Peak house


A few months before the US housing market started a sickening slide which would last more than four years, David Lereah published his life’s work. As chief economist for the National Association of Realtors, Lereah was a media darling, jetted around the country in luxury, made a fat association salary  and bought a massive McMansion.

His book, “Why the Real Estate Boom will not Bust,” predicted an endless appreciation for American real estate, just as he did in nonstop TV interviews, even as the historic slide in sales and prices started. In 2007 he was still pumping. “It appears we have established a bottom,” he said. And then the bottom fell out.

These days Lereah is unemployed, admits he “spun” for his former employer and has apparently given up trying to sell his house. And while a mini-boom has erupted in some markets as vulture buyers fight over homes selling for 50% of their value three years ago, most observers think US real estate will not bottom for another year or two. It’s ended up being the greatest destroyer of middle class wealth in modern history.

Lereah came to mind today as I read the latest news release from the Canadian Real Estate Association. While realtors always say they lust for a ‘balanced’ market, it seems they just can’t resist trying to turn stability into a circus. Like now.

“Potential buyers who moved to the sidelines late last year when economic uncertainty peaked,” says CREA president Dale Ripplinger, “are returning to the housing market now that the worst of the recession may be behind us.” Meanwhile Re/Max executive spokesguy Michael Polzler says, “recent buyers had been lucky to snap up some of the best real estate deals in years.” And adds LePage’s Phil Soper: “We believe this improvement represents a sustainable change across the country.”

There you have it, from the trio of media housing experts: The recession is virtually over. Today’s buyers are scoring bargains. And the housing rebound is going to last. The inevitable result, then: Higher prices.

Along with politically-engineered cheap mortgage rates, this is why a lot of young couples are buying. Because the Canadian clones of David Lereah are telling them it’s more than safe – it’s smart.

The reality is neither Ripplinger, Polzler nor Soper know this to be true. But as experienced real estate professionals, they must know that real estate sales and prices can only increase sustainably when affordability also does. That comes from one of three factors – higher family incomes, lower prices or cheaper financing.

Today family cash is stalled out, unemployment is rising quickly, over 2 million people are out of work and household debt equals almost 140% of disposable income. No luck there.

Prices, according to CREA, have just reached a new all-time high, surpassing the record set in the second quarter of 2008. Another strike out.

So, it is cheap financing – the availability of oceans of debt at half the cost of last year – that has caused this real estate renaissance to occur. And interest rates have but one direction in which to move.

This is why the Canadian Davids are so dangerous. These conditions will not last and are not the new normal. Mortgage debt entered into now will be with the borrowers for years, perhaps decades – at escalating cost. And how can buying an asset when its price has never been higher be a bargain?

I’ll say it again. These are the greater fools CREA is celebrating, when it should responsibly be cautioning them. Out of the ashes of a recession hardly finished burning, our realtor shills are fanning the flames of a new pyre. Thanks to them, we’re almost there. Peak house.

And now, one of the reasons I write this blog. Thank you.


I am a 30 year old full time single dad who makes a good living.  I had been getting a lot of pressure from friends over the last couple of months to ‘secure my future’ and buy a house.  When I started looking into housing in Burlington (close to family support and trains to work in Toronto) I was amazed and felt that something was seriously wrong.  For the money I make I could qualify for insanely high amounts of money that would limit my lifestyle (coupled with day care and car payments).  As my search to figure out what was really going on started, I found your site.  This site put everything into perspective for me.  I have now happily continued renting, plan on reducing my lifestyle accordingly and waiting for the right time, 5 years or 10 years from now.

The thing that scares me is that only one out of all of my friends, who recently sold his house to start renting, understands the reasons not to get into the market right now.  Neither of us knows anyone else who do not look at us like we are crazy for sitting out on the ‘free money’.  We both are amazed at how many people we know who are not only leveraged as far as possible but truly believe they have protected themselves for the future.

Had I not found this blog, which I am now sharing with as many people as I think can stomach going against the grain, I may have ended up in the same horrifying predicament.  At this point I am content with the fact that my savings should allow me to save significant amounts for retirement, my daughter’s education and potentially for a house at a reasonable price one day in the future.  If for some reason everyone else is right and housing prices never go down again (I believe it would take a miracle for them) I will at least be able to sleep at night knowing that I, unlike many in my age bracket, will be able to pay for retirement and education for my child.  I really can’t see how I could possibly lose by not buying now.

Thank you for confirming my concerns and finally putting reality into perspective. — Cam


Smoke-eating blogger makes the news: here


For Garth's latest podcast, go here.


#1 lgre on 07.14.09 at 10:09 pm

I’m the same age as Cam and see and hear the same thing, I have friends who cannot leave their house because their expenses are milking them dry..I know some are feeling a bit like ‘we made a mistake buying’ but wont admit it..time will get them into reality, unfortunately for them.

#2 dd on 07.14.09 at 10:10 pm

But Garth … the North Shore of Vancouver must be the best deal in town? Surely it can’t be like San Fran or LA? It surely can’t decrease in value because it is the next fin/leisure/tourist destination on the planet.

#3 Increasing that 1% on 07.14.09 at 10:21 pm

It’s so nice to not have a mortgage.

#4 JO on 07.14.09 at 10:29 pm

In my over 19 years of watching markets (started at 12), i have never seen such an extreme level of optimism toward an asset class. The level of conviction and optimism at a minimum meets and IMO exceeds that seen in March 2000 with tech stocks.

The foundation of this bubble is mud as usual. Nothing but ultra cheap debt and faulty underwriting where most homebuyers are using a taxpayer backed “insurance” program to get into homes they cannot afford.

The inevtiable shake out that has started will wreak havoc with the middle class. In Ontario, imagine a homebuyer who got into the market on less than 10 down this year or anytime in the last 3-4 yrs. You can lose your job, have little or no cash to pay for living expenses, want to sell your home but oops..maybe one third of your neighbours are in the same position…then once every couple of months, one of your neighbours sells or goes into POS..oops, everyone’s home value drops maybe 30-50K each time this process happens…then your turn cash, no job, can’t sell the house you bought (no one is a homeowner until every penny is paid off and mortgage discharged), and you go into POS..and then, maybe 9 or so months after, the bank comes knocking on your door to sue you for the difference between the sale price and the mortgage outstanding..could easily be 30-60 K in a modestly severe decline of 20 % in home prices – very likely in next 2-3 yrs IMO. All the while, most of these morons could have kept their meagre savings in the bank to help pay for rent and groceries (and allowed them to remain mobile for work purposes) and rented for much cheaper than “owning”…actually, it’s a cruel joke..most of the buyers are simply paying high priced rent to the banks.


#5 Nostradamus jr. on 07.14.09 at 10:38 pm

Great blog tonite Garth.

…See how this man is able to think thru his dilemna logically?

Do you know why he can think it through so easily?

Because he’s not married, that’s why.

#6 45north on 07.14.09 at 10:38 pm

I took a course for a week in Burlington – I liked it – the Go Train took you right into downtown Toronto in less time than a commute in from Highway 7.

My sister told me her husbands two children (in their 30’s) are about to buy $800,000 houses in Toronto. What! The children are both married with kids. I told my sister they were nuts! She said don’t even go there and besides both step-children were good for a $million.

Apparently these shrewd market-savy investors (her step-children) have not read about what is happening in the US and not this blog either.

#7 Dean on 07.14.09 at 10:47 pm

I think it’s amusing that the spin continues unabated while the US continues to spiral downward. It’s actually looking like we’re determined to make exactly the same mistakes as the US. We’re going to overleverage on cheap credit and then the whole thing will evaporate when rates go up.

Garth, when you originally mentioned that we could have the same kind of meltdown here I was skeptical. Seeing what is happening now (a housing boom in the midst of a massive recession??!) I finally see what you’re talking about.

I’m not sure about the rest of you, but to me, the stock market seems like less of a risk than real estate right now. At least stocks have shown some acknowlegement of this recession. Other than a brief drop, real estate hasn’t even blinked — there seems to be something artificial in that. How can the GDP of a country drop precipitously without having any real effect on real estate?

#8 Chandresh Patel on 07.14.09 at 10:52 pm

I don understand why CBC has to pimp real estate? Doesnt it get taxpayers’ money??they are supposed to tell the truth without any “positive spin”….

But all you get on CBC tv and radio is these realty pipers…agents/bankers/mortgagers…all that crowd.

why dont they invite ordinary canadians and ask questions re their balance sheets….why they dont invite people like Garth ????

#9 Coho on 07.14.09 at 11:09 pm

Garth, in this article as well as the last one, you’ve written that the banks are caving in to political pressure to lower rates. I think you know that governments are a few rungs down the ladder when it comes to dictating policy.

The privately owned central banks which governments come to borrow money from, dictate to gov’ts.. It’s not the other way around.

Gov’ts print money for the central banks, which in turn, lend it back to the governments. Pretty sweet deal for the central bank owners. Not so sweet for the rest of us. One third of our annual tax dollars go to service the interest on the debt to these bankers. The central banks control the money supply and thus control governments.

Imagine being the one who everyone in your neighbourhood came to for a loan and all you did was buy ink and paper and print hundred dollar bills to lend out at 5%! Nothing to back the paper “currency” except you were born into the right family or bloodline. You have the “divine right” of being king of the neighbourhood, thus the priviledge to control its money supply.

Someone has been making alot of money over the centuries, and it isn’t the governments. Why would governments bankrupt themselves (or worse, go into debt so far that they can never pay it back) and destroy the middle class, thus creating a situation for potential anarchy? Any sane government wouldn’t. This situation has been planned long ahead of time by the unseen puppet masters whose agenda is a one world totalitarian government.

#10 Basil Fawlty on 07.14.09 at 11:27 pm

“Professional Realtor” is an oxymoron, like “Jumbo Shrimp”.
What happens to the “Green Shoots” when the latest round of stimulus is completed, and the bond holders demand higher interest rates for the legions of debt being created? They either keep stimulating, or we get a depression. The options have dwindled to inflate or die.

#11 wetcoaster on 07.14.09 at 11:47 pm

Awesome post Garth,these real estate experts turned economists need to get off the crack. They are so full of their BS they actually believe it, but is that not part of the job description ? Why do we need Carney running the BOC when we have the 3 Stooges and their crystal ball ?

#12 Nostradamus Jr's Analyst on 07.14.09 at 11:53 pm

What’s all the excitement about? It’s just the usual spring bounce.

This should put things into perspective:

Japan’s housing bubble took 14 years to fully deflate.

The US housing bubble is bursting much more violently and is now 3 years in with 3 years to go.
Canada’s in just 1 year in and we’re 2 years behind the US as usual.

Sit back, relax and watch the carnage in the Great White North – it’s going to be a very long show.

#13 JET on 07.15.09 at 12:05 am

It’s pure craziness out there! It’s almost like things are back to normal – surreal.

A couple of updated charts for Toronto (GTA):

#14 squidly77 on 07.15.09 at 12:06 am

its a great time to buy a house in calgary
employment has skyrocketed and employers are desperately short of employees and of course wages are surging

calgarys vacancy rate has fallen below 0.5% and vacancies are rare and as a result rents have surged and are up an average of 15% yoy

for broke people and people with really really really bad credit dont despair as the (good) government of canada has found a way (subsidized by the taxpayers) to let you to buy a calgary home too for absolutely nothing in fact for free

thats right for a limited time only you too can buy a calgary home for free and in most cases we will hand you a cheque for up to $40,000 upon possession

thats right a free house and free cash just sign the papers and you get the keys and if your nice we may even give you a free car and free gas for a year and of course a vacation so that you can be relieved of the stress encountered by receiving your free house car and cash

you can then call the brick and they will fill your home with splendid brand new furniture that requires no payments for 36 months so its free to

worried about the cost of yard work relax my friend
just call home depot and they will supply you with ride-able lawnmower and a deluxe weed whacker also with no payments due for 36 months so its free too

i will provide you with a phone number and a nice lady will come over and landscape your brand new home and you will not have to pay her for 36 months as so thats free to

i will also personally guarantee you a 30% yoy equity gain
as the world has run out of oil and canada has now replaced saudi arabia and is the oil capital of the world

new york city has nothing over calgary as calgary has been crowned the new mecca of the free world

so hurry hurry buy your calgary home now before they are all gone forever

if madness amongst people can happen

i have seen it

#15 squidly77 on 07.15.09 at 12:15 am

this is a post to a public blog
so ill keep it clean….kinda ah
whats gonna happen to buyers today
it rhymes with your lucked
and your seriously gonna get financially lucked up

#16 Nostradamus Le Mad Vlad on 07.15.09 at 12:29 am

“. . . can’t resist trying to turn stability into a circus.” — What’s wrong with stability? If uncertainty and instability is one’s pleasure, invest with JPMorgan or Goldman Sachs!

The more I understand about the sheer, utter greed of these self-proclaimed high-and-mighty bizness wackos who are generally ruining peoples’ lives, the more I see that Monty Python’s Flying Circus made a lot more sense, and always will! ;-)
This was on June 30, 2009. Better long-term investments may be Cdn. dividend stocks (taxed quite low), giving a monthly income / cash flow. —
CBC News updates at 6:59 PST had two very curious reports. The OECD said that rising global unemployment will have a marked effect / social unrest on the world’s economies, now and the near future (worldwide 30 mln. + unemployed).

Immediately following, the Cdn. real estate markets had rebounded dramatically, and things were looking rosy again based on the CREA is trying desperately to pull the wool over our eyes. This is where the two opposites are now racing ahead flat out and ultimately, will crash headlong into each other.

I guess that is what Garth meant when he said this will end badly — sheeple are only looking at life with rose-colored glasses, and there will be plenty of political carnage / roadkill as well. Glad I’m not a politico!

Life could be a little easier! “The average length of unemployment is higher than it’s been since government began tracking the data in 1948.” —

Seems North America is not the only one who can’t figure out what they’re doing! —
All I can add to this is: “How Convenient!” —

#17 Sardine_City on 07.15.09 at 12:30 am

Someone should tell this character to get a wife (or two) instead of ‘day care’ whatever the hell that is. Especially when the kid is female.

Time to buckle down and face the pain of the weight of the world for the rest of his life. There’s no reason to have screaming kids in a megalopolis in the first place house or no house; it significantly lowers the quality of life for everyone else.

The real tragedy of this most recent RE bubble is it encourages still more repugnant domestic squalor, overpopulation, and social irresponsibility than the last one.

#18 Munch on 07.15.09 at 12:42 am


This is your life’s work, and you’re doing a great job.

It’s nice to get good feedback, isn’t it?

Now, extend your area of influence and write for more geographies – the difference you make is immeasurable. I don’t think you’ll ever know how many people’s lives you have literally saved by preventing them from jumping into the biggest mistake of their lives.

Take the rest of the day off!

Regards, Munch

#19 Munch on 07.15.09 at 12:45 am

From another site – interesting.

“Basic Economics – here is why California is broke! Let me explain… There
are two families. Mr. HonestSchmuck and Mr. Parasite- Both families have two
parents, two children, and they live in California.
Mr. HonestSchmuck works in construction, has a Social Security number, and makes
$25.00 per hour with payroll taxes deducted – Mr. Parasite also works
construction, has NO Social Security number and gets paid $15.00 cash per
hour “under the table.”
Mr. HonestSchmuck – $25.00 per hour x 40 hours = $1000.00 per week or $52,000 per
year minus 30% away for state and federal taxes… Mr. HonestSchmuck now has
$31,231.00 per year.
Mr. Parasite- $15.00 per hour x 40 hours = $600.00 per week or $31,200 per
year. Mr. Parasite pays NO taxes out of his illegal $31,200.00 per year
Mr. HonestSchmuck pays Medical and Dental Insurance with limited coverage $1000.00
per month (in California) or $12,000 per year. Mr. HonestSchmuck now has $19,231.00.

Mr. Parasite has full Medical and Dental coverage through the State of
California and Local ‘City of Angels’ (L.A) Health Clinics at an annual cost
of $0.00 per year. Mr. Parasite still has his $31,200.00 yearly salary.
Mr. HonestSchmuck makes too much money is therefore NOT eligible for Food Stamps or
Welfare, so he pays for food at around $1,000.00 per month or $12,000 per
year. Mr. HonestSchmuck now has $7,231.00.
Mr. Parasite has no documented income therefore, he is eligible for Food
Stamps and various forms of Welfare. Mr. Parasite still has his $31,200.00
Mr. HonestSchmuck also has a house payment of $1,000.00 per month or $12,000.00
per year and he is now in the hole to the tune of (-) $4,769.00.
Since Mr. Parasite… Remember, has no documented income… He also receives
a $500 per month Federal Rent Subsidy – this subsidy pays his rent at
$500.00 per month or $6,000.00 per year – he still has $31,200.00 in his
Mr. HonestSchmuck sees this happening and realizes he has to figure out some way to
make ends meet or he is going to lose his house – so… He now works as much
overtime as he can. He finds a part time job on the weekends and evenings.
Mr. Parasite has nights and weekends off to enjoy with his family.
Mr. HonestSchmuck’s and Mr. Parasite’s children both attend the same school. Mr. HonestSchmuck
pays for his children’s lunches while Mr. Parasite’s children get a
government sponsored breakfast and lunch.
Mr. Parasite’s children have an after school ESL program. Mr. HonestSchmuck’s
children go home after school. Mr. HonestSchmuck and Mr. Parasite both enjoy the
same Police and Fire Protection Services, but Mr. HonestSchmuck paid for them and
Mr. Parasite did not.
Mr. HonestSchmuck must repay educational loans for his children to go to college –
Mr. Parasite does not. Therefore Mr. HonestSchmuck cannot afford to send his
children to College – Mr. Parasite can!
California taxpayers (like Mr. HonestSchmuck ) pay for all of Mr. Parasite’s stuff.
That totals over $42,000 in this example. So Mr. Parasite has his $31,200
plus at least $42,000 of value received each year or the equivalent of
$73,200 after tax income. Mr. HonestSchmuck is struggling and Mr. Parasite leads a
pretty good life.
And Voila – California is now broke, busted, and disgusted. And now, you and
I will bail them out.”

#20 Rock Bottom on 07.15.09 at 12:52 am

Garth, you’re painting all realtors with the same brush, but I found one in Calgary whose actually forecasting a 7.5% drop between now and December and is telling buyers to wait:

Truman predicted the price rise/fall in Calgary deadly accurate last year.

He even posted your “Today’s buyers are the greatest fools” word-for-word on his blog.

#21 Anon on 07.15.09 at 1:13 am

“peak house”- good one!

Could you please cover one more topic in addition to house pricing and sizing- housing quality. West coast stick frames are plain scary, definitely not built to last even their owners lifetime. This makes the whole house purchasing deal even more unreasonable…

#22 Bing on 07.15.09 at 1:18 am

Thanks for sharing this. In the real estate industry, it is understandable to have tactics from time to time. I know of a real estate coach who could also help many in the real estate industry make money despite the current crisis.

#23 Grumpydawgs on 07.15.09 at 1:35 am

So, prices have peaked out again. We’re back to where we left off? I don’t think so. Since when does the average Canadian make that kind of money?

If the only mortgage that anyone can afford is under 50% of the 20 year average, then what happens when ‘normal’ comes back around?

Whats changed is that people aren’t taking out $200K mortgages anymore at 7.5% with 25% down , they’re taking $600K at 3.5% with zero down and a PCL for the 5% kickstarter.

With a new truck lease on the front lawn and a houseful of ‘don’t pay till 2012’ furniture , thats a recipie for disaster.

Thats a world of hurt if rates are forced back up by the recovery the government keeps touting is ‘just around the corner’.

I’d say ‘be afraid, be very afraid’.

Whats changed is that the situation has gotten worse.

#24 Canadian Army Guy on 07.15.09 at 2:18 am

I’ve said it before, the “magical” world of real estate is not regulating itself effectively. Never has…
A government watchdog must step in to control their spin. Real estate and banks have an effect – good or bad- on the economy. We can’t let a few persons from CREA, Royal Lepage, etc just go on TV and have their plug which promotes their industry.
Is the recession over? The spinsters say yes, while the unemployment numbers say no.
Are we at the bottom? Maybe. Wait for consumer confidence to drive the recovery.
Will real estate sales soon slow down? Wait for this fall.
Wait for bond yields to go higher (which seem to drive mortgage rates)… but they just won’t as of late.


1. In a two income couple, try to live on one salary only.
2. Never get onto a 20+ years mortgage
3. Respect your 40% gross income for debt (one salary only)

We have achieved these (never easy) and are now semi-retired in our 40’s.

#25 hal smith on 07.15.09 at 2:45 am

The twenty somethings that are loading up on debt, IE: 35 year nothing down mortgages have no intention of ever paying them off. They plan on inheriting their way out of debt. It’s the only way……..

#26 Mike (Authentic) on 07.15.09 at 4:51 am

David Lereah, CREA president Dale Ripplinger, Michael Polzler, Phil Soper and many others are prime examples of selling out your pride, honour and family name for money.

It’s so sad to see it. Yes, you need money to live, but it’s a shallow persuit in life to want it more than anything else and then on top of that be a trickster? Shameful.

As for David Lereah being unemployed. Why would anyone want to hire him? He has proven that he is just there for the money.

Cam the 30 year old full time single dad – Smart guy. Many of us are fighting the same battle with helping others understand the reasons not to get into the market right now.


#27 David Bakody on 07.15.09 at 5:51 am

A Connecting View ….. The Ontario government has just driven the cost of electric cars up by $ 10,000 each ….. the same way low interest rates have driven the price up on housing …… Hello ladies and gentlemen ….. a sale is never held when the demand for things is high couple this with cost of rising fuel prices as share holders demand more profit or move their stocks! Make any sense anyone ….. remember the story I told about new home housing grants?

“One for you two or three for me” whatever the market will bear!

#28 David Bakody on 07.15.09 at 5:57 am

Cam …… I am off to Tim’s and will chat more on your secondary words (Education) as it appears you and a few others have got it wrt to housing.

#29 Bill-Muskoka (NAM) on 07.15.09 at 6:58 am


If you did not catch Sen. Barney Frank on Jon Stewart’s show Monday night, I suggest you do so. It was quite revealing about what caused the sub-prime mess in the U.S.! It was the federal government’s policies.

#30 Samantha on 07.15.09 at 7:10 am

So, Mr. L admits “I spun” and says “he’s abandoned what he calls the “positive spin”. It’s easy to assume we know what a benign sounding term like this means, but to better understand what he did and what he abandoned, I decided to find a definition of “positive spin”.

“Positive spin” from Wikipedia: “In public relations, “spin” is sometimes a pejorative term signifying a heavily biased portrayal in one’s own favour of an event or situation. While traditional public relations may also rely on creative presentation of the facts, “spin” often, though not always, implies disingenuous, deceptive and/or highly manipulative tactics.

and further from the same source:

“The techniques of “spin”s include selectively presenting facts and quotes that support one’s position (cherry picking), the so-called “non-denial denial,” phrasing in a way that assumes unproven truths, euphemisms for drawing attention away from items considered distasteful, and ambiguity in public statements. Another spin technique involves careful choice of timing in the release of certain news so it can take advantage of prominent events in the news.”

Hmm…back where I grew up we didn’t dress up a bull and call it a heifer.

This “positive spin” stuff sounds like a fancy way of saying: “Hey, I mislead people by manipulating the information they used to make important decisions and I got paid beaucoup bucks to do it.”

That Folgers moment photo just screams smug satisfaction. There should be a text balloon over his head saying “wanna stroke my granite”.

Isn’t it reassuring to know that he has no regrets, although he does admit he was “wrong”…and “I have to take responsibility for that”. Really. How is he planning to do that exactly? Is he going to seek out people who purchased homes based in whole or in part on his “work”, (oh and let’s not forget that book), and see how happy they are with his contribution to the expansion of the money pit that real estate has become?

And the best quote of all “It’ll take a long time to get back to the peak prices we saw in many markets.”

Ya think?? “A long time”….how about never? Why? Because these prices should not have happened in the first place. Median incomes never supported these bloated balloon prices in the first place. And that was before employment in this Country went on life support.

Does Mr. L and others in that industry have no moral compass? Do they honestly not care about contributing to the financial ruin of those who use their data and information?

If we go the bail out route or stipend route currently under consideration in the USA, I have a good idea of where the money should come from: CREA. I’m sure they won’t mind, we’ll just put a “positive spin” on it.

#31 Joe on 07.15.09 at 7:45 am

“Low interest rates are not the new norm” is this comment a true prediction of the future? I had originally thought that these low rates could not last. Then you hear the media talking about growth has to come back and we must do everything to ensure that it does. Well we used to sell 17M cars every year and now we only need to produce 10M. Does this mean we have to keep rates low until we are selling 18m? This seems to be the rational.

#32 Lost in Essex County on 07.15.09 at 8:02 am

For me, I’m left with a sense of “if not now, when?”. I’m not thirty, but fifty-two. Its been nearly five years of renting and waiting (I thought the bubble was nuts in 2003,” how could it possibly go higher??”).

A day doesn’t go by that my wife doesn’t bring up buying, and she has a point. Here there a few places to rent and lots of relatively (compared with Victoria, which we left) cheap places to live. This area never really entered a bubble and has dropped on high unemployment (or so we’re told).

Even if the market continued to drop another 25%, we’re not going to be bankrupt. And perhaps, as this area will likely always be less costly to live than other areas of southern Ontario, retirees and those with flexible employment will move here keeping prices stable?

What do you think?

#33 Did you know? on 07.15.09 at 8:18 am

Toronto Star is the media whore for the realtors in Toronto. They put a positive spin on every news about real estate and any news might be affecting housing purchase. If you visit their website in the business section for the last 3 days, they put up the same news and trying to pump up the market. You should find a different source for news!

#34 Joseph on 07.15.09 at 8:24 am

I really appreciate this blog. The times when I consider throwing myself into the real estate market I get a solid dose of cold reality expressing the pitfalls of such a venture. Disposable income is something I really enjoy right now which would need to be sacrificed for a larger house. Blogger message #2 (Jo) did it for me today. Great piece.

#35 Chris L. on 07.15.09 at 8:33 am

Story of the fire house in the Guelph newspaper:

Bidding war over fire sale

Fourteen potential buyers make offers on house in attempted murder-arson case
July 15, 2009
Thana Dharmarajah
Mercury Staff


A south-end home ravaged by a house fire when a woman allegedly tried to burn it down with her teenage son inside has been sold.

The home at 89 Milson Cres. was on the market for only four days, listed at $99,900. However, Royal LePage Royal City Realty handling the sale fielded about 200 inquiries about the property between Friday and Monday.

#36 dd on 07.15.09 at 8:33 am

#19 Rock Bottom

..but I found one in Calgary whose actually forecasting a 7.5% drop between now and December and is telling buyers to wait..

Ya … sure you did. What the guy actually is said “I’m now telling buyers to wait a couple months. We’re at the peak price for this year, there’s a very poor and limited selection, and there’s not much downside to waiting it out.”

Wait a couple of months? Try a couple of years.

#37 David Bakody on 07.15.09 at 8:53 am

Cam …. using the tax system for education is a good plan but paying for all bills for higher education is not …. our girls stated work (babysitting and grocery stores) very early and continued both until they finished university. I paid for their first year and we helped out. Some of our friends picked up the full check and kids did not have to work and they did not find work or had to continue on with yet another round of school. Things that come to easy for children can and most likely will cause them to believe that Mum/ Dad will do all. I was speaking with a manager that told me it is not uncommon to have parents or these kids show up at interviews speaking for them.

#38 VOODOO on 07.15.09 at 8:57 am

It’s quite sickening what they’re allowed to get away with. Take a look at our manufacturing shipments graph:

“The wholesale softness in activity, across a broad cross section of industries is indicative of the deterioration in demand,” Ms. Buskas said. “This will continue to be a feature of manufacturing activity going forward as the U.S. economy continues to struggle back and the Canadian dollar remains on a firming trend.”

And in the very same newspaper on the very same day:

“The renewal of good fortunes for Mr. Stewart is seen across Canada and is the best signal yet that the country’s real estate market is well on its way to recovery.”

As Garth said, this isn’t going to end well.

#39 Rock Bottom on 07.15.09 at 9:07 am

#34 dd

He didn’t say anywhere “wait a couple months then buy,” which is what you are implying. I think he’s saying, “wait a couple months, then re-assess the situation based on the selection, prices, and market forces. Pretty good common-sense advice especially coming from a realtor.

It’s far different from what I’m used to seeing from realtors. And he did predict a drop in prices.

This is from yesterday’s Calgary Herald and it is in stark contrast:

“Christina Hagerty sensed the housing market was turning around, but, after finding a home for a recent client, the Calgary realtor said the signs are now unmistakable.

“Anything we saw right away had competing offers or it was sold the next day,” she said.

“It was crazy; definitely the stampede was around the $400,000 to $500,000 range.”

#40 pjwlk on 07.15.09 at 9:10 am

#5 Nostradamus jr. on 07.14.09 at 10:38 pm

” …See how this man is able to think thru his dilemna logically? Do you know why he can think it through so easily? Because he’s not married, that’s why.”

Ain’t it the truth! I’m truly surprised at the number of guys I know who are “whipped”.

#41 BE on 07.15.09 at 9:15 am

This comic reminds me of many of the posters here. If you find this insulting, it’s probably because it’s you.

You’re the guy sitting, right? — Garth

#42 Live Within Your Means on 07.15.09 at 9:17 am

House on new extension of our street sold for approx. $350K in ’06. Assessed in ’09 for $422K and sold for $550K and this is in Dartmouth. Crazy! Another house on our street (approx. 30 YO) was assessed in ’08 at $267K, purchased for around $219K for very quick sale by children whose parents were very eldery and ended up in hospital. Buyers immediately put it on the market for $260K with no takers. Needed lots of interior work which they did as well as exterior – new roof, new siding, some new windows and doors. They’ve had it on the market for months at $319K. Replaced 2 full bathrooms, put in hardwood floors, new kitchen, etc. , but still no takers. Problem is, as we and many of our neighbours surmise, is that they removed all walls in living, dining and kitchen area and its just too open concept for maritime tastes. It has a complete in-law ‘apt’ downstairs, but only minor renovations done and it doesn’t comply with zoning bylaws so they can’t advertise it as such. It was done as a flip. They’ve let the gardens go to weeds, cut down and/or butchered some trees, bushes, etc. I know one of the buyers/renovators & tried to tell him about the landscaping, but he doesn’t seem to care. Wonder how much they’ll lose on this one.

Meanwhile, we’ve had 3 renovation companies into give us a quote on totally renovating a bathroom upstairs, extending a bedroom and bathroom downstairs (requires digging up cement floor to put in a shower) & all have given us excuses for not providing a quote. My husband said he would not proceed with renovations until I purchased all fixtures, tiles, etc. because I’m fussy. Family room downstairs is unusable, due to storage of these items. We think possibly the renovators don’t want to do this project as they won’t get their commission for buying these items. These renovators were recommended by friends. What say you?

BTW, the vast majority of what I bought, in cash, was before our govt. announced that home reno program & our home was paid off many years ago. We’re also seriously considering replacing some windows this year, but not on credit.

Yeah, we’re boomers that some on this blog love to hate. But, we spent wisely, paid our taxes & didn’t buy more than we could afford based on one salary, even tho we had 2.

#43 Nostradamus jr. on 07.15.09 at 9:29 am

#30 Lost in Essex County

“”A day doesn’t go by that my wife doesn’t bring up buying””

lol, I posted earlier that the reason Cam rents and also comes across calm and level headed is because he is no longer married.

…Seriously, you should buy, any drop will be small comparitively to your deserved lifestyle.

From Mish’s blog today…

“”President Barack Obama says lost auto industry jobs in states such as Michigan will not come back and new jobs will require greater training and post-high school education to achieve a higher skilled work force.

…job training cannot possibly work. There are so many qualified, experienced, out of work individuals that few if anyone would hire a GM welder retrained in JAVA programming for a programming position. Moreover, no one would hire a banker as a welder. Nonetheless, president Obama and colleges are both touting such retraining as a way to get a job.

Bear in mind, I am all in favor of education, but the idea that 40-50 year old assembly line workers, home builders, mortgage brokers, etc etc can be retrained and compete against those with 20 years experience and still out of a job is absurd.

President Obama is bright enough to understand this. Yet, instead of telling the truth, Obama is willing to waste billions of taxpayer dollars spreading false hope.

Under guise of political expediency, Obama simply cannot tell the truth to those out of a job. The sad truth is the situation is hopeless for many if not most of those who are over 40 and recently lost a high paying job.””

…Friends…..Simply replace the U.S. w/ Ontario, President Obama w/ Premier McGuinty and then you know the $10K bailout for electric auto/GM is just a pipe dream.

#44 Herb on 07.15.09 at 9:43 am

#22 Canadian Army Guy,

“We have achieved these (never easy) and are now semi-retired in our 40’s.”

In a previous comment you claimed to have over 30 years of military service. We don’t enrol people at or below the age of 10, so what gives?

#45 PTDBD on 07.15.09 at 9:44 am

There is no need for all this anxiety about mortgages. In the USA, there is a report that unemployed homeowners during this “jobless recovery” will have their mortgage payments covered by the government. Can Canada be far behind?

That Ontario plan for subsidizing new electric car purchases for $10,000 is certainly an attention getter. How will this impact current sales of cars? Doesn’t Ontario have an electricity supply problem?

Alberta is looking at these subsidies from Quebec and Ontario. It is speculated that they will impose a counter-setting 50k tax on such purchases to subsidize the Oil Sands.

#46 wellwell on 07.15.09 at 10:00 am

The spring rally in Britain’s housing market was a ‘false dawn’, and 2008 prices likely won’t return until sometime after 2015:

Here are some quotes from the Guardian article:

PricewaterhouseCoopers said recent signs of a recovery in the market which had been detected by a fresh survey of estate agents were a “false dawn”. John Hawksworth, the chief economist at PWC, said prices would experience a gentle decline for the next 18 months and then pick up slowly over the following years.

“Although the estimated average UK house price overvaluation of around 25% in mid-2007 has now been largely eliminated, our analysis suggests that house prices could still have further to fall over the next year.”

* * *

PWC said it was more likely than not that real house prices in 2015 could still be below average levels seen in 2008, after adjusting for inflation. Even in 2020, after five years of relatively strong growth, the consultancy saw a 30% chance that real house prices could be below 2008 levels.

#47 gold bugger on 07.15.09 at 10:20 am

@Marxist Army Guy:
I realize no level of government intervention will satisfy most spineless Canucks, but real estate is regulated up the @zz.

When you write, “A government watchdog must step in to control their spin,” what you are asking is that government control free speech.

I really hope you are semi-retired, because we don’t need proto-fascists like you in the army.

#48 Industrial Guy on 07.15.09 at 10:21 am

$151,000.00 for a burnt out wreck?

Garth, I think we need to consider a name change here. The Greater Fool just doesn’t cover these folks. They are far beyond fools.

RE Lemmings would be more appropriate. They act just like our furry rodent friends who folklore claim, stoically march off cliffs to their death.

I propose the following change to Websters …….
The RE Lemmings, deaf, dumb and blinded with greed, with an uncontrollable desire to commit mass financial suicide.

#49 PTDBD on 07.15.09 at 10:44 am

FREE $50 cell phone and FREE free cell service for those on welfare in 16 USA states. Colorado will be 17’th if approved.

#50 HJ on 07.15.09 at 10:56 am

As if buying a house didn’t already require a good eye for detail, now you have to worry about old Meth labs making you sick …

#51 Houman on 07.15.09 at 11:05 am

Some one please help!!!
I have read greater fool and have been reading this site for a long time. People are getting 5 year mortgage at 3.6 fixed right now. In fact I have an application approved for 3.6. What will it take for the prices to go down? We already know that the interest rate will remain here for the rest of the year. why in hell would goventment increase the rate if they know that it would hurt the housing market? They would do anything in their power to keep the RE market growing.
I make 6 figures, planing to get married aug 2010 and I am thinking about getting a condo around 250-290k range with 20% down. Do you guys think it is stupid?
Please help me out here, I have been negative on RE for 2 years now but the bounce now is crazy.
A 2 bedroom condo at Young and finch that was sold for 323 6 months ago is selling for 366 now!!!!
Thanks in advance

#52 MikeB on 07.15.09 at 11:13 am

Of course the problem with low rates is that the cycle starts all over again… people are buying on credit supposedly at 25% which is still 75% leveraged… The prices have not dropped so there is potentially no upside unless you get a POS for below asking . Not easy to come by these days and idiots bid them up..
So if house buying gets the economy rolling again and then the banks raise rates gently upwards those heavily leveraged will likely get caught at some point if one hiccup comes their way. It is a false economy built largely on overleveraged securities.. This bubble will burst but it might take years.

#53 POL-CAN on 07.15.09 at 11:18 am

Hello all…

As promised I thought I would share my observations from 3 great weeks in Europe (just got back 4 days ago).

We spend 1 week in Poland (Wroclaw and Cracow), 2 days in Prague, and 2 weeks in Bulgaria (Sofia and Sveti Vlas on the Black Sea).

The high end hotels we stayed at in Cracow and Prague were dead. Very few other customers. I kind of liked it this way. Tourism is way down compared to prior years and car traffic was way down (car and truck). Restaurants in the tourist areas were busy enough, but nothing like in prior years.

In Sofia traffic was way down compared to last summer. The electronic stores we went to were dead. All purpose stores were steady (people have to eat right?).
On the sea side in the town we chose to stay in you could clearly see the result of a global slowdown. The place was dead with maybe a 30 % occupancy at the start of the peak season. All these thousands of units were built within the last few years. Lots of for sale signs of apartments/condos. They really over built here. The high end restaurants that were overflowing with rich tourists in former years were almost empty. From speaking with wait staff their traffic is off 70% from last year. How could any business stay afloat in these conditions? From the street vendors the message was even worse. All said that they are just hanging on hoping for the traffic to return next year. Probably will not happen. What a waste.

I see that the party here in Toronto has continued while we were gone. I find it funny that while the rest of the world has alcohol poisoning, we continue to drink the spiked punch. This will not end well.

#54 r1200c on 07.15.09 at 11:23 am

Here’s one argument for Nostradamus Jr…

So much for BC’s underground industry:

Barack Obama on Marijuana Decriminalization 2004:

#55 Dan in Victoria on 07.15.09 at 11:24 am

I listened to your podcast with Tom Jefferies yesterday,very informative interview. Especially the bit about the US carbon tax being used as protectionism….could be some dire results for Canadian manufacturing.And Canadians in general.I would encourage people to listen to it,it really made me think as to what could happen here at home.Thanks for that Garth.

#56 r1200c on 07.15.09 at 11:25 am

So much for BC’s underground industry…

Barack Obama on Marijuana Decriminalization 2004:

#57 rory on 07.15.09 at 11:26 am

#22 Canadian Army Guy you said:

“We have achieved these (never easy) and are now semi-retired in our 40’s.”


First, I always respect service to country.

Second, pls correct if I am wrong but as a military person do you not get full pension after 20 years, maybe 25 tops.

Therefore, being retired took no financial genius and left the taxpayer to support 20 years of service with 40+ years of pension payments – which are totally unsustainable, unless the taxpayers support it, based on the contributions you would have made.

So please smile all the way to the bank, but pls don’t gloat about being retired in your 40’s and all your ‘perceived’ hardships…I think maybe luck had a lot more to do with it …IMO.

If wrong, please correct, fiercely.

#58 Larry on 07.15.09 at 11:32 am

My biggest fear in all this Garth is that the govts will do whatever is required to rescue the banks who lent the money to people with no money to purchase overpriced houses.
Here i am renting in Calgary where every Tom Dick and Mary is buying a shack for 400K. My ING account pays me 1.35% down from 3.5% 10 months ago. Am i the greater fool for renting and not the people buying who will probably be bailed out by the govt (us) anyways.
The masses are drunk on real estate and debt while us prudent savers are being screwed.

#59 POL-CAN on 07.15.09 at 11:37 am

Hey MikeB….

Hang in there…. We are bound to run out of greater fools (aka first time home buyers) at some point :)

Sooner or later, the stock market will crash again scaring everybody. Or the bond market will push the interest rates higher, killing access to free money.

Currently the inventory is so poor that anything decent is generating bidding wars. Once the inventory starts rising again due to the above two points, the prices should start falling fast.

Our circumstances changed a bit and I have a feeling we will be forced into buying some time this fall. Not something I am comfortable doing but you can’t win all arguments with “fundamentaly it should crash anytime now”. The argument worked last fall/winter but has been killed this spring. We live in an instant gratification age and not all people have the patience to wait an unknown amount of time.

#60 TJ on 07.15.09 at 11:41 am

Manufacturing sales fall in May far more than expectations

Manufacturing sales fell six per cent to $38.4 billion in May, the lowest level in more than a decade as Canada’s industrial sector was battered by output cuts linked to the restructuring of the North American car industry.

Statistics Canada reported Wednesday that plant shutdowns in the motor vehicle and primary metal industries, along with continued volatility in the aerospace sector, accounted for most of the decline in May.

#61 rory on 07.15.09 at 11:44 am

Hi all;

The 10K subside sounds like one more in a long line of ways to bankrupt a province/country.

Gov’ts meddling in the micro environment while the macro just sits unchanged…while Nero fiddles, Rome burns.

#62 Chris no longer in England on 07.15.09 at 11:49 am

Sardine_City #16: “…There’s no reason to have screaming kids in a megalopolis in the first place house or no house; it significantly lowers the quality of life for everyone else.”

Another repugnant and unnecessary comment. There do seem to be some family/child haters on this blog at times. Thank goodness my nearest neighbour is cheerful and charming (and so are his 3 kids). I would hate to live next door to you.

#63 Live Within Your Means on 07.15.09 at 12:27 pm

#51 POL-CAN on 07.15.09 at 11:18 am

We too just got back from 3 weeks in France. We were’nt staying at any ritzy places, however. Read in the paper that anywhere from 30-50% of French citizens were staying home for their vacation. Restaurants & outdoor cafes didn’t seem to be hurting, however. In general we found prices had increased from 2 years ago. It seemed that anything that costs 1$ here costs 1 Euro there. As much as we tried to find out salary equivalent, we couldn’t actually make an accurate comparison of wages for equivalent work. especially taking into consideration their social benefits, although their changing under Sarko. Two friends are putting in good sized solariums and we assume their homes are paid off. All kinds of people in the stores, but that was likely due to les Soldes. As a treat, we bought my husband’s PIL some filet mignon steak. Can you believe $58 Euros per kilo. Only thing that was way cheaper there was wine & booze. They’re now selling crossants made with butter!!. Who would have thought that one had to check they weren’t. I made the mistake twice until I discovered this fact. Aside from the marvelous architecture, culture, etc. that France & Europe has to offer, we’ll take Canada.

#64 BE on 07.15.09 at 12:41 pm
“You’re the guy sitting, right? — Garth”

Of course I am, I’m not so elitist to think that I’m some how superior to everyone else.

Oh wait but that very statement proves that I’m not like the guy sitting there thinking he’s special and everyone else is mindless.

My head hurts.

#65 Ultraman on 07.15.09 at 12:47 pm

Sardine_City #16: “…There’s no reason to have screaming kids in a megalopolis in the first place house or no house; it significantly lowers the quality of life for everyone else.”

That’s an incredibly ignorant thing to say. Being a childless couple in the city (Vancouver) I can assure you that having kids around not only improve the quality of life, they are the life.

Sardine_City, you are an idiot.

#66 ncoffee on 07.15.09 at 12:51 pm

#60 Chris no longer in England

“There do seem to be some family/child haters on this blog at times. ”

For sure. There is are some seriously sexist men here who for one reason or another seem to be totally incapable of dealing with 50% of our species and continually act like they’re being victimized by them somehow. Jesus, just suck it up, learn to deal with people who aren’t 100% exactly like you, or just switch teams already. Sheesh.

(I wonder what the overlap between the anti-immigration types and the sexist types is? Could be wrong, but I’d guess it’s significant.)

… But on the other hand, we do have too many people in the world. You can be the most environmentally fixated person in the world, but by having a kid you instantly double (at least) the amount of pollution you’d create over a lifetime. Think about it.

Also, couples who don’t have kids are generally happier than those who do, according to recent studies (Google it up), even though socially we’re conditioned to rarely, if ever, admit it.

Consider not having kids; trust me, it’s great!

#67 Onemorething (aka DaHKkid) on 07.15.09 at 1:06 pm

Dinner with professionals up in upscale Westhill/Wadsley area last night. Great group of Lawyers and Commercial RE people.

Counted quite a few FOR SALE signs best guess these homes in $3M+ range (I dont want to think of what the taxes are on these).

Some weird stories of people running down to Phoenix to buy RE bargains, leveraging VAN property to do so.

This is what you do to subsidize the rainy season, try and go somewhere else if you can during!

The Comm RE guys showed occupancy down 25% and another 1/3 in arrears.

I soap boxed for a bit especially on Unemployment, CAN reliance on US for exports, Strong CAD not good, demand for commodities in the toilet thus exports to US faltering, no end in site until 2012 for US RE and visioned 12-18 month Lag in CAN followed by a L shaped decade of slow growth.

It’s like this was the first time anyone had considered this?????

This is not a VAN thing, or BC thing or ON thing, this is a typical CAN thing where people are just oblivious to the world outside their own.

I see a lot of nice people getting hurt in the next 3-5 years in Canada. It will be bad as there has been no real correction here like in all other parts of the world.

This is the problem with being linked to the US so predominantly and when “like the mob” try to get out, they will keep pulling us back in.

I will wait until 2012! This will then provide the landscape for whether Canada is even a good place to live moving forward. Scary but possible!

#68 R on 07.15.09 at 1:08 pm

I am seeing alot of comments on this blog about good incomes and secure jobs. Nursing use to be one of the most secure jobs around. I see they now have a hiring freeze in Alberta. The overpriced real estate that has been reduced is still overpriced in most markets. The cheap money won’t last forever. Will your good income and secure job be there next year? Once again we have a group of people who live in the present. It might be wise to start thinking about tomorrow and beyond.

#69 R on 07.15.09 at 1:17 pm

Remember this …….Nothing in life is permament Not even life itself.

#70 TJ on 07.15.09 at 1:27 pm

Before you think about buying a ‘cheap’ Condo in Florida:

The report of key economic indicators from the Florida Center for Fiscal and Economic Policy’s (FCFEP) finds that per person, income growth in Florida has fallen behind the rest of the nation and that the gap in income between the most affluent and those on the bottom rung of the economic ladder is among the widest in the nation – and getting wider.
The report noted these signs of trouble:

* Florida’s population growth, which has driven the state’s economy since World War II, is stagnant.
* Florida’s rate of income growth has fallen to 45th in the country.
* The real rate of growth in gross state product – the value of goods and services the state produces – has fallen to 47th in the nation.
* With a poverty rate of 12.5 percent, the number of people living in poverty in Florida has increased by 180,000 in one year.
* About 1.9 million Florida residents – about one in 10 – receive food stamps.
* Foreclosures in Florida have quadrupled over the last three years. In the first four months of this year, new Florida foreclosure filings totaled 198,880, according to RealtyTrac.
* Per-capita state government spending is 44th in the nation, and Florida spends proportionately more of its budget on corrections than all but two states and a smaller share on education than most states.

#71 Grumpydawgs on 07.15.09 at 1:36 pm

#57 pol-Can, you’re right about that ‘instant gratification’ line. I call this bunch ‘The Peter Pan Generation’ .

One thing about Canada is that we have a small complacent population, no objective media and a government willing to lie chr=eat and steal towards whatever political ends are on the pollsters results at any given time.

Look at the comments by the Cons recently about just letting the deficit run. Just bizarre. of course this mans higher taxes soon. You’d expect the pop to be up in arms, but…..nothing.

Savers are screwed, money in the bank doesn’t create revenue for the government. Seniors are subsidizing lazy polititico’s by having to crystallize their savings into cash to live on, this is a great thing says the government. The fact that you may have cash in the bank is being treating as subversive by the government who wants you to spend us out of the recession as opposed to them cutting and running efficiencies.

This country is going to fail, its inevitable. I’m ready to bail when taxes are run up to the unsustainable levels that the government will need to service its debt.

I’m thinking Malaysia. Nice, warm, cheap, safe and calm beaches everywhere. The cost of living is 1/3 of here. Nice house is renting at under $300 per month. Everyone speaks English, good hospitals, great shopping, high tech everywhere, police aren’t killing people like here.

Canada for seniors is way overrated.

#72 jussupow on 07.15.09 at 1:41 pm

@56 That is going to happen you should not second guess yourself. We are going to witness the second stimulus down sough and likely the third one before this administration is done. We are going to see negative interest rates and unprecedented powers given to the fed. All this will keep the deflationary pressure under control. Of course no major fin institution is going to fail. Goldman is going to rack up fabulous quarters. Real economy suffer (but that’s small potatoes) for years and years but the collapse won’t happen (likely postpone for the next wave). Despite what many here think the stimulus(es) do have a stabilizing effect. Every other week an intel is going to report (mixed report propped by china stimulus this time) and the market rupture upwards. The faster we are going to realize that and act upon it the better. People who buy these days are greater fools not.

@57 Hmm… so MikeB should wait as we going to run out of greater fools first time home buyers. And you, as your circumstances changed, have a feeling will be forced buying something. That is called “pulling a garth” and I must admit – it is smart. Talk you book but do the sensible thing.

@39 Precisely.

#73 Nostradamus jr. on 07.15.09 at 2:08 pm

Rory, One more thing aka H K Kid et al

This comes across as a very succinct posting…

#69 Grumpydawgs

“”(Canadian) Savers are screwed, money in the bank doesn’t create revenue for the government. Seniors are subsidizing lazy polititico’s by having to crystallize their savings into cash to live on, this is a great thing says the government. The fact that you may have cash in the bank is being treating as subversive by the government who wants you to spend us out of the recession as opposed to them cutting and running efficiencies.

This country is going to fail, its inevitable.””

#74 dd on 07.15.09 at 2:21 pm

#70 jussupow

…second stimulus down sough and likely the third one before this administration is done. Despite what many here think the stimulus(es) do have a stabilizing effect… and the market rupture upwards…

Ya, for how long? Yes the market will advance but it is the real economy that will add earnings to corporate income statements. If there are no earnings then the markets cannot substain this run and will fall back until another stim package. And how long can we be running deficits? Sooner or later all the debt will have to be paid off.

#75 POL-CAN on 07.15.09 at 2:24 pm

# 70 jussUpow

MikeB and I have had a back and forth on housing in Toronto for the last year. We agree as do many other posters here that people that buy now are making the biggest mistake of their lives. No one seems to realize that no one is safe. No industry is safe. No job is safe.

We have a large downpayment, make very good money in industries that so far have been safe from lay offs at least here in Canada, and are sticking to the 33% of disposable income for all housing related costs rule. I would have loved to save a whole lot of money by waiting but such is life. Instead we will use a good chunk of the remaining 66 % to pay off the principle as fast as possible.

Like I said…. For us the circumstances have changed and I find myself no longer being able to explain away this dead cat bounce in housing prices or how long it will last. At some point resistance does become futile.

The governments around the world are conspiring to keep the bubble economy from colapsing in order to save their bankster friends. If they kept the rates high they would have killed the economy quicker. People and corps would have walked away from their debt obligations and the banks would have collapsed. It really is that simple.
The bond market is not co-operating however and rates have been on the rise in the last month or so. Too much QE too fast and this will blow up sending bond and T rates higher and mortgage rates will follow. All this despite the central bank rates stuck at 0.25 %.

I am as bearish on our economy and real estate as they come. You could even say I am 100 % tin-foil as I belive this crisis had been designed and implemented on purpose. No one saw it coming my ass.

Just look at the GS profit report from yesterday. Gambling with tax payer money. How can they loose whe the tax payer guarantees the losses? Sick.

#76 Marc on 07.15.09 at 2:25 pm

Marriage was the worst decision I ever made. Marriage license, + marriage commissioner, totol $200 in 2005. Filing divorce papers in B.C. supreme court for an uncontested divorce, $300. Why is the legel requirments of divorce more costly then the legel requirments of marriage? Governments profiting off peoples misfortune I suspect, or the cost of marriage has gone up 50% recently.

#77 squidly77 on 07.15.09 at 2:41 pm

since david liar is the poster boy today and the blog author is treating the real estate industry like a really full cat who has just caught a mouse because it could
heres some fuel for the campfire..hahahaha

Why Would a Realtor intentionally put
the wrong SOLD data into the MLS?
and is anybody really watching?


#78 squidly77 on 07.15.09 at 2:44 pm

i dont know where that blog comes from but its all over the place today

#79 POL-CAN on 07.15.09 at 2:54 pm

#61 Live Within Your Means

Things are still cheaper in countries that do not use the Euro yet.

For excample:

1. In BG 5 adults had a very good dinner at many restaurants with drinks for under 100 CAD with tip. 2 apartments plus 1 studio cast us 125 CAD per day.

2. In Greece the year before just one room cost us 70 EURO or 95 CAD per night and dinners for 2 were in the 50 to 60 EURO range.

I do not know how much people earn in France on ave, but my cousins tell me that in Poland the ave income is approx 35 K Zloty or 12.5 K CAD. So while the cost of living in terms of food and clothing etc. is less (it has to be based on their incomes), their housing prices are just as crazy as here. Out of reach for the ave income erner.

The sin stuff is indeed cheaper everywhere in Europe. In BG I was paying around 2 CAD for a 1.5 L bottle of very good beer and in Poland a pack of smokes costs 10 Zloty or 3.5 CAD.

#80 squidly77 on 07.15.09 at 2:54 pm

keeping an eye on the ball

its not over by a long shot

#81 Sphinx on 07.15.09 at 2:59 pm

Good post!….he used to be known as ‘David LIEreah’ in the blogosphere during his last 2 yrs as Chief Economist of NAR, this was for his always postive spin on RE, and spewing lies consumed by the greater fools. Gregory Klump is the equivalent in Canada, and he’s doing same pefect job!

“…That comes from one of three factors – higher family incomes, lower prices or cheaper financing.”, you nailed it right there…incomes already going down (layoffs, reduced working hours, part-time jobs), cheaper financing has bottomed or about to (the MBS bond market is about to implode), hence it’s the third factor “lower prices” that’ll return the affordability back, however, the government will delay the inevitable as much as it could, so I’d expect our real and final crash to start early 2010 and it’ll be brutal one.

#82 Denis on 07.15.09 at 3:27 pm

There’s something seriously wrong when the Governator starts issuing IOUs like when we joked around about writing IOU on a piece of paper back in Grade School.

#83 My_View on 07.15.09 at 3:30 pm

You guys crack me up! The instant gratification generation/peter pan, like buying a half million dollar 1 bdrm condo is instant gratification! You boomers had choices semi or detached homes with backyards, and lets not forget the cheap land/recreational properties the boomers were able to buy for next to nothing. How many x, y & z, generation people you know having kids in their twenties or any kids at all, and how both have to work, I know boo hoo, please. The R/E crash is not going to happen, its not only FTHB out there, I know first hand how many people are buying 2nd & 3rd homes. Most people don’t care about stocks (don’t feel safe) real estate is REAL! Even the great fearless leader Garth has bought (POS) & sold in this 2009 record breaking year, I guess Garth was lucky, his predictions did not happen and he was able to capitalize on the 2 sales he made recently; to of course the greatest fools of this decade.

#84 MikeB on 07.15.09 at 3:32 pm

From my RE lawyer perspective…. things are hopping out there BUT mostly in first time buyer world…. They get the benefit of the transfer tax break and are frantically trying to buy something before their pre approval runs out. I have noticed quite a few deals fall through EVEN on cheapy properties….So banks are being pretty careful these days ….If inventories rise like they did in Nov- Jan than things will improve for buyers but most sellers feel it is better to wait it out for next year.

#85 POL-CAN on 07.15.09 at 3:40 pm

I have said this before and I will say it again….

This crisis is far from over despite this bull sh*t casino market….

CIT Trading Halted as Lender Awaits Word on Possible U.S. Aid

I wonder how much this bailout will cost…

#86 jess on 07.15.09 at 4:17 pm

If we do a brain image on this guy would his insular cortex have some thickness on one side? :^>

#87 Nostradamus Le Mad Vlad on 07.15.09 at 4:38 pm

#3 Increasing that 1% on 07.14.09 at 10:21 pm — “It’s so nice to not have a mortgage.”

Ditto. When we paid ours off in Spring ’82, we had just under $400 left in the bank (both working), no investments and no debt. The bank (Nova Scotia) was aghast and quite annoyed, because the interest rates were around 21% and they wanted us to renew.

Now we’re both retired, no debts. Takes an awful lot of blood, sweat and tears, but it’s more than worth it.
#22 Canadian Army Guy on 07.15.09 at 2:18 am — “Remember:

1. In a two income couple, try to live on one salary only. . . . 3. Respect your 40% gross income for debt (one salary only)

Smart, basic planning. See first response. I recall Manfred Mann’s song from the ’60s — “Blinded By The Light” — today’s sheeple are Blinded By The Greed Mentality, what’s yours is mine and what’s mine is mine.

Life doesn’t work like that, as they will see for themselves shortly.
#56 Larry on 07.15.09 at 11:32 am — “The masses are drunk on real estate and debt while us prudent savers are being screwed.” — and —

#69 Grumpydawgs on 07.15.09 at 1:36 pm — “Look at the comments by the Cons recently about just letting the deficit run. Just bizarre. of course this mans higher taxes soon. . . . Savers are screwed, money in the bank doesn’t create revenue for the government.”

Both posters are right — ordinary people who live prudent lives, either keeping debts under control or, better yet, staying out of debt altogether (so no one can maintain control over lives) are in far better shape when TSHTF.

It’s the present ones who are gorging themselves on mortgages / LOC / loans, etc. digging themselves further into the quicksand of owing more than necessary, because they have chosen not to see the forest for the trees.

But for the rest of us middle-aged and old geezers, who actually learned what self-responsibility is and how it applies to us as individuals, if there is extra money sitting in bank accounts doing zippo, there are a couple of alternatives.

Get the present money producing a little more, i.e. investing in Cdn. equity mutuals (there are some very good ones out there) with dividends automatically reinvested to buy further shares, dividend-paying shares and, to a lesser extent, bank preferreds.

However, keep in mind as poster #67 R on 07.15.09 at 1:17 pm said: “Remember this …….Nothing in life is permament Not even life itself.”

We are all covered with a ‘Best-Buy’, or ‘Expiry’ date on us, so it is better to take advantage of what is available here and now — tomorrow has new adventures, and they may not be here!

#88 Nostradamus jr. on 07.15.09 at 4:50 pm

#81 My_View

“”Most people don’t care about stocks (don’t feel safe) real estate is REAL!””


Just what they say in Phoenix, Stockton, Vegas, Miami… — Garth

#89 ncoffee on 07.15.09 at 5:05 pm

Remember the good ol’ days of this blog, where so many posters here seemed to think Canadian RE would crash in just a few months at most, and that it would go down hard, maybe by 30-50% or more?

Ahh, those were the days. Everything seemed so black and white …

Now we’re all talking about waiting many years into the future, maybe two, maybe five, maybe ten, and for what, maybe getting 15% off today’s prices but with interest rates x2 or x3 what they are now? Seriously? When you could have already been busy paying off your mortgage for those years (at a lower rate even)?

Someone, anyone, please talk nice and slow to me and explain where I’m going wrong with this thinking.

You’re right. Prices will go up forever, even when incomes fall and rates rise. Makes perfect sense. Good work. — Garth

#90 Bottoms_Up on 07.15.09 at 5:13 pm

Funny how the only realtor to step forward and admit ‘spinning’ is the one who wrote the U.S. book in 2007 entitled:

“Why the Real Estate Boom will not Bust”

When I first heard about this book I almost choked on my cheerios.

#91 Bottoms_Up on 07.15.09 at 5:20 pm

#64 “…by having a kid you instantly double (at least) the amount of pollution you’d create over a lifetime. Think about it.”
Not if your kid is an inventor and comes up with ways to reduce pollution (someone had to invent solar panels, wind turbines, electric cars, geothermal energy, efficient and biodegradable packaging etc.). I love it when people ‘push’ the idea of not having kids (if YOUR parents had followed that idea YOU wouldn’t exist!!). Also, having kids can be the wonderful extension of your relationship with your spouse, and can be an insurance policy against future poverty and may ensure you’re not alone on your death bed. Cheers!

#92 ncoffee on 07.15.09 at 5:40 pm

Re #85

“You’re right. Prices will go up forever, even when incomes fall and rates rise. Makes perfect sense. Good work. — Garth”

Wow. Not remotely what I said.

My post actually was talking about prices going DOWN — by 15% (which is your number), with interest rates doubling or tripling (again, not different than what you’ve been saying) over the next five or ten years.

That being the case, the question is: is that really worth waiting for when you could be working on paying it down over that time at a lower rate?

If anyone has a serious, less defensive, less emotional answer for me, I’d love to hear it. I’ve been a longtime fan of this blog, but it will definitely be the last thing I ever read here.

Hey, nothing emotional about that response. It just reflected your belief that waiting to buy real estate is pointless, which is a very questionable position. Buy now if you want, but be prepared for price reductions later. Clearly the current environment is not sustainable, and Canada is still not immune from the conditions which have levelled house prices across most western countries. But there is no one strategy which works for everyone. Experienced real estate investors know how to find distressed, below-market properties, to arrange VTBs in time of higher rates and to add value to achieve very quick equity appreciation. If you had igonored this blog a year ago and bought, you have a mortgage at twice today’s rates on a property worth about the same, which virtually no principal paid off. Where’s the benefit in that? Calm down, dude. — Garth

#93 dd on 07.15.09 at 5:43 pm

#89 Bottoms_Up

…may ensure you’re not alone on your death bed….

However, we all leave this place alone.

#94 David on 07.15.09 at 5:47 pm

David Lereah’s literary magnum opus can be had for pretty cheap on Amazon these days. Sounds like the man has joined the ranks of the self employed small office/home office consultants. The man might have a bright future if he can learn to specialise in toxic asset disposal.
The publicity releases from the CREA are mistaken for actual news by credulous journalists and there is seldom a contrary opinion voiced in the article.
Good to know the recession is already over, in case any of us missed it.

#95 dd on 07.15.09 at 5:49 pm

#81 My_View

…Most people don’t care about stocks (don’t feel safe) real estate is REAL…

Oh that is funny. What do you think REITs are? Real estate … and the prices are going up and down and sideways. Just think if your house was listed on the exchange and priced daily … which it is when selling. YA … real until you have to sell in a down market.

#96 rory on 07.15.09 at 6:00 pm

#89 Bottoms_Up

For every one kid that reduces pollution via some invention you can bet there will hundreds that do not …compare it to pro sports …how many start out in hockey and make it big – not many …ditto for life changing inventions.

As to your other points, all very selfish and it says its all about me kind of mentality.

We need children to renew our civilizations, but given mortality rates, consumption, over population, etc, any more then 2 kids (and probably one should be adopted) and you are being selfish to the world…IMO.

#97 jess on 07.15.09 at 6:17 pm

Any regrets? asked Donna Rosato, (cnn)
A. I would not have done anything different. But I was a public spokesman writing about housing having a good future. I was wrong. I have to take responsibility for that. ”

shouldn’t David Lereah have said because instead of but.

#98 Nostradamus Le Mad Vlad on 07.15.09 at 6:20 pm

#87 ncoffee at 5:05 pm — “Someone, anyone, please talk nice and slow to me and explain where I’m going wrong with this thinking.”

Okay. Everything in its’ own time of course, but check out these two links, then align the Cdn. and US economies together and prepare for one helluva bang, coz that’s the mothership of all bubbles imploding!

Excerpt: “As to housing prices, there are a million option ARMs still to be reset over the next four years. They won’t peak out until 2011…with average increases of about 80%. That will cause hundreds of thousands more houses to be dumped onto the market…and probably push the bottom of the housing decline to 2012.”

Best wait until after the ‘lympix have finished in 2010. Then credit card debt (both here and the US), Credit Default Swaps / Derivatives, the US debt increasing (now) at US$44,000 / second, etc. etc.

Would it not be better to have WW3 introduced at some point, by way of a false-flag op.?

#99 Devil's Advocate on 07.15.09 at 6:20 pm

#93 dd on 07.15.09 at 5:49 pm #81 My_View

” “…Most people don’t care about stocks (don’t feel safe) real estate is REAL…”

Oh that is funny. What do you think REITs are? Real estate … and the prices are going up and down and sideways. Just think if your house was listed on the exchange and priced daily … which it is when selling. YA … real until you have to sell in a down market.”

Hmmm… that IS funny! What exactly is your point?

We’ve got a couple hundred grand I’d like to park somewhere… but where? It’s not going in the stock market anytime soon, I’ll tell ya that. Our house is bought and paid for so, effectively, we have three to four fold that tied up in real estate. I’m comfortable with that… I realistically don’t think house prices will fall much more than 20%. Stock market?… it’s a gamble… speculation pure and simple. Bonds? Well we missed that market I figure.

In any event, people do need a roof over their heads. We’ve got ours bought the old fashioned way (saved, saved, saved and borrowed what we could afford – which by the way started out at 17.5% interest at the time.

Real Estate IS REAL that’s why after the Dot-Com bubble burst investors flocked to bricks and mortar although it’s the dirt underneath which counts.

#100 lgre on 07.15.09 at 6:22 pm

“Remember the good ol’ days of this blog, where so many posters here seemed to think Canadian RE would crash in just a few months at most, and that it would go down hard, maybe by 30-50% or more?”

Not sure what you’re harping about, if we didnt have dollar bills thrown at everyone..prices would of dropped long time ago..but since Carney and the rest of the circus is following will take some market is dead..good for the useless who rely on government to keep them afloat and bad for the people who can actually make things happen on their own..hence why savers (ie. people with money) are having a hard time getting a return, while debtors are feeling rich.

#101 dd on 07.15.09 at 6:32 pm

#87 ncoffee

..Now we’re all talking about waiting many years into the future, maybe two, maybe five, maybe ten, and for what, maybe getting 15% off today’s prices…

Why buy a very expensive asset that will give you nothing in return for 10 years? People do not grow rich by purchasing a depreciating asset. Look at the USA … price declines might take a total of 5-6 years to find the bottom. So what. Prices have fallen about 40% so far (a little more than 15%).

It is not difficult to figure out that the returns will not be in real estate for quite a while. So move on and invest in something that will. It is not rocket science.

#102 David Rockefeller on 07.15.09 at 6:36 pm

#94 rory

Lets start by eliminating the environmentalists. That should help.

#103 dd on 07.15.09 at 6:45 pm

.#97 Devil’s Advocate
Hmmm… that IS funny! What exactly is your point?

…I’m comfortable with that… I realistically don’t think house prices will fall much more than 20%…

My point is real estate is also a gamble. So if you are right thee $400k house might lose 20%. That is a $80k loss? If you had to sell … it would be REAL!

I would say that RE is “speculation” at this point in time. It is not undervalued.

…bubble burst investors flocked to bricks and mortar although it’s the dirt underneath which counts…

YA right… talk to the Japanese about that. They are still living through the mess of the 80’s boom. Talk to the USA about that while you are at it. They are just starting to come to the realization that house prices don’t always go up. And Canada will be no different.

#104 GB on 07.15.09 at 7:06 pm

Garth, I’ve always wanted to say this. It’s ALL about risk isn’t it? One variable I always find missing from your general advice is…. health.

You seem quite the advocate for debt reduction and wealth building. Okay. I get that. But for the average Canadian, building wealth in any substantial manner involves a fair amount of sacrifice. I have been doing this now for the past 6 years( I’m 39). I don’t buy any fancy cars despite my buddies doing this. I’d love a new car…I love cars but I choose not to indulge.

I don’t bring my girls to Disney Land or fancy trips etc. I don’t buy…well anything that is considered “nice”( No Harley’s either Garth). I don’t earn enough to do both( saving/debt reduction and indulgence)

I could afford very few nice things but I certainly have an extra oh…$10,000 per year that goes either towards RRSP’s/RESP’s or against my mortgage over and above my bi-weekly payments.

All the things I hear on here. But then there is that little health nugget…what if I sacrificed all those memories in Disney Land with my two daughters, the excitement of owning that new car, the new back deck we could use to help us enjoy our back yard a bit more…all to have a stroke at the age of say 55 and be either dead or markedly disabled?

Sometimes you’ve just gotta enjoy life…NOW, while it’s still here and you are healthy enough to enjoy it.

I’m not sure if most of your blog is dedicated to two types people:

1. Very wealthy

2. Stupid middle income earners who think it’s a great idea to drop 400,00$ on a house.

I’m neither of those. But I find it next to impossible as a middle income earner to do both….indulge in life’s little luxuries( Trips etc) and debt reduction and retirement savings….

I’m just saying…all this stashing cash is a great idea so long as your health holds up….

#105 GB on 07.15.09 at 7:21 pm

Canadian Army guy,

Read Rory’s comment in post #55.

#106 Mike B on 07.15.09 at 7:48 pm

There are alot of greedy sellers out there these days.. fortunately buyers are working to keep from being sucked into the abyss…prices can rise overnight but reductions can take months or longer…It is hard to wait for the perfect moment as there are tons of lemmings out there creating the flow. Saw a POS that got 12 reg offers first day. A bad house on a good lot and people go into auction mode. July numbers should be good but a stock market correction close to march lows will quickly put the brakes on things. Hell Toronto has 10% unemployment yet houses are selling…. Why… cheap money and the manipulation of the market by central banks.. Stay tuned for a much needed collapse.

#107 taxpayer like you on 07.15.09 at 8:45 pm

101 dd

“My point is real estate is also a gamble. So if you are
right thee $400k house might lose 20%. That is a $80k
loss? If you had to sell … it would be REAL! ”

Not if you paid $175K for it. And really, it’s your home,
right? You didnt buy it for an investment.

I find the greatest irony in this blog when posters comment on speculators and greater fools treating houses as an investment (ie buying for profit) but then we criticize those who chose not to.

Dont speculate with the family home.

PS Euro bloggers – you would never guess a recession with all the fans, campers etc. at the tour de france.

#108 Jim on 07.15.09 at 9:19 pm

Home sales jump over 30 percent in June:

You’re a day late. — Garth

#109 timbo on 07.15.09 at 10:03 pm

#50 mike

perfect and to the point

Even if house prices stay flat in Canada, our exports are going to drop as unemployment will increase down south. This is going to reduce demand even further. Citi group and California are going to be huge bailouts that will force even more layoffs. I think debt has really put the USA in vicious circle and without a massive change in employment it will be impossible to break. This is not even taking into account all the defaults that are taking place because people are not paying their mortgage. It also makes one wonder when you read that many are able too but because of the – equity there is no point in paying, so they squat.

The media will do anything to make you spend to keep things going but smart people start saving when times get tough. The tax-base next year will be ugly and debt, which has skyrocketed, will need more and more cash to service.

#110 Jonathan on 07.15.09 at 10:07 pm

Wow are Canadian politicians must think they are so smart.

In America they just let their home prices fall. We would have offered sub subprime up here just to keep the house of cards from tipping over. Aint nothing going down on Harper’s shift.

#111 Jonathan on 07.15.09 at 10:11 pm

Does anyone realize that the US government has to borrow 14% of their GDP just to keep their GDP at 2% below a year ago levels? If the government balanced their books tomorrow, their GDP would immediately drop 16%.

Now you know why Germany and Japan economies will shrink about 7% this year, and the US will only shrink 2%. But don’t tell that to the guys on main street business. They are going broke. If you aren’t in the stream of government spending, close up your shop. You’re no longer needed in this new ‘keep the GDP figure as high as possible” game.

#112 Sad House Buyer on 07.15.09 at 10:32 pm

Can anyone recommend a property manager in Edmonton who is familiar with non-resident tax requirements? I just got a job overseas and will probably be living overseas for some time. My current property manager has never dealt with a non-resident owner before. I have a good reliable accountant, I just need a property manager, in Edmonton.

I realise I’d be better off without the house (would I ever!!) but the soonest I can sell is next spring (since my current tenant has a 1 year lease) and I may hang onto it for another year or 2 after that, in the (maybe vain) hope that prices might come up a little so I can get some of my deposit back. I bought about the peak of the boom unfortunately. Thanks!

#113 dd on 07.15.09 at 11:16 pm

.#105 taxpayer like you on 07.15.09 at 8:45 pm

…I find the greatest irony in this blog when posters comment on speculators and greater fools treating houses as an investment…

Yet a house is part of net worth. It goes into the retirement calculation. It is real hard earned money going to buy something. If you are spending $200 or $400k it better increase in value.

#114 dd on 07.15.09 at 11:18 pm

.#105 taxpayer like you on

“Dont speculate with the family home.”

What are the people buying home now doing? Buying at the top of the market? Is this not speculation (paying way to much for an asset)?

#115 dd on 07.15.09 at 11:21 pm

.#105 taxpayer like you

…fools treating houses as an investment (ie buying for profit) but then we criticize those who chose not to….

True, however, people tend to think that houses are not risky as stocks. Just look south to the States for the answer.

#116 X on 07.16.09 at 12:03 am

#81 My_View – you just don’t get it do you… of the most basic rules of creating wealth is to not buy when everyone else is…..and buy what everyone else is not.

Believe me it isn’t sexy….but it has worked for me.

If you believe in RE so much…why buy one property…wouldn’t you rather have a dozen of a good thing instead of one.

#117 Dave on 07.16.09 at 12:08 am

Real Estate IS REAL that’s why after the Dot-Com bubble burst investors flocked to bricks and mortar although it’s the dirt underneath which counts.


yet the bricks an mortar became dirt too in almost every country in the world. A bubble just like dot com one.

#118 dd on 07.16.09 at 9:12 am

#108 Jonathan o

“We would have offered sub subprime up here just to keep the house of cards from tipping over. Aint nothing going down on Harper’s shift.”

And what is this current rate offering? Record low interest rates and record high house prices. Not a good mixture.

#119 Devil's Advocate on 07.16.09 at 2:00 pm

Real Estate is a necessity. Be it a place from which to conduct commerce or a place to erect a shelter, real estate will always enjoy a relative demand. The value of real estate, in this economic world where inflation is considered to be a necessary evil in order for our economic to function, will maintain parity with all other necessities and consequently increase in value but retain a relative balance to other necessities. Today real estate values have been pushed beyond reason through speculation and abnormally low interest rates. This will eventually change as prices will fall or hold somewhat until the economic factors catch up.

Deflation is not a bad thing for consumers or commerce. Deflation is not something governments can manage and so they interfere with the markets to negate it and push toward inflation which reaps greater tax revenues and is more easily managed.

So yes, real estate is bound to fall in the near future or at least hold while other economic factors catch up with its unwarranted increase of late. Those buying under the current market conditions are making a mistake as relative prices must fall or, more assuredly, interest rates will rise negating affordability and prices will be forced to fall.

My point is, real estate will retain a relative value and demand as long as we humans inhabit this earth (not likely to be so long as many think). We all need real estate, many of us choose to own more than we need but still we need it. A buyer should enter the market wisely rather than buying on emotion. Unfortunately we all tend to buy on emotion and later justify that decision based on logic… cognitive dissonance.