A fire in the Toronto data centre hosting our servers knocked out network connectivity and disabled this site, from 2:25 am to 9:15 am EDT Sunday morning. If your comment was lost, please repost. My apologies. — Garth


GF special? Listed: $799K. Sold: $825K. Lot 25 x 122.

Historians may rue that, in the early 21st Century, as the planet reeled under three times its sustainable population, the climate tipped towards the irreversible, a fossil fuel-driven economy ran out of reserves and a billion faced hunger as foodstocks were diverted to run cars, young couples would sacrifice all for a mortgage.

That is, I guess, if there’ll be historians.

Anyway, here’s an interesting juxtaposition for you between the young who have wants, and no resources, and the mature who have funds, and smarts:

From this week’s Georgia Straight (which used to tell it straight):

For a week after they signed the papers on their Douglas Park townhome, John Morettie and Jessica Wilson felt nauseated with anxiety. Like about 40 percent of first-time home buyers, according to Statistics Canada, the couple waited until their 30s to dive in. On the one hand, they now have enough money flowing in to afford a Vancouver-sized mortgage. On the other, they need more space than a typical box-in-the-sky condo provides, due to a work-at-home situation and the imminent possibility of kids. So thanks to a once-in-a-lifetime low interest rate, they snagged a home.

The facts: John and Jessica lived in an apartment for which they paid $1,800 in rent. When mortgage rates temporarily dipped to 2.75%, they figured they could afford to ‘buy’ – which actually meant they could afford to rent a steaming pile debt.

“But we don’t have a lot of [wiggle] room,” he said. “We can go up to four percent, but then we’re done.” Oh crap.

Actually, it appears the two moist children borrowed $600,000, with monthly payments of $2,221. Plus property taxes, house insurance, mortgage insurance, amortized closing costs and maintenance, they will likely see a monthly carrying cost of at least $3,000, or 65% more than they paid to rent a home. The best part: they’d been offered $850,000 in financing.

But not to wory. The executive director of the Mortgage Brokers Association of B.C. (Tamera Olsen) said, “I don’t think anyone wants to see what happened in 1981. The lenders are aware; they don’t want to see anyone lose their homes.…What I’m hearing is that any increase in rates will be gradual. Very gradual.”

Maybe someone should tell Tamera that lenders do not set mortgage rates. But perhaps that’s a little technical for her. And where did she ‘hear’ what interest rates will do? Ben Bernanke on Twitter?

Meanwhile John and Jessica might want to know payments on the $600,000 mega-loan, amortized over 35 years (meaning virtually no equity is being built up) can double to more than $4,200 if rates return to 8% – which is still a tad below the historic norm for the last two decades. It’s also twice the point at which they’d be financially screwed.

Now, this:

Mr. Turner: I have read your Real Estate book and followed your financial advice for several years.

My question is simple… I am 45 years old with about one million dollars in cash.  I have been waiting for the real estate market to collapse but each time it starts heading south the Government steps in to change the rules…whether it be extending the legal duration of a mortgage, or reducing the amount required for a downpayment, or most recently slashing interest rates and thereby making mortgages cheaper.

So it would seem that now we have just about EVERYONE who has thought of getting into the market in…speculators, 1st time home buys…everyone.  and many of these people are the greater fools because the prices have not retracted much compared with other countries around the world.

My question is this…does our government make their policies to protect the dumbest Canadians out there?  Is there a chance that real estate will ever be allowed to fall?  Will the government resist raising interest rates to keep inflation in check now because it would cause havoc in the real estate market (prices dropping, foreclosures everywhere)?

What would you suggest I do?  I don’t want to rent for the rest of my life. — Dave

Well, Davey the millionaire, you did not get all that money by being naïve. So, you know the answers: Absolutely, the government will do everything in its power to distort the marketplace, tilt the playing field in favour of the John & Jessicas of this world, encourage a rapid plunge into debt and aggressively discourage people like you from saving money.

Since our economy is essentially unsustainable, it can only maintain the semblance of status quo through growth. That growth gives ever-larger tax revenues, allowing the government to augment, and citizens and corporations to maintain debt payments with marginally increased incomes. When growth falls to zero or (as today) into slightly negative numbers, it is called a ‘recession.’ If it drops to 90% of former growth levels, it is called a ‘depression.’

Governments in Canada, the US, Europe and most of the rest of the world are currently doing everything they can to encourage borrowing and spending, in order to create demand and growth. The techniques include dropping interest rates to almost zero, deficit spending, printing new money, massive bailout loans to corporations, tax cuts to individuals, grants to new homebuyers and the propping up of unstable and failing companies and sectors in order to maintain jobs which will not last.

But, Dave, you know this. You have no debts, and a million dollars. You are a deity.



#1 Keith in Calgary on 07.04.09 at 10:54 am

Governments can determine when to lower rates all on thier own……..but it’s the marketplace that tells governments when they have to raise them.

Every single person who bought RE with a CMHC insured mortgage in the last 12 months since rates plummeted is screwed when this happens. Thanks to the government……..

#2 Simon on 07.04.09 at 11:01 am

I don’t often agree with Garth however I believe he and Dave are 100% correct on this one. A lot of people have gone so far down the road of being horribly in debt and so much of our economy has become dependent on people living on borrowed money that the government has no choice but to keep the whole mess going. Sort of a high-risk game of musical chairs. The sad part is that people who did try and live within their means are gonna get dragged along to cover those who didn’t.

#3 Mike B on 07.04.09 at 11:02 am

I am a Dave clone in all respects, self employed and zippo debt but find the waiting game a bit unnerving. Lots can happen to perpetually push prices higher, namely realtors… ever wonder why prices tend to rise 5% per year… magically the same as commissions… Each seller wants to cover the cost of the realturds.
Chances are Dave we may “waiting” years for rates tp become toxic… My experience has been that at the slightest whiff of good sales numbers prices go up at will… On bad news and slow sales prices take years to seek the mean, evidenced by the US…

#4 Rick on 07.04.09 at 11:04 am

WTF is going on? How do we live in a world where people with NO MONEY are able to buy a home with NOTHING DOWN? How do people with NO MONEY bid up the price of housing with NO MONEY? How can people be allowed to buy a home without having any skin in the game? I work and SAVED but why should I risk my savings on overvalued housing and compete with people who have NO MONEY and put NO MONEY DOWN and have NO RISK? How is it that I have to compete with people with NO MONEY when buying a home? Has the world gone mad? People have NO MONEY yet they shop and buy homes as if it their money. Over a HALF A MILLION Canadians are 90 days Behind on their credit payment since they have NO MONEY. The worst part is these people with NO MONEY(homeboy) talk down to those with MONEY since they have a house on BORROWED MONEY which they could never and will never pay back? Very soon I am going to come up with a plan where I will borrow and then leave Canada with a HUGE debt

#5 Janet Wiebe on 07.04.09 at 11:07 am

I have had my home for 26 years. It has paid for my student loans, assisted me in raising 3 children, and enables me to build a respectable and honourable business. It also happens to be in a location that no one else wants to move to. We need to make the most economical, efficient and effective decisions we can and hold fast and not go for the shiny thing. The quality is in who we are, not where we live.

By the way, I just listened to an interview on the CBC radio via the internet. Seems like one fellow – who appeared intelligent overall – thinks our govenmental troubles federally is due to being in a minority government. He should review some of Leter B. Pearson’s and Trudeau’s record, and I am sure Garth that you have some honourable Conservative examples from the distant/not-so-distant past? A minority government is potentially the best government as everyone pulls together to be heard, understood and heeded into the best agreement possible.

#6 Janet Wiebe on 07.04.09 at 11:09 am

Another typo: [email protected] and Lester, not Leter. Thanks.

#7 Solitario on 07.04.09 at 11:39 am

Yep…Dave, just wait…the “right time” to buy may come in 20 years or so…of course you might be dead by then…nah…that can’t happen, you’re only 45…time is on your side…

Now seriously…we’re about the same age…here’s the deal…go get a house with a big downpayment…open a HELOC…use it to buy banks preferred shares and some high dividend paying stocks…you’re going to pay about 2.25% in interest…get about 6% return from your investments…and deduct the interest paid from taxes.

#8 GoingWest on 07.04.09 at 12:02 pm

Wouldn’t you think that one of the reasons the young are not afraid to take on massive debt right now is that they know the gov will bail them out somehow when things get really bad for the masses. They are an enormous untapped voting block and are used to getting what they want.

#9 Concerned Citizen on 07.04.09 at 12:13 pm

I really do not understand why people buy overpriced houses.
Why put stress like this on yourself, I would never buy a house without a large down payment.
I think houses are very very expensive, I do not care for interest rates being so low, that means nothing to me, what is important is for house prices to be comparable to the average wage earners.

#10 David Rockefeller on 07.04.09 at 12:15 pm

Garth, you like that word “sustainable” don’t you? If the world can only sustain 1/3 the current population, 2/3s would now be dead. Since 2/3rds are not now dead, I’d say our current population is sustainable. Could sustain a lot more if govts weren’t mucking around so much in the economic affairs of its inhabitants.

Good thing you’re not one of the billion without enough food. Or should they eat cake? — Garth

#11 Concerned Citizen on 07.04.09 at 12:42 pm


How long do you think Dave should wait?

#12 Bottoms_Up on 07.04.09 at 12:44 pm

When I saw the picture of todays post, I thought it was going to be another ‘Windsor home sells for $20,000’, or ‘Detroit home offered for a raccoon and a side of squirrel’.

Are the buyers in BC NUTS?!?

Truly interesting times.

With $1,000,000 cash why don’t you become a bank and lend 1/4 mill to 4 first time home buyers? Oh wait a minute…too risky.

#13 Bottoms_Up on 07.04.09 at 12:50 pm


Wait! Don’t buy that $800,000 house! Buy three of these homes in Kanata!!!

#14 Samantha on 07.04.09 at 12:53 pm

Wow! 825K for an old house on a 25×122 lot. I hope the neighborhood is decent.

There are houses with the same size lot in Winnipeg. Neighbors so close you could ask them to pass the salt (or toliet paper depending on their house’s layout).

John and Jessica have signed up for indentured servitude to the master of housing. They won’t own with that deal. I hope they have savings in their budget (future expenses on the house and planned purchases). No mention of an emergency fund.

Dave with the zeros:

What would you suggest I do?  I don’t want to rent for the rest of my life. — Dave

You have choices:

a) buy and be prepared to fully accept and live with the consequences of that decision.
b) don’t buy and accept that there are other issues in play right now that should make a home purchase the least of your concerns.

I suggest you stop fretting about real estate and take up a hobby. Try gardening or read up on seed saving. Practical past times might just come in handy.

When the urge to buy strikes, just remember you can’t eat vinyl siding.

#15 Erasmus on 07.04.09 at 12:53 pm

It is not so crazy everywhere. My son and partner (two good jobs and ca. $100 k income) just moved into their first house ($220 K) outside metro Halifax. The house is in great shape – double lot, four bedrooms, finished basement, and surrounded by real forest. The former owners even threw in the snow blower. Now it does have a 35 min commute, but you can’t have everything.

While I have been warning them of dire times that are a coming, the hole they may have dug is not so great that a little help will keep them from falling in. As long as they keep working . . .

#16 Internal Exile on 07.04.09 at 12:53 pm

I think RICK hit the nail on the head – very well put (angry caps aside!).

#17 Jon B on 07.04.09 at 1:10 pm

Great post. Enjoyed this one.

#18 Peter on 07.04.09 at 1:14 pm


#19 Wealthy Renter on 07.04.09 at 1:24 pm

Now seriously…we’re about the same age…here’s the deal…go get a house with a big downpayment…open a HELOC…use it to buy banks preferred shares and some high dividend paying stocks…you’re going to pay about 2.25% in interest…get about 6% return from your investments…and deduct the interest paid from taxes.

Hi Mike B,

My wife and I are 8 years younger than Dave, and provided we don’t have a major calamity, we should be, in a slightly better financial position than Dave in our mid 40s. We are shopping houses again in the west end, where prices have declined a little bit. However, we will only buy when we percieve that a home is a good value, meaning it is in a good location, it will not suck us so dry that it compromises our retirement or family goals.

I read Solitario’s post with great interest. It presupposes that people can only accumulate wealth through stocks or real estate, and not by savings, hard work, or (as you do) by being an entrepreneur. Everybody has advice for us, but our friends are neck high in debt, and don’t really have any money put aside for retirement.

A real solution for our family is to remain in our nice, rented condo, where we have been paying month to month for three years. It is damn cheap too. It is a legitimate solution.

I truly don’t know where house prices are going, but when my wife and I look at our family finances, the current prices of homes, and the risks and costs associated with home ownership, renting is not a bad option.

#20 wjp on 07.04.09 at 1:25 pm

Governments have to perpetuate the debt crisis, they are like the silly borrower who uses one credit card to make the payment on another, and when that one is full, takes out another to make a payment on card 2, and it continues until such silliness reaches a crescendo, and “poof” the Government has to default…it isn’t a question of “will it or won’t it” any longer, it is just a matter of when…
Don’t think there will be any warning, it will happen overnight because Governments can only tell us about “Green Shoots” but never about “Weeds”.
Simon in his contribution # 2 said it all:
“The sad part is that people who did try and live within their means are gonna get dragged along to cover those who didn’t.”

#21 bigpictureguy on 07.04.09 at 1:32 pm

Disgusting decision -John Morettie and Jessica Wilson. They rolled the dice at the absolutely at the worst possible time – little wiggle room and with rates which have no where to go but UP

Read full article


Gotta luv the “house/drug pushers”

“But we don’t have a lot of [wiggle] room,” Morettie said. “We can go up to four percent, but then we’re done.”

Historically, Canada’s average five-year residential mortgage lending rate has boomeranged from about five percent to over 21 percent, according to the Bank of Canada.

Government programs tend to be stable, but an escalating interest rate can mean instant poverty for homeowners at the end of a fixed term.

So should couples like Morettie and Wilson think twice before taking advantage of the low rates, if they’re dependent on them?

Absolutely not, says the CEO of the Greater Vancouver Home Builders’ Association. Back in 1981, when interest rates jumped into the 20s, Peter Simpson got caught in that recession-related blip himself. At the time, he also felt like throwing up. But he made it work on his $38,000 home by scrimping, and he’s been a homeowner with an ever-increasing net worth ever since.

“You can get hit by a bus at any time,” he told the Straight, suggesting that 10 years—the maximum amount of time you can lock in an interest rate—is too long a period of time to worry about. “Your jobs will probably be paying higher in five years.…To me, my home was never an investment. I had to be somewhere, so I never thought about five or 10 years down the road.”

Similarly, the executive director of the Mortgage Brokers Association of B.C. said interest rates are not something to worry about.

“I don’t think anyone wants to see what happened in 1981,” Tamera Olsen told the Straight. “The lenders are aware; they don’t want to see anyone lose their homes.…What I’m hearing is that any increase in rates will be gradual. Very gradual.”

She also said that 10 years is too far away to worry about.

However, interest rates can have a huge impact on a family that’s mortgage-stretched. For example, at today’s rate of about 2.75 percent, a 35-year mortgage on a $600,000 home would require payments of $2,221 per month, according to Vancity’s on-line calculator. The same arrangement with an interest rate of eight percent nearly doubles the monthly payment to $4,205.

What doesn’t help first-time home buyers? Pushy lenders, Morettie and Wilson said. Some brokers were able to find up to $850,000 to lend them. That’s an amount, Morettie said, that would have left them with about $100 in their pockets at the end of the month.

#22 Peter on 07.04.09 at 1:35 pm

Hi Garth,
Who that imbecil who is bought that house on a picture?

#23 Brian on 07.04.09 at 1:52 pm

“Maybe someone should tell Tamera that lenders do not set mortgage rates. But perhaps that’s a little technical for her. And where did she ‘hear’ what interest rates will do? Ben Bernanke on Twitter?”

Could you explain how mortgage rates are set. I think it’s based of the 10 year Canadian bond

#24 Dan in Victoria on 07.04.09 at 2:05 pm

Geez,I had to get the paddles out to restart my heart when I saw what that house sold for.How many more idiots are out there?We must be close to having to order another batch.I wonder how long its going to be before people start to clue in about climate change,peak oil,infrastructure failure, etc?I read an article the other day (sorry can’t remember where)That basically said the human mind will react to danger very quickly such as snake,attacking dog,etc.But has no ability to reconize long term danger.

#25 betamax on 07.04.09 at 2:07 pm

Wouldn’t you think that one of the reasons the young are not afraid to take on massive debt right now is that they know the gov will bail them out somehow

They don’t even think that far ahead. All young people know about RE has been learned in the midst of a global credit bubble — they think RE ‘normally’ appreciates at astronomical rates, and the recent 15% correction is as good as it’s ever going to get.

And until very recently, job security was assumed as a given. The idea that a bailout might be needed has not yet crossed their minds. For the inexperienced, every scenario imagined is always a best-case scenario.

#26 $fromA$ia on 07.04.09 at 2:10 pm

#4 Rick said: “I work and SAVED but why should I risk my savings on overvalued housing and compete with people who have NO MONEY and put NO MONEY DOWN and have NO RISK?”

Theres also risk in holding onto your cash and not purchasing hard assets because the Government is trying to hold housing values up. This is the Bar raised.
Watch for inflation to make housing prices look realistic in a time of higher rates. Job incomes will be the last to increase though. Homes will lag. If you got CA$H then make sure you spend it on assets like commodities and Gold or at least other currencies.

#27 $fromA$ia on 07.04.09 at 2:11 pm

Theres a page for your next book Garth.

#28 TJ on 07.04.09 at 2:15 pm

Insanity – pure and simple.

When you see Sweden give savers a (wait for it) negative .25 rate, you know the world has gone mad and Central Bankers know the jig is up.

I read the numbers on these kids’ mortgage and the whole things smells like Tucson, about 2007.

As for Davey – get a bolt-hole, say, oh, New Zealand, where the prices have just about bottomed…..convert i/3 of the paper in Gov’t of Canada T-Bills and buy 100 K worth of silver – 50 K worth of gold….oh, never mind – you have done very well… you carry on.

As for people buying on 25 foot lots on Prior Street, as pictured….I will be first in line screaming if our Government starts bailing out folks like these financial imbeciles.

This is the curse of being human.

We never learn.

Read the “Fourth Turning”.

#29 yukondon on 07.04.09 at 2:39 pm

I agree wih everything this guy is saying. All the money being wasted propping up and sucking in buyers is just going to make a worse nightmare. End the government intervention and let the cards fall were they may , it is the only way to start new growth based on work , not phoney leveraged money. So 8oo,000 starter house? Were are the wages to suport these crazy prices? Interest rates will rise due to government boring and bingo the bubble will burst even harder. Have we not seen this before? Were is our government leadership?

#30 timbo on 07.04.09 at 2:52 pm


Probably 3 realtor’s living beside each other, flipping back and forth, driving prices up in the area. What makes this pathetic is a bank being paid by Harper to look away and sign the papers.

Damn the torpedo’s, full speed ahead….What a joke

#31 Nostradamus Jr's Analyst on 07.04.09 at 3:05 pm

The real estate crash is inevitable, government intervention can only delay it, making it much worse in the long run than if they had just stayed out of it.

Canada’s peak real estate price to income ratio peaked at 7:1 and we’re still up near our peak prices.
The US ratio maxed out at 5:1 yet they’ve collapsed.
Of course something is fishy, but again, it’s inevitable so don’t try to make sense of it – just stay out of real estate and be happy you did.

“The market can stay irrational longer than you can stay solvent.”

~John Maynard Keynes~

#32 David on 07.04.09 at 3:15 pm

Too funny! $825K simmoleons for a shotgun shack with rickety steps and a tin foil covered picture window. Looks like the two year old renovations were not as extensive as first thought. No matter, the happy home owners get to enjoy all the amenities of modernity with an indoor bathroom included.
It is not suprising that Tamera Olsen is oblivious to how long term interest rates are set. The driver of the getaway car is seldom concerned with how banks balance their ledgers.
It is almost impossible to muster any sympathy for John and Jessica’s willful stupidity. When interest rates go up, their long term no equity mortgage will far exceed the market value of a home they will no longer be able to afford. If they feel nauseated with anxiety now, they probably will not feel much better when the housing bubble collapses in earnest.

#33 fedup on 07.04.09 at 3:18 pm

You are SO right….now, when do we all shout “Hey Carney, Harper and Co., we’re mad as hell and we’re not going to take it any more!” ??
Don’t leave the country, let’s take it back instead.

#34 Mark on 07.04.09 at 3:18 pm

The government will keep bailing out people, and keep propping up the market..

UNTIL there is an election looming which they know they’ll lose. Then they’ll let the markets free fall.. Leave it to the next opposition government to try to “fix”.. And get back in 4 years later with a “i told you they were bad for the economy” election.

#35 Dean on 07.04.09 at 3:20 pm

One only has to look South to see what can, and probably will happen here. The government hasn’t had much luck bailing out anyone. Government money is a drop in the debt bucket that has been created. Right now they’re manipulating the system to keep things from sliding, but they’re almost out of ammunition. Frankly, I think they’ve managed to do a pretty good job of keeping things stable here in Canada.

I only hope that the world economy starts its rebound before the debt problem here in Canada really kicks in. That way when the foreclosures start, at least they’re not going to be accelerated by increasing job losses. It would be nice to see a prolonged slide of prices of homes back to some kind of realistic level, rather than a spiraling plunge like the US has seen.

#36 Crash on 07.04.09 at 3:25 pm

It appears to me that the economy wants to contract following natural economic principles and this is what started happening last fall 2008. Then the central banks stepped in and propped things up to try to defy gravity. But nature will take its course and I am convinced this economy is unsustainable on many levels. Whether the result is massive deflation, or inflation or whatever, the house of cards will come down.
The advice to buy bank preferreds from a HELOC is good but personally I would stay out of the equity markets just now as they are really dicey and are not following fundamentals. I would advise buying hard assets (as long as its not a junker house for $825K), and also hold some gold/silver (10% of assets) because IMO with the massive increase in the money supply recently we are headed for huge inflation down the road.

#37 Solitario on 07.04.09 at 3:55 pm

“I read Solitario’s post with great interest. It presupposes that people can only accumulate wealth…”blah blah blah… total bullshit…
it doesn’t “presupposes” anything like that.

Wealthy Renter,
investing one’s hard earned money IS HARD WORK. You have to read balance sheets, study charts, watch your investments and worry all the time about crooked CEO’s and governments. ..(remember the income trusts lies?…). Again, investing (protecting your hard earned money from government induced inflation) IS HARD WORK.
Just ask Mr.Turner. He INVESTS in real estate all the time..are you implying he’s after easy money…?
BTW, investing in banks preferred shares was his suggestion…

#38 Solitario on 07.04.09 at 4:18 pm

here’s why you’re wrong (“but they’re almost out of ammunition”):

“…But the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost….”

#39 Nostradamus jr. on 07.04.09 at 4:26 pm

And the answer is…..

Real Estate is not going to crash…and interest rates are not going to go thru the roof.

…but the Canadian Loonie vis a vis the U.S. Dollar is gonna crash…as will the Euro, Gold, Silver, as well as every other world currency.

You see, Money is not Real Estate or tangible, its just paper.

#40 Barb the reader, Calgary on 07.04.09 at 4:30 pm

Dave Millions, real estate will fall, when they run out of flying buttresses to hold up the facade — or if those buttresses get ‘yanked away’. They can only temporarily prop things up, say 2 to 5 yrs. Just wait it out. There’s been plenty of proof prices, can and will, fall when’money’s too tight to mention’. Keep remembering, songs like that were written in the early 80’s.

#41 TJ on 07.04.09 at 4:35 pm

Coming to Vancouver?

My Notary said that everyone ‘held their breath’ when Real Estate sales just died last November.

Think are out of the woods?

Read on, Macduff;

“From 2003 to mid-2006, the pace of new construction could barely keep up with demand. ‘It was like the gold rush,’ says Bradley Duhamel, a now-unemployed construction worker.

‘Realtors, mortgage brokers, contractors, architects, electricians, plumbers, carpenters, people who bought and flipped properties–everyone was making money. For awhile, it was like you couldn’t NOT make money here. Then everything just stopped.’


#42 Gord In Vancouver on 07.04.09 at 4:49 pm

#12 Bottoms_Up

Are the buyers in BC NUTS?!?

Buyers in Vancouver, Kelowna, and Victoria are nuts.

#43 Shawn on 07.04.09 at 5:01 pm

#10 David Rockefeller

Before arguing with Garth about future sustainability of the Earth’s population have a listen to James Lovelock, author of the “Vanishing face of Gaia, a final warning” on CBC radio. He is the scientist who found the link between CFC’s and the holes in the ozone, and best known as the originator of Gaia theory..the idea that the earth is a living and self-regulating organism in which geology, the oceans, the atmosphere and climate are intertwined with all forms of life.

He argues that the sum total of rise of sea level is an accurate measure of how much the earth is heating…a lot. 55 million years ago the earth heated up. Life was sustained in the arctic, while the rest of the earth went to scrub and desert. He makes a strong point for the earth heading into another hot phase in the next 20 – 100 years since it is now in positive feedback and emitting its own CO2. He thinks we will be lucky if the earth can then sustain a population of one billion. Unless new technology develops to produce food quickly. It sounds like Garth has read his book. Also we seem to be having quite a drought here in the West, state of Emergency declared. Coincidence?

Here is the interview:

http://Castroller.com/podcasts/CBCEditorsChoice/June 1st

Did anyone hear the Edmonton Real Estate Board declared the housing recession over yesterday? Its true! Talk about spin!

#44 kw on 07.04.09 at 5:01 pm

We bought in ’06 in northern N.S. 15 acre+ 1400sq. ft. circa 1850 for less than $70,000. Heat with our own firewood (as do most) we have lifetime supply. 3 wells on the property. Cleanest water available anywhere. Grow our veggies and read Garths blog. Waiting for the crash.

#45 Shawn on 07.04.09 at 5:06 pm

Wrong link above, try this:

Part 2 Gaia – James Lovelock

James Lovelock is best know as the originator of Gaia Theory…


#46 Gord In Vancouver on 07.04.09 at 5:11 pm

#22 Peter

Hi Garth,
Who that imbecil who is bought that house on a picture?



#47 Uncle Joe pipe smoke on the Volga on 07.04.09 at 5:15 pm

Why are lenders not too concerned about rising interest rates, at a time when credit defaults are rising?

It appears one hand does not know the other…

#48 somecatchphrase on 07.04.09 at 5:19 pm

#10 David Rockefeller

If you want to understand what Garth is talking about, I highly recommend the following video.

It’s called “exponential growth.”

For Cancon enthusiasts, there’s even a hockey analogy.


#49 Charles T. on 07.04.09 at 5:22 pm

Another issue coming at us is the “demographic time bomb”. It is going to have a major impact on Government balance sheets in the not too distant future.

The following is from Statistics Canada.

Canada’s elderly population is growing, a trend that began several decades ago. In 2007, the population aged 65 and older was 4.4 million and seniors made up 13% of the total population. That compares with 11% in 1987 and 8% in 1972.

Canada is one of the ‘youngest’ of the G8 countries, despite the aging of its population. Only the United States had a smaller proportion of elderly people in 2006.

Aging is expected to accelerate over the next few years, particularly when the baby boomers start turning 65. According to a medium-growth scenario, the proportion of seniors in the Canadian population will reach 27% by 2056. The older segments of the population have the fastest growth rates. In 2007, 3% of the population was aged 80 and older. This group could account for 10% of the total population by 2056. Low fertility rates and rising life expectancy are all contributing to the steady increase in the elderly population.


The following is from the British Columbia Government’s web site “Conversation on Health”. The statistics on this page are a couple of years old. Note how rapidly health care costs for the province go up as people age.

As baby boomers age, demand on the system increases

$3,157 – amount spent by the province annually per person on health care in B.C.

$2,364 – average spent by the province annually per person aged 45 – 64

$5,224 – average spent by the province annually per person aged 65 – 74

$9,841 – average spent by the province annually per person aged 75 – 84

$20,878 – average spent by the province annually per person aged 85 or older

14% – percentage of B.C. population over the age of 65 today

24% – percentage of B.C. population expected to be over age 65 by year 2030


#50 taxpayer like you on 07.04.09 at 5:43 pm

47 charles said:

“Aging is expected to accelerate over the next few years…”

I didnt know there was a gas pedal for it!! Hit the brake!!

#51 Grantmi on 07.04.09 at 6:12 pm

Gord in Vancouver…..

Very funny! :-)

#52 davers on 07.04.09 at 6:18 pm

I have already seen this article on about 4 housing blogs, this think is famous.

#53 RJ on 07.04.09 at 6:19 pm

Your example house is exactly the sort of nonsense that went on here in Florida during 2005. Seven hundred thousand US dollars for a 1200 sf. house on a 4000 sf. lot. People being pressured to “buy now or be priced out forever”. Realtors attaching the Cassandra moniker to any of us advising caution.

Today I watched a middle aged woman cry because she’s forced to live in a rental dump, after losing her job and being foreclosed on because she couldn’t make the payments on a mortgage she shouldn’t have had in the first place. Last night I witnessed another woman ask me to bury her in a trench I was digging because she couldn’t afford to pay me to fix her sewer line, or renew the plates on her van, or even put gas in it. She’s losing her home.

I see this stuff every day. If you don’t believe housing prices can drop 50%, or fathom what effect such a drop will have on your psyche, spend the airfare and visit Florida. Bring a few loonies too.

#54 Bruce on 07.04.09 at 6:24 pm

American Empire on Verge of “Total Collapse”: Celente predicts “Obamageddon” by 2012…


#55 Onemorething (aka DaHKkid) on 07.04.09 at 6:58 pm

Get out of Canada so you get some perspective as living there seems to have turned most of you into the SHEEPLE Garth describes.

Victims of the manipulation. Closed minded lemmings.

I will again submit that Canada and it’s lag behind the US was able to latch onto the Equity bubble which the air is starting to come out of as earnings shatter the market through the remainder of 2009.

This only means that the likely sustainable 1st correction (should it have occurred) will only mean double pain for any sucker who didnt sell into the rally or purchased during it.

To avoid temptation, and deliver yourself from the surrounding evils, take the crisp 1M, drop it into something guaranteed for 4-5% and take the interest and take a two year holiday anywhere in world.

Look at it another way, you will not only be making over $100K in interest, see some of the world that exists outside of the GLORIOUS AND FREE but save another $400K in looses when the tsunami hits.

Remember all, there is nothing unique about Canada only timing. Sub primers will be screwed once and for all along with many of you primers who purchased in the hot zones. Canada will now enter the wave same timing as AUS.

Better yet take $70K of that M and visit #44 KW in N.S. and have some self sustainable fun but dont tell the locals where you stashed that loot out by the wood shed eh!

#56 confused and a little crazed on 07.04.09 at 7:14 pm

#13 bottoms up

thanks for the link. Initailly when I saw Garth mls pic. I thought the world has just gone loopy and your link that someone out there $$$ have some semblance of normalancy… It’s too bad us regular joes will have to be dragged into the CMHC muck once it all done..

less govt services…higher costs in comsumer goods. The lists go on. I just don’t know :(

#57 Industrial guy on 07.04.09 at 7:19 pm

The conditions for a housing market crash are here …..Be patient. It’s just a little longer.

The crash was delayed by Government interference. The last of the lambs have entered the market. Let the slaughter begin.

Timing is everything ……… Thousands of unemployed workers on UI benefits are about to have their benefits run out in the next 90 days.

#58 Seilfworcehtsa on 07.04.09 at 7:28 pm

The house in the picture…is it for real? If so then the seller must think that he died and went to RE heaven and the buyer can’t tell hell from a hole in the ground.

#59 Nostradamus Jr's Analyst on 07.04.09 at 7:36 pm

Another ludicrous offering from Vancouver.



#60 Mathew Gibson on 07.04.09 at 7:50 pm

#5 Janet Wiebe

You bought your home 26 years ago. Thats the difference. Prices were comparitively sane back then, and so there is no comparison with the current insanity.

Garth agrees with Dave about the Government doing all it can for the John and Jessica’s, but they are both wrong: they are doing it for the banking and real estate industries, who need the Johns and Jessicas to continue signing up for debt-servitude. The Government is not operating for the common person, whether naive or intelligent. If they were, they’d be doing everything they can to pop the bubble and get housing back to its historical and affordable norm of 3 – 3.5 X income. Instead, they are doing the opposite, which reveals who they are working for.

#61 Onemorething (aka DaHKkid) on 07.04.09 at 7:59 pm

Again, if you feel discomfort in paying for the Government mismanagement of money (stimulus), which will come by way of increased taxes, and your government and it’s banks bail out the risk takers instead of the minority responsible one’s, make the biggest statement possible.


Canadians are still one of the most well accepted and received people anywhere on this planet. I cannot say the same for the rest of the Western World.

You also as Canucks can immediately stop paying taxes as soon as you do unlike the Yanks who must pay for over 10 years taxes from abroad.

If you are trying to figure out where, just ask any of the G20’s on your street.

#62 jess on 07.04.09 at 8:17 pm

negative rates?

Deep economic downturn
Economic activity abroad is very weak and this hits Sweden hard. Exports have fallen substantially and the situation on the labour market is continuing to deteriorate rapidly. The information received in recent months points to the economic downturn in 2009 being somewhat deeper than the Riksbank forecast in April.


#63 Nostradamus jr. on 07.04.09 at 8:35 pm

and the answer is…pt #2

…Do you think Obama will end his Socialism Agenda w/ just the Banks and the Auto Industry?

Think again…at the appropriate moment you will witness “the Reset”…..the Nationalism of all foreign debt.
China’s, Japan’s, Europe’s???

…Obama will close the doors to the U.S. of A. to foreign trade….trading will continue w/ Canada.

eg., Toyota, Nissan’s U.S. plants will become just that, U.S./Canada owned…as will all other foreign owned industry now sitting on U.S. soil.

…What can China, India, Russia, Middle East do?

The value of their horded copper, oil, gold will collapse, who will buy them or their manufactured goods from them?…Europe?…South America…Iceland?…lol

There will soon be one world currency…the U.S. Dollar.

…I predicted this nearly 500 years ago…

#64 Phil on 07.04.09 at 8:57 pm

Wow, you can get a beach house in HAWAII for less than that dump in Vancouver… Unbelievable!



#65 Nostradamus Le Mad Vlad on 07.04.09 at 9:01 pm

#104 Concerned Citizen on 07.03.09 at 9:06 pm — “Any advice would be greatly appreciated.”

Same thoughts come to mind — Watch and Wait, listen to and follow gut feelings (inner hunches), as they are always right. Don’t let emotions rule the roost.

When sheeple have no choice but to renew their current mtgs. soon, rates will be a tad higher (link http://tinyurl.com/kta8ah) — this is what will be here shortly.

Combined, and adding to #125 Gord In Vancouver on 07.04.09 at 10:02 am post re: ever-increasing CC defaults, corporate / personal bankruptcies, layoffs across the board, cities and municipalities being further cash-strapped, and cutting services (laying off staff) — if possible, wait until fall 2011 before getting locked in a jail cell.

Presently, add to equity / cash reserves already stored up by using a TFSA. Most should have a greater understanding of where Canada’s economy is by then — the writing has been on the wall for some time now.

Long-term patience is a major virtue, so stay away from the sale-a-bration-zoo.
#20 wjp at 1:25 pm — “. . . it isn’t a question of “will it or won’t it” any longer, it is just a matter of when… Don’t think there will be any warning, it will happen overnight . . .”

Precisely what the CPC did with the IT fiasco — promised one thing, delivered the opposite with no warning. What goes around . . .
“That is, I guess, if there’ll be historians. . . . Wait.”

Two excellent sentences. Yes, there will be historians after we’ve broken on through / come back again some more times, as this present cycle has a few hundred thousand years to run before finishing.

The cycle I speak of is the Kali Yuga, and is the fourth of four cycles. Kali Yuga = Iron Age, the most violent of the four, but there are numerous things we can do to help ourselves, most of which Garth has already spoken of.

There are also plenty of opportunities to better our fiscal growth — google “contrarian canadian investments” (or american), work with a CFP who has at least two decades’ worth of experience and steer clear of all level of govt., fed. and prov.

Without them, we’ll do just fine!

Tips: In the mid-90s, a couple of friends told me ways to make money (didn’t follow their advice).

First, one who was familiar with Hong Kong said to stand in the middle of a street, arms open wide, wait for a few weeks and the lolly would flow in.

Second suggested buying a return air ticket between Vancouver – Bangkok, set up a handful of co-workers along the route then whistle J.J. Cale’s song “Cocaine”, later turned into a monster hit by Eric Clapton.

Set for life after a year of so of doing some legwork!
You saw and heard it here first — http://tinyurl.com/nodvjg — and the message is quite clear, so if anything DOES happen, Iran is blameless.

But lookkee here, as there must always be a different viewpoint — http://tinyurl.com/n6lxqz — see the heads on the two stories, and figure it our for yourselves! Comment from wrh.com:

“Yeah, yeah, yeah; and Iraq could launch a nuclear attack on us all in 45 minutes. We’ve already heard this one. Can’t you guys fantasize something new?

“Or is politics, like Hollywood movies, just endless re-runs of the same crap over and over and over and over?”
Article from The Angry Bear (US) about Canada’s health system, and private insurance. — http://tinyurl.com/mb8993
Comedy — The Real Reason Sarah Palin Quit! — http://whatreallyhappened.com/IMAGES/palinbull.jpg

#66 Repatriated Expat on 07.04.09 at 9:33 pm

About a year ago I asked a co-worker why she was renting when she mentioned it. I was simply hoping she also felt that housing was just over-valued, but her experience was actually a lot more interesting. Back in the eighties her mom suddenly passed away and she and her siblings were unexpected home owners, or more properly defined – mortgage owners. They worked together to maintain the house payments but when interest rates were reset at higher levels they fell behind in payments.

As a young, impressionable and responsible woman, she suddenly found herself facing unsympathetic banks and being harassed by constant demands for money (even at work).

This negative experience was enough to keep her out of the housing market for the last 20+ years, even though she has had a good job and steady income for the last 20+ years.

#67 gold bugger on 07.04.09 at 9:38 pm

Keith, being in Calgary you know better than anyone that recent buyers aren’t screwed “thanks to the government.” They will get bailed out, “thanks to the government” as homeowners were by Saint Peter of Lougheed in the early 80s. Bailouts buy votes.

MikeB, realtors don’t control prices. If you had half the money you imply you do, you’d know that.

Similarly, Timbo (or Squiddly) if you think realtors are driving up prices by buying each other’s houses, you’re either clueless or paranoid.

Buyers control prices. Not sure what the Dewey Decimal system number range is, but your local librarian could help you find some excellent economics books.

And good advice to “Dave” but the Malthusian opening paragraph is baseless scaremongering. There’s more than enough food to feed the world; it’s the distribution system (mostly thanks to politics) that gets in the way. We also aren’t running out of fossil fuel; that’s a hippie dream.

#68 Joseph on 07.04.09 at 10:08 pm

Why not tell Dave to buy a house with nothing down, or some arrangement that is very close to it. The interest he makes on a million dollars will pay for the mortgage, so, in effect, he gets a new house and gets to keep his million dollars. From my viewpoint there really has been no issue with Dave other than the fact that he has been ultra-paranoid for the last decade in dispensing with his wealth in a real estate venture. Am I missing something in this picture?

#69 Greg W., Oakville on 07.04.09 at 10:19 pm

Hi #8 GoingWest,

Do you really think your vote will have any real value once Harper and his controllers bring in electronic voting machines to Canada? Coming soon!!! Have you been paying attention.

#70 Jeannie on 07.04.09 at 10:28 pm

#55.(Onemorething.etc.,) Where can one lock in 4%-5% with security in this financial climate?
The banks are paying under 2% on the accounts of even their ‘best’ clients. You paint a nice scenario for the other poster, however I know of no place other than the risky markets that offer these returns.

#71 Jimster on 07.04.09 at 10:45 pm

While reading Mish Shevlock’s blog’s comments the other day, put several posts together to come up with this scary scenario.

The Blog post referred to Sweden’s Central bank’s recent move to negative interest rates. (-0.25%).

What if? Due to a series of cataclysmic events, all western governments did this: outlawed possession of gold ( i.e. Roosevelt in 1933) and eliminated cash in favour of digital currency as they have been pushing for a long time to fight terrorism. Then they implement negative interest rates.

That seems to the perfect bankster ( and real-at-whore) solution to today’s problems.

Happy 4th everyone. Remember where your freedoms came from.

#72 Dan in Victoria on 07.04.09 at 11:01 pm

Enough of this, I’m going salmon fishing Sunday,as usual the fish are probably smarter than the first time buyers.

#73 Republic_of_Western_Canada on 07.05.09 at 12:43 am


#74 Nostradamus Le Mad Vlad on 07.05.09 at 1:06 am

Monsanto probably had something to do with this. — http://farmwars.info/?p=1145

The militarization of the police (US only, but probably coming to a town / city near you!). — http://www.youtube.com/watch?v=5k5y3fBH9Og
Goes with what I posted a couple of nights ago — the eventual breakup of Canada into different sections, for the US to pick and choose from. Nothing has changed under Obama. — http://tinyurl.com/l82xgf

Speaking of Uncle Sam, here are different areas which have not been explored fully. — http://www.conspiracyplanet.com/
Everyone knows that the USSR had 500,000 ground troops, a vastly superior air force and wanted to annex Af’stan during the ’80s, and eventually left with their tail between their legs.

Now Russia has opened the door for the US to do exactly the same thing, except with 100,000 ground troops. Alexander The Great still holds the record — three years — for capturing and holding Af’stan.

No one else comes close! — http://tinyurl.com/kqgbab

#75 GG on 07.05.09 at 1:19 am

shss this free market economy is getting too complex. even governments have no fking clue what theyre doing. lets just get back to the good plain old communism and wipe the slate clean. no rich or poor. no wise men. no greater fool.

#76 Jimster on 07.05.09 at 8:32 am


“governments have no fking clue what theyre doing.”

I think there are 2 possibilities;

1. they are stupid and dont know what they are doing.

2. they are very smart, corrupt and mostly concered with their own self interests and those of their cronnies.

Time will tell, but I personally dont think they got into power by being stupid.

#77 Bill-Muskoka (NAM) on 07.05.09 at 8:35 am

Meanwhile, Walmart is leading the cause for a National healthcare plan in the U.S.. Surprised? That is because people believe the BS the MSM publishes just like RE BS.

Wal-Mart has remedy for ailing health care

I especially like this analogy regarding the Chamber of Commerce Chamber of the Status Quo! How oh so true!

#78 Munch on 07.05.09 at 9:15 am

If Dave had a million dollars he would not be asking the question, in all seriousness.



#79 Angela on 07.05.09 at 10:19 am

#3 Mike B

Can you elaborate on this statement you made:

“ever wonder why prices tend to rise 5% per year… magically the same as commissions”

Under a 7/3 commission structure, If a $500,000 house sells for 5% more, or $25,000, the seller’s realtor’s take on that is 1.5%($375).

Furthermore, the percentage of the sale price that the realtor gets from the transaction is actually less on a $525,000 house than on a $500,000 house.

On a $500,000 sale, the seller’s realtor will get 1.90%

On a $525,000 sale, the seller’s realtor will get 1.88%

Higher house prices make a miniscule difference to the realtor’s commission.

After paying both ends of the commission, on a $25,000 increase in house prices, the seller gets $24,250 or 97% of the increase.

I will reiterate what others have said: it’s not the realtors who set the price, it’s the buyer who ultimately decides.

If you don’t wish to pay a commission, everyone in this free country of ours is able to sell without a realtor. Ask yourself, if this is the case, why do 95% still choose to use a realtor?

#80 Got A Watch on 07.05.09 at 10:28 am

When I first saw the picture at the top and the price and sale info, I assumed it was in Leaside in Toronto, but priced higher than I remember. Reminds me of the house my Dad used to own in the ’60s there.

Just shows you there is not much difference between Toronto and Vancouver, despite all the people who rush to tell you otherwise.

Anyone who buys a crappy old house like this is just plain nuts, at any price, and I don’t care what neighborhood it’s in.

The rooms are generally tiny, and if they have a closet, it is tiny as well. My Dad’s old place featured bedrooms so small that the only thing that would fit in there was the bed – forget about any other furniture. Or getting the closet door open, not enough room. It was a “4 bedroom”, if your definitions are loose – I’ve seen bigger walk-in closets than those bedrooms.

The basement is probably dank and dark, and smells moldy. Concrete floor if you are lucky. And if you are really lucky, the house has no termites eating the wood frame from the inside. The kitchen, even if renovated, is likely small and pokey. Watch your elbows and be careful not to sweep the cooking food off the stove by accident when you walk by.

Then you get on street parking, so lovely to pay the City each month for a “permit” to park in front of your own house. Got more than 1 car in your family? – sucks to be you. Any other vehicles? – too bad, not here.

All in all, the “ownership experience” there would be, to me, a version of Hell. As much as I hate condo’s, buying one of those would be preferable to this money pit hellhole.

Contrast this price with my area, was one of the highest income postal codes in Canada a few years ago – lovely rolling hills, spectacular scenery and wildlife, way more horses than people, low population density. For $800K here, you could buy a 50-100 acre property with a huge house, pool, workshops, barns, guest quarters, fish ponds, forest, maybe your own airstrip. Some have the old century farm house plus a new home. Your own private world, puts the “real” back in “real estate” – and the yearly taxes would be about $5-$6K max. This is 1 hour from Toronto.

I am sure you could find similar if you drove an hour outside Vancouver to some rural area. If you have to commute, it is worth the drive. I used to commute 90 minutes each way to downtown Toronto, and the best part of the trip each day was seeing the city dwindle in the rear view. It actually wasn’t so bad, turn up the stereo and drive, most of the drive was actual driving, once you got clear of the city snarls. Talking with co-workers on cel calls resolved a lot of issues that would otherwise have required a face to face meeting. I worked with people who commuted about the same, time-wise, but from suburban boxes in places like Milton – why, I can’t figure.

To each his own, but I say anyone who buys something like this is stupid and crazy in equal measure. 35 years of debt slavery and constricted lifestyle, for that? Are you out of your frickin’ mind?

#81 Sherlock on 07.05.09 at 10:44 am


Wow, those FTHB’s sure are young. They caught a man suspected to be the mississauga arsonist, 19 years old, and the homes expected to sell for ~$500,000.

#82 TheFirstRick on 07.05.09 at 11:29 am

#67 gold bugger on 07.04.09

Similarly, Timbo (or Squiddly) if you think realtors are driving up prices by buying each other’s houses, you’re either clueless or paranoid.

Buyers control prices.


So Islander, er, I mean Gold Bugger, the 100’s of millions of dollars spent every year by realtors and real estate boards has absolutely NO overall effect on sales??? Seems like you are the one needing a few ecomonics lessons.

#83 TheFirstRick on 07.05.09 at 11:30 am

……money spent by the RE industry on sales, marketing and advertising I meant to say.

#84 dd on 07.05.09 at 11:59 am

.#39 Nostradamus jr.

And the answer is…..”Real Estate is not going to crash”

Oh no. What is happing south of the boarder?

#85 dd on 07.05.09 at 12:04 pm

#63 Nostradamus jr. on 07.04.09 at 8:35 pm
and the answer is…pt #2

…Obama will close the doors to the U.S. of A. to foreign trade….trading will continue w/ Canada…the U.S. Dollar….

U are the biggest clown. If USA closes the door to trade it is 1930 all over again. And the US dollar? It will have its day again for the short term. In the long term it has to go down down down because the supply is going up up up.

#86 Concerned Citizen on 07.05.09 at 1:13 pm

#65 Nostradamus Le Mad Vlad on 07.04.09 at 9:01 pm
Thanks for the feedback, I will keep that in mind

#87 David on 07.05.09 at 1:29 pm

Laughing at the folly of idiots who paid $825K for a decrepit shotgun shack is one thing, but who is the third party underwriting this lunacy? Home prices have wildly outpaced rents, incomes, the rate of inflation and the normal laws of supply and demand.
Good news, all off us get to pay for the Trillion plus housing bubble in Canada. Money that could have been better spent on legitimate enterprise and industry went into financing shabby and obsolete homes financed by mortgages that will never be paid off in the owner’s lifetime.

#88 NoDebt on 07.05.09 at 2:07 pm

“The borrower will always be a slave to the Lender.”

#89 kc on 07.05.09 at 2:08 pm

Garth, I respect your opinions on the economic conditions in Canada, your opinions on RE in Canada (and other areas), however, everytime you state “the climate tipped towards the irreversible,” and hit this blog with the “climate change, global warming” fear mongoring, you take yourself down a peg.

I am not going to start any debates in here about if it is real or a hoax for this story hasn’t truely changed in 40 years, during the 70’s it was the opposite arguement, “global cooling and the new mini ice-age”

http://www.time.com/time/magazine/article/0,9171,944914,00.html <<time mag 1974


The whole "global warming" thing is nothing more than scare tactics and propaganda.

What I do agree with thou, is the need for more R&D into solar and wind power. This has nothing to do with "global warming"

Sheeple buy into the con game of "global warming"

Garth, stick to RE and econmics.


Climate change is not global warming. Believe what you wish, but this has just as much to do with economics as oil prices and money supply. — Garth

#90 timbo on 07.05.09 at 3:15 pm

The reality is that the revenues are not looking good,” Yee said. “We just simply don’t have the money to keep up the pace of services we’re providing.”

“California finance officials hope a budget deal is reached soon so they can stop their IOU effort, which aims to reassure the municipal debt market that the state will honour its bond payments ahead of nearly all other obligations.

Finance officials also want to reassure the market in anticipation of having to sell short-term debt for cash-flow purposes once a budget deal is reached.

California’s budget turmoil has made Wall Street nervous. Standard & Poor’s warned in a statement Wednesday that if California’s budget is not settled soon, the state’s A-credit rating, already the lowest of any of the 50 states, is at risk of falling”

What a mess, and to think our trade will not be affected. Makes you wonder with Cal being one of the housing bubble states what will happen to Canada if BC and Ontario go the same way. Alberta is a foregone conclusion.

#91 Greg W., Oakville on 07.05.09 at 3:44 pm

Hi #74 Nostradamus Le Mad Vlad on 07.05.09 at 1:06 am

Thanks for the link to food issue.
Regarding the ‘Monsanto probably had something to do with this.’

Have you seen this?
‘Up until recently, federal guidelines prohibited food-related uses of sulfuryl fluoride. This prohibition, however, has recently been rescinded — due to an intensive lobbying effort from DOW AgroSciences. ‘

‘Protecting Our Food from Fluoride Pesticides:’
More info at/goto http://www.fluoridealert.org/sf/index.html

At the site/link above there are other links and GOOD information about the toxic effects from fluorides have on you and your family!

What a MAD MAD World we are living in today!

#92 Mike B on 07.05.09 at 4:41 pm

First Rick 82 … Agreed Realtors are by definition always shooting for prices to go up. If one forces a buyer to put in a higher offer and they get the house the very next sucker will be given comps including the previous buyers price and consequently will force that buyer to pay even more and so on and so on… Yes Gold bugger I have put in well over 2 dozen offers and know how realtors work all too well. Pre-inspections to hide horrible problems and force clean offers…wanting verbal offers in a multi – offer scenario… Asking buyers to do the leg work.. find a house and they put in an offer only to suggest full asking …. faxing in your offer with no comps attached….pleading poverty as they drive up in a bmw/mercedes….I could write a freaking book on their antics and how they are all about more money in their pocket and ever increasing prices.
I have money because I am debt phobic and don’t fall as prey to the sales people…

#93 Mike B on 07.05.09 at 5:04 pm

Angela… Pretty basic math…the 25 k in commission on the 500k house(whever that may exist) is split btween listing agent/broker and buyer agent/broker. The selling agent will likely get bout 2 out of the 2.5% or 10 grand…
When someone is selling their home they instinctively figure out their net take , what they want to have after all costs. That means they make the buyer pay the extra
amount needed for their take home amount. When that buyer sells that house they do the same thing… Pass all costs onto the next lucky buyer…

#94 Mike B on 07.05.09 at 5:14 pm

Angela… To answer your question …. I would absolutely love to buy real estate without a realtor…. I already know which room is the kitchen and bath and can use a tape measure quite well… Never met one who can negotiate… They usually suggest full ask or more and can’t even get signbacks …. they fax in offers when it is handy but always want you sign the buyers agreement to protect their investment in time. Hell if they want zn hourly salary get a salaried job not commission based.

#95 Keith in Calgary on 07.05.09 at 6:54 pm

#67 Gold Bugger…….

Please explain in detail with supporting lnks as to how the government of Peter Lougheed bailed out Alberta home owners in the mid 80’s. I was a banker here back then dealing with the RE meltdown first hand……..and IIRC there was no help at all. Could be wrong, but I cannot remember anything.

#96 Onemorething (aka DaHKkid) on 07.05.09 at 6:57 pm

#70 Jeannie, you need to look past what you know to see what is available. Bank preferred shares as Garth has mentioned, maybe go back a few weeks in posts as Garth did write something on this.

Munch, I agree with you however many $1M holders have absolutely no idea how they came into the cash. They made money in spite of themselves and have no idea where to put it.

I dont know where in RSA you are from but was thinking of investing in a Super 14’s team (just a small part of it). Cheers!

#97 eddy on 07.05.09 at 7:53 pm

Here in Toronto, prices Have already dropped. Like Dave, I waited for prices to collapse, they didn’t, so I bought.
When I looked at inflation in utilities, taxes, food, and the general cost of living i realized my cash was just disappearing- the Government is printing money! Plus you pay tax on the interest on your cash. Dave, smell the coffee- you are being robbed

#98 Bobby on 07.05.09 at 8:13 pm

Realtors have no control over prices, they just want you to buy. If they don’t make a sale, they don’t get paid. That is why the RE industry wants to create hype so people will continue to buy.

Let’s be honest, if realtors said prices are going to fall, no one would buy this month, if the same house would be less money next month.

I don’t use a realtor as I find that in most cases there is no value for the dollar. No real professional would advocate that a purchaser make an offer with no conditions, especially an inspection. Yet they do, as they want to make that sale.

You just have to look to the US to see what will happen in Canada in the near future. With rising unemployment and rising interest rates, many buyers are going to be in a difficult spot.

Realtors always point out that in the 80’s rates rose to 18 % but lets remember that they were already at 12%, making for a 50% rise. So if the average rate is now 4% and they rise to the norm of 8-9% you can see that is a 100% rise. Watch what will happen to the RE industry.

#99 Nostradamus Le Mad Vlad on 07.05.09 at 8:36 pm

#71 Jimster on 07.04.09 at 10:45 pm — “. . . to come up with this scary scenario. . . What if? Due to a series of cataclysmic events, all western governments did this: outlawed possession of gold ( i.e. Roosevelt in 1933 [see para. below] ) and eliminated cash in favour of digital currency as they have been pushing for a long time to fight terrorism. Then they implement negative interest rates. . . .”

Ahhh yo, GotMahQwazeeMOJOworking. Velly intellesting post.

Earlier, the experience of being in the midst of an enormously massive straw-rasp-berry-sounding brainfartquake, the epicentre of which was located in the creative white space between my two outer extremities, a.k.a. my Ears took me by surprise.

So I sat up, pondering on Jimster’s excellent post, adding others’ POVs and the links I supply, esp. the one about Martial Law being introduced via a new farmers’ bill in the US, the former Bills C-51 and C-52, now reincarnated as Bill C-6 which will give big pharma and thus, big oil full control of our lives.

The bits and pieces are quietly and quickly being arranged like a jigsaw puzzle. Part of a link which I posted says “. . .Act of March 9, [1933], a declared state of emergency at the request of the Federal Reserve Bank of New York. This state of emergency was never lifted.

“Global pandemic – Level 6 – Mortgage/housing crisis – Banking/lending crisis – Automobile industry crisis – Insurance industry crisis – Healthcare crisis – Southwestern border crisis – Black market drug crisis – National education crisis – Nature/global warming crisis – Jobs/unemployment crisis – On-going weather and forest fire crises – Extreme and unread congressional legislation crisis due to on-going crises”

HyperJuxtaScrewed, to play on Garth’s headline seems to be the correct terminology to describe our present circumstances.

Lest anyone forgets, China has cloaking devices — http://tinyurl.com/cmss72 — on its nuke-powered subs (as are Russia, Israel, the US and one or two others), so we may as well Dance With The Devil We Don’t Know, coz it’s a lot more enjoyable than this trash!
The California Canary is dead; first two paras. are clear. — http://tinyurl.com/pq42zl — Giss whut? Bartering iz bak! — http://tinyurl.com/nkdsxz
Fairly decent link which may shed some light on the current malaise. — http://tinyurl.com/no95wp
Recall the bombings on 7/7/7 in London? Look what’s happening starting Tuesday the 7th — triple eclipse! — http://tinyurl.com/plksdj
A clip and lyrics for the world’s two biggest terrorist states. No need to play clip (Black Sabbath – War Pigs), read the lyrics below. — http://tinyurl.com/oredb5

#100 Angela on 07.05.09 at 8:42 pm

Mike #93
“That means they make the buyer pay the extra
amount needed for their take home amount.”

Pretty basic. The buyer simply refuses to pay. That drives down the price. The comps then show lower prices and on and on it goes.

#101 Jeannie on 07.05.09 at 11:00 pm

Onemorething…yes, I’m aware of Garth’s advice, here’s the problem; I immediately emailed my bank in Canada to enquire about the bank stocks mentioned by Garth.
The response from the financial manager was that one must be present personally to buy these investments.
As I’m not in the country, it would mean a long trek back to Canada, seems there’s no way around it.
Apparently this is some kind of govt.ruling.

Get a brokerage account. — Garth

#102 Dave on 07.06.09 at 12:49 am

When I looked at inflation in utilities, taxes, food, and the general cost of living i realized my cash was just disappearing- the Government is printing money! Plus you pay tax on the interest on your cash. Dave, smell the coffee- you are being robbed

landlords many times pay for utilities and taxes. Food is paid by you whether you’re the landlord or the tenant. Sorry if this is rocket science. Trying to catch a falling safe as you have, is a bad idea

#103 Mike B on 07.06.09 at 4:36 am

Angela 100…. too funny… much as I would like to see prices drop alot here in Toronto… they have not and save for a few homes I saw in January most sell for asking or higher. The smart buyer will assess the price and say pass but right beside him/her is some dumbass with a VRM who will pay more because their realtors scares the crap out of them… Comps here have sloped up recently not down ( even with all my praying) so the trend is a marked increase with each passing sale and given the volume here that adds up fast.

#104 BE on 07.06.09 at 8:33 am

Let me get this straight.

Dave is sitting on a million dollars right now which means he must have had several hundred thousand 6 or 7 years ago. He didn’t buy a house then for whatever reason and therefore missed the greatest run-up in housing value ever, 2003 -2008.

All the commenters heartily slap him on the back for making such a wise and level headed investment choice and tell him to wait some more (good advice now… bad advice then). Wow. Remind me not to hire any of you to be my financial adviser.

Perhaps he made money in he real estate bubble, realized his capital gain, and is laughing at you. — Garth

#105 Kalpa on 07.06.09 at 1:50 pm

I liked this post, Garth. I’m using it on my blog today. Hope you don’t mind.

You can pay me in saddlebag rub. — Garth

#106 Cara on 07.06.09 at 2:01 pm

#10 and Garth’s response.

From what I have been able to ascertain through reading, and from friends who are missionaries in some of the areas of the world suffering through the worst of the poverty and starvation, it isn’t that Earth is unable to grow enough food for the current population. The fact is that the corruption of the governments that rule these nations prevents them from developing economies that are healthy and prosperous.

Nations like those found in Africa in many cases are lush and fertile, but the people lack equipment, training and supplies to produce food.

We cannot blame the Earth for this, it is the product of mankind’s greed, corruption and quest for power.