart.

Worse, the bank makes policies that change and those policies can affect their debt collection. I was able to make payment arrangements for people to try to get them some breathing room, but then the word came down from the top – policy change. Everything I had in place for my clients was out – and we were told “hammer them for everything you can”. I left because I was going to be damned if I would do that to people who had come to trust me.

At some point, the banks and anyone else “selling” some aspect of this nonsense has to step up to the plate and take some responsibility instead of the MSM bullshit that it is ALL the consumer’s fault. If the economy isn’t’ recovering fast enough – blame the consumer. If the overpriced craptastic houses aren’t selling – blame the consumer. When people can’t maintain their insane debt loads – blame the consumer.

When do we begin to hold the entities you listed (and more that you have not listed) accountable? Revolving credit and absurd interest rates on credit cards should have been eradicated a long time ago. But no, the banks were making too much money on them.

And today, these cheap mortgage rates? That’s got to be the biggest joke of all, because the money behind those cheap rates is funded to the banks from the BOC for next to nothing. Worse, they are buying additional funds for future lending at current BOC rates. So when the interest rates go up in the future, their profit will be incredible and again the consumer will suffer for the sake of their corporate greed.

Rant over.

#79 taxpayer like you on 06.30.09 at 2:57 pm

61 Bugger:

“Stop blaming salespeople for earning commissions for
selling stuff. That’s how they make a living….”

Agreed, more or less.

I’ve had great advice form salespeople in the past, and
continue to patronize the same computer store, AV store

Where I did have an issue was Devils Advocate calling realtors “professionals” and using this to charge high
commissions. They are really just salespeople, and many are not very knowledgeable. I do know some good ones

#80 Rick on 06.30.09 at 3:16 pm

“Check this out… High end Mississauga townhome development destroyed by huge fire. Hmmm, kinda makes ya wonder doesn’t it…

This has been going on for the last couple of years. Last year was really bad as people burned their homes down almost weekly in 2008. The RE bubble is going to implode went the free money is all gone and everyone is trapped. You are going to see alot more fires.

#81 Shifty on 06.30.09 at 3:25 pm

#70 Brian
I couldn’t agree more, there was a window of low mortgage rates that resulted in higher sales. These low rates are only temporary as are the RE. sales volumes. I waited for the rates to drop, listed and sold a personal recreational property that I would normally have sweated bullets to move. The property sold within two weeks of listing. Timing is everything. My meeting with the tax man should be interesting.

#82 MenWithHats on 06.30.09 at 3:39 pm

Perfectly good reasons to ignore real estate :

BEFORE the crash in the housing market, the 25 year rate of return on residential real estate was a paltry 5.3% per year, which does not include the fact that most folks have a mortgage that offsets even that small return. Well that 5.3% is history, as it may take at least 10 years for home prices to even rise to near the same level they left headed south in 2007. Maybe a 10-15 year negative return on residential real estate will educate even the most brain addled among us.

Homes are for living in or generating rental income, and are not an investment.
Real estate as an investment vehicle sucks.Big time.

Various sources .

#83 Barb the proof reader on 06.30.09 at 4:01 pm

#68 taxpayer like you “.. thoughts on overhauling the system? Move from tax on income/investments to tax on consumption? Guaranteed minimum incomes for all to replace various assistance programs?” –TLY, you’re brave stating that :) Actually, why are ANY people below the poverty level still paying income tax… I feel strongly everyone has to pay their fair share (of those who can), but, there’s something unrealistic… families earning below $25K still paying income tax. You’ll get criticized by some blowhard who doesn’t look at the ‘big picture’, who doesn’t look at the fact that some people are just ‘unable’ to compete in a regimented economic system.

So here comes the disclaimer, because without it, some friggin’ blowhard with an agenda would love to swoop in on the discussion you started and distort it’s intent. So the rest of this note, is written for that potential blowhard: We’re born to hunt, fish, grow and gather, hand to mouth, and work hard. All people want to, and will, work hard, there’s no doubt, given the circumstances that fit them. But it takes some thought and consideration for people to realize that. There’s always a reason and the label of being ‘lazy’ is far, far, far too simplistic. Take a leap of faith for a second and just consider there’s no such thing as a “lazy” person, we are animals who will do what it takes for food and shelter. We are built that way…. if you look hard enough, even “lazy” people have something awry.. there’s ALWAYS “something”, and this is just a partial list and it’s not a list of excuses, it’s a list of reasons: depression, disability, addiction, circumstance, ignorance and a lot of hidden reasons they themselves coverup or hide their ‘reason’ out of pride. Or consider pathological/sociological. But usually it’s inability, of either the intellectual or developmental type, or something more like an emotional or mental inability to wrangle with, or fit into, the economic rules we’ve set up and live by. We are full-on, living in an economic structure that, some people, can just barely live up to. Fighting their way up the income level is simply not an option for some. And making themselves economically ‘wealthy’ is actually an impossibility for most, although the alluring message is that ‘anyone can do it’. Disclaimer over.

The checks and balances are in the system, but obviously there could be improvements such as the ones you suggest. I have no suggestions, except for education and educating everyone to always look at the big picture, the really big picture.. and then find a like-minded politician and become part of the solution. We can only do our one-six-billionth part.

#84 hagbard on 06.30.09 at 4:01 pm

I think something was put in the collective Koolaid about eight years ago. What else can explain all the insanity of the past eight years?

#85 Dawn in Calgary on 06.30.09 at 4:03 pm

Builder getting desperate?

Please, take my home! I’ll pay you to do it!

“Best of all, you can buy this executive home with no money down plus get cash money for payments.

The home was recently assessed at $1,200,000. We will give you $125,000 for your down payment plus $50,000 cash back.
So, you’ll be getting it for $1,025,000 all without putting any of your own money down, giving you instant equity plus cash in the bank for payments. “

#86 Mark on 06.30.09 at 4:18 pm

@#19 : Double mike

You say “usually it’s a 5 minutes drive one way.”. Well in that case – why dont you WALK you lazy son of a gun..


#87 Suspence on 06.30.09 at 4:22 pm

Has anybody considered that there is still a huge transfer of wealth from the parents of Boomers to the Boomers? I firmly believe this monumental transfer is the catalyst for the present appetite for real estate. Yes I know many have lost on the market but I also know that in well healed areas this transferring is definitely occurring in a massive way. Take all the obvious areas: West Van, East Oakville, Rosedale, Forest Hills. The prices of real estate are definitely down but amazingly homes are still moving, and these are not cheap homes $1.5M and up. Doesn’t anyone think this is partially due to inheritance and gifting? I have friends in all of these communities and all of them still seem to be living large. JMHO

Count on an inheritance and you will likely be disappointed. The Boomers are on track to be the longest-lived generation yet, routinely achieving 90 years of age. That’s just long enough to burn through all the cash. — Garth

#88 Sean in E-Town on 06.30.09 at 4:35 pm

One thing I have to beg to differ with you regarding Garth after hearing your HoweStreet interview. Central bankers have done what’s fairly normal in a liquidity trap, and, if you look at Paul Krugman’s blog, he’ll show you, total borrowing has fallen, government almost filling the gap left by private citizens, and also that prices can fall even when the monetary base doubles, as happened during the Great Depression and the Lost Decade. I don’t think 3% money is free when inflation is 0.1%, anymore than 6% money is free when inflation is 3.1%

Also California’s tax problem is the result of eliminating the state’s ability to increase revenues as a result of Proposition 13.

#89 rory on 06.30.09 at 4:36 pm

#74 Maureen you said: “What galls me about the government is there grand decision to cancel 100% CMHC insured financing”.

M are you new to this site ‘cuz believe or or not one of the biggest problem we have in the housing market is people that need 90-100% financing to buy a house …it is usually a good indicator they are maxed out on payments, have no spare cash, etc. Exactly what helped kill the US market. Plus if they default, they are still on the hook and the taxpayer thrrough CHMC picks up the tab …of course you are correct, the banks win and win again….IMO.

So no to 80% + financing, no to 25+ year mortgages …20% down or go home to your rental….do not pass go.

#90 taxpayer like you on 06.30.09 at 4:46 pm

77 Sam

I dont know whether your post can be called “contrarion” on this site or not, but I will acknowledge it is “good blog”.

In gerneral terms though I will side with Mr. Bugger (I think Mr. because otherwise it would be “bugette”?)
Buyers still have a choice to rent, maybe live with Ma +
Pa, or buy a different house. The seller, on the other hand, has to sell THAT house (at some point)

But that bank policy sucks. Fell victim to it once as they called my business loan. “No longer lending to samll biz in this area” I was told. Very fortuneate to find alternative source.

Spent some time latelywith Holst, Sibelius and Stravinsky.

#91 realtor obsession on 06.30.09 at 5:03 pm

#4 squidly77

“guess opinions only matter to realtors when they favour realtors and no one elses are worthy”

Is that why you’ve shut down your two blogs? You didn’t like the opinions so you closed shop? Can’t stand it when someone presents facts that blow away your fantasies?

Squidly’s graveyard of broken dreams:

#92 IvanHo on 06.30.09 at 5:38 pm

#58 ALex, Canada was founded ona basis of resource and manufacturing. Most jobs that can be taken home are not value added jobs. We can’t have an ecenomy based on people fixing each others intrernet and taking car of each other’s finances. Wow you really wound up this disgruntled, self employed machinist!! I wish my lathe would fit in one of my 4 bathrooms that I can’t afford to put paper in.

#93 double mike on 06.30.09 at 5:52 pm

#85 Mark,
Guilty as charged :(
But it’s still about 5 km one way and walking would take a couple of hours a day, which in turn would make my bragging kind of pointless :)

#94 Wesley Moxam on 06.30.09 at 6:20 pm

Hey Garth, have you seen this?

It’s an article arguing that investors should sell CND Bank stocks due to the un-popped housing bubble here in Canada.

Some numbers he gives:
Average House Price (Peak $US)
Canada: US$ 278,362 (Q2 2009)
US: US$ 230,200 (Q3 2006)
UK: US$ 317,242 (Q4 2007)

GNP per Capita (World Bank 2007 $US)
Canada: US$ 39,650
US: US$ 46,040
UK: US$ 40,660

“The key difference between Canada and other markets is that in Canada the cost of bad home loans have been socialized in advance. In Canada, we didn’t need to disguise our sub-prime excesses within dubious mortgage-backed securities. Why create an alphabet soup of bogus AAA paper when our government provides seemingly limitless quantities of underpriced mortgage insurance? As a formula for creating housing froth it has been virtually unbeatable. Housing markets may be cratering throughout the world, yet one observes a perverse new high in Canadian real estate prices in May of 2009.”

“In all, the CMHC mortgage guarantees are equal to slightly more than half of Canada’s GDP. Against this total, CMHC has miniscule equity capital of $8.1 Billion. How is it that more than $630 Billion of dodgy mortgages can be guaranteed by an entity posting just over 1% in equity? This is a question that curiously appears to have escaped the notice of Canada’s top notch financial regulators. “

#95 David on 06.30.09 at 6:54 pm

Affordability has been redefined as the ability to actually stay in a house regardless of how much non discretionary income is committed or how little is left over for the other things in life at the end of the month. Something is very wrong when living in a house with a very long term mortgage becomes a month to month nail biter and there is often more month than money.
Realtors have no idea about fundamentals with regard to housing and if they did sales would soon dry up to a trickle. Instead of using the term consumer confidence realtors should say should use family income. It is really tough for families to pay for over priced homes with EI cheques.

#96 pjwlk on 06.30.09 at 7:10 pm

#77 Samantha: Awesome post! Thanks for the insight into the real world of bankers.

#62 debtfree: “The negativity on this blog is something to behold.” It’s pretty tough to argue with facts. Honestly, I really wish there were more facts in Ontario’s economy to support a positive outlook here for the next 10 years but nobody seems to be able to find any. Only opinions based on conjecture. Can you help?

#97 Samantha on 06.30.09 at 7:15 pm

#89 Tax –

Hello and thank you, although, I am feeling somewhat contrite for the hastily assembled rant.

There is so much I wanted to convey about that experience and it is difficult to condense the magnitude of what I witnessed and the impact upon the people who were my clients.

There is such a big machine at work and the consumers – people are caught up and ground into it.

I agree that people do have choices, however, societal pressure, advertising, misinformation and corporate greed, among other things, doesn’t help people to make good choices.

The identity of the “investor” is now part of the consumer psyche. “How are your investments?” “Where are you parking your cash?” Comments like these roll easily off the average persons’ tongue. So many people have money in unsecured products that they cannot afford to lose. Madoff is a good example. I read some of the client impact statements. Some said they were “wiped out”. Why did they put money they could not afford to lose into his hands and that type of investing?

It is like the Vegas mentality has migrated everywhere. I half expect to see Elvis impersonators dropping out of the skies one of these days.

This behavior occurred prior the stock market crash of the Great Depression. People, without prior experience who could not afford to lose money, some of whom borrowed money to enter the stock market, did so believing that participating in the stock market would be their path to wealth.

And, there is also the element of greed and how it is encouraged in people. Sadly, many people fail to see that some of the wealthiest people have all said that they became wealthy by living not at their means but below their means. They also fail to see that those who acquired wealth in the stock market didn’t have a “system” (more Vegas thinking) – they were just plain lucky they never lost it all. I wonder if there are any statistics on that one – how many play and how many lose?

Wealth is a hollow word. I prefer abundance, because to me, it means having enough – not more than what I want or need, and that makes for a simple and happy life.

I am sorry to hear about your experience with the business loan and glad that you were able to locate an alternate source. Funny how they don’t understand that good policy is a guideline with enough elastic in it to accommodate the client. The abrupt changing of policy is unfair. I would love to see someone walk into a bank and say “I have changed my policy. I will no longer pay 5% on my mortgage. I will only pay 3%”.
How far would that person get?

Schoenberg and Debussy over here, and as I type Holst (Neptune, the Mystic – music to soothe the cranky soul – I might need some Hildegard von Bingen before the day is done).

#98 905er & Spouse on 06.30.09 at 7:49 pm

So, we’re in Mississauga today and we see this condo development with this big sign outfront that says:
“10% down
$20,000 cash back
From the $190,000”

I’m thinking 10% of $190K is $19K this seems to be no money down, unless my math is horribly wrong.

I can’t believe that people would allow themselves to be bribed with their own money.

This isn’t even considering that the $20K that they are getting back they will be paying interest on for 20-35 years.

Really….what are these people thinking!

#99 905er & Spouse on 06.30.09 at 8:08 pm

Today’s song of the day:
Talking Heads: Burning Down the House

Hold tight wait till the party’s over
Hold tight We’re in for nasty weather
There has got to be a way
Burning down the house

#100 Popeye the sailer man on 06.30.09 at 8:14 pm

US cities may have to be bulldozed in order to survive

#101 CalgaryRocks on 06.30.09 at 8:14 pm

How is it that more than $630 Billion of dodgy mortgages can be guaranteed by an entity posting just over 1% in equity?

Cuz they’re not dodgy.

#102 TJ on 06.30.09 at 8:21 pm

The New Homeowner Hallucination: “We’ll Rent For A Year And Then Sell When The Market Comes Back.

Next Segment of the Housing Market to Crash: $1+ Million McMansions.

#103 TJ on 06.30.09 at 8:30 pm

As of April 2009, average home prices across the United States are at similar levels to where they were in the middle of 2003. From the peak in the second quarter of 2006, the 10-City Composite is down 33.6% and the 20- City Composite is down 32.6%.

In terms of annual declines, the three worst performing MSAs continue to be the same three from the Sunbelt. Phoenix was down 35.3% in April, Las Vegas declined 32.2% and San Francisco fell 28.0%. Denver, Dallas and Boston continue to fare the best in terms of annual declines down 4.9%, 5.0% and 7.7%, respectively. Charlotte, Chicago, Cleveland, New York, Portland and Seattle posted record annual declines in April. For the month Dallas was the best performer returning +1.7%, while Las Vegas was the worst performer down 3.5%.

Of course, this won’t happen in Vancouver because we are hosting the Olympics!

Contractors taking shortcuts on the construction of Vancouver’s Olympic Village could lead to costly mould problems for future owners of the condominium units, according to a union official.

Lee Loftus, the business manager of the International Association of Heat and Frost Insulators and Allied Workers, alleges there are problems brewing behind the drywall where shoddy work may result in energy losses and a mouldy mess for future owners.

Here’s some more sobering math: Assuming the cost of Olympic social housing is $150 million ($110 million in construction plus $40 million in land), each unit would have to rent out at $3,200 a month to pay out that 30-year mortgage. Clearly that’s unsustainable when social housing’s monthly rents are measured in the hundreds of dollars.

#104 JO on 06.30.09 at 9:20 pm

Recommended tax system overhaul:
-come up with one simple definition of income, so that most individuals can file a T1 no more than 2 pages long
-exclude capital gains / dividends / interest from savings from taxation
-once the simplified definition of income is achieved, base income tax on 3 brackets: 0-25 K – pay 5 % or less/ 25.01K – 75 K – pay 15 % / 75 K or higher – pay 20 %. these are combined ont and fed rates.
-eliminate most credits and deductions, save a very small number
-shift taxation slowly to consumption – increase GST and PST to no more than 17 or 18 %
-reduce manpower in CCRA over 50 % and cut other bloated areas of gov’t, including a reduction in civil servant manager salaries/pensions of at least 10 % / new system should see much lower evasion / increased economic growth will very likely increase tax revenues: combination of these will help generate significanlty higher tax revenues despite a lower tax burden
-follow same concepts in reforming corporate tax system
-most of the tax collection could be done by provincial tax agenices and a very small CCRA dept.

-now elect a politican who believes in the same idea

#105 CalgaryRocks on 06.30.09 at 9:25 pm

“ CMHC has miniscule equity capital of $8.1 Billion. How is it that more than $630 Billion of dodgy mortgages can be guaranteed by an entity posting just over 1% in equity? This is a question that curiously appears to have escaped the notice of Canada’s top notch financial regulators. “

I would add to my previous statement that billions of dollars in profits have been transfered from the CMHC into the government’s general coffers. This profited everyone at the expense of the young, first time home buyers. It may explain why these so called ‘top notch’ regulators have missed a couple of details.

That being said, the theory that house ‘losses have been socialized’ by the gvmt through the CMHC would only be valid if the massive profits had not been socialized first.

#106 Grumpydawgs on 06.30.09 at 9:34 pm

Garth , I don’t know how you can say the the CDN dollar is ‘too high’. We have been getting the short staff from our government by its constant intervention. This red herring about the currency being too high is laughable in it’s absurdity.

In fact what is happening is that Canadian manufacturers are being forced to limp along with antiquated unsafe equipment because they can’t afford to upgrade. That is why we can’t compete in manufacturing with other western countries with the same input costs. we cannot raise the productivity as they have in Germany and the Eurozone generally.

Wages and living standards are being kept down artificially because the manufacturing sector is hampered by political pandering to special interest groups. We now have the lowest wage base and standard of living of any western nation, why is that?

Its the sights of the CDN government that are too low not the dollar. This age old Liberal BS about a level playing field for the world may work well at the cocktail parties of the ivory tower well paid government paycheque earner/federal Liberal Elitist and the Trudeau Maniacs of the world but what this policy has really done is deteriorate the CDN standard of living below the norm of competition and we have been by-passed location for international development because of the antique infrastructure and social drag.

When it was neccessary to develop the Quebec economy in prearation for nationhood the Trudeau Liberals bought in the seven percent solution to keep unemployment high and keep wages low in order to bolster the coffers of Quebec based industries.

Well the revolution didn’t work and now its time to get off the drum and let Canadians enjoy the best of what our dollar has to offer and that isn’t a cut rate destination for high currency tourists and well heeled immigrants of convieniance.

The idea that the CDN dollar is too high insults everyone.

#107 Jonathan on 06.30.09 at 9:38 pm

#51 MattBg

“And 5 years ago, I planned to take the 401 to work and realized after a couple of days that it was backed up to Winston Churchill every single day because of on-ramp congestion way down the highway in Mississauga.”

Now by 7:45am, it is backed up to Highway 25 – about 10km South of Winston Churchill. A lineup of hundreds of cars on James Snow Parkway trying to get on the 401 has made the trip nauseating.

Thank goodness I moved.

#108 john m on 06.30.09 at 9:44 pm

DBRS downgraded the preferred shares of the major Canadian banks Tuesday morning because of what it called the “elevated risk” that the dividends could get cut.

The Toronto-based rating agency said in a statement that the downgrade follows a change in its rating methodology for the global banking sector.

DBRS said the downgrade reflects an increased risk of preferred dividend non-payment relative to default risk of senior bank debt.

In the wake of the financial crisis Canadian banks have been issuing record amounts of preferred shares in a bid to shore up balance sheets hurt by exposure to the turmoil.<<<Financial post——–this is not going to end well.

#109 Bob and Doug .....the Canadian Bro's on 06.30.09 at 10:09 pm

What a joke….

Should’ve let it sink…….dead weight…..anchors away.

#110 Bob and Doug .....the Canadian Bro's on 06.30.09 at 10:13 pm


Squiddly77 probably couldn’t come up with the chump change to fund his blog as Squiddly77 missed the boat on real estate in Calgary.

Arm chair quaterback……but never in the game.

#111 BigAl (Original) on 07.01.09 at 1:12 am

Maybe someone can clarify something for me.

Does the Bank of Canada actually lend money it creates as computer entries to the banks at x%, and then the banks turn around and lend that money to a borrower at x plus y %?

OR, does the bank/trust co./credit union,etc. just create their own computer entry and simply lend out that money?

Either way, what are the losses to the banks when mortgages (or loans) default?

#112 BigAl (Original) on 07.01.09 at 1:20 am

….previous post continued…

I guess what I’m trying to figure out is who loses actual money in defaults of mortgages and loans. Is it the Bank of Canada, or the local bank who lends consumers the money? Or nobody?

#113 Got A Watch on 07.01.09 at 10:48 am

A big Happy Canada Day! to everyone. With all the bad news, the truth is, Canada is still a great place to live.

Yes, we have further hard times ahead, as we discuss here everyday. But compare those problems to what is going in many other nations around the globe – and be thankful you live in Canada. We are still the greatest place to live, and I mean that. I love everything about this nation, almost, and those quibbles are not worth worrying about for long on Canada Day.

Get out and enjoy the day and the season. Take pride in your country, the greatest on earth. A radio show just stated a recent poll says “90% of Canadians think this country is the greatest on earth” – yes, it is.

Wave the flag, drink some great Canadian beer or wine, enjoy a BBQ of your favorite foods, watch some fireworks, enjoy some time with family and friends. The bad economy will still be there for years, no point in obsessing about it on July 1.

And a big maple-glazed donut to Garth, for hosting this Blog. Sometimes the discussion gets loud and boisterous, like a night at the local pub, but almost everyone’s heart is in the right place.

I totally reject those who want to divide and diminish this great nation, it deserves better. Yes we have problems, but who does not? I remain optimistic over the long term, no matter how painful the next 8-10 years will be, in the long haul, even that is but one chapter in a large history book.

Canada is a nation to be proud of! Eh!

#114 Tony on 07.01.09 at 11:07 am

Much of this sucker’s rebound was caused by the manipulation of the US stock markets by the US government and the hedge funds who only buy long. When the stock market falls another 50 percent over the next two years real estate will once again collapse worldwide. You’ll never get a better opportunity to sell stocks short than now. I can list stocks to sell short if you want me to. If the stock markets weren’t manipulated (something that started in the late 1990’s) then the DOW would be around 3,000 and the S&P 500 around 200. The stock markets *will* regress to the mean. It’s a 100 percent certainty all stock markets worldwide will fall for the next 5 months especially Chinese stocks.

#115 Debtfree on 07.01.09 at 12:32 pm

96 pjwlk sorry no ont. insight. However I’ve seen this before . This recession seems to me the same but deeper . Every time we out in bc seem to get a rash of ont .ppl . move in with lots of cash . That’s happening again only this time we are also getting lots of yanks with money . The basspro guy is just the tip of the iceberg. He’s bought a lodge one of the nicest here (then shut it down to the public ) and hundreds of acres of farm land in several different pieces and is driving one of his neighbours ( my friend ) crazy with offers on his 100 acres on the skeena. Sounds, I must admit like B.S. but all you have to do is check .

#116 taxpayer like you on 07.01.09 at 12:37 pm

Big Al:

I was taught (oh so long ago) that the BOC does not actually lend money to the banks, though the system would allow it. The rate the BOC sets determines how much the chartered banks must keep in reserve. BOC rate goes up, reserve requirement increases. In order to increase this amount, the chartered banks would tighten their lending practices (less money out) and the easiest way to do this is to increase their lending rates, which lowers the demand for borrwoing from those banks.

The converse is supposed to happenif the BOC lowers its rates BUT you may remember a period a few months back when the chatered banks did not lower their rates when the BOC did because they were not willing to lend in the risky environment (and to just keep hosing us)

We had great blog earlier in the year trying to determine who loses on default. Well the BOC, CDIC and CMHC are all crown corps (verify?) so ultimately we the taxpayers are on the hook. And of course the BOC is buying, by
reverse auction, CMHC-backed mortages from the banks. People were angry about this (including Garth) but I can’t see where its ultimately any different. The real problem is the loans were unwise in the first place.
You’ll also hear many different figures about the value of these distressed assets. You’ll see earlier in this post $600B kicked around but C-Rocks disputes that, and I think he is correct, but we cannot ascertain the actual figure. Also, the BOC is buying/has bought $75B of those, but I dont know if that has actually happened, or is just the current upper limit they have set.

#117 Ottawa on 07.01.09 at 12:42 pm

I find the lack of objective information on Canadian RE frustrating. I have no problem finding a wealth of US information allowing consumers to make informed decisions but in CND at present I am forced to rely on real estate associations for their version of statistics ( ex – )or wait for the once per month short blurb from Teranet.

I thought that the Edmonton RE blog ( very informative and am wondering about sources for statistics that could be used for other regions such as Ottawa.
Any comments on info sources that could be used as a one stop resource tool for interdependent evaluation?
For example:
Median household incomes by city,
Sales price/volume statistics used in teranet by neighbourhood,
publicly available foreclosure statistics – this is obviously available somewhere including previous sales price / mortgage amount / property description etc,
Winnipeg has property tax evaluations and descriptions freely available on-line ( but I haven’t been able to find this for Ottawa or other regions.

#118 Greg Williamson on 07.01.09 at 6:36 pm

Also fundamental is the fact few in this country (with the exception of this blog’s astute readers)

You didn’t mean ALL your readers did you? Or just the ones that agree with you?

Just Wondering?

#119 Samantha on 07.01.09 at 10:01 pm

#116 Tax

I am retracting this sentence from my #78 post as it wasn’t properly worded.

“Worse, they are buying additional funds for future lending at current BOC rates.”

Thanks for your post on #116 to Big Al.


#120 taxpayer like you on 07.01.09 at 11:00 pm

119 Sam

Yes, it may be different now. My recollection was from my economics prof and later my companys comptroller who was a CA.

BOC has promised low rates til next year. If they do increase after that, the banks would then have to increase their reserves, essentially giving some of that
money back. I see from other comments that DBRS(?)
has downgraded bank credit ratings.

In the meantime they hose! I can see why Garth
recommends bank stocks! They always win in the end.

Bartok yesterday, Mendelssohn today, work tomorrow

#121 mattbg on 07.02.09 at 7:46 am

#97 Samantha … actually, one of the weird characteristics of the Great Depression was how FEW people were actually invested in the stock market. Lots of people talked about the market and the price of stocks, and its crash impacted huge numbers, but very few actually held stocks.

#122 Samantha on 07.02.09 at 10:05 pm

#121 mattbg

You are right matt – It was a minority.

I went back to Pierre Berton’s book “The Great Depression” p. 30 –

“Only a minority of Canadians plunged into the market, but those who did became obsessed to the point of mania.”

Unfortunately, in that minority were people of modest means who took their life savings and bought on margin, and lost everything. It was a time of optimism – it couldn’t fail – everything was going up, up, up. When it began to crash, still they hung on trying to recoup losses they couldn’t afford.

I wonder is it so different today?

#123 Samantha on 07.02.09 at 10:19 pm

#120 Tax

Banks do well in good times and bad times. It is said that the last organism left on Earth will be the cockroach. Possibly whoever said that did not consider banks?

Bach, Schumann, Shubert and Strauss…(Can you imagine Ms Gaga singing “Pierrot lunaire”?)

Received a gift from my neighbors who were cleaning out their shed today – Singer treadle sewing machine complete with cabinet and puzzle box for accessories – circa 1899 – needs some restoration/cleaning, but appears to work. Beautiful gold accented multi-color Memphis design. I must locate music to treadle by.

#124 kc on 07.03.09 at 12:42 am

122 Samantha

I wonder is it so different today?

today is way different. Everyone who buys into the RRSP scam has their money in stocks/bonds/funds of some sort.

and from the way many people speak about what is going on in the markets I bet there are more who don’t admit to being in deep with day tradeing and the hope and wish lists.

#125 Samantha on 07.03.09 at 7:49 am

#124 kc

Hi kc –

It does seem like it is different today. It’s hard to tell if people are just speaking about the markets or if they really have invested in them.

Day trading can be very dangerous from what I understand. It all seems like greed and gambling. Not a good combination.

#126 CMT on 07.10.09 at 10:42 pm

Quote: “CMT remarked on twitter: 85% of Canadians would rather own than rent. (Genworth survey: “Makes sense. Most would also rather be rich than poor.” … So owning a home instantaneously makes you “rich” … Is that logical? ”

Hi Denis,

That was actually my poor attempt at sarcasm. :)

My point was that everyone wants to own a house, just like everyone wants to own a Ferrari (or insert your favourite car).

That 85% stat is meaningless to me because you can’t draw any worthwhile conclusions from it. We definitely didn’t mean to link home ownership and being rich. If you factor in opportunity costs, there’s probably actually an inverse relationship between home buying and wealth in some current markets.

Rob, Editor – CMT